Australian Government Commences Consultation on Proposed Patent Law Reforms

The Australian Government recently issued its response to the Productivity Commission’s final report on its Inquiry into Australia’s Intellectual Property Arrangements, indicating support for a number of the Commission’s recommendations.  IP Australia has now published a set of consultation papers discussing proposed implementation of the Government’s response to a number of recommendations in the report, as well as a 2013 report by the Commission on Compulsory Licensing of Patents.  Four of the five consultation papers that have been released relate to patents, and address: amending inventive step requirements; introducing an objects clause into the Patents Act 1990; amending the provisions for Crown use of patents (and designs); and amending the provisions for compulsory licensing of patents.  (Additionally, a fifth paper addresses introducing divisional applications for international trade marks.)

Written submissions in response to questions presented in the consultation papers are due by Friday 17 November 2017, and should be sent via email in Word, RTF, or PDF format to consultation@ipaustralia.gov.au.

It is presently intended that legislative amendments relating to the issues discussed in the consultation papers be included in a Bill for introduction to Parliament in 2018.  Prior to this, it is expected that there will be further consultation on an Exposure Draft of the proposed amendments.

IP Australia will conduct further consultation on other measures covered by the Government’s response to the Productivity Commission’s report – including  phasing out of the innovation patent system – later in 2017, with a view to introducing corresponding further amendments in a Bill as soon as possible.

Raising the Inventive Step

The Productivity Commission made two recommendations in relation to the inventive step requirements for patents, that have been broadly accepted by the Government.  These recommendations were:

1. to further align the inventive step standard for the grant of a patent in Australia with that of the European Patent Office through raising the inventiveness threshold; and
2. to introduce a requirement for applicants ‘to identify the technical features of the invention in the set of claims’.

The inventive step consultation paper notes that:

Like most legal tests, the assessment of inventive step needs to strike a balance between predictability of outcomes, and the adaptability to consider principles rather than rigid formulae. The PC recommended adaptability as one of the recommended guiding principles in formulating IP policy. An adaptable, principles-based approach is desirable for the assessment of patents, as it recognises that each invention and the circumstances surrounding it are different.

With this in view, the paper sets out four options for reform of inventive step in Australia:

1. Option 1 – implement the Productivity Commission’s recommendations verbatim, i.e. replace the existing definition in the Patents Act with wording based on Article 56 of the European Patent Convention (EPC) and provide additional guidance in the explanatory memorandum (EM);
2. Option 2 – similar to the first option, but with additional legislative clarification of the ‘prior art base’ for inventive step, substantially via a simplification of the existing legislative scheme;
3. Option 3 – implement the second option, and additionally amend section 45 of the Patents Act to require the Commissioner to determine whether an invention is a solution to a technical problem; or
4. Option 4 – define inventive step prescriptively in legislation to match the current EPO problem-and-solution approach.

IP Australia has thus far expressed no preference for any of the proposed options, and intends to use the consultation process to gather information before forming a view.  For what it is worth, although I am in favour of the general thrust of the Productivity Commission’s recommendation to further raise the inventive step standard, I dislike all of the options presented, in increasing order of antipathy from the first (needs work) to the fourth (strong objection).  I anticipate having more to say on this is a future article, once I have had the opportunity to consider my own response to the consultation paper.

The Object of the Patents Act

The Productivity Commission recommended that the Australian Government should incorporate an objects clause into the Patents Act, to state the purpose of the Act 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.

The Commission believes that this wording reflects Australia’s obligations in meeting the objectives of the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), Article 7 of which states that:

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

The consultation paper proposes two options.  Option A is to implement the Productivity Commission’s recommendation, as stated above.  Option B aims to clarify the text to reflect the reality that the scope of the legislation is limited to the implementation of the patent system in Australia, and that the reference to ‘Australians’ in the Commission’s text does not authorise preferential treatment for Australian users of the Australian patent system (which would violate the country’s obligations under TRIPS and the Paris Convention for the Protection of Industrial Property).  The proposed objects clause under Option B is:

The purpose of this Act is to provide a patent system in Australia that enhances the wellbeing of society 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, users of technology, and the public.

Personally, I think this proposal needs work.  I believe that the concept of ‘mutual advantage of producers and users of technological knowledge’ in the TRIPS objectives is a useful one that should not be overlooked.  Furthermore, I am concerned that the Productivity Commission’s concept of balancing the interests of ‘producers, owners, and users of technology’ (n.b. not ‘technological knowledge’, which is a different thing), and ‘the public’ (whoever that might be) is actually not balanced at all, but biased against rights-holders.

Crown Use

As the name suggests, ‘Crown use’ provisions in the Patents Act 1990  enable the Queen (or, more specifically, Her ministers and their delegates in the Australian Federal, State and Territory governments) to access and use patented technology without prior authorisation of the patentee.  The patent owner must, however, be fairly compensated for such use.  Crown use ensures that the patent system does not prevent or limit governments’ abilities to act in the public interest.  Provisions in the same terms are also present in the Designs Act 2003. 

Crown use has rarely been invoked in Australia, with only two cases having been contested before the courts.  Despite this – or because of it – a number of reviews, including one by the Productivity Commission,  have identified potential problems with the Crown use provisions, and recommended changes.

The Crown use consultation paper proposes three options:

1. Option 1 (not preferred by IP Australia) – undertake (more) public awareness and education activities to improve understanding of the existing Crown use provisions;
2. Option 2 – amend the Patents Act (and Designs Act) as recommended by the Productivity Commission in its 2013 report, with possible further improvements (four sub-options); or
3. Option 3 (not preferred by IP Australia) – implement the amendments previously proposed by Greens MP Adam Bandt during parliamentary debate on a 2014 reform Bill.

Compulsory Licensing

A compulsory licence is a Court order, that can only be granted in specific circumstances set on in section 133(2) of the Patents Act, requiring a patent-owner to grant a licence to another party, allowing that party non-exclusive rights to exploit the patented invention in exchange for fair compensation.  A compulsory licence has never been granted in Australia, although there have been three cases in which an application was made. 

As with Crown use, notwithstanding the apparent unimportance of the compulsory licensing provisions, a number of reviews have identified potential problems and proposed reforms.

The compulsory licensing consultation paper proposes three options:

1. Option 1 (not preferred by IP Australia as a sole response) – undertake public education and awareness activities in relation to the compulsory licensing provisions;
2. Option 2 (not preferred by IP Australia) – implement the Productivity Commission’s recommendations in full, including moving the anti-competitive conduct test of section 133(2)(b) into the Competition and Consumer Act 2010, replacing the existing ‘reasonable requirements of the public’ test with a new ‘public interest’ test, and repealing section 136 of the Act (which prevents a Court from issuing a compulsory license that contravenes Australia’s international treaty obligations); or
3. Option 3 – implement only a modified subset of the Productivity Commission’s recommendations, to replace the existing ‘reasonable requirements of the public’ test with a new ‘public interest’ test.

Conclusion – If You Care, Speak Up!

It is fairly clear at this stage that, in one form or another, these reforms are very likely to happen.  At the very least, one or more amendment Bills will be drafted and put before the Australian Parliament.  In recent times (as with the Raising the Bar amendments in 2012), IP reforms on which full and open consultation has been conducted have generally received bipartisan and/or crossbench support and passed into law.

Accordingly, if you care at all about any of the proposed reforms, now would be a good time to speak up and respond to the relevant consultation paper(s).  I would have thought that anyone with a stake in the Australian patent system should expect to be affected, one way or another, by a change in the law relating to inventive step, and that the proposals on this issue should attract many submissions.  The practical impact of an objects clause is more difficult to predict, but if it is going to happen than there is much to be said for trying to ensure that the wording is appropriate. 

Many (myself included) might find it hard to care too much about the fine details of Crown use and compulsory licensing provisions, given how rarely (if ever) these are invoked.  But, even so, there is an opportunity here to influence and improve the Australian law in these areas, which may interest the small subset of stakeholders who might potentially be affected, along with policy wonks, academics, and others with an intellectual interest in the operation of the law.

I strongly encourage all interested stakeholders to review the relevant consultation papers, and to provide IP Australia with the input it is seeking.

Tags: Australia, Innovation policy, Law reform, Patent law, Public consultation, Public policy