Freedom to research in Australia - exemptions to patent infringement
Patent rights are pivotal to research-intensive sectors such as the life sciences and medical devices. High expenditures and long R&D time frames often can’t be justified without the incentive that patent protection provides.
Patent rights are aimed at encouraging innovation in a manner benefiting society as a whole. The patentee is granted a time-limited exclusive right to practice the invention in exchange for a detailed disclosure of the invention to the public, both advancing the state of the art and enabling others to use the technology after patent expiry.
Society has long since recognised that a balance is required to be maintained between the private rights of the patentee and the freedom required by competitors to further innovate during the term of a patent and to compete after expiry. In Australia, the Patents Act 1990 (Cth) (the Patents Act) provides a number of exemptions to infringement which seek to encourage innovation, allow subsequent competition and promote dissemination of technical knowledge. This article considers three infringement exemptions of particular relevance to the life sciences, as well as the first substantive decision of the Federal Court of Australia on the 'experimental purpose' exemption.
Regulatory approval of pharmaceuticals (s 119A)
Section 119A of the Patents Act was introduced by the Intellectual Property Laws Amendment Act 2006 (Cth) (the 2006 Amending Act) and permits manufacturers of pharmaceutical products to obtain regulatory approval in Australia during the term of a pharmaceutical patent. The provision was designed to avoid unnecessary delays in the marketing of generic products after patent expiry.
Under s 119A, a person does not infringe a pharmaceutical patent (as defined in s 119(3)) by exploiting an invention solely for purposes connected with obtaining inclusion in the Australian Register of Therapeutic Goods (ARTG) of goods (as registered goods or listed goods) that are intended for therapeutic use. However, the exemption is not available in relation to medical devices or therapeutic devices, or device/medicine ‘boundary’ goods which have some characteristics of a medical device and some characteristics of a medicine.
Section 119A(1)(b) also exempts from infringement the exploitation of an invention claimed in a pharmaceutical patent for the purpose of obtaining similar regulatory approval under a law of a foreign country. However, this does not extend to the export from Australia of goods consisting of or containing a pharmaceutical substance per se unless the patent is one whose term has been extended.
Regulatory approval of other products and processes
Section 119B of the Patents Act was introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (the RTB Act) and extends the effect of s 119A to acts done solely for purposes connected with obtaining regulatory approval in Australia or another country to exploit any product, method or process. The defence under s 119B does not apply to pharmaceutical patents, but will apply to medical devices, therapeutic devices or agricultural chemicals. Notably, s 119B allows the export of goods from Australia in order to obtain regulatory approval under a law of a foreign country.
Section 119B is intended to account for changes in existing regulatory requirements as well as regulatory requirements that do not exist now, but may be imposed in the future.
Experimental purposes (s 119C)
Before 2012 there was a degree of uncertainty as to whether acts such as experimental use (absent a commercial purpose) were exempt from infringement in Australia. In 2004 and 2005, two concurrent inquiries were undertaken by the Australian Law Reform Commission (ALRC) and Advisory Council on Intellectual Property (ACIP) to consider this issue. As part of their consideration, the ALRC and ACIP considered a number of submissions from the public and the position in other jurisdictions regarding an experimental use defence. The ALRC and ACIP ultimately considered it desirable to remove the uncertainty in the Patents Act and recommended the introduction of an experimental use exemption.
Section 119C of the Patents Act was introduced by the RTB Act and provides a defence against infringement of a patent for acts done for experimental purposes relating to the subject matter of the invention. Section 119C does not exhaustively define the expression “experimental purposes” but s 119C(2) provides a non-exhaustive list of examples, being:
- determining the properties of the invention
- determining the scope of a claim relating to the invention
- improving or modifying the invention
- determining the validity of the patent or of a claim relating to the invention
- determining whether the patent for the invention would be, or has been, infringed by the doing of an act.
The Explanatory Memorandum to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) states that “experimental” in s 119C is intended to be given its ordinary English meaning and that the provision should apply to tests, trials and procedures that a researcher or follow-on inventor undertakes as part of discovering new information or testing a principle or supposition. However, the Explanatory Memorandum also recognises the practical reality that research is frequently undertaken for mixed purposes, and so it is not fatal if there is some commercial purpose in the experiments, provided that it is not the main purpose. Thus, s 119C may encompass contracted research, research conducted with a view to ultimately commercialising the end-products of the experimentation, and research undertaken with, and partially funded by, a commercial partner. In each case, what is required is that the specific acts are undertaken for the predominant purpose of gaining new knowledge or testing a principle or supposition about the invention.
Section 119C requires that the acts done for experimental purposes be ones “relating to” the subject matter of the invention. The Explanatory Memorandum explains that these words are intended to achieve two ends:
- To free researchers to innovate without having to conduct extensive patent searches before starting every experiment – the words are intended to cover circumstances where experiments inherently include the subject matter of a patent, perhaps as part of a larger or more complex experiment, but the researcher is unaware of the existence of the patent.
- To preserve economic incentive to develop better research tools – the words are not intended to exempt from infringement the use of patented “research tools”, which are used to facilitate an experiment. Rather, s 119C aims to exempt something that is the subject of the experiment. For example, the testing of a particular herbicide on different plants might use a patented wetting agent to facilitate uptake of the herbicide. Here, the use of the wetting agent would not be covered by s 119C as it is not the subject of the experiments but rather is being used as a tool in an experiment.
Jusand v Rattlejack
Jusand Nominees Pty Ltd v Rattlejack Innovations Pty Ltd  FCA 540 is the first substantive judicial consideration of s 119C since it was introduced. One of the respondents asserted that the supply of its 'SafetySpear' product for use in underground mining was covered by s 119C.
Rofe J considered the expression “experimental purposes” in s 119C ought not be confined to laboratory work and connotes:
at least some application of scientific method to the discovering of new information or testing a principle or supposition, the testing of a hypothesis, the existence of a protocol or methodology documentation of some kind setting out the purpose of the experiment and the variables to be measured or observed, the recording of results or observations, and the reporting of the results or observations.
Rofe J accepted that early field tests of the SafetySpear fell within s 119C. Such tests involved a limited number of prototype SafetySpears and were conducted for the purposes of determining whether the prototype SafetySpears worked and, when they failed, for testing the redesigned prototypes. Reports were also prepared on the failed tests, which included speculation as to the cause of the failures and what changes were required.
However, her Honour considered that the supply of 200 production model SafetySpears which were supplied and put to use for 12 months of testing in mining operations, did not fall within the exemption. Her Honour held that the supply was nothing more than use in the ordinary course of mine operations rather than for experimental purposes so as to fall within s 119C. Importantly:
- the supplier had no input into any trial design for the SafetySpears, including what parameters to measure, where and how the trial was to be conducted, and what constituted success
- testing was only conducted at some sites at which the SafetySpears were deployed
- there was no scientific method associated with the trial or documentation recording it
- the Partnering Agreement between the supplier and the recipient was silent as to any experimental use or trial
- the SafetySpears were supplied at a commercial price (i.e. not discounted) that included a sales margin.
- Although there is little judicial guidance on the regulatory approval exemptions for pharmaceutical patents (s 119A) and non-pharmaceutical patents (s 119B), the text of the provisions make clear that the exemptions apply to acts undertaken solely for the purpose of obtaining regulatory approval. The exemptions do not apply, for example, to pre-launch activities such as stockpiling for sale upon the expiry of the patent.
- When determining the applicability of the experimental use exemption (s 119C), the court will look to the conduct of the parties, the circumstances surrounding the utilisation of the technology in question and the nature of that use, and whether there was a commercial element associated with the use.
- Rofe J’s decision provides guidance that a commercial context or ultimate commercial purpose, such as the testing of prototypes, may take advantage of the experimental use exemption, but it requires at least some application of the scientific method to the discovering of new information, the testing of a principle, supposition or hypothesis.
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