The Australian patent area: as obscure as fog at sea?

Australian patents are enforceable to prevent infringement throughout the Australian patent area. For many commercially important sectors (eg, manufacturing, onshore mining and pharmaceuticals), definition of the 'Australian patent area' presents no issue. The sale of patented pharmaceuticals is an obvious example – typically, pharmaceutical sales occur on land in Australia.

However, the question is far from straightforward where patented inventions are practised offshore, particularly in the growing offshore natural gas sector. Then the extent of Australia’s patent area and the rapidly growing relevance of patents start to matter. Complications in defining the patent area start to mount up.

The Australian patent legislation defines the 'patent area' to mean:

• Australia;
• the Australian continental shelf; and
• waters above the Australian continental shelf (Section 3 of Schedule 1 of the Patents Act 1990).

But what territory qualifies as the Australian continental shelf or the waters above it?

The Patents Act defines the 'Australian continental shelf' as the continental shelf adjacent to the coast of Australia (including the coast of any island forming part of a state or territory) (Section 3 of Schedule 1 of the Patents Act). This definition is seemingly ambiguous,although – following legal technicalities – the definition is best assisted by reference to two further pieces of legislation (Section 2B of the Acts Interpretation Act 1901 and Section 3(1) of the Sea and Submerged Lands Act 1973) and a treaty (the United Nations Convention on the Law of the Sea 1982 (UNCLOS III)). UNCLOS III makes a distinction between the concepts of continental shelf and exclusive economic zone (EEZ) (although it accepts that the two may overlap). A country’s EEZ can extend up to 200 nautical miles from the baseline from which the breadth of its territorial sea is measured. The territorial sea extends only 12 nautical miles from that baseline.

The question for patentees with technology practised sometimes, or even exclusively, offshore is whether infringement can occur in the Australian EEZ in addition to continental shelf waters and the territorial sea (encompassed within the definition of 'Australia'). The answer could be yes, provided that one of the following criteria is satisfied:

• The EEZ and continental shelf coincide – that is, the continental shelf can extend, through natural prolongation, up to 200 nautical miles from the baseline from which the breadth of the Australian territorial sea is measured (Article 76 of UNCLOS III). The pending claims of other states to any portion of the EEZ are considered not to change the infringement position, since patent infringement is a question of domestic law. Australian courts are bound to accept that the continental shelf extends to the limit defined by the Australian executive government at any given time (Petrotimor Corporation de Petroleos SARL v Commonwealth of Australia [2003] FCAFC 3). In this case, technology is not relevant.
• The EEZ extends beyond the continental shelf and the technology relates to exploiting, managing or conserving the natural resources of the waters superjacent to the seabed, the seabed and its subsoil (Article 56 of UNCLOS III; see also Section 11 of the Seas and Submerged Lands Act). Such acts are within Australia’s sovereign power to control and are likely to directly engage the question of patent rights. Therefore, such acts would occur within the patent area, given its broadest reasonable definition. Another view is presented by Westerngeco LLC v ION Geophysical Corporation (776 FSupp2d 342 (2011) SD Texas), but US patent law clearly requires that infringement be “within the United States” (35 USC 271). The Australian definition is wider (see Sections 3, 12 and 13 of Schedule 1 of the Patents Act), because the concept of continental shelf, in which a country has had sovereign rights since at least 1958, has extended over time from the natural prolongation theory into the idea of an EEZ where sovereign rights, if perhaps constrained, still adhere.

Under the second scenario, the nexus of the patent with natural resources exploitation, management and/or conservation is critical. In areas of technology without such nexus with natural resources, patent infringement might well be found not to occur if a distinction is made between the continental shelf and the EEZ for patent law purposes. For example:

• patented technology aimed at surveying or extracting minerals or hydrocarbons from the seabed, subject to appropriate permits, could well be the subject of enforceable rights; or
• if a ship simply passing through the EEZ includes patented navigation technology, this might avoid infringement in Australia. UNCLOS III and domestic law recognise freedom of navigation and, presumably, technology associated with navigation. 

Importantly, patent laws may be relevant even if other Australian laws are inapplicable (eg, certain industrial relations laws – see Fair Work Ombudsman v Pocomwell Ltd [2013] FCA 1139). Therefore, specialist advice should be sought on each legal issue that could arise when conducting operations in Australia’s EEZ.

The difficulty in defining the patent area is compounded by a further complication. Australia’s continental shelf and EEZ can be extended by executive action implemented through proclamation (see Sections 10B and 12 of the Seas and Submerged Lands Act). At least two such proclamations have issued under the act, so it may be vital to check for such proclamatory extensions in determining whether patent infringement has occurred in a particular case.

Does the legislative definition of ‘patent area’ need work? At one level, the Patents Act definition is certainly somewhat obscure, and reference to the EEZ would be helpful and consonant with the concept of Australian sovereign rights as recognised in UNCLOS III and domestic law - notably, the Seas and Submerged Lands Act. However, such definition would need to be qualified. A useful clarification would result from an amendment to reference directly the definitions of ‘continental shelf’ and ‘exclusive economic zone’ as provided in the Seas and Submerged Lands Act and UNCLOS III.