The Effect of Section 79
89 In the absence of s 79, a patentee would have no right to bring a proceeding in respect of an act that occurred after the term of a patent had expired but before the term was extended ("the relevant period"). This is because such an act could not infringe the exclusive right to exploit the invention referred to in s 13 which exists only during the term of the patent. A patentee seeking relief in respect of an act which had occurred during the relevant period must instead rely on s 79. The primary judge referred to the gap in the patentee's rights to which we have referred as follows at [187]-[189]:
[187] Section 79 deals with the gap by creating a legal fiction. The fiction involves treating the extension as granted at the time the (infringing) acts were done when in fact, the acts must have occurred within the gap between expiry of the patent and the grant of the extension of the term. The rights which s 79 vests in the patentee under the legal fiction are expressed to be the same rights to start proceedings the patentee would have had if the extension had been granted when the act was done. As explained, for the fiction to work for the patentee, those rights (to start proceedings), to be the "same rights" the patentee would have had, necessarily carry with them the patentee's exclusive s 13 rights to exploit the invention. That is, the s 79 fiction can only function at all if part of the fiction is that during the period covered by s 79, when the extension of term is granted, the patentee has the s 13 exclusive rights to exploit the invention as if it were "during the term of the patent", when in fact that period is never "during the term of the patent". And because, like ss 13 and 78, s 79 has effect (albeit a future contingent effect) from the moment a patent is granted, it must be the case that the suite of rights which a patentee has from the date of grant of a patent are the exclusive rights provided for by ss 13, 78 and 79 (and s 120). To operate as a coherent scheme, it is that suite of rights which a patentee may assign to an exclusive licensee, including the exclusive rights as qualified by s 78 and as provided for by the legal fiction in s 79.
[188] These considerations mean that s 79 is an ambiguous provision for at least two reasons. One, it does not refer to the patentee having the same exclusive rights to exploit the invention as if the extension had been granted at the time the act was done, even though this must be the case. Two, it refers instead to the patentee having the "same rights" to start proceedings as it would have had if the extension had been granted at the time the act was done when, on my view as to how the section must be understood (as giving the patentee the same right to exploit the invention), s 120 would simply operate according to its terms.
[189] The one thing that is clear is that, given the ambiguity of s 79, the interpretation which best gives effect to the purpose or objects of the Patents Act is to be preferred and regard may be had to extrinsic material to assist in the task of giving meaning to the provision. In particular, this is not a case where, like Actavis v Orion, the statutory provision is clear and, in terms, does not permit a person other than a patentee or the exclusive licensee to start proceedings.
90 After referring to a paragraph in the Explanatory Memorandum to the Patents Bill 1990 (Cth) which she did not find of much assistance, her Honour continued at [191]-[193]:
[191] To my mind, the objects or purposes of the Patents Act are best given effect by reading s 79 as if it vests in the patentee the same exclusive rights it would have had to exploit the invention under s 13 during the period covered by s 79 as if the extension had been granted at the time when the (infringing) acts were done. On this basis, on an assignment of the s 13 rights to an exclusive licensee, the rights assigned are subject to and include the future contingent effects of ss 78 and 79. The words "the patentee has … the same rights to start proceedings …" in s 79 would not be read as if they operated to exclude an exclusive licensee from starting proceedings. They would be read as rights the patentee has from the grant of the patent (as with ss 13, 78 and 120) which are capable of assignment to an exclusive licensee so that for the patentee in fact to have the "same rights to start proceedings", both the patentee and the exclusive licensee must have the rights under s 120. To read the words as if they were intended to exclude an exclusive licensee from starting proceedings under s 120 for the period covered by s 79 is to ensure that the patentee does not have the "same rights" for which s 79 provides because, under the fiction created by s 79, those rights include assignment and, if assigned to an exclusive licensee, the rights under s 120.
[192] Sandoz's arguments to the contrary would result in a scheme which is unworkable. Section 79 cannot be read literally as to do so means the patentee has no exclusive rights to protect by starting proceedings for infringement in the period which s 79 covers. So the "same rights to start proceedings" cannot be given its literal meaning. It must mean (also or instead) that the patentee has the same exclusive rights under s 13 it would have had if the extension had been granted at the earlier time. Not only would s 79 not work if s 79 is given its literal meaning, s 78 also would not work because the period covered by s 79 is not "during the term" of the patent and thus the confining effect of s 78 would not operate during the period covered by s 79. So, even for the patentee and leaving aside any consideration of an exclusive licensee, s 79 cannot be given its literal meaning. For these reasons, contrary to the submissions for Sandoz, there is no "logical sense in the proposition that only the patentee may sue during the period provided for in s 79(d)-(e) because during that period the 'patentee' has no patent in force and therefore no exclusive rights under s 13 over which it could grant an exclusive licence".
[193] The best way to give effect to the scheme of the Patents Act for extensions of term of patents is to construe ss 78 and 79 in the same manner. For the reasons given above, the rights of the patentee which are confined under s 78 necessarily, from the grant of the patent, are also so confined so that the exclusive licensee can never get a greater right and takes rights subject to s 78. And the rights of the patentee under s 79, in my view, must be understood as contingent rights that existed from the moment of grant of the patent, so that the exclusive licensee takes those rights as well. Otherwise, looked at from the time of grant of the patent when the entire suite of rights exists and is assignable, the patentee would not have the "same rights to start proceedings" as it would have had as provided for in s 79. To be the "same rights to start proceedings" the patentee must be able to create an exclusive licensee who can also start proceedings under s 120 including for the period of an extension. The object or purpose of s 79 being to fill the gap between the expiry of the patent and the grant of the extension by giving rights as if the extension had been granted at the earlier time is best achieved by a construction which results in the same position for the patentee during the s 79 period. The construction of Sandoz does not achieve that object or purpose.
91 The primary judge concluded that an exclusive licensee has the right to start proceedings in respect of an act done during the relevant period. In essence, her Honour reasoned that s 79 necessarily expanded the scope of the exclusive rights of the patentee to exploit the invention and to authorise another person to exploit the invention during the term of the patent. Her Honour considered that unless s 79 extended the scope of the patentee's exclusive rights, an action for infringement based on an act during the relevant period would necessarily fail because there never could be any infringement of the patentee's exclusive rights during the relevant period.
92 Her Honour considered that the patentee's exclusive rights, as enlarged by s 79, include the right to start proceedings under s 120, and that those rights are capable of assignment to an exclusive licensee. If, in accordance with the express terms of s 79, the patentee has "the same rights to start proceedings" during the relevant period then the patentee must be capable of creating an exclusive licence which also gives the exclusive licensee the right to start proceedings under s 120 in respect of acts done during the relevant period.
93 Sandoz submitted that, in the circumstances of this case, the only source of any right to commence proceedings under the Act was s 79, and that the primary judge erred in finding that s 79 conferred any such right on an exclusive licensee. Sandoz submitted that the language of s 79 was unambiguous in this respect and that it only allowed the patentee to start a proceeding in respect of an act done during the relevant period.
94 Sandoz challenged the correctness of the primary judge's reasoning on the basis that her Honour did not identify any true ambiguity in the language of s 79 and was instead founded on what she perceived to be a need to arrive at an interpretation of the relevant provisions which allowed the patentee to assign the right to start proceedings under s 79 to an exclusive licensee, something that she regarded as essential to the maintenance of a coherent statutory scheme. Sandoz further submitted that her Honour's reliance on the concept of assignment was misplaced because an exclusive licensee under the Act is not a person to whom any rights must have been assigned.
95 Lundbeck's submissions reflected the same approach to the construction question that was taken by the primary judge. Lundbeck submitted that under s 120, the patentee or exclusive licensee may start proceedings for infringement of the exclusive rights created by s 13. It submitted that an exclusive licensee has the "right to start proceedings through the patentee" and that the right to grant an exclusive licence under s 13 which permits the exclusive licensee to commence proceedings is one of the patentee's "rights to start proceedings". Lundbeck submitted that because s 79 is a substantive provision which has the effect that where an extension of term is granted after expiry, the patentee's rights under the patent backdate to the date of expiry, the exclusive rights of the patentee under s 13 must also extend to the period commencing after expiry and ending when the extension is granted. According to Lundbeck's written submissions:
The effect of the regime is that where an exclusive licensee has the benefit of an exclusive licence of the patentee's rights, the extension of the duration of the patentee's rights flows on via the exclusive licence to the exclusive licensee … As a consequence of the substantive right granted by s 120, the exclusive licensee has the right to sue for infringement during the relevant period pursuant to s 120. If the exclusive licensee is party to proceedings bought by the patentee, the exclusive licensee may enforce its rights.
96 In its oral submissions Lundbeck also referred to s 57 of the Act which relevantly provides:
57 Effect of publication of complete specification
(1) After a complete specification relating to an application for a standard patent has become open to public inspection and until a patent is granted on the application, the applicant has the same rights as he or she would have had if a patent for the invention had been granted on the day when the specification became open to public inspection.
(3) Subsection (1) does not give the applicant a right to start proceedings in respect of the doing of an act unless:
(a) a patent is granted on the application; and
(b) the act would, if done after the grant of the patent, have constituted an infringement of a claim of the specification.
97 Lundbeck pointed to s 57 as another example of a situation in which an exclusive licensee may be entitled to commence proceedings in respect of acts that were done at a time when the patent was not in force, ie. because it had not been granted at the time the relevant act was done. The fact that s 57 was expressed to confer this expanded right on the patent applicant (there being no mention of an exclusive licensee in the section) was said to support the conclusion that s 79 allows the exclusive licensee to commence infringement proceedings in respect of acts done during the relevant period.
98 We note at the outset that the only acts of infringement that were the subject of the infringement proceeding brought against Sandoz were acts that took place after the Patent had expired and before the extension of the term was granted. It follows that any entitlement that Lundbeck Australia had to bring its infringement proceeding against Sandoz depended on the operation of s 79.
99 It is necessary to distinguish between the exclusive rights granted to the patentee under s 13 from the right to commence infringement proceedings. While s 13 defines the exclusive rights of the patentee, it does not confer on the patentee or an exclusive licensee a right to commence an infringement proceeding. Section 120 is the source of both a patentee's and an exclusive licensee's right to commence such a proceeding.
100 Provided that the relevant licence agreement creates a true "exclusive licence" then the exclusive licensee will have a statutory right to commence infringement proceedings under s 120 regardless of what the licence agreement has to say. Of course, the licence agreement may, as between the parties, impose contractual restrictions on the right of the exclusive licensee to commence an infringement proceeding. But the licence agreement is not the source of the exclusive licensee's right to sue except in so far as it confers the right that is necessary to make the licensee an exclusive licensee.
101 As we have mentioned, Lundbeck referred in its submissions to the right of an exclusive licensee to "start proceedings through the patentee" suggesting, as we understood the submission, that the exclusive licensee's right to commence proceedings was somehow derived from the patentee's own right to commence proceedings. However, the exclusive licensee's right to bring proceedings does not involve it commencing proceedings through the patentee. When an exclusive licensee commences a proceeding for patent infringement it does not do so in the name or right of the patentee.
102 At this point it is useful to refer to some well-established principles of statutory construction. As the plurality (Hayne, Heydon, Crennan and Kiefel JJ) stated in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47]:
[47] This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
(footnotes omitted)
103 In Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 the High Court said at 519 [39]:
[39] … The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.
(footnote omitted)
See also SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at 368 [14] per Kiefel CJ, Nettle and Gordon JJ, and 374 [37] per Gageler J.
104 We do not think s 57 or s 78 of the Act assists Lundbeck. Section 78 makes clear that, during the term of an extension, the exclusive rights of the patentee are not infringed by a person engaging in certain acts of exploitation. It has nothing to say about who may commence proceedings for patent infringement during the extended term. As for s 57, it confers on the patent applicant the right to sue in respect of acts done after the complete specification became open for public inspection but before any patent was granted subject to certain provisos. It does not purport to confer any right on any person other than the patent applicant consequent upon publication of the complete specification.
105 In the absence of s 79, the patentee would have no right to commence proceedings in relation to an act done during the relevant period because such an act could not infringe the patentee's exclusive rights. In that respect, we agree with the primary judge that s 79 enlarges the scope of the patentee's rights in that it implicitly deems an act done at a time when the patent had expired but had not been extended to be an act done after the patent was extended. While that explains why an act of the kind to which s 79 is directed may constitute an infringement of the patentee's exclusive rights, it does not explain why the exclusive licensee should also be taken to enjoy the same right to commence proceedings in the circumstances in which s 79 applies.
106 As we have explained, the primary judge's interpretation of s 79, and its relationship to s 13 and s 120, was influenced by a perceived need to adopt an interpretation of those provisions which best gives effect to the purposes or objects of the Act. Her Honour was of the view that those purposes or objects were best given effect by interpreting s 79 so as to create a "coherent scheme" that would allow an exclusive licensee to commence a proceeding in relation to an act done during the relevant period.
107 It is by no means clear to us that the purposes or objects of the Act justify an interpretation of s 79 that is not supported by the ordinary meaning of the statutory text which, by its terms, does not confer on an exclusive licensee any right to commence proceedings in respect of an act done during the relevant period.
108 One matter that featured prominently in Lundbeck's submissions was what it said would be the anomalous result of holding that a patentee could bring proceedings in respect of acts done during the relevant period, but that an exclusive licensee could not. Lundbeck submitted that there was no discernible reason why the legislature would not want to extend this same right to an exclusive licensee in the circumstances at which s 79 was directed.
109 We do not accept that submission. In the case of an expired patent, a patentee is still the patentee of the patent and, as Lundbeck has demonstrated, has the right to apply for an extension of the time in which to apply for an extension of the term of a patent that has previously expired. But the question whether a person remains an exclusive licensee of a patent after it has expired can be more problematic. If an exclusive licence is expressed to operate for the term of the patent then it would, subject to any term to the contrary, cease to do so once the patent expired: cf. s 145 of the Act which applies despite anything to the contrary in the licence agreement. The potential uncertainty surrounding the rights of an exclusive licensee during the relevant period may explain why the legislature referred only to the patentee in s 79. Another possibility is that the legislature considered that the right to commence proceedings in respect of an act done during the relevant period should be confined to the patentee because it is only the patentee who has the right to apply for an extension of the term of the patent, and to avoid the possibility of an exclusive licensee asserting a right to commence proceedings (contingent on an extension being granted) in circumstances where only the patentee has the right to apply for an extension of the term.
110 We do not suggest that either of the possibilities to which we have referred necessarily explain why s 79 refers to the patentee but not an exclusive licensee. We refer to them only for the purpose of demonstrating that there may be other reasons apart from infelicitous drafting that explain why s 79 (unlike s 120) refers to the patentee but not an exclusive licensee. Ultimately, we do not think the proper construction of s 79, or its relationship to s 13 or s 120, is assisted by a consideration of any general legislative object or purpose beyond acknowledging that the purpose of s 79 is to allow the patentee to commence infringement proceedings in circumstances where it could not otherwise do so. In the result, we consider that s 79 should be interpreted in accordance with its plain language which means that it is only the patentee that may commence proceedings in respect of acts done during the relevant period.