Steely resolve in IP Reform?

The Productivity Commission's report on Intellectual Property Arrangements features the following unsurprising points 'key points' -

• Australia’s intellectual property (IP) arrangements fall short in many ways and improvement is needed across the spectrum of IP rights. 

• IP arrangements need to ensure that creators and inventors are rewarded for their efforts, but in doing so they must:

− foster creative endeavour and investment in IP that would not otherwise occur 

− only provide the incentive needed to induce that additional investment or endeavour 

− resist impeding follow–on innovation, competition and access to goods and services. 

• Australia’s patent system grants exclusivity too readily, allowing a proliferation of low quality patents, frustrating follow–on innovators and stymieing competition.

− To raise patent quality, the Australian Government should increase the degree of invention required to receive a patent, abolish the failed innovation patent, reconfigure costly extensions of term for pharmaceutical patents, and better structure patent fees. 

• Copyright is broader in scope and longer in duration than needed 

— innovative firms, universities and schools, and consumers bear the cost. 

− Introducing a system of user rights, including the (well-established) principles–based fair use exception, would go some way to redress this imbalance. 

• Timely and cost effective access to copyright content is the best way to reduce infringement. The Australian Government should make it easier for users to access legitimate content by:

− clarifying the law on geoblocking  

− repealing parallel import restrictions on books. New analysis reveals that Australian readers still pay more than those in the UK for a significant share of books. 

• Commercial transactions involving IP rights should be subject to competition law. The current exemption under the Competition and Consumer Act is based on outdated views and should be repealed. 

• While Australia’s enforcement system works relatively well, reform is needed to improve access, especially for small– and medium–sized enterprises. 

− Introducing (and resourcing) a specialist IP list within the Federal Circuit Court (akin to the UK model) would provide a timely and low cost option for resolving IP disputes. 

• The absence of an overarching objective, policy framework and reform champion has contributed to Australia losing its way on IP policy. 

− Better governance arrangements are needed for a more coherent and balanced approach to IP policy development and implementation. 

• International commitments substantially constrain Australia’s IP policy flexibility. 

− The Australian Government should focus its international IP engagement on reducing transaction costs for parties using IP rights in multiple jurisdictions and encouraging more balanced policy arrangements for patents and copyright. 

− An overdue review of TRIPS by the WTO would be a helpful first step. 

• Reform efforts have more often than not succumbed to misinformation and scare campaigns. Steely resolve will be needed to pursue better balanced IP arrangements.

The Commission offers the following recommendations and findings -

An analytical framework for assessing the IP system 

Recommendation 2.1 In formulating intellectual property policy, the Australian Government should be informed by a robust evidence base and be guided by the principles of: 

• effectiveness, which balances providing protection to encourage additional innovation (which would not have otherwise occurred) and allowing ideas to be disseminated widely • efficiency, which balances returns to innovators and to the wider community • adaptability, which balances providing policy certainty and having a system that is agile in response to change • accountability, which balances the cost of collecting and analysing policy–relevant information against the benefits of having transparent and evidence–based policy that considers community wellbeing. 

Copyright term and scope 

Finding 4.1 The scope and term of copyright protection in Australia has expanded over time, often with no transparent evidence-based analysis, and is now skewed too far in favour of copyright holders. While a single optimal copyright term is arguably elusive, it is likely to be considerably less than 70 years after death. 

Copyright use and licensing 

RECOMMENDATION 5.1 The Australian Government should amend the Copyright Act 1968 (Cth) to: • make unenforceable any part of an agreement restricting or preventing a use of copyright material that is permitted by a copyright exception • permit consumers to circumvent technological protection measures for legitimate uses of copyright material. 

Recommendation 5.2 The Australian Government should: • amend the Copyright Act 1968 (Cth) to make clear that it is not an infringement for consumers to circumvent geoblocking technology, as recommended in the House of Representatives Standing Committee on Infrastructure and Communications’ report At What Cost? IT pricing and the Australia tax • avoid any international agreements that would prevent or ban consumers from circumventing geoblocking technology. 

Recommendation 5.3 The Australian Government should proceed to repeal parallel import restrictions for books to take effect no later than the end of 2017. 

Recommendation 5.4 The Australian Government should strengthen the governance and transparency arrangements for collecting societies. In particular: • The Australian Competition and Consumer Commission should undertake a review of the current code, assessing its efficacy in balancing the interests of copyright collecting societies and licensees. • The review should consider whether the current voluntary code: represents best practice, contains sufficient monitoring and review mechanisms, and if the code should be mandatory for all collecting societies. 

Fair use or fair dealing — what is fair for Australia? 

Recommendation 6.1 The Australian Government should accept and implement the Australian Law Reform Commission’s final recommendations regarding a fair use exception in Australia. 

Recommendation 6.2 The Australian Government should enact the Australian Law Reform Commission recommendations to limit liability for the use of orphan works, where a user has undertaken a diligent search to locate the relevant rights holder. 

The patent system — getting the fundamentals right 

Recommendation 7.1 The Australian Government should incorporate an objects clause into the Patents Act 1990 (Cth). The objects clause should describe the purpose of the legislation as enhancing the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology. In so doing, the patent system should balance over time the interests of producers, owners and users of technology. 

Finding 7.1 The Raising the Bar initiative moved the inventive step and other elements of patent law in the right direction by raising the threshold for granting a patent. There is a strong case, however, for further raising the threshold. 

Recommendation 7.2 The Australian Government should amend ss. 7(2) and 7(3) of the Patents Act 1990 (Cth) such that an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art. The Explanatory Memorandum should state: • a ‘scintilla’ of invention, or a scenario where the skilled person would not ‘directly be led as a matter of course’, are insufficient thresholds for meeting the inventive step • the ‘obvious to try’ test applied in Europe would in some instances be a suitable test. IP Australia should update the Australian Patent Office Manual of Practice and Procedure such that it will consider the technical features of an invention for the purpose of the inventive step and novelty tests. 

Recommendation 7.3 IP Australia should reform its patent filing processes to require applicants to identify the technical features of the invention in the set of claims. 

Recommendation 7.4 The Australian Government and IP Australia should set patent fees to promote broader intellectual property policy objectives, rather than the current primary objective of achieving cost recovery. To this end, the Australian Government, with input from IP Australia, should: • restructure patent renewal fees such that they rise each year at an increasing rate (including years in which patents receive an extension of term) — fees later in the life of a patent would well exceed current levels • reduce the initial threshold for claim fees, and increase claim fees for applications with a large number of claims. 

The innovation patent system 

Recommendation 8.1 The Australian Government should abolish the innovation patent system. Chapter 9: Business method patents and software patents 

Finding 9.1 Raising the inventive step, requiring technical features in patent claims, and the inclusion of an objects clause would better balance the patent rights of software innovators and users. 

Pharmaceuticals - getting the right policy prescription 

Recommendation 10.1 The Australian Government should reform extensions of patent term for pharmaceuticals such that they are only: (i) available for patents covering an active pharmaceutical ingredient, and (ii) calculated based on the time taken by the Therapeutic Goods Administration for regulatory approval over and above 255 working days (one year). The Australian Government should reform s. 76A of the Patents Act 1990 (Cth) to improve data collection requirements for extensions of term, drawing on the model applied in Canada. Thereafter no extensions of term should be granted until data is received in a satisfactory form. 

Finding 10.1 There are no grounds to extend the period of data protection for any pharmaceutical products, including biologics. 

Recommendation 10.2 The Australian Government should introduce a system for transparent reporting and monitoring of settlements between originator and generic pharmaceutical companies to detect potential pay for delay agreements. This system should be based on the model used in the United States, administered by the Australian Competition and Consumer Commission, and include guidelines on the approach to monitoring as part of the broader guidance on the application of the Competition and Consumer Act 2010 (Cth) to intellectual property (recommendation 15.1). The monitoring should operate for a period of five years. Following this period, the Australian Government should review the regulation of pay for delay agreements (and other potentially anticompetitive arrangements specific to the pharmaceutical sector). 

Registered designs 

Finding 11.1 The Australian Government has committed to implement many of the recommendations made by the Advisory Council on Intellectual Property in its recent review of Australia’s designs system. These measures will help address participant concerns about the cost of acquiring registered design rights, and the lack of understanding of design law. Recommendation 19.2 provides for a low-cost avenue for IP enforcement currently sought by designers. 

Trade marks and geographical indications 

Recommendation 12.1 The Australian Government should amend the Trade Marks Act 1995 (Cth) to:

• reduce the grace period from 5 years to 3 years before new registrations can be challenged for non use 

• remove the presumption of registrability in assessing whether a mark could be misleading or confusing at application • ensure that parallel imports of marked goods do not infringe an Australian registered trade mark when the marked good has been brought to market elsewhere by the owner of the mark or its licensee. Section 97A of the Trade Marks Act 2002 (New Zealand) could serve as a model clause in this regard.

IP Australia should:

• require those seeking trade mark protection to state whether they are using the mark or ‘intending to use’ the mark at application, registration and renewal, and record this on the Australian Trade Mark On line Search System (ATMOSS). It should also seek confirmation from trade mark holders that register with an ‘intent to use’ that their mark is actually in use following the grace period, with this information also recorded on the ATMOSS 

• require the Trade Marks Office to return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under s. 43 of the Trade Marks Act) • in conjunction with the Australian Securities and Investment Commission, link the ATMOSS database with the business registration portal, including to ensure a warning if a business registration may infringe an existing trade mark. 

Recommendation 12.2 The Australian Government should amend the Australian Grape and Wine Authority Act 2013 (Cth) and associated regulations to allow the Geographical Indications (GIs) Committee to amend or omit existing GIs in a manner similar to existing arrangements for the determination of a GI (including preserving the avenues of appeal to the Administrative Appeals Tribunal). Any omissions or amendments to GIs determined in such a manner should only take effect after a ‘grace period’ determined by the GI Committee on a case by case basis. 

Plant Breeder’s Rights 

Recommendation 13.1 The Australian Government should proceed to implement the Advisory Council on Intellectual Property’s 2010 recommendation to amend the Plant Breeder’s Rights Act 1994 (Cth) to enable essentially derived variety (EDV) declarations to be made in respect of any variety. 

Circuit layout rights 

Finding 14.1 Dedicated intellectual property protection for circuit layouts is not ideal and seldom used, but given Australia’s international commitment to protect circuit layouts and no superior alternatives, the best policy option is to maintain the status quo. 

Intellectual property rights and competition law 

Recommendation 15.1 The Australian Government should repeal s. 51(3) of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) at the same time as giving effect to recommendations of the (Harper) Competition Policy Review on the per se prohibitions. The Australian Competition and Consumer Commission should issue guidance on the application of part IV of the Competition and Consumer Act to intellectual property. 

IP and public institutions 

RECOMMENDATION 16.1 The Australian, and State and Territory governments should implement an open access policy for publicly funded research. The policy should provide free and open access arrangements for all publications funded by governments, directly or through university funding, within 12 months of publication. The policy should minimise exemptions. The Australian Government should seek to establish the same policy for international agencies to which it is a contributory funder, but which still charge for their publications, such as the Organisation for Economic Cooperation and Development. 

Finding 16.1 The adoption of an additional ‘use it or lose it’ provision for patents owned by publicly funded organisations is not warranted. 

Intellectual property’s institutional arrangements 

Recommendation 17.1 The Australian Government should promote a coherent and integrated approach to IP policy by: • establishing and maintaining greater IP policy expertise in the Department of Industry, Innovation and Science • ensuring the allocation of functions to IP Australia has regard to conflicts arising from IP Australia’s role as IP rights administrator and involvement in policy development and advice • establishing a standing (interdepartmental) IP Policy Group and formal working arrangements to ensure agencies work together within the policy framework outlined in this report. The Group would comprise those departments with responsibility for industrial and creative IP rights, the Treasury, and others as needed, including IP Australia. 

Finding 17.1 Australia’s approach to negotiating IP provisions in international treaties could be improved through greater use of independent impact assessment and more meaningful stakeholder consultation. 

Recommendation 17.2 The Australian Government should charge the interdepartmental IP Policy Group (recommendation 17.1) and the Department of Foreign Affairs and Trade with the task of developing guidance for IP provisions in international treaties. This guidance should incorporate the following principles: • avoiding the inclusion of IP provisions in bilateral and regional trade agreements and leaving negotiations on IP standards to multilateral fora • protecting flexibility to achieve policy goals, such as by reserving the right to draft exceptions and limitations • explicitly considering the long term consequences for the public interest and the domestic IP system in cases where IP demands of other countries are accepted in exchange for obtaining other benefits • identifying no go areas that are likely to be seldom or never in Australia’s interests, such as retrospective extensions of IP rights • conducting negotiations, as far as their nature makes it possible, in an open and transparent manner and ensuring that rights holders and industry groups do not enjoy preferential treatment over other stakeholders. 

International cooperation in IP 

Recommendation 18.1 The Australian Government should: • pursue international collaborative efforts to streamline IP administrative and licensing processes separately from efforts to align standards of IP protection. In so doing, it should consider a range of cooperative mechanisms, such as mutual recognition • use multilateral forums when seeking to align standards of protection. 

Recommendation 18.2 The Australian Government should play a more active role in international forums on intellectual property policy — areas to pursue include: • calling for a review of the TRIPS Agreement (under Article 71.1) by the WTO • exploring opportunities to further raise the threshold for inventive step for patents • pursuing the steps needed to explicitly allow the manufacture for export of pharmaceuticals in their patent extension period • working towards a system of eventual publication of clinical trial data for pharmaceuticals in exchange for statutory data protection • identifying and progressing reforms that would strike a better balance in respect of copyright scope and term. 

Compliance and enforcement of IP rights 

Recommendation 19.1 The Australian Government should expand the safe harbour scheme to cover not just carriage service providers, but all providers of online services. 

Finding 19.1 Timely and competitively priced access to copyright-protected works is the most efficient and effective way to reduce online copyright infringement. 

Recommendation 19.2 The Australian Government should introduce a specialist IP list in the Federal Circuit Court, encompassing features similar to those of the United Kingdom Intellectual Property Enterprise Court, including limiting trials to two days, caps on costs and damages, and a small claims procedure. The jurisdiction of the Federal Circuit Court should be expanded so it can hear all IP matters. This would complement current reforms by the Federal Court for management of IP cases within the National Court Framework, which are likely to benefit parties involved in high value IP disputes. The Federal Circuit Court should be adequately resourced to ensure that any increase in its workload arising from these reforms does not result in longer resolution times. The Australian Government should assess the costs and benefits of these reforms five years after implementation, also taking into account the progress of the Federal Court’s proposed reforms to IP case management.