In an earlier article on 30 January 2019, we set out the key changes that were in store for the assignment and licensing of intellectual property (IP) in 2019 and beyond.

Key issues:

  • The amendments to the Treasury Laws Amendment (2018 Measures No. 5) Bill 2018 (the Bill) have now passed through both the House of Representatives and the Senate.
  • An amendment proposed by the Senate (and accepted by the House of Representatives) to section 82 of the Competition and Consumer Act 2010 (Cth) (the CCA) may have wider reaching implications than first thought.

As anticipated, the amendments to the Treasury Laws Amendment (2018 Measures No. 5) Bill 2018 have now passed through both the House of Representatives and the Senate.

Importantly, there was an amendment proposed by the Senate (and accepted by the House of Representatives) to section 82 of the Competition and Consumer Act 2010 (Cth) which may have wider reaching implications than first thought.

Section 82 has traditionally allowed a party to recover the amount of loss or damage suffered as a result of another party breaching the restrictive trade practices requirements in Part IV. Previously, this posed no issues from an intellectual property perspective as it was exempt from the trade practices requirements in Part IV. But, for the change to Section 82 discussed below, the removal of the section 51(3) IP exemption for conditional licensing or assignment of IP rights such as:

  • Patents;
  • registered designs; and
  • copyright or eligible circuit layout rights;

would have exposed any unsuccessful applicant in a Part IV action relating to IP to a costs order in favour of the successful respondent.

Key points

The change to section 82 potentially narrows the circumstances in which the applicant will be liable for the respondent’s costs incurred in proceedings under Part IV of the CCA. Upon application, the court can make a ‘no adverse costs’ order i.e. an order that the applicant is or will not be liable for the respondent’s costs of such proceedings, even if the applicant’s claim is unsuccessful. Please see our recent article which discusses this in more detail.

Whilst it seems the amendments to section 82 were designed to protect small business, one potential consequence of the change is that, where a licensee brings an unsuccessful claim under Part IV against a licensor in relation to an intellectual property issue, the licensor might be stuck paying its own costs under a ‘no adverse costs order’.

When deciding whether to make a ‘no adverse costs order’ the court is required to consider (amongst other things)the financial disparity between the applicant and the respondent and whether the prospect of an adverse costs order being made against an unsuccessful applicant might deter the applicant from pursuing a claim under Part IV against a larger, better resourced opponent.

The Bill is expected to receive royal assent within the next 7-10 working days, and consequently:

  • the amendment to section 82 will apply to actions brought on or after 1 July 2019; and
  • the removal of the section 51(3) exemptions is anticipated to occur around late July to early August (being six months from the date of royal assent).