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Release of the Productivity Commission’s Draft Report on Australia’s IP System

Sarah Gilkes | May 17th, 2016

On 29 April 2016, the Productivity Commission released its draft report summarising the results of its inquiry into Australia’s intellectual property arrangements. mdp Director Sarah Gilkes summarises the key issues and recommendations in the report.

The purpose of the inquiry was to review all aspects of Australia’s intellectual property system (including copyright, trade mark, patent and design laws), and to recommend any changes that the Commission felt were necessary to ensure that the interests of both innovators and consumers were appropriately balanced. The Commission was also asked to take into account Australia’s obligations under various international agreements regulating intellectual property, including the recently signed Trans-Pacific Partnership Agreement.

Balancing the interests of innovators and those wishing to access innovation is an ongoing challenge for intellectual property legislators.

On the one hand, innovators need to be incentivised to share their innovations so that society can access and benefit from those innovations. In some cases, the act of innovation itself also needs to be incentivised, especially where the cost involved in research and development (R&D) is prohibitive (such as in the pharmaceutical and biomedical industries), and the R&D activities are only undertaken on the understanding that there will ultimately be a prospect of profit. As an incentive both to sharing innovation, and to the act of innovation itself, the monopolies offered under intellectual property laws (in particular, under the Patents Act 1990), and the resulting ability to commercialise those monopoly rights, are a powerful inducement. Intellectual property rights are also an important tool for inventors in attracting investment from private investors or venture capital firms, particularly in the early stages of commercialisation when those inventors are not yet to demonstrate a track record of customer engagement or financial return.

On the other hand, by granting a monopoly to an innovator, intellectual property laws necessarily limit the ability of consumers to access the innovation. Perhaps of more concern, they also limit the ability of other innovators to build upon the original innovation. An invention disclosed in a patent, for example, will often result in the patent owner being the only party who is able to develop more advanced versions of the invention. This means that any other inventors working in the same industry who may have ideas as to how to improve upon the original invention are often prevented from making those improvements, resulting in a decrease in market competition and (arguably) a detrimental impact on society through the stifling of further innovation.

In considering these competing interests, the Productivity Commission has made a number of preliminary recommendations, some of which would result in significant changes to Australia’s current intellectual property laws. The recommendations include:

  • abolishing innovation patents (the eight-year patents, which were introduced in 2001 and replaced the former six-year petty patent);
  • limiting the circumstances in which software patents will be granted;
  • introducing a ‘fair use’ exception to copyright infringement (which would see Australia take an approach to copyright infringement which is closer to the one used in the USA); and
  • improving the dispute resolution mechanisms for intellectual property, with the aim of making it easier (and less costly) for SMEs to enforce their intellectual property rights.

It appears from the preliminary recommendations that the Productivity Commission’s focus is on shifting the current intellectual property system so that it expands the rights of those accessing IP, and places greater limitations on those seeking to obtain IP monopolies. Submissions on the draft report are due on 3 June 2016, and the final report is expected to be released in August 2016.

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Sarah Gilkes

Sarah Gilkes

Director, BA(Hons) LL.B LL.M at mdp
Sarah is a highly accomplished, award-winning lawyer with specialist expertise in intellectual property (IP) and commercial law. Sarah helps clients to protect and strategically develop their ideas, taking them from the concept stage through to commercialisation. She also provides commercial advice to Australian and international businesses, guiding clients through a range of business challenges including business acquisitions and disposals, corporate structuring, shareholder agreements and capital raising.
Sarah Gilkes

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