On 9 August 2012, the Productivity Commission released an Issues Paper outlining the scope of its inquiry into the compulsory licensing provisions of the Patents Act 1990 (Cth) and calling for submissions from interested parties.1

The Federal Government’s Terms of Reference require the Commission to:

  • assess whether the current provisions for the compulsory licensing of patents can be invoked efficiently and effectively;
  • recommend any measures to ensure that the compulsory licensing mechanisms can be efficiently and effectively utilised in a manner consistent with Australia’s international obligations; and
  • recommend any alternative mechanisms to ensure that the balance between the incentives to innovate and access to technology best reflects the objectives of reasonable access to healthcare solutions, maximising economic growth and growing the Australian manufacturing industry.

Currently, the compulsory licensing provisions of the Patents Act allow a person to apply to the Federal Court for an order requiring a patentee to grant the applicant a licence to “work” a patented invention.2 An applicant must, however, meet either a public interest or competition test in order to be granted a compulsory licence under those provisions and must pay the licensor compensation for the granted rights. To date, only two cases have specifically considered an application for a compulsory licence under these provisions and in both cases a compulsory licence was refused.3

The Productivity Commission’s inquiry comes after and in the context of the Federal Government’s recent reforms to the Patents Act4 and announcement that it will introduce legislation to enable courts to grant compulsory licences to manufacture and export pharmaceuticals to countries dealing with epidemics and other health crises, as a result of Australia’s accession to the Doha Declaration on the TRIPS Agreement and Public Health. The Terms of Reference also expressly direct the Commission to consider the broader relevance of compulsory licensing, including in the context of gene patents and healthcare, climate change mitigation and alternative energy technologies, food security5 and standard essential patents.6

The Commission invites interested parties to prepare submissions on the issues raised in the Issues Paper. Submissions are due by 28 September 2012. Details on how to make a submission are set out on the Productivity Commission’s website.