The Productivity Commission has issued a draft report concerning intellectual property (IP) arrangements in Australia. It is a broad overview of the entire IP system in Australia.

In August 2015, the then Treasurer, Joe Hockey, requested the Commission undertake an enquiry into Australia’s IP arrangements. For a Commission with no previous expertise in IP law, this was a big task. While the Commission has now produced a draft report, their final report is still several months away. It is clear however, that the Commission considers Australia’s IP laws confer rights too easily and protect innovations and ideas for longer than necessary to encourage innovation.

The tenor of the report is clear from the outset: ‘IP arrangements should provide the minimum incentives necessary to encourage investment.’ This view is maintained throughout the draft report and underlies many of the recommendations, most of which involve some curtailment of the protections currently available for inventions and creative output in Australia. The key recommendations in the report are to:

  • change the inventive step requirement for patents to make it more difficult to secure a patent grant
  • abolish the innovation patent system
  • limit the ability to secure patents for new business methods and software
  • pursue changes in multilateral and bilateral trade agreements to rein back what is seen as an overly generous international system of IP rights
  • introduce a new system for the calculation of the period for an extension of term for patents which cover pharmaceuticals
  • delay joining the Hague Agreement for the International Protection of Designs, notwithstanding the recent adoption of the Hague Agreement by both the United States and Japan
  • abolish the defensive trade mark registration system.

The report states that the patent system should only grant patents to socially valuable innovations that would not otherwise occur. However, it is unclear from the report how the Patent Office could ever determine the ‘social value’ of an invention. The question of what type of invention is deserving of a patent is centuries old. The English, in passing the Statute of Monopolies in 1623, set the bar reasonably low, but provided that a patent should not be granted to manners of manufacture which were ‘mischievous to the state’ or ‘generally inconvenient’. While the Commission has misgivings about the social value of some patented inventions, no real solution to this issue is offered.

The level of ‘inventiveness’ that should be required for the grant of a patent has also been a source of extensive debate for many years. Since the introduction of the Australian Patents Act 1990, there have been numerous changes to the test for ‘inventiveness’. It now seems that Australia is set for a further change – this time to an ‘obvious to try’ test.

Towards the end of the draft report, questions are raised regarding the most appropriate body for reviewing or proposing changes to IP laws in Australia. It is suggested that there may be a conflict of interest for IP Australia to be initiating reform.

Over the last 30 years, there have been many enquiries into various aspects of IP in Australia. These enquiries have led to a number of changes to Australian IP law, most notably to major revisions of trade marks law in 1995, and patents law in 1990 and in 2002. Since the Commission was not involved in these earlier enquiries, perhaps it was not the most appropriate body to lead the recent investigations.

Regardless of the final shape of the report presented to the Government, it can be expected that there will be some major reforms to Australia’s IP laws in the near future.

Greg is the Chairman of the POF Board and is the firm’s senior litigator. Greg has been involved in a number of successful ex-parte applications for the seizure of goods infringing IP rights, and acts for several international companies both for the acquisition and enforcement of IP rights.