Proposed changes to Crown use in Australia

Date: 2013-06-27
Author: Daneta Crump

The Intellectual Property Laws Amendment Bill 2013 includes proposed changes to the Crown use provisions that are intended to provide greater accountability and transparency by the Government and to clarify that Crown use covers the provision of a service that Governments have primary responsibility for providing or funding, such that third party providers can be covered.

The Productivity Commission Inquiry Report into Compulsory Licensing of Patents was released on 27 May 2013. The purpose of the inquiry was to assess the impacts and mechanisms of the Patent Act’s compulsory licensing safeguard, however it also considered the Crown use provisions, which have been adopted in the Intellectual Property Laws Amendment Bill 2013, which was introduced into Parliament on 30 May 2013.

Current provisions

The Crown use provisions are defined under Section 163 of the Patents Act 1990, where, “the invention concerned is exploited by the Commonwealth or a State (or by a person authorised in writing by the Commonwealth or a State) for the services of the Commonwealth or the State, the exploitation is not an infringement…” and the Commonwealth or a State may authorise a person “before or after any act for which the authorisation is given has been done.” Section 163(3) defines that “…an invention is taken for the purposes of this Part to be exploited for services of the Commonwealth or of a State if the exploitation of the invention is necessary for the proper provision of those services within Australia.”

Currently there are no requirements for the Crown to advise the patentee of their intended actions. Under Section 164 the relevant authority must inform the patentee or applicant “as soon as practicable after an invention has been exploited”.

Key findings of the Productivity Commission and proposed amendments to the Patents Act 1990

Scope of Crown use

Finding: There is uncertainty about the extent to which the phrase ‘”for the services of the Commonwealth or a State” can include non-government bodies that deliver goods or services in sectors where governments have primary responsibility. This has been of particular concern in the healthcare sectors.

Proposed amendments: The Intellectual Property Laws Amendment Bill 2013 Schedule 1 introduces the following changes:

  • amendment of wording for Crown use to: “provision of a service that … Governments have primary responsibility for providing or funding”, to be known as the primary responsibility test:
    • exploitation of the invention by a relevant authority, or for a relevant authority by an authorised person, for the services of the relevant authority concerned.
    • a relevant authority may, in writing, authorise a person. Governments will be able to authorise private service providers to use inventions, if the relevant criteria is met.
    • an invention is taken for the purposes … to be exploited for the services of a relevant authority if the exploitation of the invention is necessary for the proper provision of those services in Australia.
  • services includes a service that is:
    • primarily provided or funded by the Commonwealth;
    • primarily provided or funded by the Commonwealth and one or more of the States;
    • primarily provided or funded by the State;
    • primarily provided or funded by the State and one or more of the other States or the Commonwealth.

Transparency and accountability

Finding: There is a need to improve transparency and accountability.

Proposed amendments: The Intellectual Property Laws Amendment Bill 2013 Schedule 1 introduces the following changes:

  • A relevant authority may, in writing, authorise a person for the Crown exploitation. The person must be authorised before any act covered by the authorisation is done.
  • The Crown exploitation is not an infringement if the following conditions are met:
    • the relevant Minister considers that the relevant authority has tried for a reasonable period, but without success, to obtain from the applicant and the nominated person, or the patentee, an authorisation to work the invention on reasonable terms;
    • the relevant Minister approves the proposed exploitation by instrument; and
    • at least 14 days before the exploitation starts, the relevant Minister gives the applicant and the nominated person, or the patentee:
      • a copy of the instrument of approval; and
      • a copy of a statement of reasons for approving the proposed exploitation.
  • s163A allows for emergencies, as considered by the Minister; the patent holder must then be notified as soon as practicable.
  • relevant Minister means:
    • in relation to exploitation by or for the Commonwealth – the Minister
    • in relation to exploitation by or for a State – the Attorney-General of the State
  • s165(2) has been amended to align the pricing principles with those for compulsory licensing.

What’s next?

The Intellectual Property Laws Amendment Bill 2013 is currently before the House of Representatives. The Bill must be agreed to by both the House and the Senate and then will be assented to by the Governor-General before it comes into effect.