Transcript Slide 1

LESI 2009
Negotiating the International Life Sciences
Licence Agreement
Rob McInnes
Principal
Ownership of IP in Australia
 Principles derived from English law
 Statutes are differently worded for different IP rights re
employees
 Patents governed by non-statutory principles
 No “work done for hire” principle for contractors
 All subject to express contract terms
 Universities and institutes have always owned IP created
by their employees under ordinary principles, but…
A Disturbing Case on IP Ownership

University of Western Australia v Gray

Prof Gray employed from 1985 to foster research at UWA

Federal Court Judge distinguished a “duty to research” from a “duty
to invent”

UWA did not own inventions resulting from Dr Gray’s research
» UWA did not have the contractual power to prevent Dr Gray from
publishing

Regulations under UWA’s statute ware ineffective

Probably limited to universities/public sector
Joint IP Ownership in Australia
 Any owner can work the invention
 Neither party may license or sell a patent or copyright
without consent of all owners
 Percentage shares of ownership are commonly referred
to but are meaningless
 Subject to contractual modification
 Know-how/trade secrets need to be defined before
“ownership” is meaningful
“No Challenge” Clauses
 No express legal restrictions in Australia
 May be unlawful as part of a course of conduct
constituting a misuse of market power
Negative Covenants

Trade Practices Act:
» Generally, market sharing by competitors is unlawful
» Generally, “vertical” conditions like distribution territories are only
unlawful if they substantially lessen competition or are part of a misuse
of market power

TPA s51(3): - exempts certain IP licences from most antitrust
restrictions
» Exemptions do not apply to resale price maintenance or misuse of
market power

Exempt licence conditions in:
» patent licences relating to the patented invention
» registered trade mark licences relating to the characteristics of the
goods bearing the mark
» copyright licences relating to the subject matter of the copyright
Improvements in Australia
 Australia has no explicit antitrust or patent misuse issues
with licensor ownership of licensee improvements
 May be unlawful as part of a course of conduct
constituting a misuse of market power
 No legal need to distinguish “improvements” in the
ordinary sense and improvements falling within licensed
IP
Post-Patent Royalties
 No express prohibition on post-patent royalties, but…
 s 145 Patents Act
» patent licence agreement may be terminated by either party
once the patent expires or is revoked
» Problems with licences of multiple patents and/or in multiple
jurisdictions
» for payments to continue, use a separate know-how licence or a
service/consultancy contract
Patent Misuse in Australia
 S 144 Patents Act
» conditions in a licence may not be used to force the purchase of
non-patented goods or to prevent licensee from using other
products or processes
» except where the licensor proves the licensee had the option of
not submitting to the condition and it is terminable with
compensation
» sanctions include unenforceability of the condition and the patent
Insolvency and Termination
 Normal for licence agreements to be expressly
terminable by licensor for insolvency of licensee
» No US-style compulsory continuation of licences
 If licensor becomes insolvent, any assignment of the
licensed IP is subject to the licence
» Unless liquidator gets court approval to disclaim the licence
Naked Patent v. Know-How Licences
 Need to make “bundles” of IP for best licensing
outcomes – parallel patent/know-how licences
 Registered design system is being improved
» Distinctiveness required to register, but broader enforcement
possible
 Good definition and active protection of confidential
information required
 NDAs that go too far can be void as restraints of trade
 Copyright for software, manuals etc
Dispute Resolution
 Courts are reasonably efficient in Australia
 No history of efficient, cheap arbitration in IP disputes
 Expert determination good for some issues
 Urgent injunctions:
» Serious question to be tried
» Without an injunction, plaintiff will suffer injury for which damages
will not be an adequate remedy
» The balance of convenience favours the grant of urgent relief
 Often express final hearings are offered
Enforcement by Licensees
 For patents, only licensees who have the right to exploit
exclusively throughout Australia, including to the
exclusion of the patentee
 Not sub-licensees
 Not licensees with a licence subject to reserved rights
Statutory Implied Warranties (Federal, in AU)
 IP licensing is a service under the TPA
 “Consumer” sale if less than A$40K (even if acquired for
trade, business or profession)
 Liability cannot be excluded but can be limited in
business transactions
 Implied warranties that:
» services will be rendered with due care and skill
» materials supplied will be reasonably fit for purpose
» and the big one …
Trade Practices Act s 74(2)

Where a corporation supplies services … and the consumer,
expressly or by implication, makes known to the corporation any
particular purpose for which the services are required or the result
that he or she desires the services to achieve,

there is an implied warranty that the services supplied under the
contract … are of such a nature and quality that they might
reasonably be expected to achieve that result,

except where the circumstances show that the consumer does not
rely, or that it is unreasonable for him or her to rely, on the
corporation's skill or judgment
Funding Conditions & Government Policy in Australia
 Federally: typically “benefit to Australia”
 Discretionary approvals
 Australian SME preference
 Move to requiring a “Commercialisation Plan”
 Interpretation has changed over time
 States can have stricter requirements
Permissions for Biological Materials
 Border controls for biological materials
 GMOs:
» Permit system through the Office of the Gene Technology
Regulator
» Streamlined for “DNIR” (no intentional release)
 Stem cells:
» Human cloning prohibited
» licensing system for the use of excess embryos from ART
Any Questions?
Rob McInnes
+61 2 9393 0300
[email protected]