As the COVID-19 pandemic continues, the Australian healthcare system faces supply shortages of COVID-19 vaccines. Due to a worldwide shortage of 'low dead space syringes' earlier this year, Australia's rollout of COVID-19 vaccinations has been impacted.

Whilst COVID-19 vaccines can be administered with normal syringes, using a 'low dead space syringe' which minimises waste of a vaccine during its administration may mean that more doses can be extracted from each vile, resulting in more people being vaccinated.

If this US patented syringe was also patented in Australia, and a third party manufactured these syringes without authorisation from the patent holder, this would amount to patent infringement (subject to any exceptions or defences that a defendant may be entitled to rely on). This is because it is a patentee's exclusive right to exploit their patented invention.

Like many medical technology and pharmaceutical companies around the world, the patentee of this syringe, TSK Laboratory, has granted free patent licences to use the technology for administering COVID-19 vaccines. Nevertheless, this raises an important question - if medical technology and pharmaceutical companies choose to enforce their patented rights and exercise a monopoly over COVID-19 related inventions, what kind of recourse might the Government have to access such proprietary medical technologies in the public interest?

There are a number of mechanisms under the Patents Act 1990 (Cth) (Patents Act) that can be used to legally exercise a patented invention without the consent of the patent holder. These mechanisms include exploitation by the Crown for Crown use, compulsory licensing and acquisition of the patent by the Commonwealth.

Coincidentally, changes to the Patents Act came into effect on 27 February last year when Australia was planning its response to the COVID-19 crisis, expanding the Crown use provisions and clarifying the compulsory licensing provisions under the Patents Act, to make it easier to rely on these mechanisms.

Mechanisms available under the Patents Act

Crown use

The Crown use provisions under the Patents Act provide a safeguard for the Crown to step in, access and use a patented invention where it is necessary to address the public interest, or for use in an emergency.

Exploitation of a patent under the Crown use provisions must be for 'Crown purposes', meaning the exploitation must be for services that are primarily provided or funded by the Commonwealth, State or Territory Government authorities (for example, healthcare).

Commonwealth, State and Territory Government authorities (and persons authorised by them in writing) may exploit a patented invention without infringing the patent holder's rights if the exploitation of the patent is for Crown purposes, the relevant authority has received Ministerial approval, and a number of other conditions are satisfied.

Broadly, these conditions include:

the authority must have first sought to negotiate with the patentee for authorisation to exploit the invention on reasonable terms;

at least 14 days before exploitation commences, the patentee must be given a copy of the Minister's approval and a written statement of reasons for that approval; and

where the authority has authorised a person to exploit the patent, the person must have received that authorisation before any exploitation commences.

Changes to the Patents Act last year introduced a new section, section 163A, granting power to the Minister to approve exploitation of patents in emergencies. During a period of emergency, the conditions that must be satisfied by a relevant authority are slightly modified. Broadly, the requirement for prior negotiation with the patentee, and the requirement to provide a patentee with a copy of the approval and statement of reasons of the Minster prior to exploitation, do not apply (although this statement must still be provided as soon as reasonably practicable after the use has begun).

The amendments do not provide guidance as to what constitutes an emergency. However, the explanatory memorandum to the bill makes it clear it would cover a public health crisis such as a plague or epidemic, or a medical emergency such as a pandemic.

Exploitation of a patent for Crown use is subject to providing the patentee with remuneration as agreed between the parties or, in the absence of agreement, as determined by a court.

If Australia faced circumstances where there was a sudden demand for medical supplies the subject of a patent, the Minister could approve, and the Government could authorise, for example, a medical equipment manufacturer to exploit the patented invention if it were necessary to provide immediate healthcare services to COVID-19 patients in Australia.

Compulsory licensing

The Patents Act also provides for a compulsory licensing regime. Under this regime, the Federal Court has the power to grant a licence to an applicant to exploit a patent, provided it is at least three years after the date on which the patent was granted and a number of conditions are met.

Changes to the Patent Act introduce a 'public interest' test to be applied by the Federal Court when considering a compulsory licence. This replaces the old, fairly untested 'reasonable requirements of the public' test. These amendments are aimed at more appropriately addressing the needs of the public to enjoy scientific progress by incorporating the more commonly used notion of the public interest.

In granting a compulsory licence, the following conditions must be met:

• the demand in Australia for the invention is not being met on reasonable terms, and authorisation to exploit the patent is essential to meet that demand;
• the applicant tried, for a reasonable period, to obtain authorisation from the patentee on reasonable terms;
• it is in the public interest to provide the applicant with authorisation; and
• the patent owner has given no satisfactory reason for failing to exploit the patent as required to meet the demand for the invention in Australia.

The Federal Court may also grant a compulsory licence in circumstances where a patentee has contravened, or is contravening, the Competition and Consumer Act 2010 (Cth).

Relevantly to the current crisis, the Patents Act also confers power on the Federal Court to grant compulsory licences to manufacture generic versions of patented pharmaceutical inventions (e.g. medicines) for export to eligible importing countries to address public health problems (which includes countries identified by the United Nations as least developed countries, for example, Nepal).

Among the changes discussed above, an objects clause was also introduced into the Patents Act intending to clarify the underlying purpose of the patents system in Australia. It seeks to balance the interests of producers, owners and users of technology and the interests of the public. The introduction of the object clause will help to inform courts in their application of the mechanisms discussed above, in the event the Government or third parties seek to rely on these provisions.

Reliance on Crown use and compulsory licensing provisions have rarely been invoked and these mechanisms remain largely untested by the courts. Last year, the opposition called on the Government to consider its ability to invoke Crown use to deal with the COVID-19 pandemic. In practice, the Government has not needed to rely on these mechanisms under the Patents Act to exploit patented technologies for COVID-19 related purposes. This is due to the overwhelming health industry response of suspending patent rights, rather than enforcing those rights.

If you need help understanding how these changes could impact your rights as a patent holder, contact a member of our team.