¹ The natural rights argument — that is whether small investors should have equal access to the patent system on essentially moral grounds or on the basis of their rights as a human being — raises larger and more complicated questions. From the perspective of prevailing custom and practice, economic rights are far more circumscribed than human rights. That is, there is a fairly low minimum level of rights accorded to individuals in the economic system on purely moral grounds or on the basis of natural rights. Individuals, impecunious or otherwise, do not have a natural right to get a bank loan, float a company on the share market, to operate in licensed professions and trades, to dig a hole anywhere they desire or build anything on their land etc. Whether these existing practices are desirable is of course a large issue. Hence, we avoid the question of whether a cheap and efficient patent enforcement system is desirable from a natural rights perspective or on the basis of inventors’ moral claims, and limit ourselves to the economic issues.

² Organisation for Economic Co-operation and Development ('OECD’), The Economic Impact of Counterfeiting and Piracy (2008)Google Scholar.

³ Australian Institute of Criminology, Intellectual Property Crime and Enforcement in Australia, Research and Public Policy Series No 94 (2008) .

⁴ Advisory Council on Industrial Property, Review of Enforcement of Industrial Property Rights (1999) <http://www.ipaustralia.gov.au/pdfs/general/acip_report.pdf> at 30 March 2010; Chris, Dent and Kimberlee, Weatherall, ‘Lawyers’ decisions in Australian patent dispute settlements: an empirical perspective’ (2006) 17 Australian Intellectual Property Journal 255Google Scholar; American Intellectual Property Law Association, Report of the Economic Survey 2007 (2007)Google Scholar.

⁵ For example, lawyers may be able to estimate the number of cases where a patentee comes to them having noticed copying, and the proportion where court proceedings are filed. If a sufficiently representative set of estimates can be obtained, this information could be combined with information about filed legal proceedings to get some sense of the amount of copying going on outside formal legal proceedings. There are difficulties, however, in framing such a study: for example, in identifying the appropriate sample of lawyers. If patent litigation specialists are surveyed, the data may not capture information about complaints from small businesses, which are likely to turn at least in the first instance to their patent attorney or general commercial lawyer rather than a patent litigation specialist.

⁶ A ‘back of the envelope’ calculation supports this hypothesis. Dent and Weatherall, above n 4 note that a majority of respondents to a survey of lawyers (78 per cent) responded that between 0 and 20 per cent of cases of copying that came to lawyers resulted in court proceedings being filed. This however was a small survey, and did not involve detailed review of lawyers’ files. The ‘filing rate’ for patent cases for the period 1995–2005 found by an earlier study was an average of 22 contentious proceedings filed per year in Australian Federal Courts, or 242 cases over the course of 11 years: Fiona, Rotstein and Kimberlee, Weatherall, ‘Filing and Settlement of Patent Disputes in the Federal Court 1995–2005’ (2007) 68 Intellectual Property Forum, 65Google Scholar. If that represents, say, 10 per cent of all cases notified to lawyers (which may be a high estimate or a low one, given that lawyers reported only within a range of 0-20 per cent), that would mean 2 420 cases of ‘copying’ notified to lawyers over that period. As will be seen, this number seems lower than the number we have found in this study.

⁷ See, eg, Rotstein and Weatherall, above n 6 for Australian figures. Many such studies have been undertaken in the United States: see, eg, Jean, Lanjouw and Mark, Schankerman, ‘Enforcement of Patent Rights in the United States’ in Wesley, Cohen and Stephen, Merrill (eds), Patents in the Knowledge-Based Economy (2003) 149Google Scholar; Glynn, Lunney, ‘Patent Law, The Federal Circuit, and the Supreme Court: A Quiet Revolution’ (2004) 11 Supreme Court Economic Review 1Google Scholar; James, Bessen and Michael, Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (2008)Google Scholar; Jay, Kesan and Gwendolyn, Ball, ‘How are Patent Cases Resolved? An Empirical Examination of the Adjudication and Settlement of Patent Disputes’ (2006) 84 Washington University Law Review 237Google Scholar; for a similar study in Germany see Katrin Cremers, Determinants of Patent Litigation in Germany, ZEW Discussion Paper No 04-72 (2004).

⁸ William, Kingston, Enforcing Small Firms’ Patent Rights (2000)Google Scholar.

⁹ Kegang, You and Seiichi, Katayama, ‘Intellectual Property Rights Protection and Imitation: An Empirical Examination of Japanese FDI in China’ (2005) 10 Pacific Economic Review 591Google Scholar.

¹⁰ Simon Rodwell et al, Study: Effects of Counterfeiting on EU SMEs and a Review of Various Public and Private IPR Enforcement Initiatives and Resources (2007).

¹¹ We thank a referee for pointing this out. Letters are more likely to be sent by the corporate sector than the public sector or individuals.

¹² The application was deemed Australian if the ‘country of origin’ or ‘country code’ of the applicant was Australia (the first names applicant had an Australian address). Further details of the population/survey method are provided in Appendix 1.

¹³ This is the major point of departure from other inventor surveys from around the world such as the PatVal-EU survey. See Raul González, ‘From the Lab to the Market: The Commercialization Strategy of Patented Inventions’ (Paper presented at the Academy of Management Conference, Atlanta, Georgia, 11-16 August 2006), and the special issue of Research Policy (2007) 36(8) for examples of applications of the PatVal-EU survey.

¹⁴ See Gonzalez and Research Policy (2007) 36(8), above n 13 for examples of applications of the PatVal-EU survey, which also involved inventors. It is also worth noting that surveys sent to businesses generally have a lower response rate than was obtained in this survey, because businesses, small businesses in particular, receive surveys on many issues, leading to some level of survey fatigue.

¹⁵ See Paolo, Giuri et al, ‘Inventors and Invention Processes in Europe: Results from the PatVal-EU Survey’ (2007) 36(8) Research Policy 1107Google Scholar, discussing the inventor-survey methodology and pilot surveys done in that project to support the view that inventors were a good source of information. Giuri et al conducted pilots in which they tested inventors’ confidence in answering various questions about their employer or the firms’ actions and motivations in relation to licensing and commercialisation more generally; finding, on the whole, that inventors were confident that they could answer the questions. While Giuri et al did not ask questions about enforcement, there is no reason to think that inventors are less well informed about enforcement than commercialisation decisions and issues relating, for example, to licensing decisions which were part of the Giuri et al study.

¹⁶ There were an estimated 38 003 Australian applications over the period 1986–2005. Of these however 17.6 per cent did not possess an inventor name, leaving 31 313 unique applications. When estimating population counts for Table 16, we multiple the numbers by 1.214.

¹⁷ More information on the population, sample and survey method is provided in Appendix 1.

¹⁸ A company is ‘large’ where it, or its highest Australian-located parent company, has a turnover greater than A$50m per annum. Otherwise the company is defined as a SME. Definitions of variables are found in Appendix 3.

¹⁹ Organisation status was determined by the name of the applicant.

²⁰ This concordance gives a smaller, more manageable set of 30 technology categories more clearly related to conventional industry classifications. Classification into an OST technology class depends on the main IPC classification of the patent application.

²¹ As noted in the Introduction, actual infringement, strictly speaking, can only be known once a court judgment has been rendered. It should be noted too that our survey asked about copying and responses to copying; the questions were drafted to avoid engaging in too much detail about technical legal matters.

²² Damages for patent infringement are calculated from the date that the complete specification is open to public inspection or the date of the infringing conduct, whichever is later: Patents Act 1990 (Cth) s 57(1). However, under s 123 of that Act, a court may refuse to award damages, or to make an order for an account of profits, in respect of an infringement of a patent if the defendant satisfies the court that, at the date of the infringement, the defendant was not aware, and had no reason to believe, that a patent for the invention existed. Thus it is worth sending a letter even prior to grant, notifying the alleged infringer that a patent is pending (and making them aware that they may be liable for damages even for the period prior to grant if the patent ends up being granted). Of course there is a risk involved in doing so: it may cause an alleged infringer to contemplate opposition to the patent grant under Chapter 5 of the Patents Act 1990 (Cth).

²³ Unpublished surveys by Intellectual Property Research Institute of Australia, at the University of Melbourne, have found that sizable minorities of academic researchers believe (falsely) that there is a research exemption under Australian patent law. John Walsh, Charlene Cho and Wesley Cohen, ‘View from the Bench: Patents and Material Transfers’ (2005) 309 Science 2002 found from a survey of 414 biotechnology public sector researchers that copying and infringement is commonly accepted within their research communities.

²⁴ Under current university rules and funding arrangements in Australia, it is common to ask university researchers to report, among their annual performance reporting, any patents obtained relating to their research; patents count as ‘outputs’ (like research papers and publications) for the purposes of performance and promotion of academic researchers.

²⁵ Indeed, it is possible that these attitudes may mean that public sector researchers do not even perceive certain acts as copying — as opposed to simply (appropriate) reuse of knowledge — when they would be seen as illegitimate copying by, say, an inventor working in a SME.

²⁶ See below Part III E, page 29 and accompanying fn 57.

²⁷ This would be consistent with the 1999 findings of the Advisory Council on Industrial Property inquiry into patent enforcement in Australia, suggesting that many management decisions regarding IP enforcement are ad hoc, with managers preferring to avoid or ignore enforcement where possible: Advisory Council on Industrial Property, above n 4. The Advisory Council on Industrial Property noted that around 7 per cent of industrial property owners believed that IP Australia monitored industrial property infringement and undertook enforcement action on behalf of the owner.

²⁸ Again, as noted in Part II, this table assumes that inventors are aware of the reasons why patent owners do not take action to enforce patents; this assumes, then, some discussion within the organization or with the inventor. In public presentations of these results, some lawyers have commented that inventors are not involved in decision–making about enforcement. We are assuming, however, at least some level of discussion within the organization, and a personal connection by the inventor to the invention. As noted in Part II, the fact that inventors are not a perfect source of information on these questions is consistent with them being a good, and even superior, source. It would seem likely that the results may be more reliable in the case of individual inventors and for patents held by SMEs, where the number of people involved is smaller, than for larger patent holders (and note that we had fewer responses from inventors within larger firms on this question). It may be worth noting, too, that we did not ask more detailed questions about the decision-making process: for example, we did not ask the inventors to place the reasons in an order of priority.

²⁹ For other evidence to this effect, see Giuri et al above n 15. In this inventor survey conducted in Europe, the researchers found, for example, that small firms use 80.2 per cent of their patents (of which they license out 26 per cent) and leave 18 per cent unused. By contrast, in large firms, 58.9 per cent of patents are used internally (Alfonso Gambardella, Paola Jiuri, and Myriam Mariani, Study on Evaluating the Knowledge Economy: What are Patents Actually Worth? The Value of Patents for Today's Economy and Society, (2006) Report the output of ETD/2004/IM/E3/77 conducted for the European Commission, Directorate-General for the Internal Market, 12) but less than 10 per cent are traded: and about 40 per cent are not exploited, more than half of which are blocking competitors: Giuri et al, above n 15.

³⁰ Australian law differs from that in for example the US, which presumes patents valid in litigation: 35 USC §282 (1994). For comments in the Australian context, see Advisory Council on Industrial Property, above n 4, 14–15. This report had a presumption of validity as its ‘core objective', on the basis that uncertainty about validity caused much of the complexity and cost of patent litigation, and was a barrier to enforcement: Advisory Council on Industrial Property, above n 4, 11. The Intellectual Property and Competition Review Committee ('IPCRC’), Review of Intellectual Property Legislation under the Competition Principles Agreement, Final Report (2000) 175–6 recommended against changing the legislation, on the basis that the onus would already be on the party challenging the validity of a patent.

³¹ As noted above, there would be difficulties in conducting such a survey: see above n 14, above n 15 and accompanying text.

³² Patents Act 1990 (Cth) s 128.

³³ It is also worth noting that another small set of inventors (eight of those who indicated that proceedings were not filed) indicated that they had reached the stage of drafting, but not filing proceedings in court. Note that our data are for the number of patents which were the subject of a filing. Litigation numbers differ as several patents may be involved in a given case. In the US there are 1.5 patents per case: James Bessen and Michael Meurer, ‘Lessons for Patent Policy from Empirical Research on Patent Litigation’ (Working Paper No 05–22, Boston University School of Law, Law and Economics Working Paper Series, 2005) 2.

³⁴ Advisory Council on Industrial Property, above n 4, 9.

³⁵ While an Australian patent cannot be the subject of overseas proceedings, the invention might be the subject of rights overseas. It was thought that entering into too much detail on these points with non-legally-trained inventors would lead to uncertainty and difficulty in completing the telephone survey.

³⁶ We are indebted to John Swinson for this point. An ‘opposition’ is an administrative proceeding within the patent office (ie IP Australia) in which a third party challenges the validity of a patent after it has been accepted by IP Australia but before it has been granted: Patents Act 1990 (Cth) Chapter 5. Oppositions are managed in an adversarial manner and often by lawyers, so could easily be perceived, by a non-lawyer inventor, as ‘litigation'.

³⁷ Kimberlee, Weatherall and Paul, Jensen, ‘An Empirical Investigation into Patent Enforcement in Australian Courts’ (2005) 33 Federal Law Review 239, 283Google Scholar. In the US, patent holders win slightly more than half of their cases: Bessen and Meurer, ‘Lessons for Patent Policy from Empirical Research on Patent Litigation', above n 33, 3, suggesting that these figures cannot be explained by positing that inventors were thinking of US, rather than local proceedings for infringement.

³⁸ Rotstein and Weatherall, above n 6. Bessen and Meurer report that only 1.9 per cent of federal cases in the US in year 2000 went to trial: Bessen and Meurer, ‘Lessons for Patent Policy from Empirical Research on Patent Litigation', above n 33, 3. This figure however may underestimate the numbers of cases resolved by the court in one way or another: in another study, Kesan and Ball have showed that many cases are ‘resolved’ after a preliminary ruling by a court (for example, a preliminary hearing on validity or interpretation, or a summary dismissal action perhaps relating to part of a claim). Kesan and Ball conclude that 6–9 per cent of cases are terminated through final rulings granting a motion for summary judgment, and that approximately 80 per cent of patent cases settle: Kesan and Ball, above n 7, 264.

³⁹ See above n 34 and accompanying text.

⁴⁰ Weatherall and Jensen, above n 37, 262, 265. It should be noted that this study considered cases where judgment was given between 1997 and 2003: the Federal Court has argued that cases have become more streamlined since that time, so the period may in fact be shorter: see Federal Court of Australia, Submission of the Federal Court of Australia to the Advisory Council on Intellectual Property on the Interim Report on Post-Grant Patent Enforcement Strategies (2009) <http://www.acip.gov.au/enforcesubsinterim.html> at 30 March 2010.

⁴¹ Rotstein and Weatherall, above n 6. It is worth noting too that ACIP has recently noted that the Federal Court provided, in the context of a review of post-grant patent enforcement, data to show that the percentage of patents cases finalised within 12 months has increased significantly in the last two years: ACIP, Post-Grant Patent Enforcement Strategies – Final Report (2010) 39.

⁴² For the law reform discussions on this issue, see above n 30. The government chose not to make any change in the subsequent amending bill: Patents Amendment Act 2001 (Cth), amending the Patents Act 1990 (Cth); for a discussion see Commonwealth Parliamentary Library, Patents Amendment Bill 2001, Bills Digest No 2001–02 (2001) 7.

⁴³ Weatherall and Jensen, above n 37, 275.

⁴⁴ George, Priest and Benjamin, Klein, ‘The Selection of Disputes for Litigation’ (1984) 13 Journal of Legal Studies 1Google Scholar.

⁴⁵ Rotstein and Weatherall, above n 6.

⁴⁶ Kesan and Ball, above n 7, 282 (Table 11).

⁴⁷ See the discussion of Table above.

⁴⁸ These characteristics are not comprehensive: there are others we could have looked at, such as the complexity of the patent or the number of claims. There are also factors which are no doubt relevant to decision-making on enforcement but which cannot be measured: the personality of people within the firm, for example. However, we have chosen to test what we saw as the most important measurable variables: the nature of the invention, grant status, ownership, technology, and value.

⁴⁹ The specific question was: Relative to the ‘state of the art’ at the time of the patent application, was the invention…(with the options)…an incremental improvement? A radical improvement? Unsure? The Radical variable was =1 if the inventor indicated ‘a radical improvement'; and =0 otherwise.

⁵⁰ The patent examination variables are defined as Grant (=1 if the patent application was granted; =0 refused or pending) and Refused (=1 if the patent application was refused; =0 granted or pending).

⁵¹ We classified the invention's applicant according to four organisational types: Large Company, SME, Public Research Organisation ('PRO’) and Individual. As organisational type is not mutually exclusive (several organisations may be party to one application), these variables are included separately into the regression. For each variable, the value was =1 if one of the parties to the application was of that organisational type; and =0 otherwise.

⁵² For each variable, the value was =1 if the invention was classified under that technology area; and =0 otherwise.

⁵³ If the applicant is planning to file the patent application in four or more countries, then it is cheaper to use the PCT route rather than the standard national route. Since there is likely to be a positive correlation between the number of countries an application is filed in and its economic value, we use the PCT variable as an indicator of underlying commercial value. For the PCT variable, the value was =1 if the application was PCT; and =0 otherwise. We also used mail-out survey information on whether or not a number of different commercialisation stages were attempted including: development (proof of concept, testing and validation, prototype, other), license, spin-off pre-manufacture (gathering market intelligence, validating commercial opportunity and trialling the manufacturing process, market launch); mass production and export. For each variable, the value was =1 if the activity was attempted; and =0 otherwise. To measure sales revenue, the inventor was asked to nominate one of 6 categories: 0<$100 000; $100 000 to $500 000; $500 000 to $1m; $1m to $2m; $2m to $10m or >$10m. The mid point of each range ($15m in the case of the last category) was used to construct a value.

⁵⁴ In a separate estimation, we found that whether or not an attempt was made to licence the invention was related to the probability of being aware of copying and sending a letter but not filing in court.

⁵⁵ Cremers, above n 7, 15, 25 (Table 4).

⁵⁶ Jean, Lanjouw and Mark, Schankerman, ‘Protecting Intellectual Property Rights: Are Small Firms Handicapped?’ (2004) 47 Journal of Law and Economics 45Google Scholar. The pattern of enforcement found here (in terms of sending letters) is closer to the German pattern (with a higher patent litigation rate for mechanical patents; and lower rates for pharmaceuticals and chemicals) than for the US (where drugs and biotechnology, inter alia, experienced higher rates). The kinds of patent disputes that occur in a jurisdiction are likely to be related to the nature of the industries operating in that country. It is perhaps not surprising that the US sees high rates of pharmaceutical patent litigation given that many pharmaceutical companies are based, or have significant operations in, the US. 8 of the top 15 pharmaceutical firms (by sales) in 2005 were based in the US: see Arthur Daemmrich, ‘Where is the Pharmacy to the World? International Regulatory Variation and Pharmaceutical Industry Location’ (Working Paper No 09–118, Harvard Business School, 2009) 4 <http://www.hbs.edu/research/pdf/09-118.pdf> at 30 March 2010.

⁵⁷ The importance of invention quality echoes the characteristics of patent litigation in the US and Germany, where the likelihood of litigation rises with the value of the invention or patent: Lanjouw and Schankerman, above n 56; Cremers, above n 7.

⁵⁸ As Intellectual Property Advisory Committee ('IPAC’) noted, an important issue in costs is proportionality: we expect more to be spent when more is at stake: IPAC, The Enforcement of Patent Rights (2003) 17. We note that policymakers are only able to address the issue of litigation costs in part: much depends on the behaviour of the parties: see generally Ian, Starr, ‘Great Britain', in André, Boujou (ed), Patent Infringement Litigation Costs: A Practical Worldwide Survey (1987) 75Google Scholar. The traditional ‘accusatorial’ litigation system in the UK, where litigation is led by the parties, which decide what issues are relevant, and what evidence should be investigated, is partly responsible for the high costs of patent litigation in the UK: David, Llewellyn and William, Cornish, ‘The Enforcement of Patents in the United Kingdom’ (2000) 31 International Review of Intellectual Property and Competition Law 627, 630Google Scholar; see also Research in Motion UK Ltd v Visto Corporation [2008] EWHC 819 (Pat) 15. In that case one side (Research in Motion) outspent the other by a factor of four or five.

⁵⁹ We acknowledge that there are many possible complicating factors here that could operate in particular cases. It is possible that patents hold a deterrent effect on copying/infringement, such that it is worthwhile obtaining a patent for its deterrent effect even if a firm is aware that it could not afford or would not pay to enforce the patent. That is, the firm may be acting rationally in choosing to pay a certain amount in the hope that it will reduce the chance of infringement. How frequently firms have been deterred from a particular course of development by the existence of a patent is not susceptible to simple measurement. Alternatively, a firm may hope to be approached for a license without ever having to actively enforce or write a letter first. Further, circumstances may have changed between when the patent was applied for and the time enforcement issues arise: an invention previously important to the firm may have become less so if development trajectories or commercial activities of the firm have changed. We cannot categorically say, on the basis of our survey, that these firms who chose not to enforce or even send a letter were acting irrationally when they applied for the patent. Nevertheless, these findings raise the question whether the firm was well-advised in seeking expensive legal rights that it did not subsequently take steps to enforce.

⁶⁰ Proposed by ACIP, Review of the Petty Patent System (1995) 56; also the IPCRC, Review of Intellectual Property Legislation under the Competition Principles Agreement, above n 30, 177–8. Similar proposals have been raised overseas: see for example the Gowers Committee, Gowers Review of Intellectual Property, Final Report (2006) 8 (Recommendation 44).

⁶¹ IPAC, Practice and Procedures for Enforcement of Industrial Property Rights in Australia (1992)Google Scholar.

⁶² Proposed by IPAC, ibid; ACIP, Post-Grant Patent Enforcement Strategies – Final Report, above n 41; see also the Gowers Review of Intellectual Property, above n 60, Recommendation 43; IPAC, The Enforcement of Patent Rights (2003) 30. The UK IPO offers a mediation service: Ministry of Justice, The Annual Pledge Report 2007/08: Monitoring the Effectiveness of the Government's Commitment to using Alternative Dispute Resolution (2009) 10.

⁶³ Proposed by Advisory Council on Industrial Property, above n 4.

⁶⁴ Proposed by the Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia (1984) 8 (Recommendation 34). But see the Australian Law Reform Commission, Gene Patenting and Human Health (2004) [9.101]–[9.103] (litigation insurance is a commercial matter); also Advisory Council on Industrial Property, above n 4, 27–28 (while a commercial matter, litigation insurance should be part of patent law information campaigns).

⁶⁵ The need for some mechanism for ‘umpires decisions’ (quick rulings not necessarily having legal force) was discussed both in ACIP's Review of the Petty Patent System, above n 60 and by the IPCRC, above n 60, but have foundered due to doubts about their constitutionality: see IPCRC, above n 61, 177; ACIP Review of the Petty Patent System, above n 61, 57–8. In the UK, the Patent Office has the power to issue ‘advisory opinions’ on both validity and infringement: Patents Act 1977 (UK) ss 74A, 74B. ACIP has recently proposed instead the creation of an IP Dispute Resolution Centre within IP Australia which would keep a register of experts for expert assessment of issues including validity: ACIP Post-Grant Patent Enforcement Strategies – Final Report, above n 41, Recommendation 2. There is also a proposal for the creation of a Patents Tribunal empowered to give non-binding determinations in private disputes: at Recommendation 3.

⁶⁶ It is of course possible that at least some of these inventors are uninterested in enforcement —for example, because they obtained a patent for its prestige value. Further, as noted above n 59, individual decisions not to enforce may be rational on a cost-benefit analysis. This does not detract from the broader policy issue, given the numbers involved.

⁶⁷ At present, the Federal Court has the power to transfer trade mark, design, or patent matters to the FMCA on request: Jurisdiction of the Federal Magistrates Court Legislation Amendment Act 2006 (Cth); Federal Court of Australia Act 1976 (Cth) s 32AB(8A). No transfers have yet occurred, no doubt due to professional scepticism. While it is not clear that the FMCA will continue to exist, given the recommendations of the Semple Review accepted by the Attorney-General, even under current proposals there will continue to be a lower division of the Federal Judiciary: see Attorney-General's Department, Future Governance Options for Federal Family Courts in Australia: Striking the Right Balance (2008); Attorney General Robert McClelland, ‘Rudd Government to reform Federal Courts’ (Press Release, 5 May 2009). At the time of writing, plans are on hold following the opposition from the profession and from the Liberal Opposition: Commonwealth, Parliamentary Debates, Senate, 13 May 2009, 2592–2594 (Senator George Brandis), and following the decision of the High Court in Lane v Morrison (2009) 239 CLR 230.

⁶⁸ IPRIA, Submission to the Advisory Council on Intellectual Property in Response to its Issues Paper: Post-Grant Patent Enforcement Strategies (2007).

⁶⁹ In 1989 a Patents County Court ('PCC’) was established with concurrent jurisdiction with the High Court Patents Court. Commentators assert that most cases are still filed with the High Court and that ‘[t]here is now little difference in the cost or speed of litigating in either the PCC or the Patents Court': Llewellyn and Cornish, above n 58, 629.

⁷⁰ Discussed in Justice Michael Kirby, ‘Hubris Contained: Why a Separate Australian Tax Court Should be Rejected', Speech delivered at the Challis Taxation Discussion Group, 3 August 2007, available at <http://www.hcourt.gov.au/speeches/kirbyj/kirbyj_3aug07.pdf> at 30 March 2010.

⁷¹ Recommended by ACIP, Should the Jurisdiction of the Federal Magistrates Service be Extended to Patent, Trade Mark and Design Matters (2004). The government chose in the end not to extend specific jurisdiction even in trade mark or design matters to the FMCA.

⁷² This view is expressed in a submission in relation to the Interim Report of ACIP, Post Grant Patent Enforcement: Interim Report (2009), available at <http://www.acip.gov.au/enforcesubsinterim.html>. There may be some basis for this view, given the UK experience: see above n 69.

⁷³ For example, Kirby, above n 70; Rochelle, C. Dreyfuss, ‘The Federal Circuit: A Continuing Experiment in Specialization’ (2004) 54 Case Western Reserve Law Review 769Google Scholar; Rochelle, C. Dreyfuss, ‘In Search of Institutional Identity: The Federal Circuit Comes of Age’ (2008) 23 Berkeley Technology Law Journal 787Google Scholar.

⁷⁴ We have surveyed all patent applicants in the period 1986–2005, in relation to events occurring up to the date of the survey in April 2007. This means that our responses do not correlate to any kind of ‘per year’ litigation rate.

⁷⁵ Approximately 22 contentious proceedings are filed in the Federal Court each year: Rotstein and Weatherall, above n 6.

⁷⁶ Based on settlement rates for patent litigation in the Federal Court: Rotstein and Weatherall, above n 6.

⁷⁷ During 2007–08, 84 173 matters overall were filed in the FMCA and 82 689 matters were finalised: Federal Magistrates Court Annual Report 2007–2008 (2008) 24. The overwhelming majority of these cases relate to family law. There are 53 Federal Magistrates: at 14.

⁷⁸ In theory, a judge with time on his or her hands could actually encourage people to bring their disputes in the confidence that they would be dealt with quickly, thus making the patent system and its enforcement more effective, and perhaps justifying the expense of the salary.

⁷⁹ Justice Kirby, above n 71 (on the importance of job satisfaction in attracting and retaining good jurists).

⁸⁰ In the Federal Court, patent matters go to a judge who is a member of the Patents panel, and who hence has a patent speciality: see Federal Court of Australia, Practice Note IP 1: Proceedings under the Patents Act 1990 (Cth) (2009). The FMCA since 2000 has not been conducive to this kind of appointment, because the overwhelming majority of its work is in family law. If the proposal to merge the FMCA into the Family Court and Federal Court, creating a lower division of the Federal Court with general jurisdiction were to occur, this might make possible the creation of lower court positions with a patent specialty and a broader commercial jurisdiction: see above n 67.

⁸¹ Federal Magistrates Act 1999 (Cth) s 9 and sch 1.

⁸² See generally Senate Legal and Constitutional Affairs Committee, Parliament of Australia Inquiry into Australia's Judicial System and the Role of Judges, Final Report (2009).

⁸³ Private practice would compromise judicial independence, disinterestedness and integrity, and public confidence in same, since the requirement of lawyers to act in the interests of clients might prove embarrassing to the impartial hearing and determination of cases: Grollo v Palmer (1995) 184 CLR 348, 364–7; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; see Federal Magistrates Act 1999 (Cth) sch 1 cl 4.

⁸⁴ A part-time appointment of someone with a young family, a person taking extended leave from private practice, an academic or a person otherwise employed in a law reform commission would be possible. Many current Federal Court Judges teach in universities or act on law reform bodies: see, eg, Federal Court of Australia: Annual Report 2007–2008 (2008) 3–6. But appointment of an academic would likely not satisfy the profession (and thus would not attract a sufficient caseload): Law Council of Australia: Business Law Section, Intellectual Property Committee, Submission of the Law Council of Australia to the Advisory Council on Intellectual Property in response to its Issues Paper: Post-Grant Patent Enforcement Strategies (2007). And appointment of younger candidates has significant implications since they cannot be removed or appointed for a limited term (Constitution, s 72; Waterside Workers Federation v J.W Alexander Ltd (1918) 25 CLR 434, 461, 487), and will accrue very expensive superannuation entitlements under current arrangements which assume more senior appointees.

⁸⁵ As happens currently in relation to appeals on interlocutory questions: Federal Court of Australia Act 1976 (Cth) s 24(1A).

⁸⁶ This would limit appeals in smaller claim cases while allowing the full panoply of appeal rights for cases where large sums are at stake: see, eg, Smith Kline & French Laboratories (Australia) Ltd and Others v Commonwealth of Australia and Others (1991) 103 ALR 117. There might be some difficulties where the key remedy sought is an injunction, but it is a valuable exercise to put a value on the litigation.

⁸⁷ Order 62, r 36A of the Federal Court Rules (Cth) already limits the costs recoverable in a trial by a third where a party is awarded judgment for less than $100 000. Admittedly the marginal costs of launching an appeal are a small part of the costs of litigation, so a rule directed only at the costs of the appeal would not be much of a disincentive.

⁸⁸ Courts are reluctant to impose the full costs of an appeal on a successful appellant, so any provision would have to be very clearly drafted: see Tamawood Ltd v Paans [2005] 2 Qd R 101, 113.

⁸⁹ See, eg, the Building and Construction Industry Payments Act 2004 (Qld) s 29.

⁹⁰ Federal Court Rules (Cth) O 52, r 17.

⁹¹ A party may obtain a stay if they show reason, which need not be exceptional or special: Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65-67; in patent cases a stay has been ordered where undertakings are given and it is shown that execution of the judgment would cause disruption to the infringer's business: Esco Corporation v PAC Mining Pty Ltd [2008] FCA 1018 (Unreported, Tamberlin J, 4 July 2008).

⁹² A presumption could be created by requiring a party to show ‘exceptional circumstances'. A rule prohibiting the granting of a stay would be inadvisable as it might cause injustice or render an appeal nugatory.

⁹³ ACIP, Post-Grant Patent Enforcement Strategies—Final Report, above n 41, 7 (Recommendation 3); see also above n 65 for further detail. ACIP's 2006 Report on post-grant enforcement strategies discussed the possibility of a part-time administrative patent tribunal to make decisions concerning technical matters in a patent infringement case: ACIP, Post-Grant Patent Enforcement Strategies—Issues Paper (2006) 17–19 This slightly roundabout structure was a result of the constitutional requirement discussed in Charles, Lawson, ‘Revisiting Merits Review of Patent Application, Grant and Validity Decisions under the Patents Act 1990 (Cth)’ (2007) 14 Australian Journal of Administrative Law 178, 192–3Google Scholar. The ACIP Final Report abandons the idea of having a Tribunal capable of making binding ‘decisions’ in favour of a tribunal with the power to make non-binding determinations and conduct binding arbitrations.

⁹⁴ Non-presidential members of the Administrative Appeals Tribunal may be appointed if they have 5 years experience ‘at a high level in industry, commerce, public administration, industrial relations, the practice of a profession or the service of a government or of an authority of a government'; hold a degree in ‘law, economics or public administration’ or another relevant field, or hold ‘special knowledge or skill’ in a relevant area: Administrative Appeals Tribunal Act 1975 (Cth) s 7(2).

⁹⁵ Section 71 of the Australian Constitution requires that the judicial power of the Commonwealth shall be exercised by the High Court, federal courts and courts invested with federal jurisdiction only: Nicholas v The Queen (1998) 193 CLR 173, 206 (Gaudron J). On the application of this rule to patent disputes, see Lawson, above n 93, 192–3; Chris, Dent, ‘Patent Opposition and the Constitution: Before or After?’ (2006) 17 Australian Intellectual Property Journal 217, 222–5Google Scholar.

⁹⁶ Dent, above n 96; see also Law Council of Australia, above n 85; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245. In some areas the High Court has been willing to allow a fair degree of latitude in establishing administrative tribunals with powers to make determinations subject to judicial review: see, eg, A-G (Cth) v Alinta Ltd (2008) 233 CLR 542 (concerning the Takeovers Panel). However, the Takeovers Panel makes decisions on the fairly broad questions of policy not usually within the purview of a court (for example, what constitutes ‘unacceptable circumstances’ in relation to a takeover under the Corporations Act 2001 (Cth) s 657A): this is not directly comparable to a finding of infringement of a patent.

⁹⁷ Cutting off appeal rights can tend to lead parties to reject a forum for dispute resolution. One example is the re-examination system in the US. Inter partes re-examination, when introduced in 1999, did not have any provision for a re-examination petitioner to appeal. This was generally acknowledged to act as a disincentive to use the system: there were no inter partes cases filed in 2000, only 1 in 2001 and 4 in 2002). The bar on appeals was removed effective November 2002: see Stephen Merrill, Richard Levin and Mark Myers, A Patent System for the 21^st Century (2004) 96. Numbers have climbed since.

⁹⁸ Jerome, Reichman, ‘Of Green Tulips and Legal Kudzu: Repackaging Rights in Subpatentable Innovation’ (2000) 53 Vanderbilt Law Review 1743Google Scholar; see also Pamela, Samuelson, Randall, Davis, Mitchell, Kapor, and Jerome, Reichman, ‘A Manifesto Concerning the Legal Protection of Computer Programs’ (1994) 94 Columbia Law Review 2308Google Scholar (similar suggestion differently labelled).

⁹⁹ There is also a question of how such a system would overlap with the innovation patent system. It would not seem to be an efficient use of government resources to support both a compensatory liability system and an innovation patent system aimed at, in essence, the same set of innovations and inventions.

¹⁰⁰ Another possibility is that patents are being granted more broadly than the innovators in fact need or want to use. From a policy perspective that is also undesirable, since the broader rights may be blocking developments by other parties.

¹⁰¹ Wesley Cohen, Richard Nelson and John Walsh, ‘Protecting their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (Or Not)', (Working Paper No W7552, National Bureau of Economic Research, 2000).

¹⁰² See generally above n 30.

¹⁰³ See generally Advisory Council on Industrial Property, above n 4, 16–17 (Recommendation 3).

¹⁰⁴ See also ACIP, Post-Grant Patent Enforcement Strategies – Final Report, above n 41, 47–50.

¹⁰⁵ Copyright Act 1968 (Cth) pt V, div 7; Trade Marks Act 1995 (Cth) pt 13.

¹⁰⁶ The patent owner has the exclusive right to exploit their invention: see Patents Act 1990 (Cth) s 13. ‘Exploit’ includes ‘import’ under the definition in Schedule 1 to the Patents Act 1990 (Cth).

¹⁰⁷ Advisory Council on Industrial Property, above n 4, 27. The Advisory Council on Industrial Property noted that ‘provisions such as these would be difficult to administer, and that further consideration would need to take place with customs officers and others on how the process would work in practice': at 27.

¹⁰⁸ ACIP, Post-Grant Patent Enforcement Strategies—Issues Paper, above n 94, 26–7.

¹⁰⁹ ACIP, Post-Grant Patent Enforcement Strategies—Final Report above n 41, 51–2.

¹¹⁰ International IP treaties also draw this distinction, requiring customs procedures for interception of infringements only in the case of ‘counterfeit trademark or pirated copyright goods': Agreement on Trade-Related Aspects of Intellectual Property Rights, opened for signature 15 April 1994, [1995] ATS 38 (entered into force 1 January 1995) art 51.

¹¹¹ We thank an anonymous referee for the latter observation.

¹¹² These concerns were raised in the submission of the Australian Customs Service in response to ACIP, Post-Grant Patent Enforcement Strategies—Issues Paper, above n 94: Australian Customs Service, Customs Submission: Advisory Council on Post-Grant Patent Enforcement Strategies (2007) <http://www.acip.gov.au/enforcesubs.html> at 30 March 2010.

¹¹³ As a result of Council Regulation (EC) No 1383/2003 of 22 July 2003 Concerning Customs Action Against Goods Suspected of Infringing Certain Intellectual Property Rights and the Measures to be Taken Against Goods Found to Have Infringed Such Rights [2003] OJ L 196/7. For an incorporation of these provisions into domestic law see the UK: Goods Infringing Intellectual Property Rights (Customs) Regulations 2004 (UK).

¹¹⁴ Council Regulation (EC) No 1383/2003 of 22 July 2003 Concerning Customs Action Against Goods Suspected of Infringing Certain Intellectual Property Rights and the Measures to be Taken Against Goods Found to Have Infringed Such Rights [2003] OJ L 196/7, 10 (art 5.5).

¹¹⁵ Nor, incidentally, are Customs authorities liable for failing to stop or detect shipments: Council Regulation (EC) No 1383/2003 of 22 July 2003 Concerning Customs Action Against Goods Suspected of Infringing Certain Intellectual Property Rights and the Measures to be Taken Against Goods Found to Have Infringed Such Rights [2003] OJ L 196/7, 13 (art 19.1).

¹¹⁶ The controversy mostly relates to transhipment — that is, the seizure of (mostly) drugs in transit (that is, not about to enter the European market but on their way to some other market, such as India) on the basis of patents in the transit (European) country. As to the legality of this, see Frederick, Abbott, ‘Seizure of Generic Pharmaceuticals in Transit Based on Allegations of Patent Infringement: A Threat to International Trade, Development and Public Welfare’ (2009) 1 World Intellectual Property Organization Journal 43Google Scholar.

¹¹⁷ 8413 applications did not have an inventor name and 37 did not have an address.

¹¹⁸ We exclude applications lodged between 1986 and 1988 as the high percentage of grants suggests that some non-granted applications are missing from the database.

¹¹⁹ However, this is partly due to the fact that recent applications have not yet been examined. For applications lodged between 1989 and 2000, the response rate is 12.6 per cent for non-grants and 18.6 per cent for granted applications.