22 March 2014

Changes to Privacy PIDs

The Office of the Australian Information Commissioner (OAIC) has announced the making of Privacy Public Interest (Enhancing Privacy Protection) Amendment and Repeal Determination 2014, reflecting the Privacy Act 1988 and Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth) that amends the Privacy Act 1988 (Cth).

Under section 72 of the 1988 Act the Australian Information Commissioner was authorised to make a Public Interest Determination (PID), ie a formal determination that an act or practice that might breach one of the Information Privacy Principle, National Privacy Principles or an approved privacy code would be regarded as not in breach of the Act. The PIDs thus function as delegated legislation, giving the Commissioner considerable power to change the effect of the Act in technical areas that might not attract the interest or understanding of Parliament.

The PIDs included the controversial genetic data PIDs (PID 11 and 11A) that in their initial form authorised clinicians to trawl directory database to contact any Australian with a particular surname, on the basis that those people might be a genetic relative of someone with a serious genetic condition. The PIDs were in essence a licence to embark on a badly-managed and inadequately conceptualised genetic expedition that was likely to result in more harms than benefits.

The reforms provided by the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth) amend the Commissioner's power to make a determination under s 72, which now refers to the new Australian Privacy Principles (APPs, replacing the discrete IPPs and NPPs) and registered APP codes.

Schedule 6 of the 2012 Act features 'savings provisions' for those PIDs in force prior to commencement of the amendments this month. It indicates that an existing PID has effect as if it had been made under the amended Privacy Act. The Commissioner may, by legislative instrument, vary an existing PID to take into account amendments made by the 2012 Act. In considering that variation the Commissioner may consult any person or entity, taking into account any matter that he considers relevant.

The Privacy Public Interest (Enhancing Privacy Protection) Amendment and Repeal Determination 2014 amends PIDs 3A, 5, 12 and 12A. Amendments under item 12(3) Schedule 6 of the Privacy Act 1988 and Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth) are intended to ensure that each PID operates as it did prior to this month.

PIDs 4, 7, 11, 11A, 13 and 13A are repealed as no longer required, given that the acts and practices are covered by an exemption or exception to one of the APPs. PID 8 is also repealed as no longer required, given that the act or practice covered by that PID is complete.

The PIDS affected by the changes are -
PID 3A - Commonwealth Director of Public Prosecutions: the DPP may disclose to a relevant authority information in the DPP's possession about an individual where that information indicates serious misconduct directly relevant to the performance of a regulated occupation or profession; or of a public service position.
PID 4 - Disclosure of police reports for the purposes of pursuing insurance claims or civil litigation: the Australian Federal Police may disclose personal information contained in criminal offence reports and motor vehicle accident reports subject to conditions
PID 5 - Australian Federal Police: the AFP may, subject to conditions, disclose personal information relating to homicides in the ACT, to the Australian Institute of Criminology to enable the AIC through its Homicide Monitoring Centre to undertake out research under the national homicide monitoring program.
PID 7 - the Department of Foreign Affairs and Trade: the Department is enabled to disclose the personal information of Australians overseas to their next of kin in certain limited circumstances.

PID 8 - DPP: Disclosure of personal information contained in certain DPP files that relate to serious incidences of fraud, dishonesty and deception to the Australian Institute of Criminology for research purposes.

PID 11 - Genetic Data: Collection and use of contact details of genetic relatives to enable use or disclosure of genetic information

PID 11A - Genetic Data: Collection and use of contact details of genetic relatives to enable use or disclosure of genetic information

PID 12 - Collection of Family, Social and Medical Histories: The applicant [clinicians] collects health information from an individual, or from a responsible person for the health consumer, about a third party in circumstances where a) the collection of the third party’s information into the consumer’s family, social or medical history is necessary to provide a health service directly to the consumer, and b) the third party’s information is relevant to the consumer’s family, social or medical history, and c) the applicant collects the third party’s information without obtaining the consent of the third party, and d) the third party’s information is only collected from a responsible person for the  consumer if the  consumer is physically or legally incapable of providing the information themselves.

PID 12A - Collection of Family, Social and Medical Histories: no organisation providing a health service is taken to contravene the Act if the organisation does an act, or engages in a practice, that is the subject of PID 12 (Collection of Family, Social and Medical Histories).

PID 13 - Disclosure and collection of personal information to improve outcomes for children and young people at risk of serious harm

PID 13A - Disclosure and collection of personal information to improve outcomes for children and young people at risk of serious harm
The Commissioner has concurrently approved Guidelines issued by the National Health & Research Council (NHMRC) that have the same effect as the superseded PIDs 11, 11A, 12 and 12A.


Oh, the condescension of posterity!

'Isaiah Berlin's Neglect of Enlightenment Constitutionalism' by Jeremy Waldron at the conference on “Isaiah Berlin’s Enlightenment” this week comments that
One of the most important achievements of the Enlightenment is what I shall call Enlightenment constitutionalism. It transformed our political thinking out of all recognition; it left, as its legacy, not just the repudiation of monarchy and nobility in France in the 1790s but the unprecedented achievement of the framing, ratification, and establishment of the Constitution of the United States. It comprised the work of Diderot, Kant, Locke, Madison, Montesquieu, Rousseau, Sieyes, and Voltaire. It established the idea of a constitution as an intricate mechanism designed to house the untidiness and pluralism of human politics.
Yet Isaiah Berlin, supposedly one of our greatest interpreters of the Enlightenment, said almost nothing about it. The paper develops this claim and it speculates as to why this might be so. Certainly one result of Berlin's sidelining of Enlightenment constitutionalism is to lend spurious credibility to his well-known claim that Enlightenment social design was perfectionist, monastic, and potentially totalitarian. By ignoring Enlightenment constitutionalism, Berlin implicitly directed us away from precisely the body of work that might have refuted this view of Enlightenment social design
A particularly feline "supposedly one of our greatest interpreters".

Waldron states -
I have a general claim to make about the Enlightenment and a particular claim about Isaiah Berlin.
The general claim is this: one of the most important achievements of the European enlightenment is what I shall call Enlightenment constitutionalism. It is massively important; it transformed our political thinking out of all recognition; it left, as its legacy, not just the repudiation of monarchy and nobility in France in the 1790s but the unprecedented achievement of the framing, ratification, and lasting establishment of the Constitution of the United States. Both of these are part now of our political world. They grew up in the Enlightenment. That is my general claim.
The particular proposition is about the work of Isaiah Berlin. Berlin, supposedly one of our greatest interpreters of Enlightenment thinking, had very little to say about this heritage of thought and these achievements. I have ransacked his work and I mean it: there is almost nothing on Enlightenment constitutionalism in his writings— some few rags and paltry blurred shreds of paper here and there; nothing of any significance.
You will balk at this proposition. You will say: what about the insistent theme in all of Berlin’s essays cautioning us against perfectionist projects and against the ideation of a perfect society in which all values will be integrated harmoniously and commensurably, and in which conflict among the solutions to each and all of the problems of mankind will be precluded by the unity of the standard that makes each of solutions rational. What about his warning? Isn’t that his verdict on Enlightenment constitutionalism?
No it is not. For in none of that does he really address the idea of constitutional structure, the possibility of institutionalized forms that will house rather than try to abolish human imperfection, protecting liberty and ethical pluralism and providing a modest institutional structure with which security and the general good can be promoted through representation and the rule of law, without anything approaching the hubris of totalitarian utopianism. Isaiah Berlin said nothing about that. He proceeded in his work as though all attempts at social and political design were on a par, and as though everything invested in the 18th century constitutionalist enterprise was beneath comment.
Why? Well, an unkind interpretation would be that Berlin remained silent about Enlightenment constitutionalism because it challenged—it was a most glaring counter-example to—his thesis about the dire consequences of Enlightenment rationalism. Having committed himself to this thesis at an early stage in his career, he was not about to endanger it by identifying the one strain of rationalist constructivism that offered to refute his central concern. I am sorry to say that one cannot read into this area without entertaining that hypothesis. But it is a frightful thing to say about a public intellectual. I think Berlin deserves our charity, and maybe the more charitable explanation is that he just wasn’t interested in law, constitutions, or institutional politics generally. For some reason he didn’t think that political philosophers should really be preoccupied with all that. I’ll say more about possible biographical explanations at the end of this talk.
And away he goes

DIBP Data Breach Litigation

The Guardian indicates that the Commonwealth government is being a less than model litigant in warning asylum seekers that they will be billed for costs if their action over the recent Department of Immigration & Border Protection data breach is unsuccessful.

I suspect that collecting the money is more easier said than done but the threat of costs will presumably deter some potential litigants.

The report states that
asylum seekers involved in court proceedings over a data breach which publicly disclosed the personal information of almost 10,000 people in immigration detention have been told by lawyers representing immigration minister Scott Morrison they will be billed for his legal costs should their cases fail.
A letter sent to asylum seekers in Villawood, who appeared in the federal circuit court for the first directions hearing into the matter, from the Australian government solicitor invited the applicants to “discontinue your proceedings” and follow “departmental processes” instead.
The letter, which also advises asylum seekers to seek legal advice should they wish to pursue their claims through the court, continues: “Please note that if you are unsuccessful the respondent minister will ask the court for orders that you pay the costs incurred by him in relation to these proceedings.”
Asylum seekers in detention centres are unable to seek employment in Australia.
At a directions hearing in Sydney on Wednesday, lawyers representing a number of asylum seekers from Villawood detention centre said they intended to bring claims for their clients under the Migration Act and the Privacy Act.
The immigration department has written to asylum seekers in detention apologising for the breach. The department has also advised it will assess the impact of the breach on a case-by-case basis. ...
Michaela Byers, a solicitor working for the applicants, told Guardian Australia that about 100 asylum seekers would also lodge complaints over the breach with the privacy commissioner next week.
In a separate article the Guardian reported
Asylum seekers whose personal information was disclosed in a data breach by the Department of Immigration and Citizenship appeared in the federal magistrates court on Wednesday in the first legal challenge over the blunder.
Lawyers representing seven asylum seekers being held in Villawood detention centre in Sydney told Justice Driver they intended to bring claims under the Migration Act and the Privacy Act. The asylum seekers listened in the courtroom with Villawood guards.
“Unfortunately these matters don’t fit neatly into the usual form … because of the unique circumstances,” said Shane Prince, who appeared for the asylum seekers.
“I would propose seeking declarations that there had been a breach of the Migration Act by the release of the information and second a breach of the Privacy Act.”
But counsel for the immigration minister, Scott Morrison, said his position was that “it was premature to bring these cases before the court”.
The asylum seekers had received correspondence from the department advising them of other options they could take in relation to the privacy breach, including making complaints to the Immigration Department or the privacy commissioner.
Prince said the department still hadn’t acknowledged whether there was a breach of the Privacy Act.


The Office of the Australian Information Commissioner (OAIC) has made two Determinations under the Privacy Act 1988 (Cth), which permit activity that would otherwise be in breach of that statute.

The OAIC states that
These determinations were made urgently on request by ANZ Bank, just prior to the privacy reforms commencing. A comprehensive consultation process will be initiated in the coming months to determine whether the temporary determinations should be made into a longer term determination or repealed. This consultation will allow all stakeholders to provide submissions, and if necessary a conference will be called under section 76 of the Privacy Act.
The Determinations extend beyond the ANZ Bank - ie covering the industry rather than the specific enterprise.

They are
  • Privacy (International Money Transfers) Temporary Public Interest Determination 2014 (No. 1) - here
  • Privacy (International Money Transfers) Generalising Determination 2014 (No. 1)  - here
The OAIC states that
to permit Australia and New Zealand Banking Group Limited (Applicant) and other authorised-deposit taking institutions within the meaning of the Banking Act 1959 (ADIs) to disclose the personal information of a beneficiary of an international money transfer (IMT) to an overseas financial institution when processing an IMT without breaching the Australian Privacy Principles (APPs), following the commencement of the Privacy Amendment (Enhancing Privacy Protection) Act 2012.
Specifically, these determinations will ensure that the Applicant and other ADIs do not breach APP 8.1 when disclosing the beneficiary’s personal information to the overseas financial institution, and are not held to breach another APP (other than APP 1) as a result of being held accountable for an act or practice of the overseas financial institution in relation to that information (in accordance with subsection 16C(2)).
Scrutiny of Privacy Commissioner documentation obtained under the Freedom of Information Act indicates that in least one instance the Determination appears to have been jointly written by the PC/OAIC and the ostensible applicant, and that the application was solicited by the Commissioner. That perhaps explains the "made urgently on request" wording, with the OAIC having had its hands full over the past six months and perhaps lacking a strong sense of implications.

Privacy ADR in Australia

The Office of the Australian Information Commissioner (OAIC) has announced its recognition of seven external dispute resolution (EDR) schemes under the amended Privacy Act 1988 (Cth).

Those schemes are
  • Telecommunications Industry Ombudsman Ltd [TIO]
  • Credit Ombudsman Service Ltd [COSL]
  • Energy & Water Ombudsman (NSW) Ltd [EWON]
  • Energy & Water Ombudsman (Victoria) Ltd [EWOV]
  • Energy & Water Ombudsman Western Australia [EWOWA]
  • Financial Ombudsman Service [FOS]
  • Tolling Customer Ombudsman [TCO]
Under the Privacy Amendment (External Dispute Resolution Scheme - Transitional) Regulation 2014 a transitional 12 month exemption from the requirement to be a member of a recognised EDR scheme is in place for energy and water utilities and commercial credit providers wishing to access the credit reporting system.

COSL has meanwhile announced that "having consulted with its various stakeholders, [it] is in the final stages of finalising its 9th Edition Rules" regarding privacy-related complaints. Pending release of that edition it is using interim Rules [PDF].

COSL states that
The Credit Ombudsman Service Limited (COSL) offers consumers an accessible, independent and fair external dispute resolution (EDR) service, approved by the Australian Securities and Investments Commission (ASIC). COSL has almost 17,000 participating financial services providers (FSPs) who operate in a variety of financial service sectors. Participants of the scheme include credit unions, building societies, non-bank lenders, mortgage and finance brokers, financial planners, investment managers, debt services and a wide range of other financial services and product providers.
The aim of the organisation is to provide consumers with a free and impartial dispute resolution service as an alternative to legal proceedings for resolving complaints with their financial services and product providers.
We provide a free, independent and impartial dispute resolution service. We facilitate the resolution of complaints between consumers and participants of our scheme. In doing so, we provide both consumers and financial services providers with an alternative to legal proceedings for resolving financial services disputes.
We are not government-funded, nor do we regulate the financial services industry or discipline participants of our scheme.

We are required to meet certain benchmarks prescribed by the Australian Securities and Investments Commission (ASIC) and have been approved by ASIC to operate as an external dispute resolution (EDR) scheme in the financial services industry.

Participants of our scheme include non-bank lenders, finance brokers, credit unions, building societies, debt collection firms, financial planners, trustees, servicers, aggregators, mortgage managers, and many more.

Facebook and Surveillance posts

The 18 March Parkes Champion Post reports - under the title 'Man, 20, charged over Facebook posting' - that
A 20 year old Parkes man has been charged with breaching the Surveillance Devices Act after allegedly illegally recording a conversation in a local fast food outlet and posting the video on Facebook.
The man allegedly entered the outlet after 2pm last Friday and recorded a conversation he had with a staff member before posting it on the social media site.
The staff member was unaware they were being recorded and as such did not give their permission.
The man has been issued with a Court Attendance Notice to appear in Parkes Local Court on May 5.
A police spokesperson said the charge can carry a maximum five year gaol sentence or a $5,500 fine.
The relevant provision appears to be section 8 of the Surveillance Devices Act 2007 (NSW) -
Installation, use and maintenance of optical surveillance devices without consent
(1) A person must not knowingly install, use or maintain an optical surveillance device on or within premises or a vehicle or on any other object, to record visually or observe the carrying on of an activity if the installation, use or maintenance of the device involves:
(a) entry onto or into the premises or vehicle without the express or implied consent of the owner or occupier of the premises or vehicle, or
(b) interference with the vehicle or other object without the express or implied consent of the person having lawful possession or lawful control of the vehicle or object.
Maximum penalty: 500 penalty units (in the case of a corporation) or 100 penalty units or 5 years imprisonment, or both (in any other case).
(2) Subsection (1) does not apply to the following:
(a) the installation, use or maintenance of an optical surveillance device in accordance with a warrant, emergency authorisation, corresponding warrant or corresponding emergency authorisation,
(b) the installation, use or maintenance of an optical surveillance device in accordance with a law of the Commonwealth,
(c) the use of an optical surveillance device and any enhancement equipment in relation to the device solely for the purpose of the location and retrieval of the device or equipment,
(d) the installation, use or maintenance of an optical surveillance device by a law enforcement officer in the execution of a search warrant or crime scene warrant (including the use of an optical surveillance device to record any activity in connection with the execution of the warrant),
(e) the use of an optical surveillance device, being a device integrated into a Taser issued to a member of the NSW Police Force, to record the operation of the Taser and the circumstances surrounding its operation.
Section 7 of the Act reads -
Prohibition on installation, use and maintenance of listening devices
(1) A person must not knowingly install, use or cause to be used or maintain a listening device:
(a) to overhear, record, monitor or listen to a private conversation to which the person is not a party, or
(b) to record a private conversation to which the person is a party.
Maximum penalty: 500 penalty units (in the case of a corporation) or 100 penalty units or 5 years imprisonment, or both (in any other case).
(2) Subsection (1) does not apply to the following:
(a) the installation, use or maintenance of a listening device in accordance with a warrant, emergency authorisation, corresponding warrant or corresponding emergency authorisation,
(b) the installation, use or maintenance of a listening device in accordance with the Telecommunications (Interception and Access) Act 1979, or any other law, of the Commonwealth,
(c) the unintentional hearing of a private conversation by means of a listening device,
(d) the use of a listening device to record a refusal to consent to the recording of an interview by a member of the NSW Police Force in connection with the commission of an offence by a person suspected of having committed the offence,
(e) the use of a listening device and any enhancement equipment in relation to the device solely for the purposes of the location and retrieval of the device or equipment,
(f) the use of a listening device, being a device integrated into a Taser issued to a member of the NSW Police Force, to record the operation of the Taser and the circumstances surrounding its operation.
(3) Subsection (1) (b) does not apply to the use of a listening device by a party to a private conversation if:
(a) all of the principal parties to the conversation consent, expressly or impliedly, to the listening device being so used, or
(b) a principal party to the conversation consents to the listening device being so used and the recording of the conversation: (i) is reasonably necessary for the protection of the lawful interests of that principal party, or (ii) is not made for the purpose of communicating or publishing the conversation, or a report of the conversation, to persons who are not parties to the conversation.
(4) Subsection (1) does not apply to the use of a listening device to record, monitor or listen to a private conversation if:
(a) a party to the private conversation is a participant in an authorised operation and, in the case of a participant who is a law enforcement officer, is using an assumed name or assumed identity, and
(b) the person using the listening device is that participant or another participant in that authorised operation.
Section 11 deals with dissemination of recordings, reading - 
Prohibition on communication or publication of private conversations or recordings of activities
(1) A person must not publish, or communicate to any person, a private conversation or a record of the carrying on of an activity, or a report of a private conversation or carrying on of an activity, that has come to the person's knowledge as a direct or indirect result of the use of a listening device, an optical surveillance device or a tracking device in contravention of a provision of this Part.
Maximum penalty: 500 penalty units (in the case of a corporation) or 100 penalty units or 5 years imprisonment, or both (in any other case).
(2) Subsection (1) does not apply to the following:
(a) if the communication or publication is made: (i) to a party to the private conversation or activity, or (ii) with the consent, express or implied, of all the principal parties to the private conversation or activity, or (iii) for the purpose of investigating or prosecuting an offence against this section, or (iv) in the course of proceedings for an offence against this Act or the regulations,
(b) if the communication or publication is no more than is reasonably necessary in connection with an imminent threat of: (i) serious violence to persons or of substantial damage to property, or (ii) commission of a serious narcotics offence.
(3) A person who obtains knowledge of a private conversation or activity in a manner that does not involve a contravention of a provision of this Part is not prevented from communicating or publishing the knowledge so obtained even if the same knowledge was also obtained in a manner that contravened this Part.

UK health data sales

UK civil society advocate MedConfidential notes emerging information in that country about the sale of bulk (and weakly deidentified) health data, highlighted here and here.

It for example points to a Sunday Times report last week that began -
A billion NHS records containing details of patients’ hospital admissions and operations have been sold to a marketing consultancy working for some of the world’s biggest drug companies, The Sunday Times can reveal.
Harvey Walsh, a healthcare intelligence company, has paid for a database that, although stripped of names and addresses, does include the age, postcode district, medical condition and place of treatment for every patient who has received hospital care in England.
The database handed over by health officials covers 125m “episodes” of hospital treatments each year, with details of every patient admission, A&E attendance and outpatient appointment.
Harvey Walsh says it already has 10 years of data and can “track” the treatments that individual patients receive over their lifetime. It said yesterday the data helped pharmaceutical companies to drive improved patient care.
The head of the Medical Research Council, Professor Sir John Savill, is reported as stating that NHS data sharing would be seen as a “no brainer” by patients if the government explained the scheme properly.

Savill thus
insisted only “consent fetishists” could object to the Care.data scheme. ...
“It could turn the UK into the best clinical laboratory in the world and the benefit would be felt first in the UK. This could modify the game in wellness investigation and healthcare. The act of learning de-identified information in a safe haven without having specific consent does not to my thoughts threaten confidentiality."
Only “consent fetishists” could truly object to plans to share patient data which could radically improve the NHS, according to the head of the Medical Research Council. ...
Sir John, who oversees £767 million in public research funding, also warned that planned EU data protection laws would cost lives by making vital research all but impossible. He said that 2.2 million people, one in 30 Britons, were enrolled in a type of medical research study which could become impractical


'Regulating Cryptocurrencies in the United States: Current Issues and Future Directions' by Sarah Jane Hughes and Stephen T. Middlebrook in (2014) 40(813) William Mitchell Law Review explores 
the state of virtual currencies and their regulation in and by the United States and the States. It offers thoughts on which models of regulation might suit virtual currencies best. It also surveys recent enforcement actions brought by the Departments of Treasury, Justice and Homeland Security against providers of virtual currencies or comparable electronic stored value. It concludes that issuers and users of virtual currencies are not being realistic if they think that the United States will not regulate virtual currencies for some purposes.
The authors comment
Since virtual currencies first came into the marketplace in the 1990s, those responsible for monetary policy, federal anti-moneylaundering and economic sanctions programs, along with federal and state consumer protection regulators, payment systems operators, businesses, and consumers have grappled with understanding how these “currencies” work, whether they should be deemed “lawful” payment methods in the United States, and, if so, the manner and extent to which they should be regulated. Regulatory activity related to offering virtual currencies has come in fits and starts, with a burst of intensity in 2013 spurred by the attention to and use of a special form of virtual currency known as a cryptocurrency.
This article reviews developments in 2013 that pertain to cryptocurrencies and their transactors and evaluates them against the backdrop of long-established and more recent federal and state licensure, payments systems, anti-money laundering, economic sanctions, and consumer protection regulation. It also touches upon transactors’ desires for anonymity and security in their transactions and related information and discusses how the technologies upon which cryptocurrencies are based may be adapted to support both other payment methods and electronic commerce in general.
Part II describes cryptocurrencies in the market in 2013. Part III reviews the precursors to the current state of regulation in the United States, particularly the federal government’s prosecution of e-gold, Ltd. In Part IV, we evaluate FinCEN’s initial guidance on virtual currencies, which it published in March 2013, and discuss industry reaction to the new rules. In Part V, we review recent actions by legislators, other federal regulators and some state actors. Part VI analyzes the federal government’s 2013 enforcement actions against Mt. Gox Co. Ltd. (“Mt. Gox”), and Liberty Reserve, which closely followed FinCEN’s March guidance. And, in Part VII, we ask—and make some modest efforts to answer—the core question: what does the future hold for cryptocurrency? The brief conclusion in Part VIII relies in part on the legal history of concepts of “money” and “legal tender” in the United States since 1862 and concludes that it is unrealistic to imagine that cryptocurrencies will not face regulation in the United States for some or all of the purposes mentioned in this article.
They conclude
No cryptocurrency issuer, exchanger, or user should have expected that the government of the United States—or any other government for that matter—would allow any significant storage of value in its “currency” without deciding to regulate the issuer or central exchange involved in some manner. 
Why? Because that is what governments have been doing to protect both trade and their own seigniorage rights for at least the past 500 years. By 1605, for example, the English courts were already convinced of the Crown’s right to control what constituted “legal tender” and who could issue “legal tender.” The federal government’s exclusive right to issue “coins” is expressed in the U.S. Constitution. When Congress enacted the Stamp Payments Act of 1862, the National Currency Act of 1863, and then the National Bank Act of 1864, it expressed its conviction that it alone had authority to declare what qualifies as “legal tender.”
The Supreme Court agreed with Congress in a series of famous decisions beginning shortly after the National Bank Act was enacted. In Veazie Bank v. Fenno, the Supreme Court upheld Congress’s imposition of a tax of ten percent imposed on state and national banks paying out “notes” of individuals or state banks used for circulation, likening this tax to the payment of duties. The Court specifically recited a number of facts about the manner in which Congress has taken charge of legal tender, including (1) denying the quality of legal tender to foreign coins, (2) providing a law against counterfeits and base coin on the community, (3) restraining the issue of notes not issued under its own authority, and (4) observing that without the power to control these aspects of legal tender, Congress’s “attempts to secure a sound and uniform currency for the country must be futile.” The Supreme Court was even more forceful in holding the 1860s “legal tender” acts constitutional, both as to contracts entered into before and after their passage. The Court’s opinion discussed the powers of the sovereign and noted that the Court would have to reverse course for its growing body of canons of statutory construction if it did not uphold Congress’s acts concerning legal tender.
A government’s interests are no less when one considers the authority to tax transactions and profits189 and to impose duties on foreign transactions. Thus, following its announcement that it would not require Bitcoin exchanges to register as a “money service” or “money transmitter” in the United Kingdom, Her Majesty’s representatives still warned Bitcoin users about paying attention to the tax implications of their Bitcoin transactions. Those representatives, however, predicted that regulation “will definitely come into play” and “so it is in the best interests of businesses that think they are transacting as a money services business to still keep anti-money laundering and know-your-customer practices in play so they’re prepared for when HMRC does come knocking.” Soon afterwards, Her Majesty’s representatives did an about-face and, following a meeting with Bitcoin U.K. representatives, announced their intention to issue regulations.
Considering the different possible regulatory paradigms and the questions we raised in Part VII of this article, we find ample evidence of governments’ interests in regulating cryptocurrencies in one fashion or another and of several possible ways to determine which of the competing federal-versus-state and payments-versus-securities- versus-commodities paradigms should be considered. 
Even among the paradigms that apply to different payments systems, options abound. The participants in transactions of this type have long had regulations governing their rights and have had, in greater and lesser degrees, government regulation of depositories and exchange/payment systems rules. Some of these regulations grew out of informal self-regulation, at least as the subjects suitable for resolution by private law or system rules—as opposed to public law—are concerned.
The federal government’s action against e-gold and its 2013 regulatory guidance and law enforcement actions against Liberty Reserve and Mt. Gox persuade us that the government will exercise regulatory authority over cryptocurrencies and other virtual currencies to some extent.
Despite the tendency of new Internet-based entrants to imagine themselves to be entitled to exist and operate without regulations, a kind of unregulated Wild West attitude, the oldfashioned notions of why we regulate payments and value-storage media that we discuss in this article suggest to us that regulation will happen, and that its challenges will be similar to those faced since kings and princes first issued coins and then issued other indicia of stored value such as paper “money” that qualified for use as “legal tender.”
The idea that governments issue “money” and declare what qualifies as “legal tender” is an ancient notion. The history of regulating money and legal tender suggests that it is not likely that governments will surrender their privileges to regulate cryptocurrency issuers, exchanges, administrators, or users. The real questions are which paradigm(s) governments will use, how much enforcement energy they will spend on regulating cryptocurrencies, and whether and how they will compete with each other to offer regulatory schemes that do not send cryptocurrency entrepreneurs, investors, and users running offshore.
On 25 March the US Internal Revenue Service in its Notice 2014-21 (Virtual Currency Guidance) indicated [PDF] that indicated that
In some environments, virtual currency operates like “real” currency - i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction. 
The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.
  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes. 
  • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099. 
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer. 
  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

21 March 2014

ACT Information Privacy Bill 2014

The ACT Government has introduced into the Territory's Legislative Assembly the Information Privacy Bill 2014 (ACT), emulating the amended Privacy Act 1988 (Cth).

The Government indicates that the "main purpose" of the Bill is
to introduce ACT privacy legislation to regulate the handling of personal information (other than personal health information) by public sector agencies in the Territory. ...
Previously the Commonwealth Privacy Act 1988, as enacted in 1994, applied to the ACT and was administered by the Privacy Commissioner on behalf of the ACT Government. The Privacy Act applied to ACT public sector agencies by virtue of section 23 of the Commonwealth Australian Capital Territory Government Service (Consequential Provisions) Act 1994. The Privacy Act also applied to the private sector in the Territory, as it does in other Australian jurisdictions.
In addition to this, the ACT has its own legislation dealing with personal health information and workplace surveillance:
  • the Health Records (Privacy and Access) Act 1997 provides a for privacy and access rights to personal health information whether it is held in the public or the private sector; 
  • the Workplace Privacy Act 2011, modelled on NSW legislation, regulates when an employer may conduct surveillance on an employee.
In acknowledging the responsibilities of ACT self-governance, and in light of the Commonwealth privacy reforms, it is timely for the ACT to consider developing its own Privacy Act applying to public sector agencies in the Territory.
This would cease the operation of the Commonwealth law in relation to public sector agencies in the Territory, leaving the Commonwealth law to cover the private sector, an approach adopted in other Australian jurisdictions, including New South Wales and Victoria.

The Government notes that "introduction of an ACT Privacy Act" was a 2012 election commitment, along with introduction of a statutory cause of action to protect against serious invasions of privacy.
Separate privacy legislation for ACT public sector agencies meets this commitment. Additional policy work on evaluating the suitability of a statutory cause of action for a breach of privacy will continue after the Australian Law Reform Commission (ALRC) report into a statutory cause of action for serious invasions of privacy that will guide the second stage of the Commonwealth’s privacy reforms is published in June 2014.
The Explanatory Statement regarding the Information Privacy Bill indicates that it
is concerned with regulating the information handling and privacy practices of ACT public sector agencies.
There are two provisions (sections 53(1) & (2)) which create criminal offences for the unauthorised and reckless use or disclosure of protected information by a public sector officer or other person who has obtained the information through their role performing functions under the Information Privacy Bill.
It is a defence to the charge of use or disclosure of protected information if the use or disclosure is authorised by a Territory law, is in relation to the exercise of a function under a Territory law, is in a court proceeding or is used or disclosed with consent of the person to whom the information relates.
The maximum penalty for these offences is 50 penalty units, imprisonment for 6 months or both. These offences are in line with the principles set out in the JACS Guide to Framing Offences and are aimed at ensuring that personal information which can come into the possession of individual public sector officers by virtue of their position in a public sector agency is not misused.
Creating offences to discourage the abuse of personal information is necessary to ensure trust in the ability of the Commissioner and other officials to responsibly manage information obtained or compelled from ACT residents by the operation of the Information Privacy Act. At the same time, the bill provides that officials cannot be held civilly liable for an act or omission done honestly and without recklessness in the exercise of a function under the Information Privacy legislation.

What is covered? The Statement notes that " personal information for the purposes of this act"
is any information that is - ‘information or an opinion about an identified individual, or an individual who is reasonably identifiable—
a) whether the information or opinion is true or not; and
b) whether the information or opinion is recorded in a material form or not’.
The definition has been adopted from Commonwealth Privacy Act 1988 incorporating amendments by the Commonwealth Privacy Amendment (Enhancing Privacy Protection) Bill 2012.
The amendments to the definition do not significantly change the scope of what is considered to be personal information. The definition continues to be based on factors which are relevant to the context and circumstances in which personal information is collected and held. The definition continues to be sufficiently flexible and technology-neutral to encompass changes in the way that information that identifies an individual is collected and handled.
The definition of personal information in the Act specifically excludes personal health information. The ACT’s existing Health Records (Privacy and Access) Act 1997 will continue to regulate privacy and access rights to personal health information held in the public or the private sector. ... An act or practice of a public sector agency will be an interference with the privacy of an individual where it breaches a Territory privacy principle in relation to personal information about the individual, or breaches a TPP code that binds the agency in relation to personal information about the individual. An act or practice of a contracted service provider under a government contract will be an interference with the privacy of an individual if the act or practice breaches a TPP or TPP code binding the agency which entered into the contract
The Bill enshrines several Territory Privacy Principles (TPPs), which are not an exact match for the Australian Privacy Principles (APPs) under the Commonwealth statute. They are -
TPP 1 – open and transparent management of personal information
TPP 2 – anonymity and pseudonymity
TPP 3 – collection of solicited personal information
TPP 4 – dealing with unsolicited personal information
TPP 5 – notification of the collection of personal information
TPP 6 – use or disclosure of personal information
TPP 8 – cross-border disclosure of personal information
TPPs 7 and 9 are not substantive TPPs but refer to Commonwealth APPs which are not relevant to the handling of information by public sector agencies. APP 7 prohibits direct marketing and APP 9 regulates the adoption, use or disclosure of government-related identifiers (for example, Medicare numbers and driver’s licence numbers).
TPP 10 – quality of personal information
TPP 11 – security of personal information
TPP 12 – access to personal information TPP 13 – correction of personal information
Entities addressed by the proposed legislation are -
• a Minister (ie the Chief Minister or a Minister appointed under section 41 of the ACT Self-Government Act);
• an administrative unit (ie an administrative unit established under section 13(1) of the Public Sector Management Act 1994, for example the Justice and Community Safety Directorate);
• a statutory office-holder and the staff assisting the statutory office-holder, for example the Director of Public Prosecutions, appointed under section 22 of the Director of Public Prosecutions Act 1990;
• a territory authority (ie a body established for a public purpose under an Act, other than a body declared by regulation not to be territory authority. An example is the ACT Legal Aid Commission);
• a territory instrumentality (a corporation established under an Act or statutory instrument, or under the Corporations Act, and is a territory instrumentality under the Public Sector Management Act 1994, for example the ACT Professional Standards Council established under the Civil Law (Wrongs) Act 2002;
• a territory-owned corporation or a subsidiary of a territory-owned corporation (eg the ACTEW utility);
• an ACT court (ie the Supreme Court, Magistrates Court, Coroner’s Court or a tribunal, and include a judge, magistrate, tribunal member and any other person exercising a function of the court or tribunal).

The Statement goes on to note that
Privacy is a quality that emphasises human desire for personal autonomy, dignity and freedom from arbitrary or unreasonable or oppressive interference and intrusion into an individual’s personal sphere. The right to privacy and reputation is set out in section 12 of the Human Rights Act 2004. That section states that - Everyone has the right— (a) not to have his or her privacy, family, home or correspondence interfered with unlawfully or arbitrarily; and (b) not to have his or her reputation unlawfully attacked.
The right to privacy in the Human Rights Act is based on the right to privacy set out in Article 17 of the International Covenant on Civil and Political Rights (‘ICCPR’). The UN Human Rights Committee (‘UNHRC’), commenting on the right to privacy, noted that ‘as all persons live in society, the protection of privacy is necessarily relative. However, the competent public authorities should only be able to call for such information relating to an individual's private life the knowledge of which is essential in the interests of society...’
The UNHRC has stated that unlawful, in the context of the right to privacy set out in Article 17, “means that no interference can take place except in cases envisaged by the law. Interference can only take place on the basis of law, which itself must comply with the provisions, aims and objectives of the Covenant”. The protection from arbitrary interference with privacy means that the State cannot randomly or capriciously interfere with an individual’s privacy in a manner that is unrestrained or not based on demonstrable evidence. The UNHRC has stated that an interference that is lawful can be arbitrary if it is unreasonable in the circumstances. Reasonableness implies that any interference with privacy must be proportionate to the end sought and must be necessary in the circumstances of any given case.
The Information Privacy Bill supports and enhances the right to privacy by ensuring that there is a clear framework setting out how ACT public sector agencies collect, use, disclose and otherwise manage personal information. Ensuring there is a comprehensive and clearly identifiable privacy regime in the ACT means that individuals are protected from arbitrary or unlawful breaches of an individual’s right to privacy.
If breaches do occur, the Information Privacy Bill establishes mechanisms for the independent investigation and resolution of complaints and an avenue for redress through the courts. Arguably, part 4 of the Act may impose a limitation on the right to privacy by exempting some public sector agencies from the operation of the Act. The right to privacy is not absolute and may be reasonably limited by laws which can be demonstrably justified in a free and democratic society. Under section 24 an exemption for certain public sector agencies is limited in application to three non-permanent investigative bodies, plus entities prescribed by regulation, that can be established to perform important functions of inquiry, according to law. These include:
(a) a board of inquiry under the Inquiries Act 1991;
(b) a judicial commission under the Judicial Commissions Act 1994;
(c) a royal commission under the Royal Commissions Act 1991;
(d) an agency prescribed by regulation.
Section 17 of the Inquiries Act 1991; s 28 of the Judicial Commissions Act 1994 and s 20 of the Royal Commissions Act 1991 all create criminal offences for the unlawful and unauthorised collection, use or disclosure of information obtained by virtue of a person’s involvement with the inquiry or commission. These protections are stricter than those set out in the Information Privacy Bill 2014, but also appropriately tailored to the special nature and conduct of such investigations.
Under section 25 the Information Privacy Bill will not apply to the following acts and practices:
(a) for a Minister—an act done, or a practice engaged in, by the Minister other than an act done, or a practice engaged in, by the Minister in relation to the affairs of a public sector agency administered by the Minister;
(b) for an ACT court—an act done, or a practice engaged in, by the ACT court other than an act done, or a practice engaged in, by the ACT court in relation to a matter of an administrative nature;
(c) for the Office of the Legislative Assembly—an act done, or a practice engaged in, by the Office other than an act done, or a practice engaged in, by the Office in exercising a function in relation to a proceeding of the Legislative Assembly;
(d) for officers of the Assembly—an act done, or a practice engaged in, by the officer of the Assembly other than an act done, or a practice engaged in, by the officer in relation to a matter of an administrative nature;
(e) for an FOI exempt agency—an act done, or a practice engaged in, by the agency in relation to a document in relation to which the agency is exempt from the operation of the FOI Act;
(f) for an agency prescribed by regulation—an act done, or a practice engaged in, by the agency in relation to a matter prescribed by regulation.
Section 28 of the Human Rights Act states that rights can be subjected to reasonable limitations set by laws that can be demonstrably justified in a free and democratic society. These exemptions for the listed specific acts and practices are necessary for the effective operation and independence of those specified entities. The exemptions continue existing privileges for Government and the Legislative Assembly and maintain the independence of the Courts.
FOI exempt agencies have been identified as appropriately exempted from other information handling and release rules because they relate to commercial–in-confidence information or relate to personal health information. Entities exempted from the Information Privacy Act in relation to their non-administrative functions are subject to other forms of accountability and oversight which offer equivalent privacy protections in manner that is suitably adapted to allow certain public officials in specific agencies, officers and members of the Assembly and the judiciary to perform their important functions. These limitations are clearly defined and the boundaries within which practices are exempted are proportionate to the importance of supporting the functions of the exempted entities. There are no blanket exceptions for these entities, and their administrative functions still fall within the scope of the Act.

The Statement comments that
While the right to freedom of expression is a fundamental right, the Information Privacy Act balances the need for communication of information with the right to privacy by setting out different categories of information and imposing additional requirements for the handling of personal information and sensitive information. Other forms of information can be collected and stored without restriction, subject to other Territory or Commonwealth laws. The limitations set out in requiring public sector officials to observe the Territory Privacy Principles (TPPs) in the Act, aim to limit unauthorised use or disclosure of personal information obtained by ACT public sector agencies.
These limitations are both justified and proportionate to ensure that this information, collection of which is necessary for the proper functioning of governance, is handled in accordance with clear procedures and practices that recognise the importance of personal information to the person to which it relates. In the landmark UK case McKennitt v Ash Eady J considered the tension between freedom of expression and the privacy rights of an individual. He stated that -
It is clear that [in the UK] there is a significant shift taking place as between, on the one hand, freedom of expression for the media and the corresponding interest of the public to receive information, and, on the other hand, the legitimate expectation of citizens to have their private lives protected … Even where there is a genuine public interest, alongside a commercial interest in the media in publishing articles or photographs, sometimes such interests would have to yield to the individual citizen’s right to the effective protection of private life.
It is desirable that the broad powers of agencies to require and compel, on threat of penalty, a wide range of personal information, are restrained by a general system of checks on the fair and reasonable use and disclosure of that information.
The limitations in the TPPs are not absolute. Personal information can be used or disclosed within circumstances prescribed by the Act or other Territory laws. There are protections for use or disclosure done honestly and without recklessness by an officer in the course of performing functions under the Act. The Act establishes mechanisms for investigating and resolving alleged breaches of privacy and as part of such investigation may determine that a an act or practice was not an interference with the privacy of the individual or was authorised by law.
ACT Information Privacy Commissioner

The Bill provides for establishment of an Information Privacy Commissioner, discussed here.

20 March 2014


The Australian Institute of Criminology has released 'Same sex intimate partner homicide in Australia' (Trends & issues in crime and criminal justice no. 469) by Alexandra Gannoni and Tracy Cussen.

The report [PDF] uses data from the AICs National Homicide Monitoring Program database to describe what is known about the trends and key characteristics of same-sex intimate partner homicide.

 Of the 1,536 intimate partner homicide incidents recorded from 1989–90 to 2009–10 in Australia, around 2% were classified as same-sex intimate partner homicides (n=31; 2.1% cf n=1,505; 97.9% which were classified as opposite-sex intimate partner homicides).

Although there were some statistical differences, homicides were similar in both subsets – knives were the most commonly used murder weapons, and males were responsible for the majority of killings.

The authors comment
Comparatively little international research has been conducted exploring the nature and context of same-sex intimate partner homicides and no research has specifically examined same-sex intimate partner homicides in Australia. However, as Drake (2004: 317) argues:
Research about [gay, lesbian, bisexual and transgendered] homicide is necessary if the overall homicide rate is to be reduced...Focusing on stigmatised and underrepresented groups … might not appear important, [but] this kind of attitude helps exacerbate the crime problem and ensures that homicide will always be problematic.
In an attempt to address this gap in the Australian homicide literature and to contribute new knowledge to the study of homicide in general, this paper describes the key characteristics of same-sex intimate partner homicide in Australia as recorded in the NHMP and draws together national and international research concerning its associated factors.
They go on to state that
The findings in this paper should be interpreted in light of the following five limitations. First, despite the quality assurance efforts, there may be an undercount of same-sex intimate partner homicide incidents. Due to concealment issues associated with same-sex relationships, there is a possibility that some cases may have been miscoded by police as between strangers, or between friends or acquaintances. Second, as already noted, the lack of specific information about a victim or offender’s sexual or gender identity precludes an analysis of transgendered, bi-sexual or intersex persons as victims or offenders in homicide matters. Third, it is possible that the prevalence of drug and alcohol use among both same-sex and opposite-sex intimate partner homicide incidents is underrepresented. While the NHMP relies on post-mortem toxicology tests to determine whether the victim had drugs or alcohol in their system, identifying drugs or alcohol for the offender is usually based on a subjective assessment of the investigating officers. Fourth, although the paper uses the NHMP’s best available data on mental health, it is possible that the prevalence of mental disorders is underrepresented. A mental disorder is recorded where information is available and where a specific condition of the offender has been determined. This information does not always come to the attention of investigating officers. Finally, both same-sex and opposite-sex intimate partner homicide rates per population may be an overestimate.
During the period 1989–90 to 2009–10 stab wounds were the leading cause of death for both same-sex and opposite-sex intimate partner homicide victims (47% and 41% respectively). The authors note some differences -
  •  strangulations or suffocations were more common among same-sex intimate partner homicide victims (n=8; 25%) than opposite-sex intimate partner homicide victims (n=181; 12%); 
  • beatings were more common among opposite-sex intimate partner homicide victims (n=321; 21%) than same-sex intimate partner homicide victims (n=5; 16%); and 
  • about one in five opposite-sex intimate partner homicide victims (n=272; 18%) died from gunshot wounds, compared with none for same-sex intimate partner homicide victims (n=0; 0%).
Female same-sex intimate partner homicide victims were more likely to die from stab wounds (n=4; 100%) compared with male same-sex intimate partner homicide victims (n=11; 39%). Of the eight male same-sex intimate partner homicide victims who died as a result of strangulations or suffocations, three (38%) were known to have been attributed to erotic asphyxia according to court transcript material.

Analysis of the apparent motives (or reasons) from 1989–90 to 2009–10 indicates that same-sex intimate partner homicides occurred for many of the same reasons as opposite-sex intimate partner homicides. Domestic arguments were identified as the leading motive for both same-sex and opposite- sex intimate partner homicide incidents (n=8; 25% and n=837; 56% respectively), although in most cases further information regarding the nature of the argument was not available.

Other apparent motives identified for both same-sex and opposite-sex intimate partner homicide victims included:
  • revenge (n=1; 3% and n=23; 2% respectively); 
  • jealousy (n=3; 9% and n=102; 7% respectively); 
  • relationship desertion/terminations (n=2; 6% and n=291; 19% respectively); 
  • money (n=3; 9% and n=24; 2% respectively); 
  • other arguments (n=4, 13% and n=16; 1% respectively); 
  • mercy killings (n=1; 3% and n=10; 1% respectively); and 
  • apparently delusional (n=1; 3% and n=10; 1% respectively).

Pharma Review Recommendations

The Pharmaceutical Patents Review report [PDF] noted in the preceding post features several findings of interest to intellectual property specialists, health policymakers sand civil society advocates -
F3.1 In their negotiation of international agreements, Australian Governments have lacked strategic intent, been too passive in their IP negotiations, and given insufficient attention to domestic IP interests. For example, preventing MFE appears to have deprived the Australian economy of billions of dollars of export revenue from Australian based generic manufactures. Yet allowing this to occur would have generated negligible costs for Australian patentees. The Government does not appear to have a positive agenda regarding the IP chapters of the TPP Agreement. The Government has rightly agreed to only include IP provisions in bilateral and regional trade agreements where economic analysis has demonstrated net benefits, however this policy does not appear to be being followed. 
F9.1 There is insufficient evidence to support an increase in data protection beyond the current five year period for biologics at the present time. However, the Panel acknowledges that the regulatory environment and market for biologic and biosimilar medicines is still developing and that the situation should be revisited when further market experience gives us a better understanding of the relevant issues. 
F10.1 The patent system is of obvious significance to the pharmaceutical industry, trade negotiations and health policy. However, the government agencies with policy and program responsibility in these areas are not engaging sufficiently with each other and are not taking highly relevant issues into account in their deliberations. Each agency needs to be the eyes and ears of the system from various perspectives, aware of inter-actions of several factors – end users, innovation, industry and international implications – in order to optimise policy settings for the pharmaceutical system in what is a complex regulatory and service delivery environment. The areas of Government influencing pharmaceutical pricing particularly have both the need and the resources to obtain a detailed appreciation of the pharmaceutical patent system and its impact on a range of health issues.
The Review's recommendations are accordingly -
R3.1 The Government should expeditiously seek a situation where Australia has strong yet parsimonious IP rights – that is, rights that are strongly enforced and that provide the incentive necessary to underpin an appropriate level of investment in innovation - but that are not defined so broadly as to impose costs on innovation or other activity without commensurate benefits. Australia should take a leadership role in seeking consensus with jurisdictions with similar interests to identify and pursue a range of changes in international patent law and practice along these lines. 
R3.2 The Government should ensure that future trade negotiations are based on a sound and strategic economic understanding of the costs and benefits to Australia and the world and of the impacts of current and proposed IP provisions, both for Australia and other parties to the negotiations. The Government should strongly resist changes – such as retrospective extensions of IP rights – which are likely to reduce world economic and social welfare and it should lead other countries in opposing such measures as a matter of principle. 
R3.3 Given the current constraints placed on Australia by its international obligations, as an interim measure the Government should actively seek the cooperation of the owners of Australian pharmaceutical patents to voluntarily agree to enter into non-assertion covenants with manufacturers of generic pharmaceuticals seeking to manufacture patented drugs for export. This would help them avoid the embarrassment of Australia’s trade and investment performance being penalised by its previous agreement to strengthen IP rights. 
R4.1 The Government should change the current EOT to reduce the maximum effective patent life provided from 15 years. Harris and Gruen support reducing the effective life to 10 years, whereas Nicol supports reducing the effective life to 12 years. The length of the extension should be calculated as being equal the number of days between the patent date and the date of first inclusion on the Australian Register of Therapeutic Goods minus 20 years less the maximum effect patent life. The current 5 year cap on extensions should remain, providing a maximum of 25 years patent term for extended patents. 
R4.2 The Government should use part of the associated savings from R 4.1 to fund R&D directly. Some of this funding could be targeted to socially beneficial research where patent incentives may be inadequate. Such areas include new antibiotics which, once developed, must be used as sparingly as possible to prevent the development of antibodies, and pharmaceuticals to address rare diseases, paediatric illnesses and endemic health issues in low income countries. This option could also include an annual review of the savings delivered through any reduction in effective patent life with some share of those savings used to fund replacement R&D subsidies. 
R4.3 Section 76A of the Patents Act should be deleted. The Pharmaceutical System Coordinating Committee recommended in R 10.1 should consider whether a mechanism for reporting on the use of public and private research funds in pharmaceutical R&D, similar to that established by the Canadian Patent Medicine Prices Review Board (PMPRB) and superior to s.76A, can and should be developed. 
R5.1 The Government should maintain the current approach that allows extensions for drugs and formulations but not for methods of use and manufacture. This will continue to provide an incentive for the development and supply of active pharmaceutical ingredients and new formulations, without adding to the existing cost of medicines in Australia. 
R5.2 Section 70(3) should be amended to clarify that the ARTG registration on which an EOT is based is that of the relevant product, the use of which would infringe the claim. 
R6.1 The Government should establish an external patent oversight committee (eg. as part of the ACIP) that is tasked with reviewing grants issued by IP Australia and auditing the decisions involved in making such grants, to ensure that IP Australia’s decisions are consistent with the relevant Australian law as well as being aligned with Australia’s major trading partners and with Australia’s interests. 
R6.2 The Government should request the Productivity Commission to undertake a broad review of the patent system, including of the effectiveness of Raising the Bar Act no later than five years from the commencement of the Act. 
R6.3 The Government should implement strategies for minimising the extent to which PBS policies permit evergreening practices, where these practices provide no net benefit to Australia. An overarching body, such as the PSCC (see recommendation 10.1) should be tasked with oversighting such strategies. 
R7.1 As the party that ‘internalises’ the most benefits of a successful challenge to a patent for a product on the PBS, the Government should take a more active role in managing the cost of the PBS where a patent relating to a PBS-listed pharmaceutical is successfully challenged in the courts. This should involve the Government sharing with the successful challenger of a patent the savings to the PBS from earlier generic entry or recovered costs to the PBS through compensation or repayment of damages from the patentee or manufacturer of the PBS-listed drug. The quantum of savings should be formula driven rather than negotiated on a case-by-case basis, with savings estimates based on the price reductions following first listing of a competitor brand on the PBS (currently 16 per cent) and price disclosure arrangements. 
R7.2 Section 117 of the Patents Act should be amended to provide that the supply of a pharmaceutical product subject to a patent which is used for a non-patented indication will not amount to infringement where reasonable steps have been taken to ensure that the product will only be used in a non-infringing manner. It may be presumed that “reasonable steps” have been taken where the product has been labelled with indications which do not include any infringing indications. 
R7.3 The Government should introduce a transparency register linking therapeutic goods included on the ARTG with related patents. The register should include the numbers of all patents owned by, or licensed to, the sponsor of the therapeutic good and relevant to the therapeutic good. Patent numbers should be supplied to IP Australia when the sponsor receives notification of the ARTG inclusion, or when the patent is granted, if grant is subsequent to ARTG listing. A sponsor should only be able to commence infringement proceedings in respect of a patent that is on the register. Upon inclusion of a generic product on the ARTG that relies on information provided earlier in relation to another product, the TGA should directly notify the owner(s) of the patent(s) listed on the transparency register in relation to that earlier product about the inclusion. 
R8.1 The Government should actively contribute to the development of an internationally coordinated and harmonised system where data protection is provided in exchange for the publication of clinical trial data. 
R10.1 The Government should establish a non-statutory Pharmaceutical System Coordinating Committee (PSCC) that reports to Parliament on an annual basis on the success and effectiveness of the patent, marketing approval and PBS systems, particularly where these interface. The PSCC should ensure there is sufficient engagement and coordination between the relevant agencies and take account of costs to Government, efficiency of registration and approval processes and respond to issues raised by industry. The PSCC should comprise senior officials from at least DIICCSRTE, IP Australia, DoHA (Pharmaceutical Benefits Division and TGA), DFAT, Finance and Treasury (as chair). 
R10.2 When drafting the objects clause to be inserted in the Patents Act, as agreed to in the Government’s response to the Senate Community Affairs Committee’s Gene Patents report, the Government should take into account that the purpose of the legislation is to: • further Australia’s national interest and enhance the social and economic welfare of Australians; and • provide strong, targeted IP protection - but only up to the point at which the costs (to consumers and through impediments of ‘follow on innovation’) are no greater than the benefits of incentivising innovation.

Pharma Patents Review Report released

What a difference a week or so makes!

In a co-authored Conversation piece yesterday I noted that that the Government had refused to release the report of the Pharmaceutical Patents Review noted elsewhere in this blog.

That refusal was regrettable, as the report would aid informed discussion about intellectual property law and public health policy.

The Government has now abruptly changed direction, presumably because of public shaming, and released the report. IP Australia states that "The current government has made the final report available in response to stakeholder interest".

The Government's statement [PDF] regarding that reversal reads
The Pharmaceutical Patent Review was commissioned by the previous government and conducted by an independent panel. The review panel provided its final report to the previous government in May 2013, which did not release the report. 
The government notes that the report is one of a number of reviews of the pharmaceutical system conducted during the term of the previous government. The government has no plans to respond to the report at this stage but may take information in the report into account when considering future policy. The views expressed and recommendations made in the report are those of the review panel and do not necessarily reflect government policy.
The report [PDF] comments that
The pharmaceutical industry relies on patents more than most: successful pharmaceuticals require significant prior investment in research and development (R&D), yet competitors can cheaply copy them once they are on the market. The patent system restricts such free riding giving patentees a period of market exclusivity. It allows a reward for past investments and, more importantly, provides incentives for continued innovation.
Patents also have negative effects. They may increase prices – and so restrict supply – by more than the amount required to provide the necessary incentives to innovate. These negative features are important because they impact on human health. And though innovators seeking to patent must disclose considerable information about their inventions - thus providing a platform to others for further innovation - patents can also restrict further innovation by increasing legal risks and constraining competition in follow-on innovation.
Thus the question of how much patent protection to offer is crucial. Pharmaceutical patent rights that run for too long or that are defined too expansively will deprive people of drugs because purchasers, including Governments, cannot afford them. They can also constrain follow on innovation: too weak a patent system means patients will suffer because the industry has inadequate incentives to develop new drugs.
International Context
Judgements about patent adequacy and sufficiency are made more complex because the patent system operates within an international environment. Some critical features of Australia’s patent system have been set by international agreements. Larger developed countries that are major net IP exporters have tended to seek longer and stronger patents, not always to the global good. The acquiescence of Australia and other countries to that agenda means that some features of Australia’s patent law are of little or no benefit to patentees but impose significant costs on users of patented technologies.
International agreements also explain in some part why the patent term in Australia has been steadily increasing over time. The life of patent protection, originally 14 years and more recently 16 years, is now set at 20 years by the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In signing the Australia-United States Free Trade Agreement (AUSFTA) Australia agreed that it would preserve a further extension to patents for pharmaceuticals beyond the 20 years that it had already legislated, without careful regard to whether thus binding ourselves to this policy for the future was in our own economic interest.
In negotiating such agreements in the future, Australia needs a more active strategic engagement with the issues. While the patent system must be strong to be effective, it should also be parsimonious, avoiding restrictions on trade and innovation that are not necessary for it to deliver incentives to innovate. Beyond this, international negotiations should address critical issues arising from the limitations of patents in providing incentives to innovate, including the need to develop drugs with high social value which are not well rewarded in markets.
There are signs that these past failures are being replicated in the current Tran-Pacific Partnership (TPP) negotiations because small, net importers of intellectual property, including Australia, have not developed a reform agenda for the patent system that reflects their own economic interests – and those of the world.
Chapter 3 offers recommendations about Australia’s stance in international forums where patent systems feature and it considers two pressing issues that have materially limited Australia’s welfare whilst providing little or no offsetting benefits to patentees. One issue concerns Australia’s ability to manufacture generic pharmaceuticals for export to countries where there is no applicable patent (MFE). Perversely, if the applicable patent has not expired in Australia, it seems Australian generic manufacturers must establish manufacturing facilities overseas to serve those markets to avoid infringing Australian patent rights. This result offers no obvious benefit to the original patentee, for the drugs will be produced for the export market, but it prevents Australian business and its workers from producing them.
Secondly, for so long as a patent runs in Australia, current patent law prevents a generic manufacturer from stockpiling generic pharmaceuticals for future export or for future sale in Australia upon expiry of the Australian patent. This is an important issue, because the firm that first enters any generic market here or offshore enjoys strong ‘first mover’ advantages. This again imposes major restrictions on Australia’s ability to manufacture generic pharmaceuticals, while providing negligible benefits to the Australian patentee, for generics can be stockpiled and imported from other countries with weaker patent regimes or shorter patent lives.
The above examples are not new, but they have yet to be rectified. A decade ago, the Productivity Commission identified MFE as an important issue. At that time, the then Department of Industry, Tourism and Resources estimated export losses of $2.2 billion from 2001 to 2009 unless patent laws were changed. Generic manufacturers continue to ask the Government to intervene. Yet little has been done to advance their cause in international negotiations. In Chapter 3, the Panel recommends that Government act on these matters
Most of the major pharmaceutical companies participating in this Review have opposed most of the Panel’s recommendations, including that they voluntarily not assert their rights to prevent Australian manufacture for export to markets where there is no relevant patent. The Panel believes that its suggestion is not just consistent with companies’ corporate social responsibilities: it would relieve them of the embarrassment of Australia lose pharmaceutical investment, employment and exports as a result of their enforcing IP rights which have little value.
Extensions of Term
An important part of the terms of reference of this inquiry is to evaluate the extension of term (EOT) that the Australian patent system allows. It applies to some pharmaceuticals for which patentees have taken at least five years from the effective patent filing date to obtain regulatory approval for the pharmaceutical’s use. The current scheme dates from 1998. It aims to attract investment in pharmaceutical R&D in Australia, as well as providing an effective patent term for pharmaceuticals more in line with that available to other technologies. The scheme currently provides an effective patent term of up to 15 years.
At the time that the EOT was introduced, the annual cost to the Pharmaceutical Benefit Scheme (PBS) was estimated to grow from $6 million in 2001-02 to $160 million in 2005-06. This cost arises because there is a delayed entry to the PBS of cheaper generic drugs. The estimate for 2012-13 is around $240 million in the medium term and, in today’s dollars, around $480 million in the longer term. The total cost of the EOT to Australia is actually about 20 per cent more than this, because the PBS is only one source of revenue for the industry.
Using the patent scheme to preferentially support one industry is inconsistent with the TRIPS rationale that patent schemes be technologically neutral. More importantly, particularly where there is already substantial patent protection and where the EOT comes into effect after the patent term has already run 20 years, patents are unlikely to be as effective as direct funding as a policy instrument for increasing pharmaceutical investment.
In 1984, the Government’s Intellectual Property Advisory Committee found it difficult to accept that the prospect of additional returns from an extension of the then 16 year standard patent life could materially influence investment decisions made many years beforehand. This argument gathers additional force in light of the post-TRIPS extension of the standard patent term to 20 years and the further five year EOT for pharmaceuticals.
It is difficult to see why a pharmaceutical firm would chose to conduct R&D in Australia merely because the Government decided to offer an EOT here, for it can qualify for the EOT whether or not its R&D was done here. More fundamental issues such as relative costs of R&D and skill availability are likely to drive the location of R&D spending. And indeed, the Review finds that the increased patent protection afforded by increasing patent life and establishing an EOT has not led to an increase in investment in Australian pharmaceutical R&D that is commensurate with the costs of the EOT to Australia.
The introduction of the EOT in 1998 provided a wind-fall to pharmaceutical companies: they were rewarded with an incentive for work they had already undertaken. And regarding R&D yet to be undertaken it would have been more efficient for the Government to provide a direct subsidy to support Australian-based pharmaceutical R&D, rather than the EOT. This reflects several factors including: the difference in discount rates applicable to Government and commercial firms; the effect of subsidising activity at the beginning and throughout product development, instead of during its period of marketing; and the ability of a subsidy to be linked to spending on pharmaceutical R&D in Australia.
An additional benefit of a direct subsidy is that it can target research for which patents provide inadequate incentives. Such areas include new antibiotics which, once developed, must be used sparingly to prevent the development of drug resistance, and pharmaceuticals to address rare diseases, paediatric illnesses and endemic health issues in low income countries.
The Panel considered several options to reform patent extensions. Australia is required by AUSFTA to provide some form of pharmaceutical EOT but its scope and length are not specified. Actual savings obtained from reducing the term of the extension would be affected by many factors, including price changes caused by increasing sales volumes, the 16 per cent mandated price reduction following the entry of a second drug, the influence of competing generic manufacturers and reductions from price disclosure mechanisms. But there are timing issues in reducing the EOT provisions immediately without compensation. Savings from the options considered in this report, including the recommendation to reduce the effective life of extended Australian pharmaceutical patents, would take several years to reach full effect.
Chapter 5 of the report canvasses some technical issues concerning EOTs. The class of pharmaceuticals that is eligible for EOT in Australia is narrower than that in some other developed countries (on the other hand, there are countries, such as Canada and New Zealand that do not provide for EOT). Originators call for a widening of eligibility to accord with that used in the United States and Europe. In considering these submissions, the Panel takes the approach that it would not recommend more generous patent protection than exists, unless there was evidence that it was justified by national interests.
The Panel accepts recommendations from many parties that the Patents Act 1990 (Cth) (Patents Act) be amended to repeal the provision requiring applicants to provide the Department of Health and Ageing with information on Commonwealth money spent on drugs subject to an EOT. Although these data - much of which appear to be inadequate - have been provided to the Commonwealth since 1999, there is no evidence that they have ever been used or are useful. Complying with the requirement is costly and the Panel sees little reason for its continuation.
The Panel accepts that there is a technical anomaly with the legislative provision concerning the eligibility of drugs for extension. In one case, a court found that the presence of impurities in an earlier drug shortened the EOT available to a patent. The Panel recommends an amendment to this provision to address this.
A pharmaceutical company can indirectly infringe a patent if it supplies a drug specifically for a purpose which is different to another, patented use but where it is still possible that the drug could be put to the patented use. This infringement can occur even when the company has not induced or supported that use. As a number of submissions recommend, the Panel supports an amendment to the Patents Act to protect a pharmaceutical manufacturer that has taken reasonable steps to avoid indirect infringement.
Patent Standards and Evergreening
In most developed countries, including the United States and Europe, there are concerns about pharmaceutical manufacturers using patents and other management approaches to obtain advantages that impose large costs on the general community. The cost arises because these actions impede the entry of generic drugs to the market. Although some find the term to be a pejorative, relevant literature has dubbed such actions ‘evergreening’: steps taken to maintain the market place of a drug whose patent is about to expire. Chapter 6 discusses these and associated matters.
The Panel has little doubt that pharmaceutical manufacturers act to preserve the profitability of their products as they are legally required to do on behalf of their shareholders. And it is logical that patentees will seek further patents for improvements to their drugs - so called follow-on patents - with an eye to extending the market life of the original drug. Similarly, patentees are entitled to market these newly patented drugs before the original patent expires. It is probable that less than rigorous patent standards have in the past helped evergreening through the grant of follow-on patents that are not sufficiently inventive. The newly proclaimed Intellectual Property Amendments (Raising the Bar) Act 2012 (Cth) (Raising the Bar) was intended to moderate this problem somewhat, though the extent to which it will do so is unclear. The Panel sees a need for an external body, the Patent Oversight Committee, to audit the patent grant processes to help ensure these new standards are achieved, and to monitor whether they inhibit the patenting of follow-on pharmaceuticals which promote evergreening with no material therapeutic benefit. The Government should also review the effectiveness of the patent scheme when the impact of Raising the Bar Act has become clear.
Another approach used to protect a product is to entangle it in a knot of patents, a so-called patent thicket, which raises costs for new entrants. Such thickets would stymie generic manufacturers or developers of new pharmaceuticals. Though opinions will differ as to whether the term ‘thicket’ applies, the interaction of patents, follow-on patents, and drug marketing practices may have an impact on pharmaceutical prices and the costs of the PBS. Those implications are considered below.
Australia’s intellectual property system, like any other, works best when property rights are tightly delineated and there is an efficient adjudication system to resolve disputes. Chapter 7 discusses these matters. There are three dispute mechanisms that involve the Patent Office. These non-judicial mechanisms have been affected by recent changes to the law, but they are not typically favoured by disputants as to the validity of individual patents partly because they lack finality (administrative decisions of the Patent Office can always be appealed to the courts).
As in other matters heard by Australian courts, patent challenges and patent infringement cases are very expensive and time consuming. Where a generic manufacturer is the potential challenger of a patent, it must consider whether the small size of the Australian market and the relatively small – and diminishing - margins from generic drugs make a challenge worthwhile. In addition, although the Government does not contribute to a challenger’s costs, it will typically be the major single beneficiary from a finding of patent invalidity. The benefits come from reduced drug prices for the PBS. On the other hand, the Government can incur important additional costs when an originator succeeds in obtaining an injunction for the sale of a generic drug. And the originator, with its higher margins from drug sales, has stronger incentives than its putative opponents to litigate.
The Panel is aware that the Government has started to seek costs from relevant parties because injunctions - and subsequent findings of patent invalidity - can delay price reductions for the PBS. The Panel, however, recommends that the Government - as the annual funder of the $9 billion PBS - should become more closely involved in pharmaceutical patent cases. For example, there are likely benefits to the Government from improving incentives for generic manufacturers to test the validity of patents.
As a result of AUSFTA, there are complex procedures that must be followed when a generic pharmaceutical manufacturer wishes to enter the market. Some submissions question the adequacy of these processes and others the impetus they provide to seek injunctions against the sale of the generic. The Panel recommends a mechanism to reduce the risk that generic manufacturers wishing to enter a market will inadvertently infringe a patent. It recommends a system which requires each originator to list its relevant patents for a drug listed on the Australian Register of Therapeutic Goods (ARTG). That listing might not identify all applicable patents but it would capture all of the originator’s applicable patents. If such a listing was established, the Panel further recommends that the Therapeutic Good Administration (TGA) notify the owners of listed patents when a generic equivalent of the ARTG listed drug received regulatory approval.
Data Protection
When an originator seeks regulatory approval for a drug, it must provide data to the TGA demonstrating the drug’s safety and efficacy. Although these data remain confidential to the TGA, it may use them after a five year period to approve a generic or equivalent drug. This saves the pointless replication of tests to show safety and efficacy. A number of submissions argue that the five-year period of data exclusivity in Australia is too short.
A number of countries have a five-year exclusivity period; it is also the period Australia agreed under AUSFTA. Other countries, especially in North America and Europe, have longer periods. For many drugs the data exclusivity period is largely redundant because the relevant patent expires later. For some drugs, the data exclusivity period adds to the protection afforded by patent. It is conceivable that drugs might not be brought to Australia, for example, because regulatory and marketing costs cannot be recouped within five years. Medicines Australia submits that some of its members chose not to supply a total of 13 drugs to the Australian market because of the inadequacy of the data exclusivity period. However, they are only able to identify three of these, and the Panel’s analysis - shown in chapter 8 - suggests they are not convincing. AbbVie offers a more compelling example, but even there the Panel believes that expanding data exclusivity for all or for a wide class of drugs is a poorly targeted response to issues affecting a small number of pharmaceuticals. A policy of subsidising drug development discussed above seems more appropriate.
Chapter 8 also discusses the desirability of publishing data used for regulatory approval, much as information provided in patent applications must be published. The Panel does not recommend that Australia unilaterally release data submitted to the TGA, such publication has international repercussions, but it recommends that the Government work with other countries to achieve that end.
Chapter 9 discusses the emerging challenge of biologics and biosimilars – the generic versions of biologics. Currently biologics have the same data protection period as small molecule drugs in Australia, although a longer period is provided for biologics in some other countries. Originators call for a longer data protection period for these types of drugs. However, given that standardised regulatory processes for registration of biosimilars are still under development in Australia and elsewhere, the Panel does not recommend changes at present.
Better Integration and attention to detail in governing the Pharmaceutical System
In concluding, Chapter 10 considers the need for a non-statutory body to oversee and report to Government and Parliament on the complex inter-relationships and linkages between TGA, PBS, IP Australia, international agreements and industry, budgetary and economic matters. The complexity of these issues means that isolated consideration of particular features would likely not give optimum results. Agencies need to consider how their own issues impact on the responsibilities of other agencies. Measured by dollars alone, the size of the pharmaceutical industry and the PBS and the economic consequences of patents warrant a mechanism that requires close collaboration between agencies and attention to the fine details of the system to identify the best options to promote the national interest. The Report shows that the Australian patent system has worked against Australia’s best interests. Patents are clearly necessary and important for the development of and access to needed drugs. But Australia’s patent system has allowed and will continue for some time to allow patents to be granted which would not be granted elsewhere; it has awarded a longer effective patent life than is provided in the United States or than seems necessary to underpin drug development in Australia; it has allowed patents to expire later in Australia than in its major trading partners. All of this has limited the generic manufacturing base, employment and exports and it has increased Australia’s pharmaceutical costs. The Raising the Bar Act which recently came into force may moderate this, but its efficacy will not be evident for some years, and there is the prospect that, even with the changes introduced by Raising the Bar, patent standards are still insufficient to moderate evergreening in the pharmaceutical industry. The Panel’s recommendations, if adopted, would only start the next phase of the repair work.