Guest Post: Worried about patent trolls? Think software patents are a ‘bad idea’?

Here is the second guest post from the IP lawyer team at Wrays – we hope you are enjoying the series – please do let us know if you have any questions or feedback in the comments below:



The ongoing discussion around patent trolls and the patentability of software is now a much hyped issue in the IT industry. The well-publicised Apple-versus-Samsung patent war has re-awakened an old debate about patent trolls preventing legitimate users from utilising patented inventions.

Amongst all this debate, what has not been considered are Australia's provisions for compulsory licenses? This mechanism is already in place to balance a patentee's incentives to innovate with the public's interest in accessing patented new technology.

In line with recent changes to Australia's intellectual property laws, the Productivity Commission has been commissioned to inquire into whether our provisions for the compulsory licensing of patents should be changed. The Productivity Commission is the Australian Government's independent research and advisory body on economic, social, and environmental issues affecting the welfare of Australians. 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. The findings of the Commission could significantly increase the public's access to inventions currently protected by patents.

Only a patent holder has the right to legally produce and sell their patented invention, import it and/or licence it to a commercial partner. However, there is no requirement for a patent holder to use the invention. Even if they do not use the invention, they can still prevent anyone else from using it.

In situations where a patentee is not properly making use of the patented invention, Australian law provides the public with the option of a "compulsory license". Any person may apply to the Federal Court for a compulsory license after three years from the date when the patent was granted. However, in order to attain a compulsory license, a series of tests must be met. The manner in which the tests are currently framed means that it is very difficult in a practical sense to convince the court that a compulsory license should be granted.

Importantly, compulsory licenses are not free. A licensee must still pay a licence fee. The parties must come to an agreement on how much the patentee should be paid or the court will decide this for them. Often this will be either equal to the market rate, or slightly less than the market rate.

A compulsory license is granted for the "public good", and only in specific circumstances. Moreover, a court can revoke the compulsory license where the circumstances which justified it cease to exist. A compulsory license cannot be exclusive. This means that the courts can grant more than one compulsory license for the same patented invention.

To our knowledge, no compulsory licenses have ever been granted in Australia. While attempts have been made, they were not successful. The Productivity Commission inquiry will be looking into whether this situation should be changed.

How does this affect you?

We expect the Productivity Commission to recommend that our compulsory licensing provisions be simplified.

If the compulsory licensing provisions are simplified, it may become much easier for IT start-ups to access patented IT inventions for a reasonable licence fee. This would reduce the ability of patent trolls to threaten small IT start-ups based on patents for inventions that are not being used in Australia.

If you are a patent holder, such changes could mean that you may need to ensure that you are commercialising and/or using the invention that you have patented in Australia.

If you feel strongly about this issue, you have an opportunity to provide your submissions to the Productivity Commission. Submissions can be made at any time up to 28 September 2012 ( If you are interested in making submissions and would like to discuss this area of law further, please feel free to contact Joe Seisdedos ( or Vicky Longshaw (

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