The Productivity Commission recently released the draft results of its inquiry into Australia’s intellectual property arrangements. The inquiry sought to better understand the impact of those arrangements on investment, competition, trade, innovation, and consumer welfare.

The draft report recommends a number of changes to Australia’s current IP system aimed at improving the overall wellbeing of Australian society, taking into account Australia’s international trade obligations. The final report from the Commission is due to  be provided to the Australian Government by August 2016. If the Commission’s final report maintains all of the draft key recommendations, and the Australian Government accepts those recommendations, substantial changes to Australian IP legislation can be expected in the future.

Background

Under the terms of reference issued in August 2015, the Productivity Commission was asked to suggest changes to Australian intellectual property arrangements that would:

  1. encourage creativity, investment and new innovation by individuals, businesses and through collaboration, while not unduly restricting access to technologies and creative works;
  2. allow access to an increased range of quality and value goods and services;
  3. provide greater certainty to individuals and businesses as to whether they are likely to infringe the intellectual property rights of others; and
  4. reduce the compliance and administrative costs associated with intellectual property rules.

The Productivity Commission’s draft report comments that, notwithstanding a growing focus on Australian innovation in recent years, Australia remains a large net importer of IP (see Figure 1). Despite this, the draft report states that Australia provides relatively strong patent rights compared to other countries. Furthermore, the Commission perceives that there is a non-trivial number of patents granted each year that have low social value and that such patents actually ‘impede innovation by frustrating the efforts of follow on innovators and researchers.’2 The Commission also considers that ‘low value patents can be used as a strategic tool for stalling or excluding market entry, and can contribute to ‘patent thickets’, which potential market entrants must ‘hack’ their way through in order to compete in a particular technology space.’3 In this context, and noting Australia’s IP commitments under various international agreements which limit the Australian Government’s policy-making in the area of IP, the Commission has drafted recommendations intending to rebalance policy more in favour of Australian interests.

Click here to view the graph

Key recommendations

Patents

  • amend ss 7(2) and 7(3) of the Patents Act 1990 (Cth) (Patents Act) such that an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art.
  • explore opportunities to further raise the overall threshold for inventive step in collaboration with other countries in international forums.
  • incorporate an objects clause into the Patents Act. The objects clause should describe the purpose of the legislation as being to enhance the wellbeing of Australians by providing patent protection to socially valuable innovations that would not have otherwise occurred and by promoting the dissemination of technology
  • abolish the innovation patent system.
  • amend s 18 of the Patents Act to explicitly exclude business methods and software from being patentable subject matter.
  • reform extensions of patent term for pharmaceuticals such that they are calculated based only on the time taken for regulatory approval by the therapeutic goods administration over and above  one year.

Designs

  • not join the Hague Agreement (registered designs) until an evidence-based case is made, informed by a cost-benefit analysis.

Trade Marks

  • restore the power for the Trade Mark Registrar to apply mandatory disclaimers to trade mark applications.
  • repeal part 17 of the Trade Marks Act 1995 (Cth) (Trade Marks Act) which relates to defensive marks.
  • amend s 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of marks that could be misleading or confusing.
  • amend the schedule of fees for trade mark registrations so that higher fees apply for marks that register in multiple classes and/or entire classes of goods and services.
  • amend s 123 of the Trade Marks Act to ensure that parallel imports of marked goods do not infringe an Australian registered trade mark, provided that the marked good has been brought to market elsewhere by the owner of the mark or  its licensee.

Copyright

  • amend the Copyright Act 1968 (Cth) (Copyright Act) so the current terms of copyright protection apply to unpublished works.
  • clarify that it is not an infringement for consumers to circumvent geoblocking technology.
  • repeal parallel import restrictions for books in order for the reform to take effect no later than the end of 2017.
  • amend the Copyright Act to replace the current fair dealing exceptions with a broad exception for fair use.

Plant Breeder’s Rights

  • amend the Plant Breeder’s Rights Act 1994 (Cth) to enable essentially derived variety declarations to be made in respect of any variety.

Multiple submissions from members of the public and interest groups have been filed in response to the Productivity Commission’s draft report. It will be interesting to see whether these submissions impact the final recommendations from the Productivity Commission.