The Intellectual Property Laws Amendment Act 1998 amended the Patents Act 1990 to provide, amongst other things, a mechanism for extending the term of patents covering pharmaceutical substances. What constitutes a pharmaceutical substance is defined by section 6 of the Act. These provisions came in force on 27 January 1999. The aim of this legislation is to bring Australia in line with the US, Europe, Japan and other jurisdictions where an effective term of 15 years protection is provided for pharmaceutical substances.

Extensions of term of patents covering pharmaceutical substances are provided in consideration for the length of time required to obtain regulatory approval permitting commercialisation of a new drug. Permitting drug developers to apply for a patent term extension of up to 5 years provides them with an adequate patent life to allow them to make a return on their investment.

Section 70 of the Patents Act 1990 provides statutory basis for extensions of term. The following criteria must be fulfilled in order for a patent to be eligible for an extension of term:

(i)(a) at least one pharmaceutical substance per se must be disclosed in the patent and in substance fall within the scope of a claim or claims; and/or

(i)(b) at least one pharmaceutical substances produced by a process involving the use of recombinant DNA technology must be disclosed by the patent and in substance fall within the scope of a claim or claims of the specification;

(ii) the goods containing or consisting of the substance must be included in the Australian Register of Therapeutic Goods

(iii) a minimum of 5 years must have elapsed between the filing date of the patent and the date of first regulatory approval of the pharmaceutical substance.

The term of an extension granted under these provisions is determined by subtracting five years from the length of time elapsed between the filing date of the patent and the first date of regulatory approval. The term of the extension is limited to a maximum of five years.

The rights of the patentee during the extended term are more limited than for a normal patent. Although the term of the entire patent is extended, exploitation of any form of the invention that is not a pharmaceutical substance or any exploitation of pharmaceutical substances for non therapeutic purposes, will not constitute infringement of the patent during the term of extension.