Australia: Being litigation ready: Getting Australian patent ownership and licensing right

Last Updated: 21 November 2016
Article by Duncan Longstaff and Katrina Crooks

Ownership and licensing arrangements relating to an Australian patent can have significant implications in infringement and revocation proceedings. Recent decisions delivered by the Federal Court of Australia have highlighted the need for patentees to consider carefully and formalise their chain of title and exclusive licensing arrangements, or else risk losing their patents and/or the markets they protect.

There are many commercial, legal and regulatory factors which inform and influence patent ownership and licensing arrangements. Often an Australian patent will be owned by a foreign company which does not itself exploit the invention in Australia, and instead licenses a related company or a third party to do so. The foreign patentee may be the parent company, or a related IP holding company which licenses the patent family globally, for administrative efficiency and/or for tax or other financial reasons. The foreign patentee may also be the company which developed the invention and then granted licences to a larger commercialisation partner with global distribution capabilities. In any of these situations, the ownership and licensing arrangements relating to an Australian patent are often part of global agreements which are not crafted or implemented with the idiosyncrasies of Australian patent or contract law in mind. Recent statutory amendments provide Australian patentees with a greater opportunity to correct the formal ownership of a patent post-grant. However recent cases have emphasised the importance of correcting ownership and licensing issues before infringement proceedings are commenced.

Standing to sue for infringement

An Australian patent can be enforced against an alleged infringer by either "the patentee" or "an exclusive licensee", as recorded on the Register of Patents.1 The Register will record the first owner of a patent as the person named in the Notice of Entitlement, and will only record new patentees and any exclusive licensees, non-exclusive licensees and other interests (eg, mortgagors) upon provision of proof to the satisfaction of the Commissioner2 – typically an agreement or deed.

Patentees and Unregistered owners

An Australian patent is personal property which can be assigned.3 An employer will automatically be entitled to apply for and be granted an Australian patent where the invention was created by its employee during the course of employment.4 Otherwise, patent assignments are only legally effective if they are in writing. Patent assignments also will not provide standing to sue unless they are recorded on the Register.

Accordingly, a person who has provided good consideration to "own" an Australian patent will have no standing to sue for infringement if the assignment was not in writing or if it has not been recorded on the Register as the patentee. Such an "owner" will instead be limited to applying to the Commissioner to be entered on the Register as patentee and/or applying to a court for equitable orders requiring the registered patentee to pass through proceeds of infringement proceedings or take other steps. Where parties take steps to rectify the formal ownership of an Australian patent, causes of action for past infringements must be explicitly assigned in addition to the patent itself. However even if the right to take action for such past infringements is properly assigned, the associated damages will be assessed by reference to the loss suffered by the person who was the legal owner and registered patentee at time of infringement – even though the subsequent owner may have been the one commercially exploiting the invention.5

A registered patentee who commences infringement proceedings, but is found by the Court to lack entitlement, can also face serious consequences. An Australian patent can be revoked by a court on the ground that the patentee is not entitled to the patent.6 Prior to 15 April 2013, where a patent was granted to a person who was not at the time of grant entitled to it, the patent was incurably invalid.7 It is now possible for the chain of title to be corrected and updated at any time before or after the grant of the patent,8 including after infringement or revocation proceedings have commenced.9 However if done during infringement/revocation proceedings, the Court may still exercise its discretion to revoke the patent. Revocation of an asserted patent not only defeats all infringement claims but can have significant financial impacts such as paying the litigation costs of the alleged infringer and potential liability for claims under any "usual undertaking"10 given by the patentee as a condition of obtaining an interlocutory injunction earlier in the proceeding.

Exclusive licensees

The recent decision of the Full Court of the Federal Court of Australia in Bristol-Myers Squibb Company v Apotex Pty Ltd [2015] FCAFC 2 (23 January 2015) confirmed that, to qualify as an exclusive licensee, a licensee must be conferred a licence to all forms of "exploitation" of the claimed invention throughout Australia, to the exclusion of the patentee and all other persons. The statutory definition of "exploit" includes making, hiring, selling or otherwise disposing of a patented product or product of a patented process or method, or using a patented process or method.11 A licence will not be exclusive if the patentee reserves any aspect of "exploitation" to itself, such as the right to manufacture the claimed product, or if the scope of the licence is somehow qualified in a way that permits the patentee to continue some form of exploitation. In the Bristol-Myers Squibb case, the reservation by the patentee of the right to manufacture the patented products rendered the licence non-exclusive, notwithstanding its recordal on the Register as exclusive licensee. The licensee was held not to have any standing to sue for infringement.

By contrast, in the subsequent decision of the Full Court of the Federal Court of Australia in Actavis Pty Ltd v Orion Corporation [2016] FCAFC 121 (9 September 2016), a licence was upheld as satisfying the requirements of exclusivity notwithstanding an undertaking by the exclusive licensee only to procure the patented products from the patentee or a party authorised by the patentee. The licence itself contained no reservation of rights to the patentee, and the undertaking to purchase patented product exclusively from the patentee or a party authorised by the patentee was deemed a separate promise (within the same agreement). Crucially, this procurement promise did not restrict the exclusive licensee's rights to manufacture the patented products itself and did not positively require the exclusive licensee to procure the patented products from the patentee or a party authorised by it. It is also important to note that, even though the exclusive licence agreement included a recital with an apparent qualification that the exclusive licence was "in relation to the Products", the Full Court did not consider it appropriate to read down the operative licence clause which did not expressly have that qualification.


The Full Court of the Federal Court of Australia commented (without having to decide) in the Actavis case that the exclusive licensee took the proper course in not arguing that its Australian subsidiary, which it granted an exclusive sub-licence, was an exclusive licensee. The statutory definition of "exclusive licensee" is worded ambiguously and in our view it is arguable that an exclusive sub-licensee could be considered the relevant exclusive licensee of an Australian patent. Nevertheless, at present any exclusive sub-licensee risks having its standing to sue for infringement successfully challenged by the respondent.

Prospects of obtaining an interlocutory injunction

Where a patentee and/or its exclusive licensee commence infringement proceedings, often they will at an early stage seek an interlocutory injunction to restrain the allegedly infringing conduct until final determination of the matter at trial. The court will conduct a preliminary assessment of competing cases of infringement and validity, and will also assess the "balance of convenience" with particular reference to the likely irreparable harm which each party might suffer if injunctive orders are made or not.12 A loss of standing for either a patentee or an exclusive licensee will mean that its potential harm will no longer be a major factor in assessing the balance of convenience. This can be critical where the party losing standing is the exclusive licensee which conducts the business through which the invention is commercially exploited in Australia, while the patentee has no operations of its own in Australia.

Having an exclusive licence document which unequivocally proves the Australian company commercially exploiting the invention is the exclusive licensee of the relevant Australian patents, via a direct agreement with the registered patentee, will assist in recording the exclusive licence on the Register of Patents and quelling arguments as to the standing of the company likely to suffer the most substantial and irreparable harm from the infringing conduct.

Implications for damages and permanent injunctions

Loss of standing of a patentee or an exclusive licensee can also have significant consequences for the form and assessment of final relief where an Australian patent is upheld as valid and infringed. If a patentee loses standing, its exclusive licensee necessarily does too, rendering its entire case incompetent and likely exposing both parties to costs consequences. Loss of standing for an exclusive licensee which commercially exploits the patented invention in Australia can also drastically reduce the infringer's exposure, particularly where the patentee has no Australian business and has played no active part in the litigation. Damages may be nominal where the exclusive licensee's losses are no longer in issue and the patentee cannot establish that it suffers losses as a result of the exclusive licensee's losses. An infringer may also be in a better position to resist the imposition of a permanent injunction where only the business of a non-party licensee will be affected by the infringing conduct continuing during the remainder of the patent term.


1 Patents Act 1990 (Cth), section 120(1).

2 Patents Act 1990 (Cth), section 187; Patents Regulations 1991 (Cth), regulation 19.1.

3 Patents Act 1990 (Cth), sections 13(1) and 14(2).

4 University of Western Australia v Gray (No 20) (includes corrigendum dated 29 April 2008 and 22 April 2008) [2008] FCA 498 (17 April 2008); Patents Act 1990 (Cth), section 15(1).

5 Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited [2012] FCA 779 (24 July 2012); affirmed in Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62 (14 June 2013).

6 Patents Act 1990 (Cth), section 138(4).

7 Stack and Another v Davies Shephard Pty Ltd and Another (2001) 108 FCR 422 at 435 [34] per Whitlam, Sundberg and Dowsett JJ; University of British Columbia v Conor Medsystems, Inc (2006) 155 FCR 391; Patents Act 1990 (Cth), sections 15 and 138(3)(a).

8 Patents Act 1990 (Cth), sections 22A and 138(4), introduced by the Raising the Bar Act 2012 (Cth).

9 Patents Act 1990 (Cth), sections 34 and 192.

10 Federal Court of Australia, Practice Note CM 14 – Usual Undertaking as to damages, available at

11 Patents Act 1990 (Cth), Schedule 1 – Dictionary.

12 Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156 (30 November 2011), applying Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shelston IP ranked one of Australia's leading Intellectual Property firms in 2015.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Duncan Longstaff
Katrina Crooks
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions