Bye, Innovation Patents (and other news): Australian Productivity Commission – The Federal Government Response

The Australian Federal Government’s response to the controversial Productivity Commission’s Inquiry into Intellectual Property Arrangements was released on Friday.

It deals with the many recommendations made by the Commission. Here are some of the highlights, in so far as they directly affect Australian businesses:

Copyright

• In principle, the government supported the recommendation that restrictions on parallel importations of books be repealed. The government says it “will consult with the book industry to develop a reform pathway that is in the public interest.” This will upset Australian writers and publishers, who fear a flood of cheap imports and an adverse effect upon both the Australian writing industry and Australian culture as embodied in Australian literature.
• The introduction of a fair use exception for copyright went through to the keeper. “This is a complex issue” says the government, and promises to further consult. Fair use has caused a great deal of angst amongst Australian copyright owners. But the American approach is very good. Section 107 of the US Copyright Act sets forth an illustrative list of some types of uses which may qualify as fair use. The list identifies the following: “use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.” The list is not intended to be exhaustive – Campbell v Acuff-Rose Music Inc 510 US 569, 577 (1994) (noting the “illustrative and not limitative” function of the examples given). In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:

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• The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit educational purposes;
• The nature of the copyrighted work
• The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
• The effect of the use upon the potential market for or value of the copyrighted work.

Section 107 concludes with the following words: “The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.” The fact that the government did not take a pragmatic approach to this and mirror the pragmatic and flexible US legislation is unfortunate.

• Orphan works: “The Government recognises the difficulties both creators and cultural and collecting institutions face in utilising orphan works. It stifles the ability for knowledge to be shared and new content to be created.” It seems that there will be a limitation of liability where diligent searches to locate the author have failed.
• Collecting societies will be the subject of a further review to promote best practice.

Patents

• The government supported the recommendation to put beyond doubt that the assessment of inventive step in Australia is consistent with the European Patent Office.
• There was a slightly chilly response to the idea of lowering patent fees “to promote broader intellectual property policy objectives, rather than the current primary objective of achieving cost recovery.” The government said, “Current Government policy under the Australian Government Charging Framework is that where specific demand for a government activity is created by clearly identifiable individuals or groups, those individuals should be charged for it wherever possible. Granting of IP rights is clearly within this policy statement, and as a regulatory activity is appropriate for cost recovery.”
• Innovation patents are out. “The Commission found that the majority of SMEs who use the innovation patent system do not obtain value from it, and that the system imposes significant costs on third parties and the broader Australian community.” Given the ease by which innovation patents can be obtained and the significant remedies which accrue to innovation patents, this should be regarded as good news, except for those who used innovation patents for a scarecrow effect. Innovation patents are a cause for confusion, and their abolition is a welcome development.
• Changes to the mechanism of extension of pharmaceutical patents, putting more onus onto patent owners, did not gain any real traction.
• Pay for delay agreements between innovators and generic pharmaceutical companies: The government agreed in principle with the recommendation that “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.”

Trade Marks

• The government supports the recommendation to reduce the grace period from 5 years to 3 years before new registrations can be challenged for non-use. This will compel trade mark owners to use registered marks, and not stockpile them (a bad habit of the wine sector in particular).
• The government does not support the recommendation to remove the presumption of registrability in assessing whether a trade mark could be misleading or confusing.
• Unravelling some very confusing case law (which, with respect, seemed to run counter to the purpose of the legislation), “The Government supports recommendation (c) to ensure that parallel imports of marked goods do not infringe an Australian registered trade mark when the good has been brought to market elsewhere by the owner or licensee. The Government accepts that section 123 of the Trade Marks Act is not effectively implementing the policy intention of allowing for the parallel importation of legitimate goods and has led to some uncertainty and confusion.”
• The government seems to like an idea of an “intention to use” or “use” statement from new applicants.
• “The Government supports recommendation (e) to routinely challenge trade mark applications that contain contemporary geographical references, but some further work is needed to determine the scope of the practice change in the Trade Marks Office. The Government agrees that geographical terms in trade marks are a particularly contentious issue in relation to misleading and confusing connotations.” This is no surprise given the penchant for European GI regulators to challenge Australian businesses on the use of European GIs applied to Australian goods.
• Finally, some 14 years after the long-forgotten Australian Council on Intellectual Property’s report on the issue, “The Government supports in principle recommendation (f) to link the ATMOSS (now known as Australian Trade Mark Search) database with the business registration portal. The Government agrees that additional assistance for business name applicants would be desirable to help them make informed decisions. The Government is currently working to establish a single online portal for streamlined business and company registration and is continuing to develop Australian Trade Mark Search to provide additional capabilities. Linkages between these databases to better assist and streamline business decision-making are being explored.” This might help fix the enormous confusion amongst SMEs in Australia around the difference between business names and trade marks.

Geographical Indicators

• “The Government supports the recommendation that amendments should be made to the process to omit Australian Geographical Indications (GI). The power granted to individuals to effectively veto an omission of a GI is unnecessary and makes the omissions procedure unworkable in practice.” That amendment to the law would remove much of the angst from the process.
• “The Government does not support the recommendation that amendments should be made to the process to amend Australian GIs.”

Plant Breeder’s Rights

• The government supported the 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.

Section 51(3) of the Competition and Consumer Act

• The government agreed to amend this: not so surprising given the ACCC’s perspective on the section as set out in Australian Law Reform Commission Report 122: “The ACCC considers the uncertainty created by s 51(3) of the Competition and Consumer Act 2010 (Cth) which undermines the capacity of competition law to regulate anti-competitive conduct, including unilateral exercise of market power, to be detrimental to the proper operation of copyright licensing.” The government’s response was, “It is now generally agreed that there is no fundamental conflict between IP rights and competition policy; rather they share the purpose of promoting innovation and enhancing consumer welfare. However, where there is evidence of anti-competitive conduct associated with IP licensing arrangements, it is important that such conduct is appropriately regulated. If anti-competitive conduct in this space is nonetheless in the public interest, authorisation will be available under Part VII of the Competition and Consumer Act.”

Open access to Publicly Funded Research

• Guaranteed to upset many university academics, the government agreed for the need for “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.”

An IP Court

• The government delivered a mixed response to the idea of a dedicated IP court, noting that the Federal Circuit Court is experimenting with such a model, and that patent matters should be determined by judges with experience in the area.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.