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Patent Ownership, exploitation, and infringement

  1. Ownership and Exploitation
    1. Exclusive Rights of Patentee
    2. Ownership
    3. Who owns inventions by employees?
  2. Ownership and Exploitation: Assignment and Licensing
    1. Assignment
    2. Licenses
  3. Infringement
    1. Test for Infringement - the Pith and Marrow
  4. Contributory Infringement
  5. Defences and Exemptions to Infringement
    1. Prior Use Exemption
    2. Exemptions for Obtaining Regulatory Approvals
    3. Experimental Use Exemption
  6. Remedies
    1. Remedies for Infringement
    2. Other Remedies
  7. Unjustified Threats
  8. International agreements on patent law

Ownership and Exploitation

Exclusive Rights of Patentee

The patentee has the right to ‘exploit’ the invention.1 ‘Exploit’ is defined in Schedule 1 to mean:

  • In relation to a product: ‘to make, use, sell or otherwise dispose of the product’ or offer to do so, or ‘import it or keep it for the purpose’ of doing so;
  • In relation to a process/method: to use the process.

The rights granted to a patentee are considered personal property.2


Ownership, within s6 of the Statute of Monopolies traditionally referred to the ‘first and true inventor’, which included the person who first introduced the invention into the realm.3 This definition of ownership is not the case today. Pursuant to the Patents Act 1990 (Cth), an inventor has a right to apply for a patent, but a person can also acquire rights to an invention. Rights can be acquires through the course of employment or by purchasing the right.4 Mere importation is no longer sufficient to apply for a patent.

There can be joint inventors of a patent.5 Joint inventors take the patent as tenants in common6 Each is entitled to work the invention without accounting to the others7 However, all joint inventors must consent to the grant of a licence or assignment of an interest. (s 16(1)(c) )) The Commissioner of Patents will be engaged to resolve instances of dispute between co-owners of a patent.8

Who owns inventions by employees?

Video overview by Taylor Lennox on When the rights to an invention will be owned by an employer.

Ownership of employee inventions vests in employers where there is an express term in the employment contract. Any express term should not be so wide as to constitute a restraint of trade.9 In Electrolux, an adaptor to fit a bag to a vacuum cleaner was invented by a storekeeper and the terms of his employment had nothing to do with inventing in relation to vacuum cleaners.

Ownership can also vest in employers by way of implied terms. Where employees are engaged to use their inventive faculty, they will be considered to be doing work they are paid to do. In these instances, the benefits to the employer include the rights to invention.10

Ownership and Exploitation: Assignment and Licensing


Patents are considered personal property.2 The rights conferred to a patent owner/s are the exclusive rights to exploit the invention.11 Patents can be bought, sold, traded, assigned or licensed. An assignment must be in writing signed by or on behalf of the assignor and assignee.12 A patent may be assigned for a place in, or part of, the patent area.13 The patent right can be divided up geographically (e.g. in different states in Australia).

There is a possibility of unregistered equitable interests in a patent.14 Pursuant to s 189(3), in some instances, “equities in relation to a patent may be enforced against the patentee except to the prejudice of a purchaser in good faith for value”.

The assignment sale of patent right gives the assignee rights to the patent. Once complete, the assignee owns the patent and the assignor has no residual rights. The details of the assignment must be recorded on the patent register.


License provide permissions for others to make use of the patent. For patents owned jointly, all co-owners must consent the grant of a licence.15 Licences do not need to be in writing (but should be for evidentiary reasons)). Licences should be registered.16 Licences can be contractually supported by consideration and for a particular term or can be bear licences determined by will of the licensor.

A licensee may terminate the licence agreement even if it is still in force at the time the patent expires.17

Video overview by David Taylor on Commercialisation and licensing of inventions.

Regency Media Pty Ltd v MPEG LA, L.L.C. [2014] FCAFC 183
  • Facts: Single licence agreement for multiple patents. Can you terminate for single patent that has expired where the other patents have not expired?
  • Answer is no – must be termination of the whole agreement.

Licence may be exclusive, sole or non-exclusive.

  • Exclusive licence granted to one persons who can exploit to exclusion of all others including patentee.
  • Sole licence like exclusive but patentee can still use.
  • Non-exclusive licences are a licence to more than one person and patentee can still exploit. Non-exclusive licences may be limited by geography, duration, purpose, scope, field of industry, etc.

There can also be implied licences, for example a purchaser’s right to use a patented product, or a purchaser’s right to repair a patented product. Such uses will not breach the patent.

Compulsory licences also exist under the Act. A court application is required to evoke compulsory licenses. These arise where a patentee has failed to exploit the patent in the patent territory.18

Exclusive Licences

An exclusive licensee may commence infringement proceedings.19 The licensee must join the patentee as a party as co-plaintiff (joint legal representation) or as a defendant.20

An exclusive licensee means a licensee under a licence granted by the patentee and conferring on the licensee, or on the licensee and persons authorised by the licensee, the right to exploit the patented invention throughout the patent area to the exclusion of the patentee and all other persons.21

Multiple exclusive licenses for patents in respect of different uses of the invention are not permitted.22


Patent infringement proceedings are outlined in s120 of the Act. Proceedings can be commenced by a patentee or exclusive licensee, although an exclusive licensee must join the patentee as a defendant or plaintiff.20) ‘Infringement’ is not defined by the Act however is considered to occur when a person exercises one of the exclusive rights of the patentee without their consent. The concepts of knowledge and intent are not elements of patent infringement. Infringement depends purely on whether a person other than the patentee, licensee or someone authorised is exploiting the exclusive rights of the patentee.

As noted previously, the exclusive rights of the patentee are to exploit the invention; including using, selling or making the invention23. These exclusive rights commence on publication of the complete specification.24 Infringement proceedings can only be commenced once the patent is granted.25

Proceedings must be started within the later of 3 years of the patent being granted, or 6 years from the date of the infringing act.26

Test for Infringement - the Pith and Marrow

A literal interpretation of the patent claims will not always suffice.27 The test for infringement is whether all essential integers (elements) of the patent have been taken - this is a question of fact.28 This is known as the ‘pith and marrow’ (purposive) approach.

The pith and marrow refers to the ‘essence and substance’ of the invention.29 Whilst this phrase is rarely used in modern patent law cases, the phrase is intended to refer to the “novel features only that [the patentee] claims to be essential”, these are the essential integers of the patent claim.30

Catnic Components Ltd v Hill & Smith Ltd (No 1) (1982) RPC 183

Facts: Patent for steel lintels for use in spanning the spaces above window and door openings. Specification required a bar to “extend vertically”. Hill created a virtually identical invention that had a bar that extended upwards 6 degrees from being vertical. The device worked entirely in the same way as Catnic’s invention. Created invention that worked in entirely same way as patentee’s invention but was 6 degrees from vertical.

Held: This was taken to be infringement.

“[A] patent specification is a unilateral statement by the patentee, in words of his own choosing, … by which he informs them what he claims to be the essential features of the new product or process… that constitute the so-called “pith and marrow” of the claim. A patent specification should be given a purposive construction rather than a purely literal one… The question in each case is: whether persons with practical knowledge [in the relevant field] would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked. The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked.”

Contributory Infringement

The doctrine of contributory infringement applies in patent law to allow a patentee to seek remedies from a person who has indirectly infringed the patent. This may occur in situations where a person has supplied another the ability to infringe the patent.

Section 117 of the Act outlines the doctrine of contributory infringement.

  • Section 117(1) If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent.

  • Section 117(2) A reference in subsection (1) to the use of a product by a person is a reference to:

    • a. if the product is capable of only one reasonable use, having regard to its nature or design that use; or

    • b. if the product is not a staple commercial product any use of the product, if the supplier had reason to believe that the person would put it to that use; or

    • c. in any case the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

The mere completion of supply of the patentable product amounts to infringement. It is immaterial whether the product is put to an infringing use.31

In Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd & Ors [2013] HCA 50, this defence was raised but could not be made out.

Defences and Exemptions to Infringement

Prior Use Exemption

Section 119 allows a person to continue to exploit a product or process if immediately before the priority date the person was using it in the patent area or had taken definite steps (contractually or otherwise) to exploit the product or process in the patent area.

There must be a continuous use of the invention. This defence can apply where a prior user learns of invention through publication or use in the prescribed circumstances mentioned in s 24(1)(a). A prior user can assign his or her rights to another.

The examination process is susceptible to error, this is why the Act makes it clear that a grant of a patent is no guarantee of validity. This defence is largely relevant where the prior user does not wish to challenge the validity of the patent.

Exemptions for Obtaining Regulatory Approvals

Pursuant to s 119A of the Act, a pharmaceutical patent is not infringed if a person exploits an invention solely for the purpose of obtaining TGA approval of goods intended for therapeutic use; or obtaining similar regulatory approval in a foreign country.

This exception is for generic versions of drugs and for regulatory approval to be sought during the patent term. This is in place to ensure that when the patent expires patent protection can be sought immediately. This does not apply to medical devices or therapeutic devices

Section 119B applies to obtaining regulatory approval of non-pharmaceuticals (eg agricultural chemicals, medical devices etc.)

Experimental Use Exemption

Section 119C of the Act was introduced with the Raising the Bar amendments. This section outlines experimental use of the patent.

Video overview by Sophie Williams on Experimental use.

Section 119 C
  1. a person may do an act that would otherwise amount to an infringement of the patent, if the act is done for experimental purposes relating to the subject matter of the invention (scientific research, unfortunately this experimental use exemption is narrow and doesn’t relieve may concerns raised).

  2. “Experimental purposes relating to the subject matter of the invention” include, but are not limited to:

    • a. determining the properties of the invention
    • b. determining the scope of a claim relating to the invention
    • c. improving or modifying the invention
    • d. determining the validity of the patent or of a claim relating to the invention
    • e. determining whether the patent for the invention would be, or has been, infringed by the doing of an act.

Experimental use focuses on the invention, patent, or infringement of the patent – it doesn’t extend to using a patented invention to discover things that do not relate to the patent. For example, if patent is a new type of syringe, you can only use it without licence to see how it works, or to see if the patent is valid; you cannot use it for experimental purposes to see if you can find a new cure for a disease.


Remedies for Infringement

Remedies for infringement are contained in ss 122 and 123. A court may grant an injunction (on any terms the court deems fit) or, at the option of the plaintiff, either damages or an account of profits.

The court may order infringing articles to be delivered up for destruction or issues Anton Piller orders (to preserve evidence). The court may “refuse to award damages, or to make an order for an account of profits, in respect of an infringement of a patent” if the infringement is considered an innocent infringement.32

Other Remedies

A non-infringment declaration can be awarded.33 These remedies can only be sought in respect of specified granted patents or certified innovation patents.34 The patentee must be joined as a respondent to these proceedings.35 The applicant must first notify the patentee with full written particulars of the use or proposed use, and patentee must fail to admit that the use would not infringe before bringing non-infringement declaration (designed to prevent non-essential litigation).36 A potential defendant can approach the court to seek a declaration if their actions don’t infringe a registered patent.

A counterclaim for revocation of the patent can be brought by the alleged infringer.37 A respondent may allege a patent is not valid and ask for revocation of the patent. This is available since the validity of patent is not guaranteed.38 A patentee whose claims survive a challenge to their validity in litigation may apply for a certificate of validity pursuant to s 19. The certificate outlines that the claim has been challenged and survive. This can be used in the future – and provides a judge further opportunity to grant an order for costs.

Unjustified Threats

The provisions dealing with unjustified threats are contained in Part 3, Chapter 11 of the Act. Section 128 allows a person to apply to the Court for:

  • (a) a declaration that the threats are unjustifiable;
  • (b) an injunction against the continuance of the threats;
  • (c) the recovery of any damages sustained by the applicant as a result of the threats.

However, mere notification of the existence of a patent or a patent application is not a threat for the purposes of s128.1

The objective of these provisions is to prevent patentees making unjustified threats, where person has not infringed a patent. A threat of litigation may be made via letters, orally, gossip, adverts or other means. The alleged infringer should be free of unjustified threats.

U and I Global Trading (Australia) Pty Limited v Tasman – Warajay Pty Limited (1995) 32 IPR 494 (Cooper J):
  • Whether the language used would convey to any reasonable person that the author of the letter… intended to bring proceedings for infringement against a person said to be threatened. It is not necessary that there be direct words that action could be taken.
  • Threat may be implied from the circumstances of communication.

To avoid being named as a respondent to an unjustified threats proceedings:

  • Only assert actions that can be proved.
  • Only refer to multiple forms of IP rights if infringement can be proved for each and every IP right asserted.
  • Only threaten proceedings if the rights holder is ready and willing to institute proceedings promptly.
  • Commence infringement proceedings promptly if the infringing conduct does not cease.

International agreements on patent law

In 1970 the Patent Co-operation Treaty (PCT) was drafted. The PCT was drafted within the existing framework of the Paris Convention. There are over 147 countries who are members of the Paris Convention. The PCT is a comprehensive guide to patent law standards. The PCT not only makes it easier for patentees to file applications in multiple countries, it also seeks to harmonise the national patent laws of the countries. The PCT has been considered successful is assisting in the development of patent law globally.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which built upon the foundations of the PCT was enacted to address the gap in the laws and the demands of modern technology and innovation, TRIPS is administered by the World Trade Organisation (WTO) and seeks to facilitate international trade and promote stability in the global economy by setting minimum standards for IP. TRIPS sought to further minimise the deviations between national patent laws. For instance in Australia, as a result of TRIPS, the term of patent protection was increased from 16 years to the international standard of 20 years.39

TRIPS also set out the basic criteria for patentability. Pursuant to Article 27 Patentable subject matter is considered to be:

“…Products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.”

In 2005 Australia entered intro a bilateral trade agreement with the US, The Australia-US Free Trade Agreement (AUSFTA), which also required a number of significant changes to Australia’s IP laws including patent legislation.

TRIPS is administered by the WTO and seeks to facilitate international trade and promote stability in the global economy by setting minimum standards for intellectual property.40

Since 2004 there have been other amendments made to the Patents Act 1990 (Cth), predominantly motivated by the need to ensure Australia’s laws were comparable and compatible with Australia’s international trading partners.41)

Access to Medicine

Video overview by Tess Van Geelen on The Doha Declaration and global access to medicines.

  1. s131  2

  2. s 13(2)  2

  3. E_dgeberry v Stephens* (1693)_ 2 Salk 447 

  4. s 15 

  5. s 31 

  6. s 16(1)(a) 

  7. s 16(1)(b) 

  8. s 17 

  9. Electrolux Ltd v Hudson [1977] FSR 312 

  10. UWA v Gray (2009) 82 IPR 206 

  11. s 13 

  12. s 14(1) 

  13. s 14(2 

  14. Stack v Brisbane City Council (1996) 35 IPR 297 at 299; ss 189(3) and 196(b)(ii 

  15. s 16(1)(c) 

  16. ss 187, 195, 196 

  17. s 145 

  18. ss 133(2), 135 and 144 

  19. s 120(1) 

  20. s120(2  2

  21. Ex parte British Nylon Spinners (1963) 109 CLR 336 

  22. Bristol-Myers Squibb Company v Apotex Pty Ltd (No 5) [2013] FCA 1114, [425]-[439] per Yates J 

  23. s 13, Sch 1 

  24. s 57(1) 

  25. s 57(3) 

  26. s 120(4) 

  27. Populin v HB Nominees Pty Ltd 

  28. Rodi & Wienenberger AG v Henry Showell Ltd 

  29. Clark v Adie (1875) 10 Ch App 667 

  30. Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183, 243; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd (2005) 67 IPR 230, 245. 

  31. Collins v Northern Territory (2007) 161 FCR 549, [61] French J; Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd (2013) 296 ALR 50, [140] 

  32. s 123(1) 

  33. ss 125-127 

  34. s 125(2) 

  35. s 125(3 

  36. s 126 

  37. s 121 

  38. s 20 

  39. Article 12 TRIPS 

  40. The US Free Trade Agreement Implementation Act 2004 (Cth) Sch 8 

  41. See the Intellectual Property Laws Amendment Act 2006 (Cth) and Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth