Patents and Experimental Use in Australia

by Caroline Ryan


The Advisory Council on Intellectual Property (ACIP) is an independent body established to provide policy advice to the Federal Government on issues relating to intellectual property.

In recent years, there has been considerable international debate on the issue of whether patents encourage, or in fact, inhibit research and development in biotechnology and health. In considering this issue, ACIP has been asked by the Parliamentary Secretary to the Minister for Industry, Resources and Tourism:
    to examine whether some types of patents are inhibiting research and development in Australia, and to determine whether both Australian researchers and business would benefit from introducing an experimental use exception provision (or some other provision) into the Australian patent legislation. In examining this question, ACIP should consider whether an experimental use exemption would help researchers more effectively use the patent system to commercialise their research and development.
To this end, ACIP published an Issues Paper in February 2004, and sought written submissions to a number of policy based questions. This initial round of submissions and consultation generated an Options Paper that was released in December 2004, outlining a number of proposals for reform, of which four have been endorsed by ACIP for further comment and public consultation.

Experimental Use in Australia

Australia's Patents Act 1990 (the Act) does not explicitly provide for an exemption to infringement on the basis of experimental use, nor has there been any case law establishing that such an exemption can be implied in Australian patent law.

Submissions from various research organisations suggested a number of reasons why experimentation on patented inventions should be allowable, including:
  • to further knowledge in the field not fully explained in the patent specification;

  • to test the validity of the patent;

  • to reduce the costs of academic instructional experimentation; and

  • to assist in the research and development of further patentable inventions in the field of technology.
One school of thought presented during the consultation process suggested that such an exemption is already implicit in Australia's patent system through the need to be able to test the validity of a granted patent and as an implied public benefit of the requirement of disclosure by the patentee.

Others argued that experimental use is clearly an exclusive right of the patentee, and that any experimental use exemption would provide a loophole to competitors, effectively reducing the economic value of patented inventions. Further, it was argued that the introduction of any such experimental use exemption would be to the detriment of clarity in determining infringement in situations of unauthorised use.

Many submissions argued that biotechnology raises special issues in relation to experimental use, because of the strong upstream/downstream effects that patented technology has on research and development. It was argued that broad patent rights (without an experimental use exemption) acted as a disincentive for others to experiment further in the field. While this may encourage more primary innovation in entirely new areas, it was suggested that less secondary innovation will occur in areas already subject to patents. This was identified as being particularly true in Australia, which is considered to be a net importer of primary innovation.

While ACIP noted that there is considerable uncertainty and a difference in opinion about the current state of Australian law on the question of the existence of an experimental use exception, it is yet to be presented with evidence that suggests that the balance between the incentives for innovation and the ability to use the innovations is being significantly affected by the lack of clarity in Australian patent law in relation to this issue.

ACIP's Prefered Options

A number of potential recommendations were proposed by way of submissions and consultation. Of these, the following proposals have been identified by ACIP as warranting further submissions and public comment:

No Change to the Current Position

While this option does not address the current state of uncertainty, ACIP identified this as a preferred option after noting that the costs of making significant changes to the law may be unwarranted, as there was little objective or empirical evidence that research and development is being significantly affected by the lack of clarity in Australian patent law on whether experimental use constitutes infringement.

Modifying the Act definition of exploit to exclude experimental use, thereby implying an experimental use exemption to infringement
This proposal suggests that by specifically excluding experimental use from the statutory definition of exploit, experimental use will be an implied exemption to infringement on the basis that it is effectively carved out of the exclusive rights of the patentee.

It is suggested by ACIP that this proposal would make clear that there is a limitation to patent rights in Australia in relation to experimental use, while giving the Courts flexibility to interpret the definition on a case by case basis.

Introducing into the Act an explicit exemption for fair experimentation with specified permitted uses

This proposal requires the Act to be amended to establish that it will not be an infringement of a patent if the allegedly infringing act constitutes fair experimentation on an invention. It is proposed that this would be analogous to the fair dealing exemption in copyright law, and that the following guidelines and examples of fair experimentation would be included in the legislation.

For example, in determining whether an act is fair experimentation, it is proposed that the following would be required to be considered:
  • the purpose and character of the act;

  • the subject matter of the invention;

  • the availability of the invention in the marketplace; and

  • the commercial effect of the act upon the patent holder.
Further, permitted acts of fair experimentation would include, but not be limited to:
  • determining how an invention works;

  • determining the scope of the claims;

  • determining the validity of the claims; or

  • developing an improvement to the invention.
This was one of ACIP's preferred options on the basis that it provides clarity by way of examples, but also some flexibility in interpretation of the general principles.

Introducing into the Act an explicit exemption for experimenting 'on' the subject matter of the invention, with inclusive permitted uses
This proposal would require the Act to be amended to establish an exemption for acts that experiment 'on' the subject matter of a patented invention, (as opposed to experimental acts 'with' the subject matter of a patented invention). By way of example, investigating the properties of an invention or how to improve upon it may be considered experimenting 'on' the subject matter of a patented invention. This exemption would only be available if experimentation was the sole or dominant purpose of the act.

Permitted acts of fair experimentation would include, but are not limited to:
  • determining how an invention works;

  • determining the scope of the claims;

  • determining the validity of the claims; or

  • developing an improvement to the invention.
This proposal was identified by ACIP as having the benefit of being partly in harmony with European laws, while requiring Australian judicial interpretation of the terms 'experiment', 'on the subject matter' and 'dominant purpose'.


ACIP has requested that further submissions and public comment be particularly directed to the proposed options outlined above. It is anticipated that a final Report of recommendations will be submitted to the Government in mid 2005.


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