INNsight article by Wayne Condon

It is not unusual for patents to be in force in Australia that either do not have a direct foreign equivalent (in the sense of the same breadth of scope) or which have a later expiry date than in many other jurisdictions.  This gives rise to an important issue for generic companies wishing to import into Australia a product manufactured overseas using an Australian patented process or method.

The Australian Patents Act 1990 does not specifically define conduct which amounts to patent infringement, however, it does set out the exclusive rights of exploitation given to a patentee which include, where the patented invention is a method or process, the right to import into Australia a product “resulting from” the use of that method or process.  It is not clear whether those words are intended to restrict the importation of products “directly” obtained by use of the patented method or process or whether they are intended to have wider application.  Certainly, the wording of the Australian Patents Act in this regard differs, for example, from the 1977 UK Patents Act which refers, in these circumstances, to a product obtained “directly” by means of a patented process.

In the US process patent owners may exclude importation into the US of products manufactured outside that country by a process patented in the US.  However, if the imported product is “materially changed” by subsequent processes or the process relates to a “trivial or non-essential component” of the imported product there is no infringement.

It is immediately apparent that the use in the Australian Patents Act of the terminology “resulting from” gives a quite different emphasis to the legislation in the UK and the US.  It is distinctly arguable, although by no means judicially settled, that a product which comes about, whether directly or indirectly, from the use of a process patented in Australia, which is then imported into that country infringes the process patent.  It is even arguable that an infringement of the process patent might be established where there were subsequent process steps undertaken in order to produce a finished product.

Is there any basis for reading the words “resulting from” so as to include a limitation that what is intended is “resulting directly from”?

Perhaps a clue is offered by earlier UK jurisprudence predating the enactment of the 1977 UK Patents Act.  In the Saccharin  case the patent in issue claimed a process for the production of an intermediate chemical substance that was subjected to further chemical manipulation in order to produce the artificial sweetener saccharin.  The finished saccharin product was then imported into the United Kingdom.  The Court held that:

“By the sale of saccharin, in the course of the production of which the patented process is used, the patentee is deprived of some part of the whole profit and advantage of the invention, and the importer is indirectly making use of the invention.”

That so-called “Saccharin Doctrine” was affirmed in the later Beecham  case but was restricted by the gloss that:

”…for infringement the process must have played more than an unimportant or trifling part in the manufacture abroad of the product, each case depending on its own merits.”

Although there has been no judicial consideration of this issue, yet, in Australia the answer may ultimately simply be a question of fact and degree.  A court in Australia, faced with a situation in which the exploitation of an Australian patented process has occurred overseas, but where that process has only played a minor or incidental role in the ultimate production of a finished product, is likely to strive to conclude that infringement is not made out.

Nevertheless, it must remain a potential concern that the words “resulting from” are at least capable of very broad interpretation.  This concern may be exacerbated when one considers that an infringement case crafted around these words could form the basis upon which an Australian patentee may seek a preliminary injunction to prevent the importation into Australia of a product manufactured overseas according to an Australian patented process or method.  Given the current willingness of the Australian Federal Court to grant preliminary injunctive relief in pharmaceutical patent cases an infringement case based on such an argument may well prevail at the interlocutory stage despite the ambiguity of the “resulting from” wording.

It remains to be seen how Australian courts will deal with what is likely to become an increasingly important practical issue given the increasing number of APIs manufactured in countries such as India, China and the Eastern European countries.   When the issue is judicially considered it is to be hoped that the courts will look to the jurisprudence in the EU, the UK and the US, and take a balanced approach to the resolution of this important issue.