Can band expect payment of its $666,000 invoice for use of its music at Guantanamo Bay?

Posted by Nicole Reid and Paul Kallenbach

Over the last few years, there have been a number of news reports about the use of loud music as an interrogation or torture technique employed against prisoners at the Guantanamo Bay military detention camp.  Recently, Canadian electro-industrial band Skinny Puppy has generated further publicity on the issue with its members' response to the discovery that their music had been used in this way. Upset by this use of their work, they have reportedly sent an invoice to the US government for $666,000 for musical services. (The suggestive amount of the invoice was apparently chosen for its relevance to the 'evilness of the deed'.)

So far, we haven't seen any reports indicating that the invoice has been paid. We can still use this interesting scenario to speculate on the legal basis for any claim that Skinny Puppy could make if these circumstances arose in Australia and payment were not forthcoming, and how likely they would be to succeed.

Copyright infringement

Based on the media reports, the legal basis for Skinny Puppy's claim seems to be that copyright in its music has been infringed on the basis that it has been performed in public without permission.

A lawyer interviewed by Billboard.biz pointed to a number of potential snags that the band may encounter in making such a claim in the US, including that the detention camp may be covered by a blanket licence (perhaps an equivalent to the licensing scheme run in Australia by the Australasian Performing Right Association), limitations on the availability of statutory damages and the fact that Guantanamo Bay is outside of the United States.

Assuming that each of these hurdles could be overcome, would the playing of a musical work to prisoners in a detention camp be a 'performance in public'?

In Australia, the test that is generally applied is whether the work is performed to 'the copyright owner's public' or, in other words, in a commercial context where the copyright owner could be expected to be paid a fee. Clearly, a prisoner would not be expected to pay to have music blasted loudly and repetitively at them. However, the fee need not necessarily be expected from a member of the audience and could be from another person willing to bear the cost of the performance. Further, even if Skinny Puppy's music was played to individual prisoners (rather than throughout the Guantanamo Bay centre), an audience of separate individuals can still make up the public: in previous cases, the playing of films to individual motel rooms and the playing of hold music over the telephone have both been found to be communications to 'the public'.

Skinny Puppy would therefore at least have an argument that it was entitled to expect that the US government would pay a fee to play music to prisoners for the government's purposes, and that accordingly the exclusive right to perform a work in public was infringed. However, the (presumably) small number of listeners and the private and restricted nature of a detention centre would be arguments against their case. It would be fascinating to see what a court would decide given the opportunity.

Moral rights

US law only grants moral rights to the creators of visual works. In Australia, however, moral rights exist in relation to all of the categories of works that are protected by copyright, including musical works. If a similar situation were to occur in Australia, would the members of Skinny Puppy be able to bring a claim for infringement of their moral rights?

In Australia, the right of integrity of authorship gives the author of a work the right not to have anything done in relation to the work that is 'prejudicial to [his or her] honour or reputation'. This expressly includes the doing of anything that results in a material distortion or mutilation of, or a material alteration to, the work. Where an artistic work is concerned, it also includes an exhibition in public of the work that is prejudicial to the author's honour or reputation because of the manner or place in which the exhibition occurs. There doesn't seem to us to be any reason why a similar treatment of a musical work (ie, the performance of the work in public in a manner prejudicial to the author's honour or reputation because of the place in which it is performed or the manner in which it is performed) could not amount to derogatory treatment. Such an infringement would also not necessarily be premised on there having been performance in public of the work (as this is not a pre-requisite for showing that there was derogatory treatment), and would not rely on Skinny Puppy needing to demonstrate infringement of copyright.

Was the playing of Skinny Puppy's work in this context prejudicial to the band members' honour or reputation? Perhaps – the band could argue that it draws a connection between their work and practices of the US government with which they disagree, and the implication that listening to their music could amount to torture is hardly flattering.

Making a claim against the state

The other interesting question raised by this scenario is the effect of the government being the alleged infringer. In the United States, the federal government generally enjoys sovereign immunity from being sued (once exception being where it has consented to waive that immunity).

In Australia, on the other hand, Crown immunity is more limited. Although there is a presumption that legislation does not bind the Crown, this presumption can be displaced if the parliament intended for the Crown to be bound, even if this is not stated expressly.

In the case of copyright, the Copyright Act makes it clear that the Crown is bound by the Act. However, the Crown is afforded special treatment, including ownership of works made under its direction or control, and the right to use copyright material for the services of the Crown. The latter entitles the Crown to obtain a licence to exercise copyright, on terms either agreed with the copyright owner or fixed by the Copyright Tribunal of Australia.

In this case, the Australian government would have a strong argument that it had a right to use music for the purposes of managing prisoners as this would be for the 'services of the Crown', even if this did amount to a public performance of the work. If it considered that it was in the public interest to do so, it could delay informing the copyright owner of this use, and would only have to pay the royalty determined by the Copyright Tribunal (assuming that it could not reach agreement with the copyright owner).

However, as Crown rights under the Copyright Act do not displace moral rights, Skinny Puppy (or its hypothetical Australian equivalent) could still have recourse to those provisions and seek additional damages on that basis.

It seems, therefore, that if your music is to be used by a government to interrogate prisoners, you will have a better chance of enforcing your legal rights if this is done by the Australian rather than the US government.

Final Australian Privacy Principle (APP) guidelines released

Posted by Veronica Scott and Paul Kallenbach

Today the Office of the Australian Information Commissioner released the final version of the guidelines on how agencies and organisations can comply with the new Australian Privacy Principles (APPs). This final version has been released following the consultation undertaken in relation to the draft guidelines released last year.

A range of changes to the Privacy Act 1988 (Cth), including the APPs, will come into effect on 12 March.  The guidelines set out how the Commissioner will interpret these new APPs and the factors that the Commissioner may take into account in exercising functions and powers relating to the APPs, as well as providing guidance on what the Commissioner considers to be good privacy practice.

Happy weekend reading to you all.

Copyright and the Digital Economy – fourth time lucky for 'fair use'?

Posted by Paul Kallenbach

The Australian Law Reform Commission Final Report into Copyright and the Digital Economy is now publicly available.

The report controversially proposes that a broad-based 'fair use' exception should replace the current patchwork of 'fair dealing' exceptions under the Copyright Act.  You can read our analysis of the Final Report here.

Consequential loss - a state of confusion

Posted by Paul Jeffreys and Paul Kallenbach

Contracts are used to allocate risk between the contracting parties.  One mechanism for doing so in a contract is by using limitation and exclusion of liability clauses.  These clauses have the effect of:

• in the case of a limitation of liability provision - limiting the requirement for one party to compensate another party to losses up to a specified amount; and
• in the case of an exclusion of liability provision - completely excluding the requirement for one party to compensate another party for particular types of loss.

A common type of loss that is often completely excluded in technology contracts is 'consequential' loss (sometimes also referred to as 'indirect' loss).  Until recently, a rather ancient line of English cases had been followed by Australian courts in interpreting the meaning of 'consequential loss'.   Unfortunately, more recent Australian authority has lent varying interpretations to this phrase, giving rise to uncertainty in the interpretation of exclusion clauses in commercial contracts.

The purpose of this blog post is to briefly summarise the varying interpretations of 'consequential loss' in those Australian jurisdictions that have considered the issue.

The traditional English (and, until recently, Australian) approach

Under English law (which Australian courts have followed until recently), 'consequential loss' has been interpreted as losses that satisfy the following two elements:^[1]

• the loss does not arise naturally as a result of a breach; and
• the loss was in the contemplation of the parties at the time of the contract and results as a probable result of a breach.

One difficulty with this approach is that, if the parties dispute whether a particular loss happens to be a 'consequential loss', the party seeking damages will have to prove that the particular loss was in the contemplation of the parties at the time of entering into the contract. 

Victoria, New South Wales and South Australia

The Australian re-interpretation of 'consequential loss' began with the 2008 decision of the Victorian Court of Appeal in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd ^[2] (Peerless). The approach in this decision was subsequently approved by the New South Wales Court of Appeal ^[3] and the South Australian Supreme Court.^[4]

The Court in Peerless created a distinction between:^[5]

• normal losses - being a 'loss that every plaintiff in a like situation will suffer'; and
• consequential losses - being 'anything beyond the normal measure … incurred through breach'.

Consequential losses were deemed by the Court to include loss of profits or additional expenses incurred as a result of the breach.

 

Unfortunately, the precise scope of what constitutes a 'normal loss' remains open.   Minter Ellison Partner Cameron Ross, in considering Peerless, has observed:^[6]

While it is clear that "normal loss" is different from "natural loss" [a key concept under the English interpretation] ... the judgment in Peerless does not provide guidance on what constitutes this measure of damages and when a party is in a similar situation.  The question whether a loss is categorised as a "normal loss" ... will inevitably be determined by the context and nature of the contract and the breach.

Despite these ambiguities, it can probably be said that the interpretation of 'consequential loss' in Victoria, New South Wales and South Australia is now somewhat broader than the original English position.  As a consequence, where a contract excludes liability for 'consequential loss, losses that may previously have been considered 'open game' may now be covered by the exclusion clause, and accordingly no longer be recoverable from the party in breach.^[7]

Western Australia

The Western Australian Supreme Court has recently rejected both the English and Peerless approach, instead adopting yet another method of interpreting 'consequential loss'.^[8]

In Regional Power Corporation v Pacific Hydro Group Two Pty Ltd [No 2]^[9] (Regional Power), Justice Kenneth Martin expressed his approval for the opinion of Professor J W Carter that both the English and Peerless approaches were 'artificial' and that they approached 'the expression 'consequential loss' from particular legal perspectives rather than a commercial perspective which will vary from case to case'.^[10]

The Court instead preferred an approach based on principles set out by the High Court in Darlington Futures v Delco Australia Pty Ltd^[11] (Delco), in particular, the principle that the meaning of an exclusion or limitation clause must be 'determined by construing the clause according to its natural and ordinary meaning, read in light of the contract as a whole'.^[12]

This principle does not, by itself, provide much guidance as to the meaning of 'consequential loss' in any particular circumstance  However, the factors considered on the facts of Regional Power may provide some guidance as to the practical application of this approach.  More specifically, in deciding whether the loss in Regional Power was a 'consequential loss', the Court considered the following factors:

• the wording of the exclusion clause;
• other clauses in the contract that deal with, or contemplate, the breach event;
• any references in the contract to the maintenance and operation of the relationship between the parties; and
• the character and responsibilities of the parties (in Regional Power, one of the parties was the State Energy Commission of Western Australia), including the commercial sophistication of the parties.

Queensland, Tasmania, the Australian Capital Territory and the Northern Territory

 

No courts in the remaining Australian states and territories have had an opportunity since Peerless to consider their jurisdiction's preferred approach to interpreting 'consequential loss', with one minor exception.

 

In Queensland, Justice Douglas distinguished the Peerless interpretation of 'consequential loss' in MGC Properties Pty Ltd v Tang^[13] (Tang).  His Honour did so because the relevant clause in Tang was an indemnification clause in a guarantee and indemnity deed, rather than a contractual exemption clause.  In the context of the indemnity, 'consequential loss' meant losses flowing from a default by the indemnifier.^[14]  The judgment shows that '[t]he natural meaning of "consequential loss" may alter depending on the context and the nature of the document'.^[15] However, as the context in Tang is distinguishable from the usual contractual exclusion clause, there remains uncertainty in Queensland as to what approach a first instance court might take.

 

We would assume that trial judges in Queensland, Tasmania, the Australian Capital Territory and the Northern Territory will, in accordance with the High Court's position on judicial precedent, follow the decisions of the intermediate appellate courts in Victoria and New South Wales, unless the trial judge is 'convinced that the interpretation is plainly wrong'.^[16]  Having said that, it didn't take much for Justice Kenneth Martin to divert from the Peerless approach in Regional Power.

 

Application in practice

 

Until the High Court renders a decision on the meaning of 'consequential loss', the issue will remain unsettled in Australian law.  It therefore remains prudent for parties in their contracts to expressly set out the types of loss that they wish to exclude (for example, loss of profits, loss of revenue, loss of goodwill or loss of business opportunity), as well as those losses that the parties agree should be recoverable from each other. 

The rather unsavoury alternative is for the parties to leave it to the courts to divine the meaning of this term - and therefore the contractual allocation of risk between them - from the contradictory patchwork of Australian jurisprudence in this area.

---

 

[1] Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. Also see Croudace Construction Limited v Cawoods Concrete Products Limited [1978] 2 Lloyd's Rep 55. ↩
[2] (2008) 19 VR 358 (Peerless). The Peerless decision has been applied subsequently in Victoria in Papadopoulos v MC Labour Hire Services Pty Ltd (No 4) (2009) 24 VR 665 and Rod Investments (Vic) Pty Ltd v Abeyratne (No 2) [2009] VSC 278. ↩
[3] Allianz v Waterbrook [2009] NSWCA 224. ↩
[4] Alstom Ltd v Yokogawa Australia Pty Ltd (No 7) [2012] SASC 49 at [286]-[289] per Bleby J. ↩
[5] Peerless at 386-387 [87] per Nettle JA (Ashley and Dodds-Streeton JJA concurring). ↩
[6] Cameron Ross, 'A loss of no consequence' (2010) 84(4) Law Institute Journal 27 (Ross), 28. ↩
[7] Ross, 27. ↩
[8] The most notable decision is Regional Power Corporation v Pacific Hydro Group Two Pty Ltd [No 2] [2013] WASC 356 (Regional Power), as discussed in the body of this article. However, Peerless was doubted in an earlier Western Australian decision: Valentine Falls Estate Pty Ltd v Smec Australia Pty Ltd [2010] WASC 319 at [6] per Sanderson M. ↩
[9] [2013] WASC 356. ↩
[10] Regional Power at [94] per Kenneth Martin J quoting Carter J W, 'Exclusion of Liability for Consequential Loss' (2009) 25 Journal of Contract Law 118, 133. ↩
[11] (1986) 161 CLR 500 (Delco). ↩
[12] Delco at 510 per Mason, Wilson, Brennan, Deane and Dawson JJ. ↩
[13][2009] QSC 322 (Tang). ↩
[14] Tang at [21]-[25] per Douglas J. ↩
[15] Ross, 29. ↩
[16] Farah Constructions v Say Dee Pty Ltd (2007) 230 CLR 89 at 151-152 [135] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. ↩

Sherlock Holmes and the case of the literary character copyright protection

Posted by Nicole Reid ● Partner: Paul Kallenbach

Image courtey of gregwake

How is a character in a literary work, as distinct from the literary work itself, protected by copyright? This issue may arise in the case of fan fiction, sequels and parodies, where a character from an existing work is used in the new work, without many of the other elements of the original work being copied.

A United States court has recently considered the copyright protection of the fictional characters Sherlock Holmes and his colleague and friend, Doctor John Watson. It found that the characters are in the public domain, other than their characteristics that were only introduced in stories which are still under copyright. However, especially in Australia, the copyright protection of a character separate from the literary works in which he or she appears is not simple.

The Sherlock Holmes decision

The recent case came about because an expert in the Sherlock Holmes canon, Leslie Klinger, wanted to have published a collection of new stories inspired by and featuring the Sherlock Holmes and Dr Watson characters. However, he and his publisher had been threatened by the owner of copyright in the Sherlock Holmes stories (a company owned by members of the late Sir Arthur Conan Doyle's family) with an infringement claim unless a licence was obtained. He sought a declaratory judgment that no permission would be required to use various story elements. The elements in question are listed in his statement of material facts, and include various characteristics of Holmes and Watson, as well as a number of other characters.

The Sherlock Holmes character is in an interesting position in the US, because it was developed over a number of novels and stories by Conan Doyle, which have different copyright statuses under US law. Copyright in the novels and most of the stories has expired, but there remain ten stories that are still protected by copyright in the US. This is because when the term of copyright protection was extended in 1998, the extension applied only to works published in 1923 or after, so it only affected some of the Sherlock Holmes stories.

The Court found that the plaintiff was only entitled to a declaratory judgment that he was entitled, without permission, to use the story elements that were introduced in the pre-1923 stories. The story elements that were only introduced in the post-1923 stories were still protected by copyright (including that Dr Watson had a second wife and a background as an athlete).

The copyright owner had argued that the characters of Sherlock Holmes and Dr Watson would remain protected by copyright for as long as any of the stories were within their copyright term, on the basis that they were complex characters developed over the course of all of Conan Doyle's works. The Court rejected this argument, and instead followed authority that had held that 'increments of expression' in later works, including storylines and character traits, can be protected by copyright separately from earlier, related works. This applies even if it means that characteristics of individual characters are effectively divided between copyright protection and the public domain until all of the works delineating these characteristics have entered the public domain.

Copyright in literary characters in Australia

In this case, the plaintiff was apparently concerned about protecting his right to create 'derivative works' based on Conan Doyle's works. A derivative work is defined in US law as one that is based on one or more existing works. Previous case law referred to by the court has held that a sequel or series featuring the same characters as an earlier work is a derivative work.

In Australia, it is less clear that a literary work featuring characters from an earlier work would necessarily infringe any copyright in the earlier work. This is because there is no exclusive right of a copyright owner to create derivative works. The adaptation right in relation to literary works is limited to the creation of translations, picture versions, dramatic versions (of non-dramatic works) and non-dramatic versions (of dramatic works).

Accordingly, in Australia, the Sherlock Holmes character as delineated in Arthur Conan Doyle's works would (if still protected by copyright) only be protected from being appropriated for use in another novel or short story by the reproduction right. An Australian court would need to consider whether a sufficiently substantial part of a copyright work was reproduced via the appropriation of one or more characters, and any other related story elements, from the work. This would depend on a consideration of the distinctiveness of the character in the original work and the quality and quantity of the elements of the original work that had been reproduced. US law appears not to require the same amount of appropriation as would be required in Australia to make out reproduction of a substantial part, and thus provides stronger protection to literary characters.

Although the outcome in the Sherlock Holmes case seems reasonable on its face, it will not necessarily be easy to apply in practice. It seems to us that it would be difficult to determine when a particular character trait was introduced, and whether it has been used in a subsequent work. A character is developed not only by simple references to his or her characteristics, but by descriptions of their thoughts, interactions and actions. To what extent will a court need to delve into literary interpretation in order to determine the traits that been bestowed on that character, and when that trait was developed?

Conan Doyle's estate has also filed an appeal, so perhaps the sequel will provide some more answers.

Online review websites and the ACCC

Posted by Paul Jeffreys and Paul Kallenbach

Have you ever shopped online and found it difficult to choose between by a myriad of products?  With more than 50% of Australians now buying online, consumers increasingly do not have the chance to physically inspect the good they are interested in purchasing, or to communicate directly with prospective service providers.  So they are increasingly looking to online reviews to help them decide which way to turn.

Online review platforms are websites or apps that provide information to prospective purchasers about particular goods or services. The platforms may be found on independent review websites (think tripadvisor.com, urbanspoon.com and yelp.com.au) or sections of other websites that contain product reviews (such as amazon.com).  These platforms offer a compelling proposition - customers have the opportunity to become better informed about goods and services, while businesses obtain free access to market feedback.  It is increasingly apparent, however, that the information contained on review websites is not always reliable.  This has started to cause legal consternation, particularly in the social media sphere, where business are required to take steps to ensure that their online presence does not contain misleading or inaccurate content (see our previous blog post on this topic here).

The issue of misleading material on online review platforms has caught the attention of the Australian Competition and Consumer Commission (ACCC), which recently released a guidance report on how businesses should deal with the challenges of potential misleading information on review platforms. The ACCC, as the regulator of Australia's consumer laws, has powers under the Australian Consumer Law (ACL) to take enforcement action in respect of misleading conduct in trade or commerce.   The ACCC has, of course, taken on the issue of misleading online content before:

• In July 2010, Jetplace Pty Ltd, the operator of an adult social networking and dating site known as 'redhotpie', was found to have engaged in misleading and deceptive conduct by generating 1,300 fake user profiles programmed to automatically send customised messages to other (real) members.[1] This was despite the website clearly stating that 'each and every profile you see on our website was place by a person just like you – someone who came to our site and registered'.
• In February 2011, the ACCC successfully prosecuted Allergy Pathway, an operator of clinics for the diagnosis and treatment of allergies, and its sole director, in relation to misleading third party content posted on Allergy Pathway's Facebook page, on the basis that it had become aware of that content but had chosen not to do anything about it.[2]
• In November 2011, removalist business Citymove paid a $6,600 infringement notice after admitting that it had posted testimonials on its own website purporting to be genuine customers.[3]
• In January 2014, P & N Pty Ltd and P & N NSW Pty Ltd (Euro Solar) and Worldwide Energy and Manufacturing Pty Ltd (Australian Solar Panel), manufacturers and suppliers of solar panels, were ordered to pay collective pecuniary penalties of $125,000 for, amongst other things, publishing fake online testimonials.[4]

These cases indicate the caution that businesses need to exercise, both in terms of the content they post on their own website or social media channels, and also in dealing with third party content on those channels (including the expectation, set by the Federal Court, that businesses must promptly remove misleading third party content of which they become aware).  The guidance report issued by the ACCC signifies a further escalation in the battle against misleading online content.

The ACCC report highlights five areas that independent online review platforms should consider:

(i) Disclosing commercial arrangements with reviewed businesses: Where commercial relationships exist between review platforms and reviewed businesses, the review platform risks breaching the ACL if it does not disclose to customers the nature of the relationship. The guidance report provides the example of the platform prominently stating that '[Review platform] receives a commission/fee for each purchase from [reviewed business] booked through this site'.

(ii) Detecting and removing fake consumer reviews: The guidance report recommends that review platforms tackle fake reviews by providing customers the opportunity to complain about or 'flag' potentially suspect reviews in addition to conducting either automated or manual internal reviews of content. The report provides factors to consider in deciding whether a review may contain fake material, including where a review uses overly positive of 'marketing-speak' and whether there has been a 'spike' in reviews about a particular business over a limited period of time.

(iii) Incentivised consumer reviews: Where an online review platform offers an incentive for users to conduct a review of a particular good or service, the platform should disclose this prominently to users (e.g. next to an aggregate (average) rating out of five or above posted comments). The guidance report provides the example of the following disclosure example: 'Some/all reviewers of [reviewed business] received a voucher [or other benefit] from [review platform] in exchange for their review'.

(iv) The omission of credible consumer reviews, inflated (average) reviews and the 'big picture': The report warns against the creation of a misleading overall impression by a body of reviews (e.g. where a platform selectively removes or edits negative reviews). It is also recommended that where a platform displays an aggregated (average) rating system, the total number of reviews should be also stated (to give customers an understanding of the sample size).

(v) Dealing with businesses who have received unfavourable reviews on your platform: The report recommends that reviewed business be provided with an opportunity to post a public response to negative reviews.

The report provides similar recommendations to businesses hosting their own review platforms. In particular, the ACCC warns against anybody writing reviews when they have not experienced the product themselves. This includes, in the words of the ACCC, to 'not encourage family and friends to write about your business without disclosing their personal connection with your business in that review'.

With online shopping becoming more central to consumers, the ACCC has increased exposure on the issue of misleading online product reviews.   Hosts of independent online review platforms and any businesses with review platforms on their websites need to be aware of risk mitigation strategies necessary to ensure that they are not breaching consumer protection laws.

 

[1] Australian Competition and Consumer Commission v Jetplace Pty Ltd [2010] FCA 759.

[2] Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74.
[3] http://www.accc.gov.au/media-release/accc-removalist-admits-publishing-false-testimonials.
[4] http://www.accc.gov.au/media-release/145000-penalty-for-fake-testimonials-and-false-solar-energy-country-of-origin-representations.

 

 

New year, new proposed amendments to IP laws (and the return of some amendments from 2013)

Posted by Nicole Reid and Paul Kallenbach

The Federal Government has released an exposure draft of the Intellectual Property Laws Amendment Bill 2014 (Bill) and a consultation paper seeking comments on the draft by 7 February 2014.

The draft of the Bill is based on the Intellectual Property Laws Amendment Bill 2013 (2013 Bill), which was introduced into parliament in May 2013 but lapsed on the calling of the September 2013 federal election.  However, several changes have been made to the 2013 Bill.

Crown use

Significantly, the provisions of the 2013 Bill amending the Crown use provisions in the Patents Act 1990 (Cth) have been removed.  These provisions had been intended to implement one of the outcomes of the Productivity Commission Inquiry into Compulsory Licensing of Patents, to make it clearer when the Crown use provisions can be invoked.  They would have provided that an authority or authorised person may exploit a patented invention for the purposes of providing a service that the Commonwealth, State and/or Territory governments have the primary responsibility for providing or funding, as long as the Crown had first attempted to negotiate with the patent owner, and then obtained the relevant Minister's approval of the Crown use.

Due to concerns that were raised about the potential breadth of these provisions, they will be the subject of a further, separate consultation process.

Compulsory licensing of patented pharmaceuticals for export

Some changes have also been made from the 2013 Bill to the provisions allowing for the Federal Court to grant compulsory licences to enable Australian organisations to manufacture generic versions of patented pharmaceuticals and export them to countries experiencing health crises.  These provisions are intended to implement the Protocol amending the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property (TRIPS Agreement), which was accepted by Australia in 2007.

As amended, these provisions of the Bill allow the Federal Court to grant a compulsory licence to exploit (not merely to 'work', as in the 2013 Bill) a patented invention where the Court is satisfied that:

• the pharmaceutical product covered by that patent is to be imported to an 'eligible importing country' (which will be specified in regulations by reference to the list annexed to the TRIPS Agreement) by, or with the authorisation of, that country;
• the proposed use of the pharmaceutical product is to address a public health problem in the eligible importing country in circumstances of national emergency or other extreme urgency, or by the public non-commercial use of the product;
• except in circumstances of national emergency or extreme urgency, the applicant has attempted for a period of 30 days to obtain a licence from the owner of the invention; and
• the applicant, the eligible importing country and any importer will take reasonable measures to prevent the pharmaceutical product from being used for a purpose other than addressing the public health problem that the compulsory licence was granted to address.

The patent owner is required to be paid remuneration, which will either be agreed with the licensee or ordered by the Federal Court taking into account the economic value to the eligible importing country of the licensed use of the invention.

The provision in the 2013 Bill that allowed for the Federal Court to order a further compulsory licence of any other patent (and the grant of a cross-licence) where the applicant would not be able to exploit the pharmaceutical product without infringing that other patent.  Instead, the applicant for a compulsory licence will need to make separate applications in respect of the two inventions (which may, however, be heard together) and there is no provision for the granting of a cross-licence.  These provisions had been criticised as being unclear and unnecessary.

Other amendments

The Bill also:                  

• extends jurisdiction in plant breeder's rights matters to the Federal Circuit Court (formerly the Federal Magistrates Court);
• provides for a single trans-Tasman patent attorney regime and single patent application and examination processes for Australia and New Zealand; and
• makes other minor technical and administrative changes to the various intellectual property statutes.