NEWS

Section 163A – The rarely used safeguard within the Patent Act 1990 that may help Australia battle the Covid-19 pandemic

Recent amendments clarifying the Crown Use provisions contained in the Patents Act 1990 (the Act) could not have come sooner, with the Covid-19 pandemic potentially triggering the use of the new ‘emergency’ Crown exploitation of inventions safeguard, found in section 163A of the Act, to ramp up the urgent manufacture of medical equipment needed by Australia to combat the Pandemic.

Background

What is a Patent?

A patent is a legally enforceable right to an invention, whether it be a device, substance, method or process. Once granted, the patent holder has the exclusive commercial rights to their invention[1] as the patent prohibits others from manufacturing, using and selling the patented invention without first obtaining the consent of the patent holder.

What is ‘Crown Use’ of a Patent?

There are provisions in the Patent Act 1990 that deal specifically with government access to patented inventions, without the patent holder’s authority. These are known as the ‘Crown Use’ provisions.

The Crown Use provisions generally exist to provide government access to invention patents, without infringing the patent, where it is necessary for the proper provision of services of the Commonwealth or a State. [2] The provisions act as a safeguard to the Australian Government (at federal, state and/or territory level), should a situation arise where access to an innovation patent is needed (for example, to deal with an emergency or public interest issue) but a licence to that patent cannot be obtained/negotiated with the patent holder in a reasonably timely manner. [3]

To utilise these provisions, it is essential that the ‘Crown Use’ relates to the exploitation (accessing and using) of the patent for the services of a ‘Relevant Authority’ (being, the relevant Australian Federal, State or Territory government)[4] or a person authorised in writing by the relevant Minister of the relevant government to do so.[5]

Under the Act, the services of the government include all services that are provided or funded by the Commonwealth and/or state or territory governments.[6] The relevant Minister is the Minister responsible for administering the Act for the Commonwealth (currently, the Minister for Industry, Science and Technologyor the Attorney General of the relevant State of Territory. [7]

Although the Crown Use provisions existed in the Act for some time, there is commentary to suggest that the lack of clarity in the former provisions caused them to be underutilised.[8] To battle this, amendments to the Crown Use Provisions of the Act were made by the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020, which came into effect on 27 February 2020.

The amendments to the Act sought to improve and clarify the operation of Crown Use provisions. [9]  That said, as well as creating consistency in the terminology used, a distinction was made between crown use in ‘non-emergency’ and ‘emergency’ situations by repealing the former section 163 and introducing a new section 163 dealing with crown use of invention patents in non-emergency situations as well as a new section 163A, dealing specifically with Crown Use of invention patents in ‘emergencies’.

Although the new general Crown Use provisions contained in section 163 of the Act are similar to the former provisions, the key difference is that, in non-emergency situations, there is a requirement to negotiate with, as well as provide a statement of reasons to, the patent holder prior to exploiting the patent. It is only after this attempt to negotiate the exploitation with the patent holder renders fruitless, within a reasonable period of time, that the patent can be exploited by the government with the authority of the relevant Minister and without the consent of the patent holder.

Crown exploitation of Invention Patents – In Emergencies

In contrast to the general provision in section 163, under the new section 163A of the Act, the government has the ability to ‘exploit’ a patent in an ‘emergency’ without first negotiating and obtaining the approval of the patent holder so long as the following necessary preconditions are met:

  1. the relevant Minister considers the exploitation is necessary because of an emergency;
  2. the relevant Minister approves the proposed exploitation before the exploitation starts; and
  3. the invention is exploited for government purposes and a person must be authorised to exploit an invention under the Crown use provisions before any act covered by that authorisation is done. [10]

An emergency would include an unforeseen occurrence or a sudden and urgent occasion for action. It could include a public health crisis such as a plague or epidemic, or a medical emergency such as a pandemic. It could also include war, national security situations, perceived threats to law and order, natural disasters and other situations of urgency. It includes, but is not limited to, situations where a state of emergency has been declared by a government.[11]

The relevant Minister is, however, required to provide the patent holder with a copy of the Crown approval to exploit the patent and a written statement of reasons approving the Crown exploitation as soon as practicable after the exploitation is approved.[12]

How could S163A help during the current Covid-19 Pandemic?

The unforeseen nature of the current Covid-19 pandemic has depleted vital resources and disrupted essential supply chains worldwide, leading to a shortage not only in day to day household items, but key medical equipment, supplies and pharmaceuticals desperately needed to combat the pandemic.

Under section 163A of the Act, there is an avenue for the government to step in and effectively authorise the immediate mass Australian manufacture (by local and/or re purposed manufacturers) of essential patented medical equipment (such as ventilators) desperately needed by hospitals to battle Covid-19, without the potential life threatening delays caused by way of obtaining the pre-approval of the relevant patent holders.

Currently, although there are talks that the Crown Use provisions have been raised by shadow industry minister Brendan O’Conner, according to InnovationAus and the reports an industry spokesman, the government has not yet invoked the power, but rather is working closely with technology and manufacturing companies as part of a landscape of options.[13]

For further information please do not hesitate to contact Robert Ishak or Effie Dimos.



[1] https://ipaustralia.gov.au/patents/understanding-patents/patent-basics

[2] Patents Act 1990, section 163; House of Representative, Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019, Revised Explanatory Memorandum 2019-2020 (Revised Explanatory Memorandum); page 17

[3] Revised Explanatory Memorandum; page 8

[4] Patents Act 1990, Schedule 1; Revised Explanatory Memorandum, page 18

[5] Patents Act 1990, Section 160A(1)

[6] Patents Act, section 160A(4); Revised Explanatory Memorandum, page 17,19

[7] Patents Act, section 163(5); Revised Explanatory Memorandum, page 22

[8] Revised Explanatory Memorandum; page 8, 17, 23

[9] Revised Explanatory memorandum, page 17

[10] Patents Act 1990, s163A(3)

[11] Revised Explanatory memorandum, page 23

[12] Patents Act 1990, section 163A(4)

[13] Innovation Australia ‘Govt to step in on patent problems’ Denham Sadler, 6 April 2020 https://www.innovationaus.com/govt-to-step-in-on-patent-problems/

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