An International Guide to
Patent Case Management for Judges

2.10 Selected topics

2.10.1 Compulsory licenses

The Federal Court of Australia is empowered to make orders requiring the grant of a compulsory license to exploit a patented invention if certain conditions are met.¹⁵¹ An application cannot be made until after the expiration of the prescribed period, which is currently three years from the date of grant.¹⁵² There are three circumstances in which the court may grant a compulsory license:

• where there has been an inadequate working of the invention;¹⁵³
• where the patentee has engaged in restrictive trade practices in connection with the patent;¹⁵⁴ or
• where the manufacture and export of a patented pharmaceutical invention is needed to address a public health issue in an eligible importing country.¹⁵⁵

In an application for a compulsory license based on an inadequate working of the invention, the applicant must prove the existence of all of the following conditions:

1. (a) demand in Australia for the original invention is not being met on reasonable terms; and
2. (b) authorisation to exploit the original invention is essential to meet that demand; and
3. (c) the applicant has tried for a reasonable period, but without success, to obtain authority from the patentee to exploit the original invention on reasonable terms and conditions; and
4. (d) the patentee has given no satisfactory reason for failing to exploit the patent to the extent necessary to meet the demand for the original invention in Australia; and

5. (e) it is in the public interest¹⁵⁶ to provide the applicant with authorisation to exploit the original invention, having regard to the following:

   1. (i) the benefits to the public from meeting the demand for the original invention;
   2. (ii) the commercial costs and benefits to the patentee and the applicant from providing authorisation to exploit the original invention;
   3. (iii) any other matters the court considers relevant, including matters relating to greater competition and any impact on innovation; and

6. (f) if the applicant is the patentee of another invention (the dependent invention) and is seeking the authorisation for the purposes of exploiting the dependent invention:

   1. (i) the dependent invention cannot be exploited by the applicant without exploiting the original invention; and
   2. (ii) the dependent invention involves an important technical advance of considerable economic significance on the original invention.¹⁵⁷

An applicant for a compulsory license based on restrictive trade practices must prove the alleged contraventions of the Competition and Consumer Act 2010 (Cth).

An applicant for a license to exploit a patented pharmaceutical invention must prove, inter alia, that:

• the application is made in good faith;
• the pharmaceutical product is to be imported by the eligible importing country or on its behalf;
• proposed use of the pharmaceutical product is to address a public health problem in the eligible importing country in circumstances of national emergency or other circumstances of extreme urgency or, in other circumstances, by the public noncommercial use of the pharmaceutical product; and
• exploiting the patented pharmaceutical invention is necessary to enable the import and proposed use of the pharmaceutical product.¹⁵⁸

An eligible importing country is “a WTO [World Trade Organization] member that notifies the Council for TRIPS [Trade-Related Aspects of Intellectual Property Rights] of the member’s intention to use the system set out in Article 31 of the TRIPS Agreement and the Annex to that Agreement as an importer” or “a country included in the list of least-developed countries maintained by the United Nations, as in force from time to time.”¹⁵⁹

If the parties cannot agree on the amount of remuneration for the compulsory license, then it is determined by the court.¹⁶⁰

The compulsory license may be revoked by agreement or by application to the court.¹⁶¹

The Crown may also exploit a patented invention for Crown purposes in certain circumstances.¹⁶²

Perhaps due to the stringency of the mandated conditions for the grant of a compulsory license, there have been no decisions on the grant of such a license under the Patents Act 1990 (Cth),¹⁶³ and few decisions under its predecessor, Section 108 of the Patents Act 1952 (Cth).¹⁶⁴