Bringing a single new medicine to market requires substantial resources over many years. To ensure continued investment in the development of tomorrow’s breakthrough treatments and cures, innovators must be able to protect and enforce patents and other intellectual property.
Patents provide temporary protection for new inventions, but it’s up to innovators to enforce those protections. When enforcement is necessary, it’s critical that patent-holders are able to ask the court for a temporary injunction—an important safeguard that prohibits potentially infringing products from entering the market until the dispute has been resolved.
Unfortunately, Australia is discouraging inventors from seeking injunctions to stop products that may violate a patent from entering the market. They are making it harder for American biopharmaceutical innovators to fight patent infringement. Specifically, the Australian government is seeking “market-size damages” from inventors that unsuccessfully seek to enforce their patents in court. If a court rules a patent is invalid or not infringed, the inventor must not only compensate its rival for lost sales, but also pay the government the difference in price between a patented medicine and its generic counterpart during the period of a preliminary injunction. The government’s share can amount to a significant financial penalty, which could cost an inventor even more than the total expected return of the patented medicine.
So, these policies amount to a Catch-22 for biopharmaceutical innovators. They can either stand idly by as competitors storm the market. Or they can risk a massive financial penalty that equates legitimate enforcement with patent abuse.
Allowing the government, which is not a party to the patent dispute, to collect damages undermines legal certainty, predictability and the incentives patents provide for investment in new treatments and cures. It unfairly tips the scales – discouraging innovators from seeking to effectively enforce their patents. It also violates obligations that Australia, agreed to in the U.S. Australia Free Trade Agreement and the World Trade Organization’s TRIPS Agreement.
“Market-size damages” harms America’s biopharmaceutical innovators and the 4.5 million domestic jobs supported by the sector. It sets a dangerous precedent for other countries around the world. U.S. innovators should not be unfairly penalized for enforcing their patents—and the U.S. government must put a stop to these practices.