12 April 2006

Damages and Springboarding in New Bill

On 30 March 2006, the Intellectual Property Laws Amendment Bill was read into parliament. The purpose of the bill is to address certain issues in Australian trade marks and patents practice. In particular, the changes help us to comply with our free trade agreement with the United States.

Since this is a patents blog, I will consider some of the more important proposed changes to our Patents Act.

1. DAMAGES

1.1. The Current Situation

Section 122 simply allows a court to grant an injunction and, at the option of the plaintiff, either damages or an account of profits. It is unusual for a court to grant damages, and the financial penalty paid by the loser is generally restricted to the legal costs.

1.2. The Proposal

Proposed section 122(1A) sets out that a court has discretion to increase an assessment of damages based on a number of factors. These include the flagrancy of the infringement and the need to deter others from infringing. Other factors are the conduct of the infringer after the act of infringement or after that party was informed that it had allegedly infringed the patent and any benefit shown to have accrued to the infringer as a result of the infringement.

2. INFRINGEMENT EXEMPTIONS

2.1. The Current Situation

Section 119 in its present form allows a person to continue to “make the product, or use the process, (or continue to do so)” without infringing a patent claiming such a product or process if that person was already doing so or had taken definite steps to do so immediately before the priority date of the patent. The section makes no mention of whether or not that right is transferable.

2.2. The Proposal

Proposed section 119 sets out that a person may “do an act that exploits a product, method or process and would infringe the patent”, without infringing the patent. The necessary proviso is that the person: (a) was exploiting the product, method or process…; or (b) had taken definite steps to exploit the product, method or process, immediately before the priority date of the relevant claim.

The proposed section introduces a definition of “exploit”, which is substantially more extensive than just “make” or “use”. In particular, “exploit” in relation to a product is to be understood to cover making, hiring, selling, “otherwise disposing of”, offering to do these, using, importing and keeping the product for the purpose of doing the preceding acts. In relation to a method, “exploit” is to be understood to cover using the method or process and doing the acts mentioned above in relation to a product resulting from the use of the method or process.

The proposed section also allows that right to exploit to be successively transferred to other persons.

3. SPRINGBOARDING

3.1. Proposed new section 119A(1)(a) provides an exemption from infringement of a pharmaceutical patent if exploitation of the invention claimed in the patent is solely for obtaining registration of goods that are intended for therapeutic use and that are not devices as defined in the Therapeutic Goods Act 1989. Section 119A(1)(b) applies the exemption if the purpose is connected with obtaining similar approval under a law of a foreign country.

3.2. Proposed new section 119(A)(2) excludes 119(A)(1)(b) for export from Australia of goods unless the term of the patent has been extended and the goods comply with certain characteristics. In particular, the goods need to be a pharmaceutical substance per se, as disclosed in the complete specification and in substance falling within the scope of the claims. Alternatively, the goods need to be a pharmaceutical substance when produced by a process that involves the use of recombinant DNA technology.

4. THE EFFECTS OF THE BILL

Any provision that allows an Australian court greater discretion to increase damages is welcome. A patent is property, albeit intangible. Theft of such property should be dissuaded as far as possible.

The new infringement exemptions are a substantial departure. Applicants need to be particularly wary of the fact that the exploitation rights arising from prior use are fully transferable.

As far as the springboarding provision is concerned, it is clear that the major pharmaceutical patent holders will not be happy. More litigation perhaps?




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