The Australian Government’s Productivity Commission, an independent national agency which is responsible for reviewing and advising on macro-economic policy, this week released a draft of its report on ‘Intellectual Property Arrangements’. The draft report contains a number of recommendations for important changes to the intellectual property regime in Australia, including amendments to legislation relating to patents, registered designs, trade marks and copyright.

The Commission has requested comments in the form of written submissions concerning the draft report from the public and interested parties. The deadline for these submissions is 3 June 2016. Given the potential importance of some of the proposed changes, we would encourage our clients to review the report and to consider making a submission to the Commission. The Commission intends to submit a final report to the Australian Government in August 2016.

Below, we summarise some of the draft report’s proposed recommendations for changes to the Australian IP system.

Patents & the abolition of Innovation Patents

The Productivity Commission based its report on the premise that the purpose of the patent system should be:

“providing protection to socially valuable innovations that would not have otherwise occurred, and…promoting the dissemination of technology. In so doing, the patent system should balance the interests of patent applicants and owners with the interests of users — including follow-on innovators, researchers and ultimately Australian society.”

In order to ensure that this objective is met, the Commission recommends a number of specific changes to the current system:

  • The incorporation of a statement into the Patents Act which explicitly describes this purpose of the patent regime, and a requirement that the Patent Office take the purpose into account when assessing whether or not to grant a patent.
  • A change to the test of whether or not an invention involves ‘an inventive step’. The draft report recommends that this test should be whether the invention ‘is not obvious to a person skilled in the relevant art’. The extent to which this would represent a significant change to current practice will certainly be the subject of some debate.
  • Changes to official fees to make having a large number of claims more expensive, and to increase costs for maintenance of a patent in the later years of its maximum term.

The draft report also recommends the abolition of the Innovation Patent system in its entirety.

Pharmaceutical & Software Patents

The draft report currently recommends important changes to the regulations around pharmaceutical patents and patents for business methods and software.

In particular, the report recommends a tightening of the criteria used in determining whether to grant an Extension of Term for a pharmaceutical patent. These extensions of term are used to compensate those developing pharmaceutical products for the fact that regulatory approval can be a lengthy process, reducing the period during which a patent can be commercially exploited. The report recommends only granting an extension in cases where the approval process took longer than a year to complete, due to delays caused by the regulator.

The report also notes that changes to the regulations around the inventive step test would be likely to restrict any inappropriate use of ‘ever-greening’ in the pharmaceutical sector – the practice of obtaining multiple patents for different aspects or presentations of fundamentally similar inventions.

In the controversial area of patents for software and business methods, the draft report recommends simply that legislation be introduced to explicitly exclude software and business methods from patentable subject matter. While debate has been on-going around the specifics of which inventions of this kind should be patentable, such a piece of legislation would be an entirely new and material change in established Australian practice up to this point.

Registered Designs and Trade Marks

The draft report makes the following recommendations with regards to Trade marks:

  • Changes to encourage more narrow protection for trade mark owners. Specifically, an increase in fees for registering a trade mark in multiple classes, and the re-introduction of ‘mandatory disclaimers’. These disclaimers would allow the trade mark registrar to register a trade mark but to explicitly exclude from the protection granted some specific elements of the mark that they believe should remain free for other traders to use. The draft report also recommends removal of the ‘presumption of registrability’ for marks that could be confusing or misleading – though once again the real impact of such a change will no doubt be the subject of debate.
  • A specific amendment to the Trade Marks Act which would ensure that ‘parallel importation’ – the import into the country of branded goods made legitimately overseas by parties who do not own or hold a licence for the relevant trade mark in Australia – is permitted.

The draft report suggests no specific changes to the Registered Designs regime, only recommending that the government review again the costs and benefits of joining the Hague Agreement before taking any action in that direction.

Conclusion

As a whole, the changes recommended in this draft report would represent the most significant reform of the intellectual property system in Australia since the Raising the Bar legislation of 2012. However, this draft report represents the very earliest stage in the government’s consideration of any such alterations. Consultation is now being sought on the draft report, and would almost certainly be required again in more breadth and depth before any legislation could be drafted. We note that the passage of legislation to enact these changes may not represent a high priority for current or future governments. Further, careful consideration would need to be given to Australia’s obligations under a number of international treaties which would appear to conflict with at least some of the draft report’s proposals.

We believe that many of the recommended changes would benefit from a great deal more consideration. Some of the Australian IP system’s unique features have been a national asset and a competitive advantage. Significant changes to these features may have unintended consequences, not only for holders of IP rights, but for consumers and the wider economy.

We would encourage our clients to review the report’s recommendations in detail and consider making a submission in response to the Productivity Commission before 3 June. The report can be read, and feedback given at http://www.pc.gov.au/inquiries/current/intellectual-property/draft.