Standing on the Edge – What Type of “Exclusive Licensees” Should be Able to Initiate Patent Infringement Actions?

13 Nov 2017

In patent laws around the world, exclusive licensees often have standing to initiate infringement actions if the relevant patentee(s) is also added to the suit. Australian patent legislation specifies that exclusive licensees have this power and, correspondingly, the definition of “exclusive licensee” clearly permits licensees to initiate infringement actions if they exclusively control the full complement of rights conferred by a patent. However, an important question remains: Does the definition of exclusive licensee include licensees that exclusively control only a portion of the rights conferred by a patent (e.g. to import and sell an invention but not make it)? The Full Court of the Federal Court of Australia has, through legislative interpretation, recently answered this question in the negative. Arguably, this interpretation is correct as a matter of statutory construction, but is it correct as a matter of patent policy? This article examines this final question via two approaches: (i) by extending the orthodox economic rationale for patents to the issue at hand, in particular by examining the role of exclusive licensing in market economies; and (ii) by evaluating the role of standing for exclusive licensees in the context of world patent harmonisation and the corresponding approaches in the UK and US.