Submissions and consultations

23.22 DP 68 noted that the ALRC had heard some ‘in principle’ support for a statutory licensing scheme in consultation meetings.^[21] However, other stakeholders had raised practical concerns about it. One concern was that the scheme might not be necessary because of the small number of participants, in terms of patent holders and potential licensees in the biotechnology industry.^[22] In contrast, another stakeholder suggested that the potentially limited use of the scheme should not be fatal to it.^[23] Concerns were also raised about the means of calculating and collecting licence fees;^[24] and whether the scheme would be TRIPS compliant.^[25] One stakeholder suggested that informal patent pooling might be better than a statutory licensing scheme.^[26]

23.23 DP 68 asked whether the Commonwealth should amend the Patents Act to insert a statutory licensing scheme for patented inventions. It further asked whether any such scheme should be available only to a limited class of patents or users; whether participation should be voluntary or compulsory; how a reasonable royalty would be determined; and who should administer the scheme.^[27]

23.24 The ALRC received mixed responses to this question. Several submissions supported establishing a statutory licensing scheme.^[28] For example, the Centre for Law and Genetics supported a voluntary scheme for certain types of patented invention, particularly research tools used in hybrid and applied research. The Centre suggested that this would operate as a type of clearinghouse mechanism, in much the same way as voluntary licensing operates under copyright law.^[29]

23.25 The Department of Health and Ageing supported a statutory licensing scheme for research tools and medical diagnostic tests, and suggested that other genetic technologies—such as gene therapies—could be included later if problems emerged. The Department considered that the scheme should be based on voluntary participation, given Australia’s obligations under the TRIPS Agreement. However, it noted that such a scheme might not be necessary, depending on the scope of possible exemptions from patent infringement.^[30]

23.26 The Department of Health Western Australia noted that a statutory licensing scheme would benefit participants by avoiding the time and costs involved in negotiating licences, and providing a steady income to patent holders. It preferred a broad scheme but, if necessary, would support a scheme that was limited to use in public non-commercial research, healthcare provision, or applied to medical diagnostic tests and research tools generally. The Western Australian Department supported compulsory participation in the scheme. It suggested several options for determining royalties, and expressed general support for a system modelled on the statutory licensing schemes existing in copyright law.^[31]

23.27 The Royal College of Pathologists of Australasia also supported the scheme, but emphasised the need for caution in order to avoid disturbing what it characterised as the current equilibrium that has been achieved by the practice of ‘ignoring’ patents for non-commercial research and testing. It considered that facilitating payment for the use of patented inventions in these contexts could have adverse consequences for basic research and genetic testing, without a commensurate increase in government funding.^[32] The Cancer Council Victoria expressed a similar view, noting that, in practice:

most genetic patents are ignored, for a variety of reasons, by academic and health institutions and patent holders alike. Patent holders generally do not seek royalty and licence fees from researchers and health care providers performing non-commercial research and genetic testing. Proposals that aim to facilitate such payments might disturb the current ‘working equilibrium’.^[33]

23.28 Ian Turnbull suggested an alternative approach in which departments and institutions would maintain registers of the research tools and patents they use. If this results in the development of a commercial or patentable product, the original patent holder would be entitled to a royalty. However, if this approach were not adopted, he supported the introduction of a statutory licensing scheme that applied for all patents and to all users.^[34]

23.29 Several submissions opposed the creation of a statutory licensing scheme.^[35] Some submissions suggested that there is insufficient evidence of a demand or need for such a scheme at this time. The Queensland Government commented that its consultations had indicated that such a regime would be premature at this stage due to the small number of gene patents that have been granted, and the few problems faced by industry and research institutions in obtaining licences in Australia.^[36]

23.30 The Department of Industry, Tourism and Resources commented that the Patents Act already has a mechanism for facilitating access to patented inventions, in the form of the compulsory licensing provisions.^[37] The Australian Centre for Intellectual Property in Agriculture raised competition policy concerns, suggesting that ‘collective licensing would only exacerbate competition problems that exist with patents’.^[38] GlaxoSmithKline considered that statutory licensing would ‘wholly undermine the exclusive rights conferred by patents for the statutorily defined class’. It also considered that it would be very unlikely that such a scheme would be TRIPS compliant.^[39]