Application of the new exemption

13.95 Submissions emphasised the need for a clear explanation, in this Report and in the Explanatory Memorandum to any amending legislation, of what uses of patented inventions are covered by the recommended new experimental use exemption.[148]

13.96 The way in which the ALRC foresees the exemption operating in various contexts, including those identified as problematic in submissions and consultations, is discussed below. Where it is essential to establish in advance whether use is covered by the experimental use exemption, a ‘non-infringement declaration’ may be sought under existing provisions of the Patents Act.[149]

13.97 An important aim of the ALRC’s recommendation is to reduce the uncertainty faced by researchers and others using patented inventions for experimental or research purposes. However, in some circumstances, uncertainty about the application of the exemption will remain and may ultimately require resolution by the courts. This is inevitable given that, in common with other provisions of the Patents Act, a new experimental use exemption must be applied to an unlimited range of possible situations and technologies.

Genetic materials and technologies

13.98 In most circumstances it will be clear whether research or experimentation involving genetic materials or technologies constitutes acts done to ‘study or experiment on the subject matter of the invention’.

13.99 The experimental use exemption would not cover most laboratory use of patented genetic research tools, such as the enzymes or reagents used in PCR, cloning and other applications. Such inventions are generally used in the conduct of research that is not directed to investigating the properties of the research tool itself, but for other purposes. On the other hand, the experimental use exemption should apply where a patented genetic sequence is being used to investigate the function of a gene, its interrelation with other genetic sequences, or its association with disease.

13.100 The way in which an experimental use exemption would operate in other situations may be less certain. Particular complexities arise with regard to the use of genetic sequences and other isolated genetic materials in the development of pharmaceuticals where use is aimed at discovering new biological pathways on which pharmaceuticals can act or finding pharmaceuticals that change the expression of the sequence.

13.101 Questions have been raised about whether an experimental use exemption should apply to the use of a genetic sequence aimed not only at investigating the properties of the genetic sequence itself but at discovering new products through the use of the genetic material.[150] To clarify this issue, CBAC found it desirable to incorporate the words ‘to investigate its properties, improve upon it, or create a new product or process’ into the wording of its proposed experimental use defence.[151] This was intended to make it clear that researchers can rely on the experimental use provision ‘to use a DNA sequence, for example, to find molecules that bind to it or act upon it’.[152]

13.102 While this interpretation of experimental use may be seen as extending too far into activities involving the use of a patented invention as a research tool—such as for screening candidate molecules in pharmaceutical research and development—it is difficult to distinguish between investigating the properties of a genetic sequence and using a genetic sequence to study whether other molecules react with it. It may be necessary, in such circumstances, to establish the dominant purpose of the research in order to resolve whether the experimental use exemption applies.

13.103 Another issue that may arise in relation to genetic materials and technologies is whether experimental use should encompass research activities that involve the medical diagnosis of particular, identifiable, individuals. For example, genetic testing using patented genetic materials or technologies may be conducted on a cohort of individuals primarily to investigate whether a form of genetic test identifies a specific genetic mutation. As part of the research program, the results of testing may be used to diagnose individual research participants. Research testing and medical genetic testing may involve functionally identical use of a patented genetic invention. To what extent should an ancillary clinical use of the patented invention affect the application of an experimental use exemption? Again, it may be necessary to establish whether the acts are done for the sole or dominant purpose of studying or experimenting on the subject matter of the invention.

Experimental use and clinical trials

13.104 Some concern has been expressed about the implications of a new experimental use exemption for the conduct of clinical trials of pharmaceutical substances. Clinical trials are research studies conducted to determine whether new pharmaceuticals or medical treatments are safe and effective.[153] At present, even assuming the existence of an implied experimental use defence, such use would constitute patent infringement, as clinical trials are generally conducted for commercial advantage, namely, as a step towards the marketing of a new pharmaceutical.

13.105 The ALRC’s recommended experimental use exemption may protect some uses of patented inventions in clinical trials from patent infringement claims. However, patented inventions are often used in clinical trials (by parties other than the patent holder) for the purpose of comparison with new products. In these circumstances, the new experimental use exemption might not apply because the patented invention may not itself be the subject of experimentation—its properties may already be well established.

13.106 Further, where the dominant purpose of a clinical trial is no longer to find out more about the properties of a patented pharmaceutical invention but to satisfy regulatory requirements, the experimental use exemption will not be available. An example of such a situation is when a generic pharmaceutical manufacturer conducts tests to prove the bioequivalence of a patented pharmaceutical and a generic counterpart. Currently, manufacturers of generic pharmaceuticals will often rely on clinical trial and other data submitted in relation to the equivalent innovator pharmaceutical when seeking regulatory approval from the Therapeutic Goods Administration (TGA).[154]

13.107 In future, the suppliers of some forms of medical genetic tests may also have to provide some form of clinical data before the TGA will grant approval for supply.[155] Whether the clinical trials using, for example, a patented DNA sequence will fall within the proposed experimental use exemption will, again, be determined by whether the sole or dominant purpose of the experiments is to find out more about the subject matter of the patent, rather than to collect data for regulatory approval purposes.

Experimental use and springboarding

13.108 A related issue concerns the relationship between the proposed experimental use exemption and regulatory review or ‘springboarding’ provisions.[156] It has been suggested that, if experiments conducted in preparing to enter the market after a patent term expires are exempt from patent infringement, the existing springboarding provisions in the Patents Act may not be required.[157]

13.109 Further, as there is normally a period after the patent term expires in which the patent holder has a de facto monopoly while competitors develop manufacturing processes or seek regulatory approvals, an experimental use exemption may result in a reduction in the effective period of monopoly enjoyed by patent holders—possibly justifying a new scheme for patent term extension.[158]

13.110 In this context, IPTA submitted that any experimental use defence should be ‘very narrow and explicitly limited to research’ and, for example, not apply to ‘production for regulatory approval in the case of pharmaceutical patents’.[159]

13.111 As discussed above, under the ALRC’s recommended exemption, study or experimentation on the subject matter of the invention must be the sole or dominant purpose of use. Use of an invention in springboarding activities—whether concerned with obtaining regulatory approval or with developing manufacturing processes—would not be exempt unless ‘study or experimentation’ remained the dominant purpose of the use.

[148] Walter and Eliza Hall Institute of Medical Research, Submission P71, 13 April 2004; Human Genetics Society of Australasia, Submission P76, 16 April 2004; Bio21 Australia Ltd, Submission P80, 16 April 2004; Queensland Government, Submission P103, 22 April 2004; National Health and Medical Research Council, Submission P107, 19 April 2004. It was suggested that the legislation should be supported by guidelines, issued by IP Australia, explaining the application of the exemption to researchers and others: Human Genetics Society of Australasia, Submission P76, 16 April 2004; Queensland Government, Submission P103, 22 April 2004; National Health and Medical Research Council, Submission P107, 19 April 2004.

[149]Patents Act 1990 (Cth) ss 124–127.

[150] R Gold and A Gallochat, The European Directive on the Legal Protection of Biotechnological Inventions: History, Implementation, and Lessons for Canada (2001), 10.

[151] Canadian Biotechnology Advisory Committee, Patenting of Higher Life Forms and Related Issues: Report to the Government of Canada Biotechnology Ministerial Coordinating Committee (2002), 15.

[152] Ibid, 15.

[153] Clinical trials are conducted in a series of steps, called phases. Phase I trials test a new pharmaceutical in a small group of people for the first time to evaluate its safety, determine a safe dosage range, and identify side effects. In Phase II trials the pharmaceutical is given to a larger group of people to see if it is effective and to further evaluate its safety. In Phase III, the pharmaceutical is given to large groups of people to confirm its effectiveness, monitor side effects, compare it to commonly used treatments, and collect information that will allow the drug or treatment to be used safely: National Library of Medicine,—What is a Clinical Trial?, National Institutes of Health, < services/ctclintrial.html> at 16 June 2004.

[154] The Australia–United States Free Trade Agreement provides that in such a case, the TGA must reject the application if the equivalent innovator pharmaceutical is covered by a patent. If the generic manufacturer submits that the patent is invalid, or will not be infringed by its generic pharmaceutical, the patent holder is to be notified of that submission. See Australia and United States, Australia–United States Free Trade Agreement, 18 May 2004, art 17.10.5.

[155] See, National Coordinating Committee for Therapeutic Goods In Vitro Diagnostic Device Working Group, A Proposal for a New Regulatory Framework for In Vitro Diagnostic Devices: Discussion Paper (2003). Genetic tests are currently classed as ‘in vitro diagnostic devices’ (IVDs). At present, IVDs can be supplied without requiring prior approval by the TGA, with the exception of tests for high-risk infectious diseases such as HIV and Hepatitis B.

[156] As discussed above, the current regulatory review provisions in the Patents Act provide that it is not an infringement, where an extension of patent term has been granted under the Act, if a person exploits a patented pharmaceutical substance solely for purposes in connection with obtaining regulatory approval for therapeutic use in Australia or any foreign country or other than for a therapeutic use (eg, to trial manufacturing processes): Patents Act 1990 (Cth) s 78.

[157] IP Australia, Submission P86, 16 April 2004.

[158] Ibid.

[159] Institute of Patent and Trade Mark Attorneys of Australia, Submission P106, 27 April 2004.