Impediments to gene patent licensing in Australia

22.25 The Nicol–Nielsen Study suggests that, in addition to the financial factors that might have an impact on an entity’s ability to commercialise its gene patents, impediments continue to exist in the licensing of genetic inventions.[43] Respondents commented that gene patent holders and potential licensees of gene patents in Australia face difficulties in negotiating licence agreements, particularly if the other party is a more experienced commercial entity:

One of the big problems identified for Australian companies is lack of the ruthlessness that many of their international counterparts have developed. Hence they tend to cave in too easily when negotiations become difficult. In part this may be because they don’t appreciate the value of what they are acquiring and giving.[44]

22.26 In interviews conducted in connection with the Study, many respondents made reference to ‘difficulties in negotiating’ patent licences and that ‘often these difficulties stemmed from the fact that they held an inferior bargaining position’.[45] Nicol and Nielsen concluded that Australian entities lack ‘deal precedents’ and that ‘one of the biggest problems is naivety in bargaining’.[46] Their Study also found that a relatively standard set of licence terms are at issue in most negotiations,[47] and certain terms are consistently matters of substantial disagreement—in particular, payment provisions, field of use restrictions, and provisions claiming reach-through rights.[48]

22.27 Australian entities may also have difficulties in identifying the patents for which a licence is needed. Respondents to the Nicol–Nielsen Study indicated that identifying the patents that may need to be licensed is an onerous and expensive exercise, and is becoming more so as the gene patent landscape becomes more complex.[49]

[43] See further Ch 17.

[44] D Nicol and J Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (2003) Centre for Law and Genetics Occasional Paper No 6, 114.

[45] Ibid, 158, 162.

[46] Ibid, 108.

[47] Ibid, 115–119, 158.

[48] Ibid, 160, 162–163. Reach-through provisions in patent licences may provide for the licensor to obtain ownership of or a licence to intellectual property in future inventions arising as a result of activities conducted under a licence: see further Ch 12 and 18.

[49] Ibid, 181–182.