EXCEPTIONS AND LIMITATIONS TO PATENT RIGHTS: PRIVATE AND/OR NONCOMMERCIAL USE

• May 3, 2022
• Maichael Bessada

INTRODUCTION[1]

1- The following Member States and patent Offices indicated that their applicable laws provided for exceptions and/or limitations related to the prior use exception: Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bosnia and Herzegovina, Brazil, Bulgaria, China, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Dominican Republic, El Salvador, Finland, France, Georgia, Germany, Greece, Honduras, Hong Kong (China), Hungary, Israel, Italy, Japan, Jordan, Kenya, Latvia, Lithuania, Madagascar, Mexico, Morocco, Norway, Oman, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Moldova, Romania, Russian Federation, Serbia, Slovakia, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, Uganda, Ukraine, United Kingdom, Viet Nam, Zimbabwe and the Eurasian Patent Office (EAPO) (61 in total).

PUBLIC POLICY OBJECTIVES FOR PROVIDING THE EXCEPTION

2- While multiple public policy objectives are pursued by the private and/or noncommercial use exception in some Member States, most Member States provided responses that described the following objectives.

Balancing of legitimate interests

3- Many responses stated that the policy objectives pursued by the private and noncommercial use exception were related to balancing legitimate interests. For example, the need to establish a balance of interest between private use and commercial use was stated in the response from Austria. The response from Brazil referred to the exception which did not unreasonably conflict with a normal exploitation of the patent and did not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties, in order to contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. The response from China specified that “[p]ersonal or non-commercial use [did] not affect the economic interests of neither the right holders nor the public at large, so one should not allow right holders to enjoy absolute exclusive ownership” in order to promote “the economic development or the well beings of the entire society”. Otherwise, “it would make the patent coverage excessively large, thus interrupting the normal activities of the public at large”.In Hungary, private use, for example, is not considered as prejudicing “the normal exploitation” of patents.

The rationale of the Patent System

4- Some Member States indicated that private and/or non-commercial use by third parties is outside the raison d’être of the patent system. For example, the response from the Netherlands stated that the objective of the patent system, i.e., to “reward [the patentee] for his contribution

to the state of the art, with an exclusive right to exploit the invention”, would not be applicable in case of private and noncommercial activities. The response from the Republic of Korea noted that, since the objective of patent protection was to “develop industries, providing the exception of private or theoretical working of a patented invention is legitimate.” Norway responded that private and noncommercial activities were “outside the exploitation as a professional activity”. Similarly, the other Member States, such as Hungary, stated that “the incentive to innovate is not endangered” by the exception.

Promotion of private, creative, and academic activity

5- Some Member States highlighted the additional aspects of the policy objectives to be

promoted, in particular, private and academic activity and creativity, personal and family use, research and teaching, as well as dissemination of knowledge. For example, it was noted by Honduras that the exception was aimed at “eliminating barriers to trade, protecting the strictly personal or family/individual right of use and stimulating scientific research and teaching”. In Mexico, it was considered that activities in the private or academic sphere and for non-commercial purposes “promote[d] and foster[ed] inventive industrially applicable activity”. Similarly, the response from Cyprus stated that the exception aimed at “encourag[ing] private initiative, principally learning, in colleges and universities”, and noncommercial or not-for-profit use of patented inventions by third parties would not incur any harm to the patentees. In the same manner, the responses from Italy and Romania stated that patents were not intended to “intervene in the private sphere”. In addition, the response from Sri Lanka stated that the objective was to “promote creativity while protecting the rights of patent holders”.As stated by the response from the United Kingdom, another aspect was that it “should be possible to carry out minor activities without hindrance by the threat of patent infringement”.Knowledge sharing, experimental research, and enhancing R&D Some Member States emphasized that the exception aimed at promoting knowledge sharing, experimental research, and enhancing R&D. The response from Mexico stated that “[p]urely experimental, scientific or technological research, testing or teaching activities, involving the manufacture or use of a product or a patented process, within the private or academic sphere and for non-commercial purposes, [w ere] activities which promote[d] and foster[ed] inventive industrially applicable activity, the technical improvements and the dissemination of technical knowledge within the productive and academic sectors”. It was considered by the response from the Russian Federation that “members of the public have an interest in unfettered access to the protected results of intellectual activity.” The response from Jordan stated that the exception promotes sharing of knowledge and experiences, and enhances R&D.

Other public policy objectives

6- Some other Member States stated that the objectives for providing this exception were to conform to current or future regional or international law. The response from Latvia referred to Article 30 of the Agreement on trade-related Aspects of Intellectual Property Rights (TRIPS Agreement). Similarly, Denmark, Italy, and the United Kingdom indicated that the exception was adapted to Articles 27(a) and 31(a) of the Agreement on Community Patents 1989 (not entered into force). In a similar manner, in Albania, its national law was aligned with the EPC 2000 and EU directives concerning inventions. According to the response from Portugal, the public and/or noncommercial use exception was introduced in its law in 1995 as a result of the accession to the EU and the EPC. In the response from Hong Kong, China, reference was made to the laws of other jurisdictions, in particular, Section 42 of the Irish Patent Act 1992.

THE APPLICABLE LAW AND THE SCOPE OF THE EXCEPTION

7- Most of the Member States provide the private and/or noncommercial use exception under their statutes. Only the response from Australia informed that the exception was not included in its statutes, but provided by common law as a “noncommercial use defense”.

Mechanisms to regulate the private and/or non-commercial use exception

8- In some Member States, by definition, private use and non-commercial use are excluded from the scope of the patent right. The right conferred by a patent is primarily defined as the right to prevent others from using the patented invention for commercial/business purposes, for example, for “industrial or commercial purposes” (Algeria, Kenya, and Madagascar), “purposes on a commercial basis” (Austria), “production or business purposes” (China), for exploiting “the invention commercially or operationally” (Norway), for activities “in or for his business” (Netherlands), for “industrial or commercial scale” (Uganda), for working “the patented invention as a business” (Japan) and for “profit or for professional purposes (Poland). According to the response from Israel, the definition of the phrase “exploitation of an invention” explicitly excludes acts which are “not on a commercial scale and not commercial in character”. The response from Norway stated that activities “outside the exploitation as a professional activity” were explicitly excluded from the scope of the exclusive rights.

Most of the Member States, however, provide a broad definition of the scope of the patent rights which encompasses all kinds of activities and explicitly stipulate that private use for noncommercial purposes or private and noncommercial use is an exception to the exclusive patent rights. In formulating the exception, provisions of many national laws stipulate that it applies to acts carried out in the private sphere and for noncommercial purposes or to use of a patented invention for personal needs with no purpose to make profits. The response from the United Kingdom stated that the exclusion is provided for acts done “privately and for the purposes which are not commercial”. In Romania, the exception is restricted to acts done for “exclusively” privately and noncommercial purposes. The patent law of Serbia clarifies that “the requirement for noncommercial and private use must be cumulatively met”. The national laws of some Members States, such as the Czech Republic and Finland, provided an exception for “acts done for noncommercial purposes”.

Definitions of the terms “private” and “commercial”

9- Only few Member States provided information about the definition of the expressions such as “private use” or “noncommercial activities” in their jurisdictions. Some Member States are interpreting commercial activities broadly in this context. In Hungary, the conceptual definition is provided by other laws, such as civil law and tax law. The response from the Republic of Moldova noted that, in the absence of a definition, “in ruling such a case, a court would conduct itself by provisions of the TRIPS Agreement and the Paris Convention for the Protection of Industrial Property”.

Most of those Members States which provided for a definition explained the concept of commercial use by referring to activities for making profit. For example, the response from Austria stated that a commercial activity was an economic activity of “certain duration, following a unitary concept and suited for repetition, which without necessarily being acquisitive does not only serve the satisfaction of personal needs”. In Israel, according to its case law, the definition of the noncommercial use is an “unprofitable private use, such as exploitation of the invention for a home purpose”.

10- Differently, in China, although the term is not defined by its law, it is widely understood as activities for the “purposes of industrial or agricultural production, or for commercial purposes”, independently from “being profitable or not” and from being a “profitable or non-profitable entity”.

In the Netherlands, the term is understood as a broad concept, including “all kinds of professional activities, including universities and governmental/administrative activities”.²⁰

11- In the Russian Federation, use of a patented invention for private, family, domestic, or other needs unrelated to business activity, where the purpose of such use is not to derive profit or revenue” does not infringe the exclusive patent rights. The response from the Russian Federation noted that “a business activity shall be an independent activity conducted at one’s own risk, aimed at systematically deriving profit from the use of property, sale of goods, performance of work or rendering of services by persons registered in this capacity in the prescribed legal process”. Further, it was explained that ‘commercial purposes’ meant use of a technical solution for deriving profit, while ‘noncommercial’ meant using the invention for other purposes (personal, socially beneficial, including in emergencies). Thus, the current Russian legislation does not treat use for needs unrelated to business activity and the generation of profit or revenue as an infringement of the exclusive patent rights.

12- In considering the applicability of the exception, whether a product was manufactured as a result of parallel, independent creative work, or using other people’s ideas (including directly using patent application materials) is not relevant in the Russian Federation. Use of a product or process in safeguarding an organization’s or entrepreneur’s business (e.g., office equipment, office furniture, vehicles, etc.) must be interpreted as purposes unrelated to “personal use”. Personal use, however, might be applicable to legal entities. For example, use of a patented solution by a company to clean the snow inside its premises for the passage of employees could, in particular, be considered as personal use, while damp cleaning of floors in a shopping center should be deemed as safeguarding business activity.

13- In the United Kingdom, there is case law providing guidance on the interpretation of the terms “private” and “commercial”. In Smith, Kline & French Laboratories Ltd v Evans Medical Ltd, the court considered that the word “privately” in Section 60(5)(a): (i) includeed commercial and noncommercial situations; (ii) was not synonymous with ‘secret’ or ‘confidential’; and (iii) was used as the opposite of “publicly”, denoting an act done for the person’s own use. In interpreting the meaning of “purposes which are not commercial”, the purposes of the act must be considered, i.e., there would be infringement if the purposes include any commercial ones in addition to the noncommercial ones. Further, experiments done for legal proceedings in the High Court or the UK IPO are not considered to be done for a “commercial” purpose.

14- Two Member States referred to the scale and purpose of the commercial activity. In the Philippines, the exception applies to acts done “privately and on a noncommercial scale or for a noncommercial purpose” and in Israel, acts pursued “not on a commercial scale and [] commercial in character”.

Inclusion of academic, experimental and research activities in the exception

15- Mirroring their policy objectives of the exception, some Member States do not strictly distinguish the exceptions with respect to noncommercial use and academic/scientific research. For example, in Mexico, patent rights do not extend to “a third party who, in the private or academic sphere and for noncommercial purposes, carries out purely experimental scientific or technological research, testing or teaching activities”. In Kenya, Section 58 of the Industrial Property Act 2002 provides that “the rights under the patent shall extend only to acts

done for industrial or commercial purposes and in particular not to acts done for scientific research”. In Israel, the Tel Aviv District Court decided that pure medical research for the discovery of medicinal properties of the patented material is not considered as a business activity even if it involves investment and experiments on a large scale, and therefore, it should be included in the exception. The Court clarified that if the material would be further distributed for free to potential clients, such activity would be considered as a business activity.

16- As a private/noncommercial use exception, the response from South Africa referred to use of patented inventions “on a noncommercial scale and solely for purposes reasonably related to the obtaining, development and submission of information required under any law” that regulated the manufacture, sale etc. of any product. It noted that the term “commercial scale” was not defined in its Patent Act, and the phrase should accordingly be given its ordinary grammatical meaning.

No prejudice to legitimate interest of patent holders

17- Some Member States provide for the exception only under the condition that private and/or noncommercial use does not prejudice the legitimate interest of patent holders, and require, for example, that the use does not “prejudice the economic interests of the patent holder” (Brazil) or does “not cause significant material prejudice to the owner” (Bulgaria)

IMPLEMENTATION CHALLENGES

18- Most Member States stated that the applicable legal framework of the exception was considered adequate to meet the objectives sought and did not foresee any amendments to their legislation. The response from Sri Lanka stated that no study regarding the adequacy of the exception had been undertaken, but it was estimated that “probably due to the existing level of R&D activities in the country, the exception had not been practically tested”.

19- In other Member States, amendments might be foreseen in the future or studies were undertaken. In Zambia, a new Bill plans to introduce a private and noncommercial use exception. The response from Brazil noted that its government was carrying out an evaluation on the implementation of the private and noncommercial use exception “with a view to assessing its usefulness in light of the objective of ensuring a balanced patent system”. In El Salvador, the law was planned to be revised in the medium term. The response from Madagascar noted that the statutory legal frameworks “may be subject to revision” in the future, but considered it adequate at that moment. The response from Mexico stated that since there was no definition which indicated clearly the scope of the exception, “it would be advisable to amend the current legal framework”.

20-Many countries stated that no challenges had been encountered in relation to the practical implementation of the exception. With reference to challenges, the response from the United Kingdom referred to its case law and the difficulties in distinguishing private use from commercial use in cases where activities have “dual-purpose”. In those cases, the private use defense would not apply if one of the purposes of those activities was “commercial in nature”.

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[1] -exceptions and limitations to patent rights: private and/or noncommercial use, a document prepared by the secretariat, standing committee on the law of patents, twentieth session, Geneva, January 27 to 31, 2014