Transfer of ‘know-how’

26.62 A patent application must fully disclose an invention. The Patents Act provides that the specification must ‘describe the invention fully, including the best method known to the applicant for performing the invention’.^[96] However, the patent holder may later acquire valuable know-how and experience that is necessary to exploit the invention effectively or optimally.

26.63 Where Crown use or acquisition is invoked, or where a compulsory licence is granted, the Crown or the compulsory licensee may encounter problems in exploiting the patented product or process if they do not have the necessary know-how to do so. The mere right to exploit without infringement may be insufficient to enable a patented invention to be used effectively or optimally. Access to the patent holder’s know-how may also be required; for example, through the provision of additional information, or access to documentation about the invention.

26.64 In 1984, the Industrial Property Advisory Committee recommended that, in ordering the grant of a compulsory licence, the court be given a discretionary power to order the transfer of related know-how as part of the reasonable terms on which the licence is granted.^[97] The Australian Government did not accept this recommendation, citing concerns regarding the imprecise scope of the term ‘know-how’; uncertainty as to how the proposal would operate in the absence of parallel legislation overseas; and uncertainty as to whether Australian courts can set enforceable terms for such a compulsory licence, particularly where the licensee has operations outside Australia.^[98]

26.65 DP 68 asked whether the Patents Act should be amended to:

• require a patent holder to transfer ‘know-how’ relating to the patented product or process to the Crown when the Crown uses or acquires a patent; and

• authorise a prescribed court, when granting a compulsory licence, to require the transfer of ‘know-how’ relating to the patented product or process.^[99]

26.66 While some submissions, particularly from the health sector, were supportive of such a change,^[100] other submissions highlighted a number of objections.^[101] Some suggested that requiring the transfer of know-how would be unnecessary because the ‘sufficiency requirement’ ensures that a patent contains sufficient information to work the invention.^[102] Practical difficulties associated with an obligation to transfer know-how were highlighted.^[103] Others emphasised the commercial value of know-how, both in relation to the specific invention and other aspects of the patent holder’s business.^[104] Concern was expressed that an obligation to transfer know-how could discourage patenting.^[105]

26.67 Another reason for not recommending reform in this area is that it would be inconsistent with the terms of the Australia–United States Free Trade Agreement, which provides that, when Crown use is permitted, the parties shall not require the patent holder to ‘provide undisclosed information or technical know-how’.^[106]

26.68 Reform would involve the complexity of introducing a new concept into the Patents Act.^[107] Further consideration would also need to be given to the means of determining remuneration for the patent holder and to arrangements to protect the confidentiality of the know-how, once transferred. As a need for reform has not been demonstrated in the context of this Inquiry, the ALRC makes no recommendation about the transfer of know-how in relation to Crown use, Crown acquisition or compulsory licensing.