Publication of Productivity Commission Final Report

Publication of Productivity Commission Final Report

Publication of Productivity Commission Final Report

The Australian Productivity Commission’s final report on its Inquiry into Australia’s Intellectual Property (IP) Arrangements was published on 20 December 2016. The full report can be accessed at http://www.pc.gov.au/inquiries/completed/intellectual-property/report.

Table 1 below, which has been extracted from the report, provides a summary of the recommended reforms to the Australian IP system. Many of the recommendations are concerning and controversial.

In view of the Government’s clearly expressed innovation agenda it will be interesting to see the Government’s response to the report, as it appears that a number of the recommendations will have a negative impact upon innovation.

The Australian Government is now considering the report. To inform its consideration additional public consultation will take place until 14 February 2016. Details of the public consultation process are available at https://consult.industry.gov.au/ip-pc-inquiry/pc-inquiry-into-ip-arrangements-1/.

Table 1: Summary of reforms and their expected benefits

Proposed reform   

Proposed benefits

PATENTS
Raise the inventive step for patent eligibility, add an objects clause to the Patents Act, improve patent filing processes, restructure patent fees and abolish the innovation patent system (7.1, 7.2, 7.3, 7.4 and 8.1).

Elevate patent quality over time to improve the signal value of patents, reducing thickets, limiting strategic misuse and shortening pendency, stimulating innovation and business activity.
Restructuring renewal fees will reduce the risk that poor quality patents remain entrenched.

Reform extensions of term for pharmaceutical patents (10.1). Reforming extensions of term will lower the cost of pharmaceuticals, benefiting consumers and saving the government an estimated $258 million each year. Additional public health benefits will arise from improved access to affordable medicines.
Improve monitoring of settlements between originator and generic drug companies (10.2). Reducing opportunities for pay-for-delay settlements will ensure timely access to affordable medicines and improve competition in the pharmaceuticals market for the benefit of consumers.
COPYRIGHT
Replace Australia’s existing fair dealing exceptions in the Copyright Act with a broad and open-ended fair use exception (6.1).

Australia’s copyright system will better adapt to technological change and new uses of copyright material, without compromising incentives to create.

Improved access to copyright works would increase economic activity and community welfare. Material gains include:
– In the case of orphan works, flexible exceptions that improve access are conservatively estimated to generate new economic activity worth between $10 million and $20 million per year.
– Consumers would enjoy better access to archived, commercially-unavailable, or otherwise
hard-to-access works.
– Fair use would end the practice where education and government users pay statutory licence fees for freely available online material, saving taxpayers an estimated $18 million per annum.

Repeal parallel import restrictions for books (5.3). Australian consumers will be able to directly access competitively priced books in Australian bookstores. Compared to average selling prices in the UK, prices in Australia are higher by an average of 20 per cent. This will benefit consumers (especially students), Australian bookstores, and overall community welfare.
Strengthen the Copyright Act to make clear circumventing geoblocking technology is not a copyright infringement (5.2). Consumers of software, TV shows, movies, music and games gain from better access and more competitive prices. Greater consumer certainty will drive competition and reduce price differentials between Australian and overseas markets — which were about 49 per cent in professional software, 67 per cent in music, and 61 per cent in games in 2013.
ACCC review to ensure best practice in governance, reporting and transparency arrangements for collecting societies (5.4).

Best practice governance and transparency will improve the efficiency of collecting societies and their distribution practices, and facilitate fair negotiations between users and rights holders.

Separate accounting of statutory and voluntary licence revenue will ensure taxpayer funds achieve value for money.

OTHER IP RIGHTS
Trade marks
Expedite the removal of unused marks, and make it harder to register misleading marks (12.1). Fewer but more accurate trade marks will enhance their value to businesses and consumers.
Link the business name and trade mark registers, and allow the importation of legitimately marked goods (12.1). Linking the trade mark and business name registers will reduce renaming and rebranding costs caused by unintentional infringement, while allowing legitimate imports will lead to lower prices and greater choice for consumers.
Plant Breeders’ Rights
Enable IP Australia to make essentially derived variety declarations in respect of any new plant variety (13.1). Improved enforcement and compliance will increase incentives to invest in pasture and fodder crop breeding, contributing to genetic gain increases and boosting livestock farming productivity and profitability.
ENFORCEMENT AND GOVERNANCE
Enhance the role of the Federal Circuit Court by introducing a dedicated IP list with caps on claimable costs and damages (19.2). Individuals and SMEs would face lower costs to resolve IP disputes through the court system. Lower risks and costs provide rights holders with greater certainty while improving access to enforcement and justice.
Expand the safe harbour scheme to cover all online service providers (19.1). Online service providers, such as cloud computing firms, would face fewer impediments to establish operations in Australia. The copyright system will be more adaptable as new services and technologies are developed, facilitating greater innovation. Aligning with international systems further reduces business uncertainty.
Implement an open access policy for publicly-funded research (16.1). Publicly-funded research publications will be cheaper to access, facilitating faster and wider dissemination of the knowledge and ideas contained within them.

Identify overarching objectives and a common framework for IP policy development, and establish an interdepartmental policy group and other formal working arrangements between agencies (17.1).

Develop best practice guidance for developing IP provisions in international treaties (17.2).

Adherence to a whole-of-government policy framework will promote a more balanced and integrated approach to IP policy and its development.

More independent input and transparency in trade negotiations involving IP will promote public confidence and help ensure any changes to IP laws are in Australia’s interests.

Work with like-minded countries through multilateral forums to achieve more balanced IP settings and to reduce transaction costs (18.1). Greater balance in IP arrangements will facilitate the production of creative works and innovation (including follow-on innovation), boosting productivity. Reducing the risks and costs of seeking protection abroad will facilitate the flow of IP and capital across borders.
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