Patent Licensing

The Productivity Commission is to undertake an inquiry into compulsory licensing in the patents system.

The inquiry is promoted by the Assistant Treasurer and the Parliamentary Secretary for Industry & Innovation as examining "whether, and how, to ensure access to patented technology while maintaining the patent incentive to create and protect new technology".

It follows recommendations in Parliamentary Committee reports and the Australian Law Reform Commission Genes & Ingenuity report on gene patents for a review of the operation of compulsory licensing provisions in the Patents Act 1990 (Cth).

The Ministers stated that -

We want to ensure there are no unnecessary delays or impediments to accessing technology. The compulsory licensing provisions are a key protection mechanism to ensure access and an important step in implementing the Government's Response to the Gene Patents Report. 

The Commission will review a range of leading international practices, including the processes under which the current provisions can be used. It will consider any alternative mechanisms, and recommend measures to raise awareness of these safeguard provisions, in particular within the small business and healthcare sector. 

Compulsory licensing is an increasingly sensitive issue internationally, particularly in the context of access to affordable health care. Accurate medical advice relies in part on the identification and use of gene sequences related to human health and disease.

Of concern to government is a perception that patents over genetic technologies, or a perceived lack of licences to use these patents in Australia, unreasonably restricts or delays patient access to medical advice based on the latest diagnostic tests. Other areas of sensitivity include climate change mitigation, food security and alternative energy technologies, and technical standards essential patents (for example, in telecommunication technologies).

The Commission is to provide a final report to the Government in nine months.

Its Terms of Reference are -

The Commission is requested to review the operation of the compulsory licensing provisions in the Patents Act 1990, in particular: 

• Assess whether the current Australian provisions can be invoked efficiently and effectively to deal with circumstances where reasonable requirements of the public are not being met or where the patentee engages in anti-competitive conduct. This includes, but is not limited to, consideration of concerns that gene patents may hinder access to affordable healthcare, including access to medical advice that relies on the identification and use of gene sequences related to human health and disease. 

• Advise on the frequency, and impact, of the issue of compulsory licences in comparable markets and the common features in such compulsory licenses. 

• Recommend any measures that may be required to efficiently and effectively exercise these safeguard provisions and invoke their use in a manner consistent with Australia's international obligations, without limiting access to overseas technologies, technology transfer, research and development investments or substantially reducing the patent incentive for innovation. 

• Recommend any alternative mechanisms deemed necessary to ensure that the balance between incentives to innovate and access to technology best reflect objectives of ensuring reasonable access to health care solutions, maximising economic growth and growing the Australian manufacturing industry. 

• Recommend measures to raise awareness of these provisions and their purpose, including the specific challenges of raising awareness among small businesses and the healthcare sector.

The Commission is to have regard to -

• the importance of incentives for industry and researchers to invest in research and development, and innovation;
• access to and transfer of technology, including climate change mitigation, food security, healthcare and alternative energy technologies, and standard essential patents in telecommunication technologies, particularly where multiple patentees are involved;
• affordable and equitable access to healthcare, including medical treatments and diagnostic tests in Australia; 
• recent changes to the intellectual property system reflected in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, including the research exemption; 
• other relevant parts of the intellectual property system, such as crown use provisions; and
• the range of international approaches.

Interestingly the inquiry is being undertaken by the Productivity Commission rather than by the Australian Law Reform Commission. There may be two reasons for that choice. The first is simply incapacity at the ALRC, following a succession of funding cuts that have been noted elsewhere in this blog. The second is that the Productivity Commission has particular values, although little experience in dealing with questions about intellectual property and little affinity with the rights of IP holders. Along with the Treasury it is a bastion of what Michael Pusey characterised as 'economic rationalism', embracing a philosophy that government intervention distorts the market and necessarily reduces national economic competitiveness. Would compulsory licensing substantially improve national economic performance, indeed so significantly improve performance as to offset problems such as trade sanctions by the US? The answer is unclear, although my sense is that the answer is no.