Counter-productive? Australia’s Productivity Commission releases Final Report into Australia’s Intellectual Property Arrangements

Yesterday, Australia’s Productivity Commission released their Final Report into Australia’s Intellectual Property Arrangements. This report was sent to Government on 23 September 2016. The Government is carrying out additional public consultation in relation to the recommendations made in the Final Report, which differ in key respects from some of the Commission’s draft recommendations. You can make a submission here – and submissions close on 14 February 2017.

As was anticipated, many of the reforms proposed by the Productivity Commission have proved controversial. Below we set out a summary of the major reforms proposed by the Final Report. You can read our original summary of the Draft Report here. We’ll also be posting on IP Whiteboard shortly with more detail on the Productivity Commission’s recommendations in particular areas of IP.

Copyright

In the contentious area of copyright reform, the Commission has recommended that Australia:

  • replace Australia’s existing fair dealing exceptions in the Copyright Act with a broad and open-ended fair use exception;
  • repeal parallel import restrictions for books;
  • “strengthen” the Copyright Act to make clear circumventing geoblocking technology is not a copyright infringement; and
  • instruct the ACCC to commence a review to ensure best practice in governance, reporting and transparency arrangements for collecting societies.

In its Final Report, the Commission clarified that it is not seeking a reduction in the term of copyright to 15 to 20 years as was suggested by the wording of the Draft Report; however, the Commission maintains its belief that the term of copyright protection is too long.

Patents

For patents, the Final Report recommends:

  • the adoption of the European test for inventive step, 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. This will mean that the “scintilla of invention” standard, held to be sufficient by Australian courts, is no longer applied; and
  • that the Government abolish Australia’s innovation patent system, having found that the system encourages “low-value patents” and is used to frustrate market entry through the use of divisional innovation patents as a tactical tool in patent disputes.

In addition, the following findings of interest were also made:

  • the Commission has not pursued its recommendation, in its draft report, that software patents be excluded as patentable subject matter. It has, instead, preferred a “wait and see” approach following the decision of the Full Federal Court in the RPL Central which held that the mere computer-implementation of a business method is not patentable;
  • the Commission concluded that extensions of term do not effectively attract R&D to Australia and recommends limiting extensions of term:
    • to patents for new active pharmaceutical ingredients (APIs); and
    • so that extensions are limited to any delay over one year (255 working days) caused by the Therapeutic Goods Administration in obtaining regulatory approval.

Under this approach, patentees will no longer be compensated for pre-approval clinical trials.

Trade Marks

In respect of trade marks and geographic indications, the Final Report recommends that:

  • the grace period be reduced from 5 years to 3 years before new registrations can be challenged on the basis of non-use (a new recommendation);
  • the presumption of registrability be removed in respect of assessing whether a mark could be misleading or confusing at the date of application;
  • changes aimed at ensuring that parallel imports of marked goods do not infringe an Australian registered trade mark when the marked good has been brought to market elsewhere by the owner of the mark or its licensee (section 97A of the Trade Marks Act 2002 (New Zealand) could serve as a model clause in this regard);
  • IP Australian should (a) require trade mark applicants to state whether they are using the mark or “intending to use” the mark at the filing date, registration date and renewal date, and this should be recorded on ATMOSS and (b) seek confirmation from trade mark holders that register with an “intent to use” that their mark is actually in use following the grace period, with this information also recorded on ATMOSS (new recommendations);
  • IP Australia should return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under section 43 of the Trade Marks Act); and
  • in conjunction with ASIC, that IP Australia should link the ATMOSS database with the business registration portal, including to ensure a warning if a registration may infringe an existing trade mark.

On the other hand, recommendations relating to mandatory disclaimers, the abolition of defensive trade mark registrations and changes to fees as included in the draft report in April have not been included in the Final Report.

General IP policy, international arrangements and enforcement

The Final Report makes a number of general policy recommendations that the Commission believes will strengthen Australia’s intellectual property system. In summary, the Commission recommends that the Government:

  • repeal 51(3) of the Competition and Consumer Act 2010 (Cth) which exempts conditions in IP assignments and licences from certain provisions of competition law;
  • enhance the role of the Federal Circuit Court by introducing a dedicated IP list with caps on claimable costs and damages;
  • expand the safe harbour scheme to cover all online service providers;
  • implement an open access policy for publicly-funded research;
  • identify overarching objectives and a common framework for IP policy development, and establish an interdepartmental policy group and other formal working arrangements between agencies;
  • develop best practice guidance for developing IP provisions in international treaties; and
  • work with “like-minded countries” through multilateral forums to achieve more balanced IP settings and to reduce transaction costs.

There’s vocal debate amongst the IP Whiteboard team about many of these proposals – and recent media commentary suggests those disagreements aren’t limited only to the offices of King & Wood Mallesons. Will you be making a submission?

About the Author

Luke HawthorneLuke is a solicitor in the Sydney IP Litigation team. Luke loves litigation – he even once caught himself refreshing AustLii. He joins the King & Wood Mallesons team from the world of media and entertainment; sadly, only ever as a lawyer. Swapping the spotlight for the limelight, he enjoys a comment on all things contentious, commercialised, or conspicuously copyright-related.View all posts by Luke Hawthorne