Proposed IP reforms provoke criticism

The Australian government published its response to the Productivity Commission's inquiry into IP arrangements at the end of August. Important proposed reforms the government plans to make span patent, copyright and trade mark law.

The government has created a new IP Policy Group to monitor the IP Policy and further industry consultations will take place over the coming months to determine how the proposed reforms will be implemented. IP Australia has already started consulting on changes to the Patents Act while consultations for changes to the Copyright Act will launch later in 2017.

One of the biggest changes to Australia's IP system is the proposed abolition of the innovation patent system. Australia has had a second-tier patent system in one form or another for almost 40 years. Users of the innovation patent system include the IT, gaming, transport and energy sectors. "It is unclear whether the abolition will disincentivise innovation and whether these companies will turn to the standard patent system," said David Fixler, partner at Corrs Chambers Westgarth.

"The government's support for the abolition of the innovation patent system is likely to impact upon Australian SMEs that currently file innovation patents," said John Afaras, partner at Spruson & Ferguson. "The government has indicated that it will maintain existing innovation patent rights and continue to explore more direct mechanisms to better assist SMEs to understand and leverage their IP and access affordable enforcement."

Although the Productivity Commission recommended limiting patent term extensions so that they can only be allowed where the regulator's actions cause unreasonable delay of more than a year, this recommendation was not supported by the government. "Innovative pharmaceutical and biotech companies will be relieved by the government's decision not to implement the Commission's proposed changes to the extension of term regime for pharmaceutical patents, which would have severely limited the availability and length of extensions of patent term," said Fixler.

The government recognises the long development lead-times and costs in bringing pharmaceutical products to market. Fixler noted that however, both innovators and generics companies will need to be aware of the government's "in principle support" for the Commission's recommendation to introduce a system for monitoring settlements between innovators and generic companies to enable the Australian Competition and Consumer Commission to identify anti-competitive agreements in particular those involving pay-for-delay.

Medicines Australia, the industry body representing the pharmaceutical industry, noted that "it's somewhat disappointing to read the government supports the Commission's view on so-called pay-for delay. It seems extraordinary to introduce additional regulatory burdens to monitor something when the government itself acknowledges that there is no evidence to support the Commission's view".

Key reforms at a glance

Patents Abolishing the innovation patent system which has a lower innovative step threshold than the inventive step Raising the inventive step Introducing an objects clause into the Patents Act 1990 to outline the underlying purposes of legislation to assist in interpretation Requiring applicants to identify the technical features of their invention and why the invention is non-obvious Pay-for-delay monitoring for pharmaceuticals to increase transparency of settlements where a generic manufacturer is paid by a patentee to delay their market entry after the expiry of a patent Copyright Repealing parallel import restrictions for books no later than end of 2017 Changing the Copyright Act 1968 to make unenforceable any part of an agreement restricting copyright material use that is permitted by a copyright exception Trade marks Reducing the grace period from five to three years before new trade mark registrations can be challenged for non-use Changing section 123 of the Trade Marks Act 1995 to make sure parallel imports of trade marked goods do not infringe an Australian registered trade mark

The government's support for changing the Trade Marks Act to ensure that parallel imports of trade marked goods do not infringe an Australian registered trade mark when the good has been brought to market elsewhere by the owner of the mark brings more clarity on when the parallel import defence may be relied on.

"These amendments will ultimately impact upon Australian retailers and importers involved with parallel imports. The changes may benefit consumers as they may be able to purchase lower cost products from overseas jurisdictions," said Afaras.

"Brand owners in the fashion and fast moving consumer goods space are likely to be affected," says Fixler. "The change will remove any basis for brand owners challenging the sale of genuine goods manufactured overseas but imported without the local trade mark owner's approval."

The government noted the Commission's recommendation on fair use exceptions but intends to conduct further consultations. "The government's decision not to implement a fair use exception to copyright infringement may be seen as a surprise as it was one of the key recommendations in the Commission's report and was the subject of many submissions," said Fixler. "The government's hesitation in implementing this reform will be seen as a win by copyright owners."

Local publishers, however, will be concerned by the government's "in principle" support for repealing the parallel importation restrictions on books. This will provide Australian booksellers with greater flexibility to choose between local and overseas suppliers and will likely lower the price paid for books in Australia.

"If parallel imports of books are permitted, publishers, both local and overseas, will likely alter their supply arrangements," says Afaras. "For example, publishers may be able to supply one edition of foreign authored books for sale internationally and into the Australian market rather than publish Australian editions of those books for sale in Australia."

The Australian Publishers Association welcomes the government's decision in "adopting a prudent approach to the reform of Australian copyright laws and rejecting anti-copyright radicalism".

As the government launches further consultations into proposed reforms and considers its plans for other recommendations from the Productivity Commission, a number of industries will be keeping a close eye on its progress.