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Patents legislation throughout the world generally provides that
one party shall not "exploit" another's patented
invention. On the other hand, it is widely accepted at common law
that "experimenting" with or around such an invention is
permissible so long as such experimentation is not
"commercial" in nature.
The so-called Experimental Use Exception to patent infringement
(EUE) is thereby a balance between at once providing strong and
exclusive rights to a patentee (i.e., Art.30, TRIPs), whilst at the
same time serving to stimulate innovation, research and
development. Naturally, the differing social, political and
economic climate of individual countries necessitates a unique
"line in the sand" as to precisely where
"experimentation" ends and "exploitation"
begins.
We have recently
(http://www.shelstonip.com/news_story.asp?m=4&y=2012&nsid=225)
reported on Australia having enacted a statutory EUE; this came
into force on 16 April 2012. New Zealand presently lacks such
legislation – and this gives rise to what is now one of
the major inconsistencies between the patent laws on both sides of
the Tasman Sea.
The issue of the EUE arguably only came to prominence in
Australasia around 2003, when an Australian biotechnology company
sought to enforce patents in both jurisdictions relating to
non-coding (so-called "junk") DNA mapping by attempting
to enter into a proprietary licensing agreement with any entity
undertaking related genetic research. Given that many such
researchers had unquestionably "experimental" motives,
questions were raised as to whether the enforceability of the
sought licensing agreements was justified, or indeed within the
scope of the Patentee's exclusive rights.
Given the questions raised in these cases, Government review of
the EUE followed in both countries. The results of the Australian
review are now reflected in section 119C of the Patents Act
1990 (Cth), as discussed in our previous article.
Government review in New Zealand has, perhaps prudently,
followed one or two steps behind Australia, with the likely
intention that Australia's new laws be adapted as basis for any
statutory New Zealand EUE. Indeed, the delays in enacting New
Zealand's new patents legislation have allowed the findings of
Australia's governmental review to be incorporated within the
Patents Bill 2008, which is presently awaiting a second
reading before Parliament. Clause 136 of the Bill presently
recites:
It is not an infringement of a patent for a person to do an act
for experimental purposes relating to the subject matter of an
invention.
In this section, act for experimental purposes relating to the
subject matter of an invention includes an act for the purpose
of:
determining how the invention works;
determining the scope of the invention;
determining the validity of the claims;
seeking an improvement of the invention (for example,
determining new properties, or new uses, of the invention).
The draft legislation thereby proposes a statutory definition as
to "subject matter", meaning that New Zealand's
unique "line in the sand" is more likely to fall on the
side of stimulating R&D than it is providing strong and
exclusive rights to a patentee. This impression is furthered by the
recent deletion of the qualifier "..if the [experimental] act
does not unreasonably conflict with the normal exploitation of the
invention". Economically-speaking, we find this largely
appropriate; smaller countries often have greater drivers to
stimulate R&D. However, we note that the Patents Bill
2008 has not yet been passed in the NZ Parliament –
and there can be no guarantee that if/when it is passed, Clause 136
will remain "as is". Watch this space...
In the interim, New Zealand researchers are forced to rely upon
a common law EUE, which provides that research of an
"experimental" nature does not infringe a patent, whereas
that conducted for a "commercial" purpose does (e.g.
Smith, Kline, French Laboratories v AG (1991) 4 TCLR 199;
Monsanto v Stauffer Chemical Co. (1984) 1 TCLR 129). However,
the case law fails to provide any guidance as to where the
distinction between "experimental" and
"commercial" research lies. Experimental use of patented
subject matter is thereby something of a risky proposition in New
Zealand at present. Researchers in Australia, conducting the
"same" enquiries upon the "same" patented
subject matter thereby have greater certainty than do their New
Zealand counterparts at present.
Shelston IP is well disposed to advise upon proposed research
activities in relation to granted or pending patents and the common
and/or statutory law of both Australia and New Zealand.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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