Compulsory Licensing of Patents

• Like most countries, Australia has legislated a system of compulsory licensing so that patent owners can be compelled to license their inventions to others in a limited range of circumstances.
• Survey data and participants' comments confirm that this is a safeguard which only needs to be invoked in exceptional cases. Rather than having to be compelled to license, patent owners often would prefer to license more than they do.
• There have been few applications for a compulsory licence in Australia, and none have been successful. While this is consistent with its status as a rarely needed safeguard, another factor may be the costly and time-consuming process involved in obtaining a compulsory licence order from the Federal Court.
• There are no clear alternatives to the Federal Court that would make compulsory licence applications significantly less costly and time consuming, without also raising concerns about the quality of outcomes and scope for appeals.
• There is a clear case to reform the criteria for granting a compulsory licence.
  • When a patent is used to engage in unlawful anticompetitive conduct, a compulsory licence should only be available under the Competition and Consumer Act 2010 (Cwlth).
  • A public interest test should replace existing criteria based on the 'reasonable requirements of the public' in the Patents Act 1990 (Cwlth). For cases other than those relating to unlawful anticompetitive conduct, this would provide an access regime when greater use of a patented invention would deliver a net benefit to the community.
• To reduce uncertainty about international treaty obligations on compulsory licensing, such obligations should be incorporated directly into the Patents Act or its subordinate legislation.
• To improve awareness of the compulsory licensing provisions, IP Australia should develop a plain English guide and make it available on its website.
• The Patents Act contains a less costly and time-consuming alternative to compulsory licensing — termed 'Crown use' — that can be invoked when an invention is used for the services of a government. Two key reforms are proposed in this regard.
  • To reduce uncertainty about the scope of Crown use, the Patents Act should be amended to make it clear that Crown use can be invoked for the provision of a service that the Australian, State and/or Territory Governments have primary responsibility for providing or funding.
  • To improve transparency and accountability, governments should be required to first seek a negotiated outcome, obtain Ministerial approval to invoke Crown use, and publicly state the reasons no less than 14 days before such use occurs. These requirements should be able to be waived in emergencies. In all cases, governments should be required to pay just and reasonable compensation.

Background information

Greg Murtough (A/g Assistant Commissioner) 03 9653 2163