6 December, 2017
On 24 October 2017, IP Australia released draft legislation to amend the Copyright Act 1968, Designs Act 2003, Olympic Insignia Protection Act 1987, Patents Act 1990, Plant Breeder's Rights Act 1994 and Trade Marks Act 1995. The draft legislation seeks to implement certain aspects of the Government's response to the recent Productivity Commission inquiry into Australia's IP arrangements and makes a number of other changes to streamline and align processes in Australia's IP systems.
Many of the proposed changes deal with administrative matters and are not controversial, for instance:
- giving IP Australia the flexibility to take actions or give information through electronic means by removal of requirements to do such things in writing;
- making requirements for filing of documents consistent across all IP rights and flexible, including allowing IP Australia to determine how documents may be filed and fees may be paid; and
- allowing the introduction of computerised decision making, which is intended to be used for certain simple, non-discretionary decisions.
However, a number of the changes will have a more significant impact on IP owners:
1. Abolition of the innovation patent system
Innovation patents were intended to provide fast shorter term protection for lower level inventions with a lower standard of patentability compared to standard patents. However, the Productivity Commission found that the system had not provided significant benefits to small and medium sized enterprises, the intended beneficiaries of the system, compared to the costs to those parties and the broader community.
The draft legislation commences the process for abolition of the innovation patent system by preventing the filing of new applications. A new requirement will be introduced into the examination of innovation patents to allow the continuation of existing applications. Existing rights to file divisional applications and convert a standard patent application to an innovation patent application will also be maintained for patents filed prior to the commencement of the new legislation.
2. Trade marks
Period for non-use removal proceedings
In accordance with the Productivity Commission's recommendation, the period after which a non-use removal application may be filed is to be reduced from 5 years after the filing date of the registration to 3 years from the date on which the trade mark is registered. The amendment will only affect marks filed after the draft legislation comes into effect.
The amendment is intended to help address concerns that there are many unused trade marks on the Register by enabling parties to commence non-use proceedings sooner against unused marks. While the change will align the position in Australia with the practice of its Pacific neighbours New Zealand, US, Canada and Japan, it will be different to the practice in jurisdictions like the United Kingdom and the European Union.
Parallel imports
Section 123 of the Trade Marks Act provides a defence to infringement for the parallel importation of trade marked goods or services. The draft legislation proposes to broaden the defence following recommendations of the Productivity Commission which were accepted by the Government that the current provision is too limited in scope and unclear. This is consistent with the Government's policy position which supports parallel imports as they benefit competition.
The new provisions provide that the parallel importation of trade marked goods does not amount to infringement if:
- the goods are similar or closely related to the registered goods and services;
- the goods have been previously put on the market in Australia or a foreign country; and
- at the time of use, it was reasonable for the parallel importer to assume that the trade mark was applied with the consent of the registered owner or an authorised user or a person who was authorised by the registered or an authorised user or by a person who has "significant influence" over the use of the trade mark or an associated entity of any of the foregoing.
The provision uses broad language and is intended to capture any significant contractual or commercial relationship where one party influences the registered owner or authorised user or vice versa. It also provides for consent to be inferred from a party's conduct and not to be destroyed where it is subject to a condition (such as a geographical restriction on where a licensee may sell the trade marked goods).
The proposed changes specifically address the position taken in recent decisions of the full Federal Court (for example, Paul's Retail Pty Ltd v Sporte Leisure Pty Ltd) where geographical restrictions in a licence agreement on where a licensee could sell the trade marked goods were interpreted to mean that the registered owner did not consent to the application of the trade mark to goods intended for sale in a different country (and, therefore, the parallel importation defence would not apply). While registered owners may continue to put conditions and geographical limitations in their licences, in the event of a breach of those conditions the registered owners are unlikely to be able to seek a remedy from the parallel importer based on trade mark infringement and will instead have to pursue an action for breach of contract against their licensee.
Deferments outside the initial acceptance period
Trade mark applicants are currently able to defer (suspend) the deadline to respond to an examination report during the initial period provided for acceptance of an application without paying fees, but not during any extension of that period (unless an extension of the deadline to defer is also obtained). The draft legislation proposes to extend the ability to defer to any extensions of the acceptance period.
This change will provide applicants with greater flexibility to suspend their applications where grounds for seeking deferment arise after the initial acceptance period. It will also reduce costs as applicants will no longer need to pay two sets of extension fees – one to extend the acceptance period and one to extend the deferment deadline.
Previous changes proposed to the Trade Marks Act
Interestingly, the current draft legislation does not contain the more far-reaching changes to the Trade Marks Act which were proposed in an IP laws amendment bill tabled at the beginning of 2017. These included a substantial reduction of the period to respond to examination reports and major changes to the current regime for obtaining extensions of this period. It appears that these matters are no longer as high priority for IP Australia and may not be tabled again for a few years.
3. Unjustified threats of infringement
The Patents Act, Trade Marks Act, Designs Act and Olympic Insignia Protection Act currently provide some protection against unjustified or groundless threats of infringement proceedings. The Plant Breeder's Rights Act does not currently provide such protection.
The draft legislation introduces a number of changes. First, the wording of the relevant provisions is to be amended so as to consistently refer to "unjustified threats", rather than "groundless threats" which is the case in some of the IP legislation. Second, protection against unjustified threats is being added to the Plant Breeder's Rights Act. Third, additional damages for unjustified threats of infringement proceedings will be introduced into the Patents Act, Trade Marks Act, Designs Act and Plant Breeder's Rights Act. These are intended to apply in the case of flagrant unjustified threats, such as where there are no prospects of infringement being proven. The amount of additional damages will depend on the specific situation, the financial means of the person making the unjustified threats of infringement proceedings and the benefit the person gained by doing so.
Further changes are to be made to the threats provisions of the Trade Marks Act. The ability of a party to avoid an unjustified threats action by commencing infringement proceedings will be removed. However, a new provision will be inserted to make it clear that mere notification of the existence of a registered trade mark will not constitute a threat.
These changes mean that greater care will need to be taken when asserting registered IP rights.
4. Plant Breeder's Rights
Essentially Derived Varieties
The draft legislation introduces a long waited amendment to the essentially derived variety (EDV) concept. The EDV concept extends the plant breeder's right over the initial variety to another variety (the second variety) if the second variety is deemed to be "essentially derived" from the initial variety. It was introduced to prevent breeders free-riding on the breeding work of other breeders, in particular through the use of mutant varieties and in the context of developments in GM technology.
The Plant Breeder's Rights Act currently only allows for EDV declarations to be made in respect of registered varieties. This allows breeders to circumvent the EDV concept by not applying for plant breeder's right protection. The draft legislation closes this loophole by extending EDV declarations to non-plant breeder's right protected varieties.
The proposed change is a good development for breeders looking to protect their varieties in Australia. However, the criteria for making an EDV declaration remain wrought with contention, being largely undefined and contradictory.
Exclusive licensees
The draft legislation inserts a right for an exclusive licensee of a plant breeder's right to bring infringement action. This change will bring the Plant Breeder's Rights Act in line with other IP rights and will equip exclusive licensees with the ability to effectively protect their revenue streams.
Next steps
Written submissions can be made on the proposals by 4 December 2017.
However, the Government will only consider submissions in the context of any unintended consequences of the legislation or issues with the drafting, rather than on the policy that underpins the amendments. The draft legislation is intended to be introduced into Parliament in early 2018.
For further information, please contact:
Jonathan L. Flintoft, Partner, Baker McKenzie
jonathan.flintoft@bakermckenzie.com
