Views on experimental or research use defences

13.42 The justifications for an experimental or research use defence may be summarised as follows. The defence:

• enables the validity of existing patents to be properly tested by experimentation;
• enables experiments to be conducted to determine whether a patentable invention falls within the scope of an existing patent;
• promotes the attainment of new knowledge about patented inventions;
• promotes the development of new and improved inventions and reduces the likelihood of monopolisation of a new area of technology by a patent holder;
• removes a burden from researchers, who might otherwise need to conduct extensive patent searches and obtain advice from lawyers and patent attorneys; and
• involves minimal interference with the patent holder’s economic interests in exploiting its patent.^[72]

General views

13.43 Submissions revealed broad support, from a broad cross-section of stakeholders, for a new experimental or research use defence, although they were often not explicit about the desirable scope of the defence.^[73]

13.44 A number of submissions argued that an experimental use defence should be recognised as consistent with principles on which patent law is, or should be, based—the exchange of monopoly rights in return for disclosure of an invention, the specifications of which may then be tested and improved upon by others.^[74] A focus of submissions was on the need to encourage innovation, research and development, including through the enactment of an experimental or research use defence.^[75]

13.45 Submissions emphasised the importance of eliminating uncertainty as to the existence and scope of an experimental use defence. This was seen as central to establishing ‘freedom to operate’ in specific research fields.^[76] Bio21 stated that, if the scope for non-infringing experimental use is presently as limited as may be suggested, ‘this would place a huge administrative and financial burden on researchers and research organisations and would essentially stop innovative academic research as we know it’.^[77]

13.46 The Centre for Law and Genetics noted that, while a practice-based research exemption currently operates in Australia, the absence of a statutory exemption ‘may encourage some patent holders to change their enforcement practices in the future’. The Centre stated that the creation of a narrow common law exemption by the courts could have a stultifying effect on non-commercial research.^[78] The Department of Health and Ageing identified a risk that, without reform, Australia could lose research programs to countries that do have experimental use defences.^[79]

13.47 Submissions also highlighted the difficulties in framing an appropriate experimental or research use defence and, in particular, in distinguishing between commercial and non-commercial activity, and in dealing with the exploitation of research tools. These issues, and others related to the framing of a new defence, are examined in more detail below.

Commercial objectives

13.48 In framing a statutory experimental use defence an important consideration is the extent to which experimental use may have a commercial objective. If the immediate purpose of the experimentation is technical—that is, to discover more about the patented invention—to what degree should the presence of potential commercial interests be permissible?

13.49 Some submissions suggested that the defence should be available only for non-commercial research, or research conducted by not-for-profit entities.^[80] However, in practice, it is difficult to distinguish between ‘pure’ or ‘basic’ research and research whose purpose or effect is to produce a commercial outcome.^[81]

13.50 This difficulty is exacerbated by policies promoting the commercialisation of publicly funded research.^[82] These policies mean that commercial objectives are defined early in the research cycle—making it harder to argue that the research has no commercial motivation. For example, commercialisation prospects may be identified in research funding applications to bodies such as the National Health and Medical Research Council (NHMRC) or the Australian Research Council.

13.51 It has been suggested that, for any new experimental or research use defence to be workable, it should avoid, as far as possible, the need to decide whether research is commercial or non-commercial in nature.^[83] In many jurisdictions, courts have struggled to determine the level of commerciality that will disqualify an alleged infringer from relying on an experimental use defence.

13.52 This difficulty was highlighted in submissions.^[84] Some suggested that any attempt to construct a defence based on distinctions between commercial and non-commercial research would be unlikely to work.^[85] A particular problem is that it is often unclear when research with potential application to the development of a new product or process becomes directed to commercial purposes.^[86] Where research starts out as non-commercial but acquires a commercial intent, questions may be raised about exactly when the defence would cease to apply and infringement commence.^[87]

13.53 Several submissions indicated that a defence based on distinctions between commercial and non-commercial purposes would be misconceived.^[88] Rather, the defence should distinguish between the types of acts carried out, rather than the nature or intentions of the parties, or whether experimentation is ‘commercial’ or ‘non-commercial’.^[89]

Experimentation or research?

13.54 A second key issue concerns the relationship that must exist between experiments and the patented invention in order for use to be protected by an experimental or research use defence. Existing experimental use defences distinguish between experimental use ‘relating to the subject matter of a patented invention’^[90] and other forms of research use. The defence covers only the former category.

13.55 This distinction has been explained in various ways. One simple explanation is that while research on a patented invention is exempt from claims of patent infringement, research simply involving the use of a patented invention is not.^[91] In other words, the defence ‘does not cover any use without a licence of a patented research tool or medium which is needed for the research but is not being experimented upon for its own sake’.^[92] For example, work to provide an improved polymerase chain reaction (PCR) methodology would probably qualify as experimental use, but work which simply used PCR as a standard methodological step would not.^[93]

13.56 The problem with a broader defence—extending to research using a patenting invention—is that it would render patent rights over research tools illusory. Where the only use of the patented invention is in the conduct of research, the invention may not be able to be exploited effectively by the patent holder. Such a situation might penalise the Australian biotechnology industry by devaluing inventions that assist research.^[94]

13.57 Some submissions explicitly supported the introduction of an experimental use defence limited to research on a patented invention.^[95] For example, in response to IP 27,^[96] GlaxoSmithKline submitted that the exemption should apply to ‘activities carried out seeking to discover new knowledge about the patented invention, irrespective of whether that research is undertaken for commercial purposes or not and irrespective whether it is undertaken in an academic or commercial organisation’. It also noted that this is the basis of the European Union defence,^[97] which received explicit support in a number of other submissions to the Inquiry.^[98]

13.58 DP 68 proposed the establishment of a new defence based on the use of a patented invention to ‘study or experiment on the subject matter of the invention’.^[99] While there was wide support for this approach,^[100] a number of submissions highlighted the potential difficulties involved in distinguishing between research on the subject of an invention and research using an invention.^[101] For example, the Department of Health and Ageing stated ‘[i]n the case of patented genes, particularly with product per se patents, there may be significant difficulty in discriminating between research on the subject of the invention and research with or using the subject of the invention’.^[102]

13.59 Some submissions suggested factors that may assist in distinguishing between experimentation that should be exempt and other research activity. The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) suggested that the amount of use being made of the invention, having regard to the nature of the study or experiment, should be relevant.^[103] AusBiotech Ltd referred to the concept of Standard Operating Procedures and noted that:

if the technique is used 1-3 times, it could be classed as experimental. If the procedure is carried out many times through something like a clinical trial, then that would be considered as use of the technology for a process rather than an experimental use and therefore be an infringement.^[104]

13.60 A number of submissions stated that the ALRC’s proposal for an experimental use defence did not go far enough to protect the conduct of research and to promote innovation.^[105] Bio21 expressed concern that the ALRC’s proposal did not provide explicitly that researchers are able to conduct research on patented DNA sequences if the research relates to improving, further developing or testing the sequence.^[106] The Australian Centre for Intellectual Property in Agriculture (ACIPA) supported the adoption of reforms similar to those proposed in the United States,^[107] which would exempt the use of patented genetic sequence information for non-commercial research.^[108]

13.61 The NHMRC stated that limiting the defence to experimentation (as defined in the ALRC’s proposal) may ‘unduly limit the defence and therefore its value to the research community’.^[109] The Queensland Government submitted that the scope of the proposed defence should be extended to ‘the creation of a new product or process using the claimed invention’.^[110]

13.62 The Centre for Law and Genetics agreed with the ALRC’s proposal but submitted that, in addition, a broader exemption should be implemented to ‘protect non-commercial research, irrespective of whether this is research on or research with the patented invention’.^[111] The Centre submitted that:

the non-commercial research exemption is justified on the basis that the patent grant only allows the holder to exclude others from exploitation. It should not be used in a way that stifles non-commercial research because this could negate the incentive goal of the patent system.^[112]

13.63 However, the Centre also recognised the problems involved in distinguishing between commercial and non-commercial research, or between basic and applied research—which might make a non-commercial research exemption difficult to apply. It suggested that one solution to this problem would be to permit researchers to self-define themselves as non-commercial users of patented invention, provided they undertake to publish their work and refrain from patenting their research results.^[113]

Private and non-commercial use

13.64 The Inquiry asked whether the Patents Act should be amended to include a defence for private and non-commercial use of a patented invention.^[114] Submissions offered a mixed response to this question. Some submissions supported the idea of such a defence,^[115] which would be useful in giving ‘a greater sense of security to the truly private user’.^[116] Other submissions opposed the introduction of a private and non-commercial use defence, mostly on the basis that it would be unlikely to serve any useful purpose, given its narrow ambit.^[117] The Department of Industry, Tourism and Resources noted that genetic technologies are unlikely to be used for private and non-commercial purposes, as they require use by experts under controlled conditions.^[118]

Defence or exemption?

13.65 While legal usage is not always consistent, an experimental use provision may be described as an ‘exemption’ where experimental use is defined as a non-infringing act.^[119] This may be contrasted with a ‘defence’, where the use infringes patent rights but the user is protected from liability with respect to patent infringement claims.

13.66 It has been suggested that any new experimental use provision should be framed as an exemption rather than as a defence because of the implications for the burden of proof in patent infringement proceedings.^[120] Where the provision is framed as an exemption, the patent holder has the burden of proving that use by another party was not experimental. In contrast, an experimental use defence may require the user to establish experimental use.^[121]

13.67 The full implications of the distinction between an exemption and a defence for the burden of proof in patent infringement proceedings are unclear. Even where the patent holder has the legal burden of proving that use is not experimental, the alleged infringer may still have an evidential burden of showing a reasonable possibility of experimental use, particularly as aspects of the use of a patented invention are likely to be within its sole knowledge.

13.68 The Intellectual Property Research Institute of Australia (IPRIA) suggested that it would be ‘more principled, and more desirable’ to conceive of the role of any provision as both:

a. clarifying (or defining) the scope of the patent owner’s rights, so that certain uses are not ‘infringements but for the defence’, but rather, uses outside the purview of the patent owner’s right; and

b. resolving the genuine conflict between the rights of the patent owner and the needs of the researcher in the specific set of circumstances where it arises.^[122]

13.69 A number of submissions suggested that the exemption should be drafted so that any other defences relating to experimental or research use that may be available, including defences implied by other provisions of the Patents Act, are not precluded.^[123]

13.70 Bio21 expressed concern that patent holders and the courts may interpret the existence of an express experimental use exemption as meaning that all research activities ‘not clearly and explicitly within the scope of the defence will be an infringement’ and that this would encourage patent holders to enforce their patents ‘more aggressively against researchers, including non-profit and university sector researchers’.^[124] IPRIA submitted that the ALRC should ‘explicitly acknowledge that the exemption does not preclude further judicial interpretations of, and refinements to, the concept of exploitation’.^[125]