02 February 2014

Australia Scores Highly In Biased IP Index

US Chamber of Commerce LogoLast week, the US Chamber of Commerce’s Global Intellectual Property Center (GIPC) released the second edition of its International IP Index, which it called Charting the Course.

Australia scored pretty well, coming in fifth out of the 25 countries covered by the index, behind only the US, UK, France and Singapore.  However, on closer inspection this is probably not something of which we should be especially proud.  While the GIPC index is touted as a measure of how well each country safeguards IP to ‘propel the creation of jobs, protection of public safety, access to future innovations, and stimulate competition in the global economy’, it might better be described as a measure of how cravenly each country kowtows to the interests of the US enterprises represented by the Chamber of Commerce.

For example, a country can gain points for entering into a free trade agreement, such as the Australia-US FTA, or by providing an extension of term for pharmaceutical patents as compensation for the time taken to obtain regulatory approval.  However, countries were scored down for such infractions as failing to provide ‘adequate’ criminal penalties for IP infringement.

However, Australia’s greatest crime against the GIPC criteria was the introduction of legislation mandating ‘plain-packaging’ (actually, restricted branding, since the packs are far from plain) of tobacco products.  Apparently, this one limitation on trade mark use in Australia sends ‘a chilling message to brand owners interested in selling in the Australian market’, and resulted in a loss of a whole point in the index, which would have placed Australia above Singapore, in fourth place!


The GIPC identified Australia’s ‘key areas of strength’ to be:
  1. providing a broad scope of patentability for pharmaceutical inventions (no doubt influenced by the recent High Court decision ruling that methods of medical treatment are patentable in Australia);
  2. patent term extensions for pharmaceutical products;
  3. the (somewhat limited) scope of limitations and exceptions to copyrights and
    related rights;
  4. the existence of digital rights management (DRM) legislation, i.e. the provisions of the Australian Copyright Act 1968 which make it an infringement to circumvent ‘technological protection measures’, whether or not any infringing copy is subsequently made; and
  5. what the report describes as ‘relatively low’ counterfeiting and piracy rates.

…and Brickbats

With regard to Australia’s ‘weaknesses’, the GIPC report notes that Australia’s overall score dropped from 87% of the maximum possible in 2012 to 81% in 2014.  However, this is apparently not due so much to any weakening of IP protections over this period, but rather to changes in the scoring methodology in 2014 such that scores ‘better reflect existing weaknesses in Australia in pharmaceutical patent protection; the online copyright sphere, including an adequate notice and takedown mechanism; and enforcement of intellectual property rights, particularly in terms of civil remedies.’

If you are thinking it odd that pharmaceutical patent protection seems to be both a ‘strength’ and a ‘weakness’, the answer to this apparent contradiction actually lies outside the Patents Act 1990 in the Therapeutic Goods Act 1989.  The GIPC is concerned that there are circumstances in which patent-holding companies are not provided with adequate notice when a competitor is proposing to introduce a generic product that may infringe a patent.

The GIPC report also makes vaguely critical noises about the pre-grant opposition system in Australia.

However, as I have already indicated, the GIPC saves its biggest rap over the knuckles for Australia’s introduction of legislation restricting the use of trade marks on tobacco packaging.  In a number of places the GIPC somewhat disingenuously neglects to mention that the restrictions are limited to tobacco products.  For example, in its summary of key findings, under the heading ‘Moving Backwards’, it contends that ‘Australia’s plain packaging requirements severely limit the ability of trademark owners to exploit their rights, and send a chilling message to brand owners interested in selling in the Australian market’, as well as making a point of the fact that ‘[i]n 2013, five countries brought action against Australia in the WTO on the basis that the new law violates Australia’s WTO commitments.’

As far as the contribution to the index is concerned, Australia scores zero, out of a possible one point, in the category of ‘non-discrimination/non-restrictions on the use of brands in packaging of different products.’

That’s right, a total fail, on the basis of a restriction which applies to just one category of products, which is applied for the purpose of furthering public health policy!


The GIPC describes its IP Index as ‘a rigorous statistical tool that business and policy makers can use to measure a country’s direction as they seek to chart a course to promoting an innovative and creative economy.’

This is a laughable claim.  It is impossible to give a great deal of credence to this report, when it is is so blatantly biased in favour of the interests of the members of the US Chamber of Commerce.  A ‘good’ IP system, from the point of view of the GIPC, is one that places all other considerations below those of US businesses, and their desire to have ‘strong’ protections for their IP.

The fact is that IP rights reflect a balancing act between the private interests of creators and a wide range of broader public interests.  The GIPR represents only one particular group of private interests.  There is nothing necessarily wrong with that – everybody is entitled to put their own case forward for consideration.  But please do not try to tell me that the GIPC International IP Index is some kind of objective statistical tool that will help everyone to ‘chart a course’ to a wonderful new world of innovation and creativity.  Because that is just a lie.


Unknown said...

We have had the debate about patent term before, but I do not think patents are really the main issue here.

The thing that I find most 'chilling' is not that purveyors of cancer sticks cannot dress their packages up in appealing colours and put them on prominent display at eye level, it is the repeated calls from US interests for greater criminal penalties for IP infringement (mostly copyright).

Where IP infringement is occurring on an industrial scale, and generating income for illicit operators of various kinds, then that is clearly a source of harm to the wider community, and criminal proceedings may then be appropriate. But this should be very much the exception.

Most IP infringement causes little or no wider social harm. To the extent that any damage occurs, it is primarily to commercial interests. If the IP owners wish to take action, they should do so at their own expense. But they know this is not commercially justifiable, so they want to try to get the criminal justice system to carry the can. Additionally, they want to see higher civil penalties, such as more easily-triggered damages multipliers, to make litigation more cost-effective.

The US authorities (under lobbying from the entertainment industry) are increasingly keen on extraditing individuals, most commonly for allegedly facilitating various forms of infringement (e.g. Richard O'Dwyer in the UK, and Kim Dotcom in NZ). The thing about extradition treaties is that they generally require an act to be a crime in both countries before it can form the basis for extradition.

This, it seems to me, is yet another reason why US interests want to see an expansion of criminal penalties for IP infringement in other countries. They are pushing for it in the TPP as well. I hope they do not get what they want.


Unknown said...

Perhaps we need a better system.

I recently took my eight-year-old daughter to a 'birthday film night' at a friend's house. They were showing a bootleg copy of the most recent Disney release (still in cinemas).

Should this be criminal behaviour? No, I don't think so. Is it wrong? Yes, I think it is. Is it actionable? Not in any real sense, no.

Perhaps some form of 'speeding ticket' equivalent, non-criminal penalty might be appropriate for many forms of copyright infringement?

Difficult to draw lines, of course. Should shop-lifting be criminal? Arguably "most [shop lifting] causes little or no wider social harm. To the extent that any damage occurs, it is primarily to commercial interests.

Unknown said...

Thanks for your comment Barry.

I would not even go so far as to propose 'piracy tickets'. If people cannot understand that there is an ethical and practical issue here -- i.e. that if they value the product, and the pleasure it brings to them and their children, then the people and companies responsible need to be able to profit from it -- there is little that can be done about this simply by imposing penalties. Any attempt to enforce IP rights in these circumstances will appear disproportionate.

I am not sure that I agree with your analogy with shop-lifting. Obviously there is a commercial element to this crime, but it differs from copyright infringement in a number of important respects. Theft not only costs the retailer (a cost that is necessarily passed on to all customers), but it also deprives another customer of the opportunity to purchase the product legally.

Furthermore, by stealing the product, the shoplifter is avoiding their responsibility to cover the real costs of production, including any environmental and human rights impacts. If someone would be willing/able to pay the price of a cheap product made in a Bangladeshi sweatshop, but chooses instead to shoplift the more expensive Australian-made product, the potential damage extends far beyond the commercial cost to the retailer.

An individual instance may not seem significant, but shoplifting accounts for billions of dollars in losses in Australia each year, and all of the related impacts associated with that level of crime.

Making a digital copy of something, however, does not deprive anybody of another sale or opportunity to purchase. The copy itself may not even represent a lost sale, since the infringer might not have been willing to pay for the product anyway.

But you are absolutely right that we need a better system, though I do not think it is about copyright enforcement so much as it is about production and distribution. I wonder, for example, if your friend might have been willing to pay something reasonable for the experience they actually had, i.e. the screening of a current-release movie in their own home, had that option actually existed? The fact that they were not interested, for whatever reason, in taking all of the kids to a cinema, does not mean that they would not have been prepared to pay for a legal download.

A big part of the problem, as I see it, is not the continuing existence of copyright (which is a perfectly good mechanism to enable creative people to profit from their creativity) but the fact that the major production and distribution companies are clinging grimly to old business models, and using very heavy-handed methods to try to maintain them. For example, I cannot see any good reason any more why there should be staggered dates for release to cinema, to pay TV, to free-to-air TV, to DVD and to digital download. I think it is largely a matter of setting the right price-points, and most people will be happy to pay for the experience they want.

Imagine if, on the day of release of Avatar 2, you could see it in a theatre for $20, buy it on Blu-ray for $100, or rent it as a digital download for $50. There would be people who would take up each of those options. In fact, the real fans would probably see it in the theatre more than once and buy the disc! Or, if you do not care so much, wait six months and rent it for $5, or buy it for $25.


Unknown said...

did they pay you well to get you to relinquish your ability to see the truth?

Unknown said...

yep.."regularly and consistent.." sounds like what we have experienced.

Unknown said...

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