Compulsory licensing could disarm patent trolls

Patents have been getting a lot of media attention lately, with the recent gene patent debate and the Apple-versus-Samsung patent war polarising public opinion.

There are those who think inventions should not be owned by anyone and the Australian public should be entitled to use them. Then there are those who believe patents are essential to get investors to risk investing in new technologies developed here in Australia.

Amongst all this debate, what has not been considered are Australia's provisions for compulsory licences.

This mechanism was put in place by law makers years ago to balance the need for incentives to innovate with the public's need to access patented technology such as medicines.

In Australia, when the patent holder is not properly making use of the patented invention, the Federal Court can grant a compulsory licence authorising the use of the patented invention.

Any person may apply to the Federal Court for a compulsory licence after three years from the date when the patent was granted.

While compulsory licenses can be granted in theory, in practice they have been very difficult to obtain.

In an effort to address this practical difficulty, an inquiry by the Productivity Commission has been commissioned into whether our provisions for compulsory licensing of patents should be changed.

Many expect the Productivity Commission to use this opportunity to suggest a middle ground between incentives to innovate and the public's access to technology.

Helping IT start-ups

In the software industry, IT start-ups are justifiably worried about patent trolls. Patent trolls are patent holders who do not use the inventions covered by their patents. Instead, they use their patents as leverage for financial gain by threatening potential infringers in the market with litigation.

This means that in developing and using their new software, a small IT start-up could risk infringing any number of patents without even knowing it.

The very real threat of patent litigation can sometimes be enough to derail the commercialisation plans of small IT start-ups.

Many feel patent trolls misuse their patent rights for financial gain in an anti-competitive way.

In response, there have been calls from the IT industry to prevent the granting of patents for software and IT technologies.

However, IT start-ups also need patents in order to obtain investment. In fact, often the only asset an IT start-up company can offer an investor as security is a patent.

Abolishing software patents to provide protection against patent trolls cannot be the answer, but perhaps compulsory licences can.

If IT start-ups gained access to inventions that are not used in Australia through a compulsory licence, this could reduce the ability of patent trolls to threaten small IT start-ups.

Read on for the compulsory license application process and the success rate of local applicants.