Australia's patent infringement exemptions: Why Australia remains an attractive jurisdiction for clinical development

Australia has become an increasingly attractive jurisdiction for conducting pharmaceutical and biotechnology clinical trials. In addition to its internationally recognised clinical research infrastructure, experienced investigators, efficient ethics approval processes and high-quality regulatory system, Australia offers significant patent infringement exemptions that can facilitate research and regulatory activities before patent expiry. For overseas pharmaceutical companies and their advisers, understanding the scope of these exemptions is important when planning global clinical development programmes, generating data for regulatory submissions, or preparing for product launch. Although Australia's exemptions share similarities with the U.S. "Bolar" exemption and comparable provisions in Europe, the Australian regime contains several unique features that warrant careful consideration.

Two separate regulatory ("Bolar") exemptions

Australia provides two distinct statutory exemptions for activities undertaken to obtain regulatory approval.

Pharmaceutical patents

The Australian Patent Act exempts acts that would otherwise infringe a pharmaceutical patent, provided the acts are undertaken solely for purposes connected with obtaining regulatory approval (in Australia or elsewhere) of therapeutic goods for human use, such as pharmaceuticals or biologics. The exemption applies to patents claiming pharmaceutical substances as well as certain raw materials, methods of producing raw materials, prodrugs, metabolites and derivatives.

The purpose of the provision is to permit the generation of regulatory data before patent expiry so that competing products may enter the market promptly once patent protection ends.

Non-pharmaceutical patents

Section 119B extends a similar exemption to patents that are not pharmaceutical patents, where the otherwise infringing acts are undertaken solely to obtain regulatory approval (in Australia or elsewhere). This provision is particularly relevant to medical devices, combination products, diagnostics and agricultural products.

The experimental use exemption

Separate from the regulatory exemptions, the Patents Act also provides a broad exemption for acts undertaken for experimental purposes relating to the subject matter of the invention.

The legislation identifies a number of examples of qualifying experimental activities, including:

• determining the properties of the invention;
• determining the scope of the claims;
• improving or modifying the invention; and
• determining validity or infringement.

Unlike the regulatory exemptions, the experimental use exemption is not confined to therapeutic products or regulatory submissions. Instead, it focuses on whether the activity is genuinely experimental and relates to the patented invention itself, i.e., performing research on the invention as opposed to performing research with the invention.

Whether activities qualify for the experimental use exemption will depend heavily upon their purpose.

Recent judicial guidance emphasises that qualifying activities should have the predominant purpose of generating new knowledge or testing a scientific hypothesis relating to the patented invention. Practical steps that may assist include maintaining contemporaneous documentation recording:

• the purpose of the experiment;
• study protocols and methodology; and
• experimental observations and results.

Routine commercial monitoring or activities directed principally towards commercial manufacture are less likely to qualify for this exemption.

Clinical candidates may benefit from multiple exemptions

Many clinical development activities may potentially fall within one or more exemptions.

For example, preclinical studies and clinical trials conducted to generate data for submission to the Therapeutic Goods Administration (TGA) may fall within the regulatory exemption where the activities are undertaken solely for obtaining regulatory approval. However, earlier-stage research designed to evaluate, optimise or better understand the patented invention may qualify under the experimental use exemption if the predominant purpose is to generate new technical knowledge. However, care should be taken to ensure that early stage research does actually qualify for any of the exemptions.

The availability of both exemptions provides greater flexibility than exists in some jurisdictions where regulatory and experimental activities are addressed under a single statutory provision.

Important limitations

It is important to note that none of the exemptions provide complete freedom to operate.

Several limitations should be considered when planning development activities.

• First, the regulatory exemptions do not permit manufacturing or stockpiling commercial quantities of product before patent expiry merely to facilitate immediate market entry.
• Secondly, manufacture for export generally falls outside the pharmaceutical exemption unless particular patent term extension provisions apply.
• Thirdly, the scope of the pharmaceutical exemption may not extend to offering infringing products for sale before patent expiry, even where the sale itself would occur after expiry. This issue was considered by the Warner-Lambert v Apotex, which illustrates that commercial launch preparations may fall outside the statutory protection.

Research tools remain an uncertain area

An area that remains largely untested concerns patented research tools. When introducing the experimental use exemption, a ‘research tool’ was discussed as something that is used to facilitate an experiment, rather than something that is the subject of the experiment. Thus, the experimental use exemption is generally understood to protect research on the patented invention rather than research using the patented invention. Consequently, patented laboratory tools, screening assays or research reagents may not automatically benefit from the exemption where they merely facilitate unrelated research. In fact, when the law relating to the research exemption was introduced, it was made clear that the research exemption should not apply to research tools.

Practical considerations for overseas companies

For multinational pharmaceutical and biotechnology companies, Australia's exemptions can significantly reduce patent risk during clinical development while preserving the patentee's exclusive rights during commercial exploitation.

When combined with Australia's internationally recognised clinical trial ecosystem, such as rapid study start-up, high-quality clinical sites, acceptance of TGA-generated data by major overseas regulators, and financial incentives such as the R&D Tax Incentive, Australia continues to offer an attractive jurisdiction in which to conduct early- and late-stage clinical development. However, it is important to carefully plan manufacturing, clinical supply, regulatory strategy and commercial launch activities to ensure at least one exemption to patent infringement applies.

For organisations considering conducting research or clinical activities in Australia, obtaining advice of a suitably qualified patent attorney early in the planning process can help maximise the benefits of these exemptions while minimising infringement risk.