None of this is especially new, or a huge surprise. FInTech has been on the PM’s radar since he toppled Tony Abbott for the top job last September. In early December 2015, Turnbull (flanked by Morrison, Assistant Treasurer Kelly O'Dwyer and Assistant Innovation Minister Wyatt Roy) fronted an audience of 150 start-up entrepreneurs at Stone & Chalk, saying ‘There has never been a more exciting time to be in FinTech’ and spruiking his government's ‘absolute commitment to innovation and supporting all of your imagination and creativity’. In his recent statement, the Treasurer confirmed that ‘backing innovation in financial services is a priority for the Government.’
This is all well and good, perhaps, if you are in the Department of Prime Minister and Cabinet, or in Treasury handing out relatively small sums of money to FinTech hubs (Morrison’s special announcement of support in Shanghai included a promise of a somewhat miserly $150,000 for the Stone & Chalk FinTech Asia program). But I have to wonder whether the Department of Industry, Innovation and Science (DIIS) is on the same page. Indeed, the apparent inability of government bureaucracy’s left hand to keep track of what its right hand is doing makes me wonder whether the DIIS is even aware that it might not be in lockstep with the PM and Treasurer. The smiling, supportive presence of Wyatt Roy at last December’s Stone & Chalk love-in suggests perhaps not.
IP Australia’s Role in Supporting FinTechThe body responsible for administering Australia’s patent system, IP Australia, falls within the portfolio of the Minister for Industry, Innovation and Science (currently Christopher Pyne) and his Assistant Minister (currently Wyatt Roy). Since around 2010 – and seemingly emboldened by the decision of the US Supreme Court in Bilski v Kappos – IP Australia has followed practices having the effect of restricting the patent-eligibility of so-called ‘business methods’, whether or not implemented via computer technology. These practices – including the diligent defence and prosecution of Federal Court appeals – have culminated in the Full Court decisions in the Research Affiliates and RPL Central cases (the latter of which is currently the subject of an application to the High Court).
Whatever the merits of these particular cases may, or may not, be, my recent experience with examination of applications at the Australian Patent Office suggests that the Full Court decisions are being interpreted expansively. One effect of this is that almost any innovation worthy of the label ‘FinTech’ appears to have little to no prospect of being patented in Australia. For practical purposes, therefore, the Government’s current enthusiasm for Australian FinTech innovation might be backed by big talk, and a bit of money. But what it is definitely not backed by is any confidence in the availability of meaningful patent rights.
Incoherency Within GovernmentWhile the ‘Government’ (i.e. the party with a majority is the House of Representatives) usually espouses particular policy positions, there is nothing unusual in specific departments within the bureaucracy holding seemingly contradictory views. For example, when public hearings were held by the Australian Senate into proposals to amend the law in relation to the patenting of genetic technologies, the Department of Health argued against ‘gene patents’, while the Department of Innovation, Industry, Science and Research – including IP Australia – argued in favour. This is, in some respects, unsurprising: patents on health related technologies potentially increase the cost of providing health care in Australia while, at the same time, providing economic incentives for companies in the industry to develop and commercialise new health care technologies. The different departments, therefore, did not share a common interest in the outcome of the gene patents enquiry.
Even so, might we not expect the government of the day to resolve competing interests, and present a coherent policy position on innovation in particular technology markets? Apparently, the answer to this question is ‘no’.
In all honesty, I have no idea what IP Australia’s policy-based objection is to the grant of patents in relation to business-related innovations, including those in the field of FinTech. I accept that it is not a foregone conclusion that patents inevitably foster innovation and commercialisation, however I am unaware of any widely-accepted basis for IP Australia’s apparent position that (for example) patents support innovation in the field of genetic technologies, but are an obstacle to innovation in FinTech. The current Government appears to believe that there is value in investing in Australian FinTech, and yet its own Department responsible for innovation does not seem to think that such investments are worthy of protection via the intellectual property system.
Australian FinTech Innovation ImpactThere is, as it happens, no question that Australian innovators are capable of creating a huge impact in the FinTech space. I present, as just one example, Alice Corporation Pty Ltd, a Melbourne-based FinTech venture that has been fifty percent owned by National Australia Bank since 2000, and which has devoted the majority of its resources since 2007 to litigation in the US relating to the validity and enforcement of its IP rights against CLS Bank International. Readers with an ongoing interest in IP protection do not need me to explain how Alice’s battle has fundamentally impacted the law relating patent-eligibility of computer-implemented processes in the United States.
So, have Australian FinTech innovators changed the world? Absolutely – as anyone currently trying to navigate patent applications relating to computer-implemented processes through the USPTO is well-aware. Have they changed the world for the better? Well, that is a different question.
The Role of the Public ServiceI have no doubt that IP Australia would respond the criticisms in this article by pointing out that they are not responsible for making the law, but only for administering its application in relation to the examination, grant and maintenance of Australian patents and applications. This is, of course, true, as far as it goes. But the real situation is more complex. IP Australia has, in recent times, taken a leading role in driving IP policy, and was the primary force behind the Raising the Bar IP reforms that were passed in 2012. With regard to the Federal Court decisions on patent-eligibility, IP Australia’s practices have determined the nature of the cases that have been subject to appeal, and the way in which these have been prosecuted before the courts. It would be disingenuous in the extreme for IP Australia to assert that its role in these cases has been merely passive.
There is nothing inherently wrong with this. There is no authority that is better-placed than IP Australia to provide informed input to government on the role of IP in the Australian economy. However, at the end of the day Australia is a democracy. We, the people, elect our representatives to run the country. Those representatives drive policy, and thus determine the directions taken by the country to achieve its economic, and other, objectives. The public servants who occupy longer-term positions within the bureaucracy exist to do what their name suggests, i.e. to serve the public, by implementing the policies of our elected representatives.
Conclusion – ‘Whole of Government’ Approach to FinTechThere may well be sound policy reasons for limiting the grant of patents in the FinTech space. I am not the kind of IP zealot who would argue that awarding monopolies is always the best approach to incentivising innovation and commercialisation in all fields of technology. On the other hand, I am unaware of any basis for treating FinTech differently from other fields of technology within the patent system. Indeed, the nature of FinTech is such that many innovations are easily copied once revealed to the market, which suggests that, all else being equal, IP protections are more, rather then less important in this area.
The Australian people have a right to know whether our Government has a coherent policy position on FinTech innovation – especially given that our money is being invested in this sector – and how the practices of all of the Government’s departments support this policy position. As matters stand right now, it is hard to identify coherence or consistency in the approach of different Government departments in this area. Perhaps it is time for the relevant agencies to take up the ‘Whole of Government Challenge’ in relation to FinTech innovation policy?