4 April, 2017
What you need to know
In December 2016, the Government released the Productivity Commission’s final report into Australia’s intellectual property arrangements.
The report recommends amendments be made in the copyright, patent and trade mark fields (amongst others).
The Government is currently considering its response, which is expected by mid-2017.
Background
The Productivity Commission generally noted that Australia’s intellectual property arrangements fall short in many ways and improvements are needed across the spectrum of IP rights. The report examined Australia’s balance between promoting innovation and protecting intellectual property.
The Productivity Commission considered that the IP system remains tipped in favour of rights holders. While any reform to address this issue is constrained by Australia’s international obligations, the Productivity Commission sought to indentify a package of reforms that would go some way to strike a balance.
The key recommendations in each IP field are outlined below.
Key Recommendations
Copyright
The Productivity Commission recommended that Australia should:
- replace the current fair dealing exceptions with a broad, principles-based US-style fair use exception. The Productivity Commission stated that this would allow Australia’s copyright law to better adapt to new circumstances, technologies and uses over time, rather than requiring piecemeal amendments to “catch up” with existing community practices. This recommendation was made despite objections from rights holders that fair use is imprecise, would create legal uncertainty and would reduce incentives for creativity and investment in new works;
- amend the Copyright Act 1968 (Cth) to make it clear that circumventing geoblocking technology is not a copyright infringement; and
- make it easier for users to access legitimate content in a timely and cost effective manner by:
- allowing the Australian Competition and Consumer Commission (ACCC) to undertake a review of current arrangements for collecting societies to ensure best practice in governance, reporting and transparency; and
- repealing parallel import restrictions for books which would have the practical effect of consumers having access to competitively priced books in Australian bookstores.
Despite confirming its stance in the draft report that the term of copyright is too long and skewed too far in favour of copyright owners, the Productivity Commission did not recommend a specific change to the term of copyright.
Patents
The Productivity Commission recommended that Australia should:
- raise the threshold for assessing the inventive step factor for patent eligibility, by increasing the required advance over the prior art and requiring that efforts are undertaken to better ensure that only technological inventions pass the inventive step threshold. The Productivity Commission stated that this would have the effect of reducing the proliferation of low-value patents;
- abolish the innovation patent system, which currently provides for a maximum 8 year patent term and only requires the lower threshold of “innovative step” be proven (rather than an inventive step), given that it has encouraged a multitude of low value patents and created uncertainty for other innovators who are unsure whether they are infringing another party’s patent;
- add an “objects” clause to the Patents Act 1990 (Cth) to give greater guidance to decision makers, and ensure that the legislation remains adaptable and fit for purpose as new technologies emerge. The Productivity Commission states that an objects clause should make it clear that the “principal purpose of the patent system is to enhance the wellbeing of Australians by promoting technological innovation and promoting the transfer and dissemination of technology”;
- restructure patent fees to discourage rights holders from casting claims too widely or using the system strategically, including by increasing renewal fees with patent age (ensuring only valuable patents are maintained) and applying higher fees for applications with a large number of claims; and
- make reforms in relation to pharmaceutical patents in order to improve access to affordable medicines for consumers by:
- confining extensions of term to cases where the action of the regulator has resulted in unreasonable delay (rather than rewarding firms for being slow to introduce drugs to the Australian market); and
- improve monitoring of patent infringement settlements between originator and generic drug companies, by reducing opportunities for originators to pay generic manufacturers to keep their products off the market beyond the scope of a patent.
Trade Marks
The Productivity Commission recommended that Australia should:
- expedite the removal of unused marks from the Trade Mark Register by reducing the grace period for when new registrations can be challenged for non-use from 5 years to 3 years. The Productivity Commission suggested that trade mark applicants should be required to nominate whether they are using the mark applied for and, if not, to later provide evidence of use in order to retain trade mark rights;
- make it harder to register misleading marks by strengthening requirements for marks not to be misleading or confusing;
- link the trade mark and business name registers in order to reduce confusion experienced by businesses which frequently conflate trade mark protection with business name registration – it said this is expected to have the effect of reducing the number of companies that need to rename their businesses, and the subsequent rebranding costs caused by (unintentional) trade mark infringement; and
- amend the Trade Marks Act 1995 (Cth) to make clear that parallel imports are allowed, in order to resolve uncertainty created by recent cases.
Other recommendations
The Productivity Commission recommended that Australia should:
- repeal the IP exemption from Australia’s competition law regime. The Productivity Commission recognises that there has been a shift so that IP and competition are not “at odds” and that the most appropriate enforcement mechanism is for the ACCC to address any anti-competitive conduct in IP transactions, which would minimise uncertainty for rights holders and licensees;
- enhance the role of the Federal Circuit Court by introducing a dedicated IP list with capped amounts of claimable costs and damages; and
- expand the safe harbour scheme to cover all online service providers, such as cloud computing firms, which would result in fewer impediments to establish operations in Australia.
What’s next?
The Government’s response to these recommendations is expected in mid-2017, so this area is well and truly one to watch!
For further information, please contact:
Lisa Ritson, Partner, Ashurst
Lisa.ritson@ashurst.com
