What you need to know
- In response to the COVID-19 pandemic, it is open to Federal, State and Territory Governments to invoke the Crown use provisions under Australia's intellectual property laws. Any decision to invoke Crown use will have significant consequences for intellectual property rights holders, particularly in the health sector.
- The Crown use provisions enable governments and other authorised parties to exploit patented inventions, use registered designs or do acts comprised in copyright if required because of an emergency such as a pandemic, without the consent of, or consulting with, rights holders. However, governments are still required to notify and ultimately remunerate the relevant rights holder.
What you need to do
- Engage with governments as appropriate as part of the response to the COVID-19 pandemic, including in relation to steps taken by the government to ensure the supply of vital medical supplies.
- Monitor the evolving response of the Federal, State or Territory Governments to the COVID-19 pandemic, including any statements regarding an intention to invoke Crown use.
- Seek appropriate assurances from governments in the event that your organisation is requested to manufacture products or offer services pursuant to the Crown use regime in order to minimise the risk of infringing the intellectual property rights of third parties.
It goes without saying that the COVID-19 pandemic presents an unprecedented public health crisis. As part of its response to this crisis, Australian governments have focussed much of their attention on ensuring an adequate supply of key medical equipment. For example, the Therapeutic Goods Administration has relaxed regulations to allow the repurposing of certain medical devices (such as sleep apnoea machines and veterinary equipment) for use as ventilators and for alcohol products to be used as hand sanitiser. The Federal Government has been in discussions with a major car company to assist in boosting the production of ventilators in Australia. The NSW Government has requested manufacturers to "re-tool" to produce essential medical supplies such as masks and cleaning products.
It is conceivable that, in the future, these efforts may conflict with the monopoly rights granted by intellectual property law (eg, personal protective equipment may be protected by registered designs; methods for ultimately producing coronavirus vaccines may be patented), particularly where existing supply chains are unable to meet demand.
In this article, we look at the emergency Crown use provisions in the Patents Act 1990 (Cth) and Designs Act 2003 (Cth), together with the Crown use provisions in the Copyright Act 1968 (Cth) which, while rarely invoked, could be used by the Government as part of its response to the COVID-19 pandemic.
While the Opposition has requested that the Federal Government outline how it intends to invoke Crown use, the government is yet to publicly do so at the date of this update.
Overview of Crown use in emergency situations under the Patents Act and Designs Act
The Crown has historically been entitled to exploit patented inventions and use registered designs for its own purposes, even where that use would otherwise infringe intellectual property rights. However, recent amendments to the Patents Act and Designs Act, which fortuitously commenced on 26 February 2020, now clarify that the Crown is able to exercise it use rights in emergency situations without negotiating, or even attempting to negotiate, a licence.
These new emergency provisions allow the Crown, or a person authorised by the Crown, to exploit an invention or use a registered design without the consent or consulting with the rights holder if:
- the relevant Minister considers that the exploitation or use is required because of an emergency;
- the Minister approves, in writing, the exploitation or use before it starts; and
- the invention is exploited or design used for the services of a government authority within Australia (whether by that authority or for the authority by a person authorised in writing).
The Minister – being the Federal Minister for Industry, Science and Technology or the relevant State or Territory Attorney-General – must then give the rights holder a copy of the approval, together with a statement of reasons, as soon as practical after approving the exploitation or use.
The term "emergency" is not defined in the applicable legislation, nor has the meaning of this term in this context been the subject of judicial consideration. However, there is no doubt that the COVID-19 pandemic would be an "emergency" for the purposes of the Crown use provisions.
Negotiating terms
There is limited relief available to prevent Crown use. Rights holders are able to seek judicial review of the Minister's decision to approve the Crown use or seek orders from a Court that the exploitation or use is no longer necessary, neither of which are likely to be of any value given the scale of the pandemic and in any event, a rights holder seeking to prevent such use may risk reputational damage.
The emergency Crown use provisions do, however, contemplate that rights holders will ultimately obtain compensation from the Crown for its exploitation of their invention or use of their registered design.
Practically speaking, this is most likely to occur after the exploitation or use, including because the Crown is required to provide rights holders information about its exploitation or use as soon as practicable after these acts (unless this would be contrary to the public interest). This information (eg, the number of units of a particular facemask manufactured on behalf of the Crown) is likely to be essential to determining compensation.
For completeness, we note it is open to the Crown to agree to terms, including compensation, even in the context of an emergency. However, we expect governments would have little incentive to do so given that, if terms are agreed, the government is required to comply with these terms or be at risk of infringement.
If the Crown and rights holder are unable to agree compensation or other terms, either party can apply to the Federal Court or a State or Territory Supreme Court to have these matters determined. The Court must then determine remuneration based on what is just and reasonable having regard to matters including the economic value of the rights.
Who can use on behalf of the Crown?
As noted above, the Crown use provisions only allow the exploitation of an invention or use of a registered design for the services of a Federal, State or Territory authority. In addition, the exploitation or use must either be by the authority itself or a person authorised, in writing, by the authority. Such authorised persons may also include current licensees or manufacturers working with the rights holder.
The concept of the "services" of an authority, which was defined as part of the recent amendments, is incredibly broad and includes all services that Commonwealth, State or Territory Governments have the primary responsibility for providing or funding. There is a reasonable argument that, given the Commonwealth funds a significant part of the healthcare system through Medicare, all healthcare services would be considered "services" of the Commonwealth for the purposes of the Crown use provisions. This means that the Government may be able to enlist a broad range of healthcare providers to exploit inventions or use registered designs on its behalf as part of responding to the COVID-19 pandemic.
Copyright
The Copyright Act 1968 (Cth) does not contain specific provisions dealing with use of copyright by or on behalf of the Crown in emergencies. As such, in the absence of legislative amendment, governments would be required to rely on the general provisions for Crown use in the Act, for example, to enable the reproduction of diagrams or plans used to produce ventilator parts. However, the effect of these provisions is similar to the emergency provisions discussed above.
The Crown use provisions in the Copyright Act enable the Commonwealth or a State to do, or authorise third parties to do (including retrospectively), acts comprised in the copyright if those acts are done for the services of the Commonwealth or State. While the term "services" is not defined in the Copyright Act, we expect it would be interpreted broadly, particularly in emergency situations.
The government is also be required to notify the copyright owner, unless this would be contrary to the public interest, with compensation to be agreed or determined by the Copyright Tribunal. However, as with the emergency provisions discussed above, there is no requirement to negotiate terms with or consult the copyright owner prior to the Crown use.
Authors: Anita Cade, Partner; Ted Talas, Lawyer; and Stephen Klimis, Graduate.
