Referral of the inquiry
1.1
The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (the bill) was introduced in the Senate and read a first time on 25 July 2019.
1.2
On 1 August 2019, the Senate referred the bill to the Senate Economics Legislation Committee (the committee) for inquiry and report by
4 September 2019.
Purpose of the bill
1.3
The bill is the government's second tranche of reforms to update Australia's patent system in response to Productivity Commission (PC) recommendations in two inquiries.
1.4
It contains provisions to introduce into the Patents Act 1990 (Patents Act) a statement of objectives, and begins phasing out the second-tier innovation patent system (IPS). Other proposed amendments address transparency and accountability for Crown use of patented technology and design, and improve certainty for the compulsory licencing of patents by introducing a 'public interest' test. The bill also contains a number of minor technical and consequential amendments to improve the efficiency of the intellectual property (IP) system.
Background
1.5
The bill addresses issues raised by the PC's Inquiry into Australia's Intellectual Property Arrangements of 2016 and 2013 Compulsory Licencing of Patents report, specifically:
inserting an objects clause into the Patents Act;
clarifying the application, scope and processes for Crown use; and
introducing a public interest test for the compulsory licencing of patents.
Productivity Commission Intellectual Property Inquiry
1.6
The 2016 PC inquiry report stated Australia had lost its way on IP policy. It found Australia's IP arrangement fall short in many ways, including:
not striking the right balance between ensuring creators and inventors are rewarded for their efforts, and providing only the level of incentive required to induce the additional investment that would not otherwise occur;
granting patent exclusivity too readily, allowing for a proliferation of low-quality patents, frustrating follow-on innovators and stymieing competition; and
displaying a lack of steely resolve to address misinformation and scare campaigns.
1.7
The bill addresses two of the 25 recommendations from the PC inquiry report. These recommendations relate to patents:
Recommendation 7.1
The Australian Government should incorporate an objects clause into the Patents Act 1990 (Cth). The objects clause should describe the purpose of the legislation as enhancing the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology. In so doing, the patent system should balance over time the interests of producers, owners and users of technology.
Recommendation 8.1
The Australian Government should abolish the innovation patent system.
Patents
1.8
Patents are a central element of the IP system. A patent grants a period of up to 20 years for the exclusive right to commercially exploit an innovation. A patent applicant can also make an unlimited number of claims to extend market protection. In exchange, the owner discloses the nature of the innovation.
1.9
For the PC, the fundamental principle of patents is that they help advance human knowledge by encouraging socially valuable innovation that would not have otherwise occurred. Innovation is said to benefit the community where it leads to the development of new goods and services and more efficient production methods. The greatest benefit comes where this knowledge disseminates to other parts of the economy.
1.10
However, it is the PC's judgment the Australian community is not getting a reasonable return from the protection granted to certain patent holders. This is despite reforms introduced in 2012 under the 'Raising the Bar' initiative (IP Laws Amendment (Raising the Bar) Act 2012) that increased the 'inventive step' threshold by redefining 'prior art' and common general knowledge.
1.11
The PC is of the view Australia provides stronger patent rights than most other advanced countries and, as a large net importer of patented technology, this overcompensation is costly for Australians—financially and in terms of innovation.
1.12
According to the PC, the rules and processes for granting particular patents in Australia lead to a multitude of patented innovations that are of little or no community benefit, with some used solely for strategic purposes to prevent the market entry of competitors or innovators. The consequence is follow-on researchers and innovators are frustrated by the rising cost of innovation as they must invest in costly workarounds. These costs are unnecessarily passed on to the community.
1.13
Further, the PC writes, 'noise' from low-value patents has the potential to weaken the credibility signal in patents. This increases the rate of return required by financiers and makes it harder for firms to leverage patents to acquire capital at lowest cost.
1.14
To address the misuse of the patent system, the PC recommended a number of reforms to better target the system at socially valuable and additional innovations. A key recommendation (recommendation 7.2) called for raising the inventive step requirements for patents. Measures to this effect were part of the exposure draft of the bill. However, following submissions from stakeholders, the government chose to delay this reform (see discussion in chapter 2 on IP Australia consultation).
Objects clause
1.15
Recommendation 7.1 of the PC inquiry report was the introduction of an objects clause into the Patents Act. The PC pointed out many countries, including Japan, Korea, China and New Zealand, have an objects clause or equivalent in their patents legislation.
1.16
The PC argued that by setting out the underlying purpose of the Patents Act, an objects clause would help:
ensure decisions in the application and design of the Patents Act are consistent over time with a well-functioning IP system;
improve the likelihood decisions align with policy objectives;
ensure the system remains adaptable and fit-for-purpose as technologies emerge and economies and business models evolve; and
help shield the system against further expansion in the scope and strength of rights, and guide disputes over the intent of future legislative change.
1.17
The PC is strongly of the view the objects clause:
…should make clear that the principal purpose of the patent system is to enhance the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology. In so doing, the patent system should balance the interests of producers, owners and users of technology.
1.18
The government has indicated its support for an objects clause on several occasions. In its response to the PC inquiry, the government agreed a statement of objectives in the Patents Act would 'provide a clear statement of legislative intent for the guidance of the courts in the interpretation of the Act'.
Innovation patent system
1.19
Recommendation 8.1 of the PC inquiry report called for the IPS to be phased out. The IPS was established in 2001 following a 1995 review by the Advisory Council on Intellectual Property (ACIP) that recommended the existing 'petty patent' system be reformed to provide 'fast, limited monopoly protection for lower level or incremental innovations'. This would create a second-tier patent system, better able to address the needs of small and medium-sized enterprises (SMEs).
1.20
There are three key features of the innovation patent:
the 'threshold for inventiveness' or 'innovative step' targets lower level invention;
lower fees and quicker administrative procedures reduce the compliance burden on applicants with patents bypassing substantive examination and typically being granted within one month (though the patent is only enforceable if it has been examined and certified—a process taking approximately six months); and
relative to standard patents, innovation patents are shorter term (eight years maximum), cover fewer claims (up to five), can only be enforced in Australia once certified, but provide the same infringement remedies as a standard patent once certified.
1.21
The PC found there are around 6,500 active innovation patents in Australia, compared to 130,000 standard patents. In recent years, between 1,300 and 1,800 innovation patents have been granted each year. In 2015, the highest number of innovation patents were in: civil engineering; furniture and games; information technology methods for management; and electrical machinery, apparatus and energy. However, parties using the IPS typically do so only once, and SMEs hold more standard patents than innovation patents.
1.22
Despite its intent, it is the PC's view the IPS has been more harmful than helpful to innovative SMEs for two key reasons:
the lower innovation step contributes to a multitude of low value innovation patents that creates uncertainty for other innovators and financiers; and
innovation patents are used strategically as a litigation tool to target alleged infringers of standard patents, or to increase uncertainty over the scope of rights for competitors.
1.23
The PC is not the only agency to identify the shortcomings of the IPS. In a 2015 review, IP Australia found the IPS fails to encourage research and development that would not have otherwise occurred, and is unlikely to provide net benefits to the community. Also in 2015, the government's independent advisory committee, ACIP, noted the IPS likely results in a 'net cost to society'.
1.24
It is the PC's view any attempt to address the flaws in the IPS would result in a worse outcome and it should instead be phased out. Although acknowledging the possibility some SMEs might be minimally disadvantaged, the PC identified a number of benefits:
simplification of the patent system;
greater patent integrity and financier confidence for SMEs; and
legitimate concerns about the costs of securing IP rights, and enforcement access and costs, would be addressed more directly.
1.25
The government supported this recommendation, noting more targeted assistance would better achieve the objective of stimulating innovation in Australian SMEs, while avoiding the broader costs imposed by the IPS.
Productivity Commission Compulsory Licencing of Patents Inquiry
1.26
Recommendations 6.2, 7.1 and 7.2 of the PC Compulsory Licencing of Patents Inquiry called for reforms to compulsory licencing of patents and Crown use provisions.
1.27
Australia has a legislated system of compulsory licencing so patent owners can be compelled to licence their inventions to others in a limited range of circumstances. Compulsory licencing is intended to be invoked in exceptional cases where enforcing a patent would not serve the best interest of the community as a whole. In its 2013 inquiry report, the PC found there was a clear case to reform the criteria for compulsory licencing and made six recommendations to this effect.
1.28
As with the later PC inquiry (outlined above), the PC emphasised the principle of balance, stating:
A patents system involves a trade-off between encouraging innovation and facilitating access to new technologies. In particular, the right to exclude others from using a patented invention is central to providing innovators with a means to benefit financially from their efforts, but it also has the potential to hinder the community’s access to new technologies.
A patent that provides a greater reward than needed to induce an invention could reduce the invention’s net benefit to the community as a whole, and result in a greater share of the benefits going to the patent owner. In cases where there are no substitutes for the invention, a patent could also facilitate monopolistic and/or anticompetitive behaviour.
1.29
Safeguards are built into patents systems by all countries to limit potential shortcomings. One such safeguard is Crown use, another is compulsory licencing.
Crown use
1.30
Crown use is one of seven mechanisms in the Patents Act that allow a patented invention to be exploited without the patentee's authorisation. Crown use is considered a less costly and time-consuming alternative to compulsory licencing (see below). Crown use can be invoked when an invention is used for services to a government.
1.31
Under current Crown use arrangements, there is no requirement for a government to first negotiate with the patent owner and, if unsuccessful, apply to the Federal Court for authorisation to use an invention. There is also no explicit requirement for compensation to be 'just and reasonable', though a patent owner can apply for a court determination on the compensation it receives. Further, uncertainty exists as to how widely Crown use can be applied, particularly in healthcare.
1.32
At the time of the 2013 PC inquiry report, although governments may have acquired patents on a voluntary basis, there had not been a compulsory acquisition of a patent through Crown acquisition provisions.
1.33
Nevertheless, the PC proposed reforms to reduce uncertainty about the scope of Crown use, and to improve transparency and accountability. The inquiry report made two recommendations with regard to Crown use:
Recommendation 7.1
The Australian Government should seek to amend s. 163 of the Patents Act 1990 (Cwlth) to make it clear that Crown use can be invoked for the provision of a service that the Australian, State and/or Territory Governments have the primary responsibility for providing or funding.
Recommendation 7.2
The Australian Government should seek to amend the Patents Act 1990 (Cwlth) to require:
the Crown to attempt to negotiate use of the patented invention prior to invoking Crown use
the Crown to provide the patentee with a statement of reasons no less than 14 days before such use occurs
Crown use to be approved by a Minister (the relevant Federal Minister or State Attorneys-General)
that in instances of Crown use, the patentee is entitled to remuneration determined on the same basis as that for a compulsory licence.
The first two requirements should be able to be waived in emergencies. However, in all cases patentees should be provided with immediate notice that their patents have been used, and a statement of reasons as soon as practical thereafter.
Compulsory licence
1.34
The Patents Act allows the Federal Court to order a patentee to grant an applicant a licence to work a patented invention on the grounds that the 'reasonable requirements of the public' are not being satisfied. The conditions for making the order are specified in paragraph 133(2)(a) and guidance on reasonable requirements of the public is given in subsection 135(1).
1.35
The PC found the current language in section 135 of the Patents Act conflates the 'reasonable requirements of the public' with the interests of individual trades or industries. The PC is of the view this is inconsistent with promoting community-wide welfare in that it appears to pursue protectionist objectives.
1.36
Further, the PC found the fact the test stands alone in Australian legislation and Common Law, rather than being consistent with and leveraging off comparable provisions in other laws, increases the uncertainty for parties on how the provision will be interpreted.
1.37
The PC argued for a new public interest test for the granting of compulsory licences and recommended:
Recommendation 6.2
The Australian Government should seek to amend the Patents Act 1990 (Cwlth) to replace the ‘reasonable requirements of the public’ test for a compulsory licence with a new public interest test. The new test should specify that a compulsory licence to exploit the patented invention would be available if the following conditions are met:
Australian demand for a product or service is not being met on reasonable terms, and access to the patented invention is essential for meeting this demand.
The applicant has tried for a reasonable period, but without success, to obtain access from the patentee on reasonable terms and conditions.
There is a substantial public interest in providing access to the applicant, having regard to:
benefits to the community from meeting the relevant unmet demand
commercial costs and benefits to the patent holder and licensee from granting access to the patented invention
other impacts on community wellbeing, including those resulting from greater competition and from the overall effect on innovation.
The new provisions should require the Federal Court to set the terms of the licence, including—where the parties cannot reach agreement—any remuneration, consistent with the public interest, having regard to the rights of:
the patentee to obtain a return on investment commensurate with the regulatory and commercial risks involved
the public to the efficient exploitation of the invention.
Provisions of the bill
1.38
The bill consists of eight schedules and contains 96 items:
Schedule 1—Responses to the Productivity Commission
Part 2—Innovation patents
Schedule 2—Crown use of patents
Part 2—Application and transitional provisions
Schedule 3—Crown use of designs
Part 2—Transitional provisions
Schedule 4—Compulsory licences
Schedule 6—Specifications
Schedule 7—Protection of information
Schedule 8—International applications.
1.39
The bill amends three pieces of legislation:
1.40
The following outlines the main amendments proposed by the bill.
Schedule 1—Responses to the Productivity Commission
Part 1—Object of the Act—Patents Act 1990
Item 1: Object of the Act
1.41
Part 1 (item 1) inserts after section 2 of the Patents Act the following provision:
2A Object of this Act
The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.
1.42
This item responds to recommendation 7.1 from the PC intellectual property inquiry report (see above).
1.43
The Explanatory Memorandum (EM) states the objects clause articulates the underlying purpose of the patents system in Australia and provides that the benefits of the patent system to society are primarily economic in nature. In this way, the application of the objects clause is limited to economic factors, and excludes ethical and social considerations.
1.44
The term 'technological innovation' is intended to be interpreted broadly to mean the application of scientific knowledge for practical purposes. This, according to the EM, is consistent with the current patentable subject matter threshold under the Patents Act, and with international practice.
1.45
The EM emphasises the substance of the objects clause is not new and merely reflects the existing goals of the patent system. Amongst other things, the clause will assist courts in interpreting the Patents Act in cases where the text of the legislation is uncertain or unambiguous.
Part 2—Innovation patents—Patents Act 1990
Items 2–9: Priority date
1.46
Part 2 deals with phasing out the IPS, as recommended by the PC. It makes several amendments dealing with 'priority date'. These amendments will prevent the filing of new applications for innovation patents by requiring the priority date, and the date of the patent for an innovation patent application (if granted), to be prior to the commencement of the amendments.
1.47
The EM states the phasing out of the IPS will not affect existing rights and the system will continue to operate for innovation patents filed before the amendments commence.
1.48
Further, the existing right to file divisional applications and convert a standard patent application to an innovation patent application (thereby adopting the priority date of the standard patent application), will be maintained for any patent or application filed prior to the commencement date of these amendments.
Schedule 2—Crown use of patents
1.49
There are 32 items in this schedule which together look to increase certainty and provide for transparency in the operation of Crown use of patents.
Part 1—Amendments to Patents Act 1990
Item 5: Before section 161 [When an invention is exploited for Crown purposes]
1.50
Item 5 inserts a new section 160A into the Patents Act to provide a definition of 'when an invention is exploited for Crown purposes' and in so doing clarifies its application and scope. This item responds to the PC recommendation 7.1.
1.51
The item specifies, amongst other things, that an invention is exploited for Crown purposes if it is exploited for the proper provision of services of a relevant authority. This includes all services Commonwealth and state/territory governments have the primary responsibility for providing or funding. It will continue to allow governments to authorise non-government bodies to exploit an invention under Crown use provisions.
1.52
The EM states the amendment will clarify the use of patented inventions in the health sector, particularly in relation to the provision of diagnostic genetic testing undertaken by private providers for private patients.
Item 7: Section 163 [Crown exploitation of inventions-general rule]
1.53
Item 7 repeals and substitutes a new section 163, and inserts a new section 163A to the Patents Act. This item responds to the PC recommendation 7.2.
1.54
These sections specify several new requirements or steps that must be completed for the exploitation of an invention by the relevant authority to be exempt from infringement of a patent. There are requirements specified for non-emergency (s163) and emergency (s163A) situations.
1.55
Amongst other things, the amendments in section 163 introduce new requirements for attempting prior negotiation, ministerial oversight and approval, and providing to the relevant party a copy of the approval and statement of reasons. Approval by the minister is not a legislative instrument and is not subject to parliamentary oversight.
1.56
Further, proposed subsection 163(2) specifies that exploitation is limited to the terms agreed by the parties or determined by the court. These terms may be agreed or determined at any point in time, including after exploitation has commenced. These terms are provided for in section 165, which is given a new heading under item 10—'Crown exploitation of inventions—terms (including remuneration)'—and amended under item 11.
1.57
The emergency provisions under proposed section 163A are, according to the EM, intended to apply in cases of an unforeseen occurrence or a sudden and urgent occasion for action. For instance, it might include a public health crisis or medical emergency, war, a national security situation, perceived threats to law and order, and natural disasters. A state of emergency need not be declared by a government. An approval given by the relevant minister for Crown exploitation in an emergency is not a legislative instrument subject to parliamentary scrutiny.
1.58
The EM states the patentee has existing rights under section 165A of the Patents Act (renamed under item 14 as 'Crown exploitation of inventions—court order to cease') to apply to cease Crown exploitation, and to challenge the exploitation under the Administrative Decisions (Judicial Review) Act 1977.
Items 8–9: Section 164 [Crown exploitation of inventions—information to be given by relevant authority]
1.59
Item 9 makes consequential amendments to section 164 of the Patents Act (retitled under item 8 as 'Crown exploitation of inventions—information to be given by relevant authority'), which allows the government not to provide information specified in subsections 163(3) or 163A(3) to the applicant/nominated person/patentee if it appears 'it would be contrary to the public interest to do so'.
Item 11: Subsection 165(2) [Crown exploitation of inventions—terms (including remuneration)]
1.60
Item 11 repeals and substitutes a new subsection 165(2) that provides guidance on how remuneration for Crown use is to be determined in cases where parties fail to come to an agreement and apply to a prescribed court for a determination.
1.61
The amendment requires the prescribed court to determine an amount of remuneration that is 'just and reasonable, having regard to the economic value of the exploitation of the invention and any other matter the court considers relevant'. The existing subsection 165(4) continues to apply and allows the court to take into account any compensation already received.
1.62
The EM states this amendment will go some way towards addressing PC concerns that the lack of guidance in the existing legislation leaves patentees disadvantaged and can weaken their bargaining position in seeking to obtain fair and equitable agreement.
Part 2—Application and transitional provisions
Items 28–29: Application of amendments
1.63
Part 2 makes a number of provisions for the application of amendments. According to the EM, the principles underpinning the application provisions are that the changes should:
take effect as soon as possible, to quickly improve the operation and transparency of the Crown use provisions; and
not unduly prejudice users of the system, particularly with respect to not affecting any existing or in-force terms for Crown use of an invention, whether these are agreed between the parties or determined by a court.
Items 30–32: Transitional arrangements
1.64
Part 2 also contains transitional provisions for: authorised person; negotiations; and agreements and determinations.
Schedule 3—Crown use of designs
Part 1—Amendments Designs Act 2003
1.65
In addition to Crown use provisions in the Patents Act, there are provisions for Crown use in the Designs Act 2003 (Designs Act). Schedule 3 amends various sections of Chapter 8 of the Designs Act, which permits the use and acquisition of registered designs by the Crown, and enables the Registrar of Designs to restrict the publication of information about a design application if to do so is necessary or expedient in the interests of the defence of the Commonwealth.
1.66
According to the EM, the proposed amendments in this schedule are consistent with those made under Schedule 2 to the Crown use provisions in the Patents Act.
Item 2: Used for Crown purposes
1.67
Item 2 repeals subsection 95(2) and substitutes new subsections 95(2), (3), (4) and (5). The amendments include a definition for 'used for Crown purposes'. A number of the amendments incorporate provisions currently in section 96, 'Use of design by the Commonwealth or a State', which is repealed and replaced with new sections 96 and 96A under item 3.
1.68
As with item 5 of Schedule 2 relating to Crown use of patents, this item provides that a design is used for Crown purposes if the design is used by a 'relevant authority' or by a person authorised by a relevant authority, and if the use is for the services of the Commonwealth or state/territory.
1.69
Proposed subsection 95(5) remakes and clarifies provisions currently in subsection 96(3) that a design is taken to be used for the services of the relevant authority if the use of the design is necessary for the proper provision of those services. It makes clear 'services of a relevant authority' includes services where the Commonwealth, state or territory has 'primary responsibility' for providing or funding.
1.70
The EM states this provides an important clarification on the extent of the infringement exemption to third-party non-government entities providing public services. This 'primary responsibility' test will take account of all providers of similar services to those provided or funded by a government, including non-government providers.
Item 3: Crown use of designs
1.71
As with item 7 in Schedule 2 with regard to patents, item 3 introduces a general rule for Crown use of designs in non-emergency and emergency situations by repealing the existing section 96 and substituting new sections 96 and 96A. This item also incorporates provisions currently in section 100 (which is repealed at item 9).
1.72
The current provisions do not require the Crown to obtain consent from, or inform, the design owner of its intention to use a design before use has commenced, though the Crown can choose to seek consent. Neither does it require ministerial oversight.
1.73
According to the EM, the introduction of ministerial approval will provide greater certainty for government or semi-government entities and for registered owners of designs. For instance, it is clearer that a number of entities can potentially qualify as 'the Crown', including employees, commissions, statutory authorities, statutory corporations, government business entities, government owned corporations, research institutes, and private corporations under contract to the government.
1.74
The decision by the minister is not a legislative instrument and therefore not subject to parliamentary scrutiny.
1.75
The emergency provisions are substantively the same as those discussed under item 7 of Schedule 2.
Item 7: Crown use of designs—terms (including remuneration)
1.76
Item 7 repeals and inserts a new section 98, which provides guidance on how remuneration is to be determined in cases of Crown use of designs. It contains the substance of proposed amendments at items 11 and 13 of Schedule 2 with regard to the Patents Act.
1.77
The EM states the amendments will address concerns raised by the PC that a lack of guidance on pricing can leave patentees disadvantaged, and the lack of an applied standard or criterion to refer to in negotiations could weaken their bargaining position in seeking to obtain fair and equitable agreement.
Part 2—Application and transitional provisions
Items 20–24
1.78
Items 20–24 make a number of provisions for the application of amendments and for transitional provisions for authorised person, negotiations, and agreements and determinations. They are substantively the same as those specified in Part 2 of Schedule 2 amending the Patents Act.
Schedule 4—Compulsory licences
1.79
A compulsory licence is an order made by the Federal Court for a patentee to grant a licence to another party to exploit an invention. The intent is it prevents a patentee from restricting others from exploiting an invention in the local market where the patentee has failed to do so.
1.80
Schedule 4 addresses the 2013 PC inquiry report recommendation 6.2 to replace the 'reasonable requirements of the public' test with a 'public interest' test when the Federal Court considers an application for a compulsory licence. Several items make amendments to this effect, in both granting and revoking a compulsory licence. This schedule also clarifies the processes for compulsory licences for inventions that build upon previous patents.
Item 2: Section 132B
1.81
Item 2 substitutes new parts into the simplified outline of Chapter 12, Part 2 of the Patents Act. It replaces the 'reasonable requirements of the public' reference with the substance of the new public interest test, and makes reference to compulsory licences for dependent patents.
Item 6: Subsections 133(2), (3) and (3B)
1.82
The proposed amendments retain much of the content of the current subsections, but remove references to 'reasonable requirements of the public' and insert public interest requirements. Item 6 also adds additional requirements for the grant of a compulsory licence, and clarifies issues related to dependent patents.
1.83
The following continue to be required for any grant of a compulsory licence:
an applicant must try for a reasonable period, without success, to obtain authorisation to work on the invention on reasonable terms and conditions;
the patentee has given no satisfactory reason for failing to exploit the patent; and
the patentee has contravened or is contravening Part IV of the Competition and Consumer Act 2010 or an application law in connection with the patent.
1.84
Item 6 also adds the following additional requirements for the granting of a compulsory licence:
there must be unmet demand in Australia for the original patented invention and the authorisation is required to meet the demand; and
the patentee has given no satisfactory reason for failing to exploit the patent to the extent necessary to meet the demand for the invention in Australia.
1.85
The public interest test, introduced by new paragraph 133(3)(e), requires that any compulsory licence be in the public interest. In making this determination, the court must have regard to:
the benefits to the public from meeting the demand for the original invention;
the commercial costs and benefits to the patentee and the applicant from providing authorisation to exploit the original invention; and
any other matters the court considers relevant, including matters relating to greater competition and any impact on innovation.
Item 7: Remuneration
1.86
Item 7 inserts a new standard to which the Federal Court must have regard when determining the amount of remuneration to be paid to the patentee in cases where there is no agreement between the patentee and the applicant.
1.87
The current standard is 'just and reasonable', having regard to the economic value of the licence and the desirability of discouraging contraventions of the law.
1.88
The EM states this does not adequately balance the interests of the patentee to obtain an appropriate economic return and those of the public in having demand for the invention met. In addition to current requirements, the amendment requires the court to also have regard to the right of the patentee to obtain a return on investment, and the public interest.
Item 11: Paragraph 134(2)(a)
1.89
Item 11 requires the court to consider, amongst other things, the public interest when making a decision to revoke a patent. This change is consequential to amendments described at item 6.
Item 12: At the end of section 134
1.90
Item 12 inserts a new subsection specifying the factors the court must consider in determining whether it is in the public interest to revoke a patent. These are the same factors set out at item 6.
Schedule 5—Seals
1.91
This schedule makes amendments to the Patents Act and Trade Marks Act 1995 to correct an anomaly whereby the seal for the Designs Office (under the Designs Act) can be kept and used electronically, but those for the Patent Office and Trade Marks Office cannot.
1.92
According to the EM, this change will allow IP Australia to issue certified design, patent and trademark documents electronically.
Schedule 6—Specifications
Items 1–6
1.93
The EM states schedule 6 corrects an oversight in the drafting of the Raising the Bar Act 2012 whereby provisions intended to abolish omnibus claims (subsection 40(3A)), were applied during the examination stage of standard and innovation patent applications, but were not applied at other stages, such as amendment after acceptance of an application or after grant of a patent, re-examination, opposition or revocation.
1.94
The effect is applications and patents to which the Raising the Bar amendment applies are required to satisfy subsection 40(3A) to be accepted, but not at other stages. In effect, it allows an applicant to amend their specification after examination to the extent it would not be acceptable if it were examined. These items correct this oversight.
Schedule 7—Protection of information
1.95
The EM explains that patent applications and associated documents are published or made publicly available to ensure the public benefits from knowledge of the invention. In some cases, patent applications can contain sensitive information that is not essential to understanding the invention.
1.96
Items 1–3 make amendments to resolve an existing ambiguity. The Commissioner of Patents (the Commissioner) currently uses a broad power under regulation 4.3 of the Patents Regulations (the Regulations) to not publish certain 'documents'. The amendments will allow the Commissioner to decide not to publish sensitive 'information' (either commercial or personal) that is not essential to understanding the invention, where such publication is not appropriate. The Commissioner may arrange for sensitive information to be redacted prior to publication or public inspection.
Schedule 8—International applications
Item 1: International applications not filed in the receiving office in English
1.97
Section 10 of the Patents Act deals with international filing dates. The existing section requires the translation of all applications to be verified in accordance with the Regulations. Item 1 changes this to require only a certificate of verification if required by the Regulations.
1.98
The EM explains this will allow the Regulations to be amended to specify this requirement only when deemed necessary by the Regulations.
Commencement
1.99
Commencement arrangements are as follows:
Schedule 1, Part 1—the day after the Act receives Royal Assent;
Schedule 1, Part 2—the day after the end of the period of 12 months beginning on the day after the Act receives Royal Assent;
Schedules 2 to 7—the day after the Act receives Royal Assent;
Schedule 8—the day after the end of the period of six months beginning on the day the Act receives Royal Assent; and
Sections 1 to 3 and all remaining provisions—the day the Act receives Royal Assent.
Consultation on exposure draft of the bill—IP Australia
1.100
IP Australia has undertaken three consultations since 2017 on issues contained in the bill:
exposure drafts of the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill and Regulations 2017 (23 October 2017 to 4 December 2017);
several IP matters, including Crown use of patents, an objects clause, inventive step requirements, and compulsory licencing (30 August 2017–17 November 2017); and
exposure draft of the bill (23 July 2018–31 August 2018).
1.101
IP Australia received 18 submissions to its 2018 consultation on the exposure draft of the bill. This consultation is discussed in chapter 2.
Financial impact
1.102
No information was provided on the financial impact of the proposed legislation. However, during hearings, IP Australia suggested approximately $11 million each year is spent by Australian companies engaging with the IPS and often not obtaining a right they can enforce.
Legislative scrutiny
1.103
The bill was considered by the Senate Standing Committee for the Scrutiny of Bills, which had no comment.
1.104
The Parliamentary Joint Committee on Human Rights considered the bill and determined it did not raise human rights concerns.
Regulatory impact
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No information was provided on the regulatory impact of the proposed legislation.
Conduct of the inquiry
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The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting writing submissions by 15 August 2019.
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The committee received 54 submissions, as well as answers to questions on notice, which are listed at Appendix 1.
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The committee held one public hearing for the inquiry. The names of witnesses who appeared at the hearing can be found at Appendix 2.
Acknowledgements
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The committee thanks all individuals and organisations who assisted with the inquiry, especially those who made written submissions and participated in the public hearing.