30 March 2018

A ‘Death Row Reprieve’ for Innovation Patents as IP Laws Amendment Legislation Reaches Parliament

5 minutes to midnightOn 28 March 2018, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 was introduced to the Australian House of Representatives.  Schedule 1 of the Bill, along with associated regulations, will implement various recommendations arising from the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, namely: clarifying the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark; expanding the scope of ‘essentially derived variety’ declarations in the Plant Breeder’s Rights Act; reducing the grace period for filing non-use applications under the Trade Marks Act; and eliminating requirements for patentees to provide certain data relating to pharmaceutical patents with an extended term.

Notably absent from the bill as introduced to parliament, however, are provisions for phasing out Australia’s second tier patent system, the innovation patent.  As recently as early March, IP Australia published its response to submissions on the proposed phase-out, rejecting continuing calls for the innovation patent system to be retained in some form, and indicating its intention to proceed with the transition process set out in the exposure draft of the legislation.  But if a week is a long time in politics, three weeks is a veritable eternity, and IP Australia has now announced that ‘the Government has decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs.’

Many people will be surprised by this sudden about-face.  Personally, I think it is a pretty shrewd move.  As I have previously noted, although submissions opposing abolition of the innovation patent were outside the scope of IP Australia’s consultation, they at least served to send a message that substantial opposition still exists, not only within the IP attorney profession but also in industry, and that opponents are continuing their campaign through other avenues, such as lobbying of members of parliament.  And, as I also pointed out, the current Government has just a one seat majority in the House of Representatives, and lacks a majority in the Senate, where it must rely upon the cross-bench to pass contentious legislation that does not enjoy bipartisan support.  As an illustration of its precarious position, in just this past week, the Government chose to withdraw legislation implementing one of its headline policies, to cut the corporate tax rate for big business from 30% to 25%, rather than face the embarrassment of a defeat in the Senate.

Removal of the innovation patent provisions from the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 represents a similar ‘tactical retreat’.  In addition to the other Productivity Commission recommendations noted above, the Bill also includes amendments to allow exclusive licensees of plant breeders rights to take infringement action, to streamline various administrative processes, and to make a number of technical improvements to Australia’s IP legislation, all of which have broad stakeholder support.  There is, therefore, every reason to suppose that these uncontentious provisions will sail through the two houses of parliament unchallenged.  Had the Bill included the innovation patent phase-out provisions, however, it is likely that it would have faced opposition from parliamentarians open to the argument that innovation patents are beneficial to, and are supported by, innovative Australian individuals and small to medium enterprises (SMEs), and that their abolition goes against the interests of Australian businesses.  Such opposition could have resulted in the Bill failing to pass in its entirety.

It will be interesting to see what form the mooted ‘further industry consultation’ takes.  Some would argue (myself included) that the innovation patent system as already been consulted to death, and the response has been the same on every occasion: a minority of submissions supporting abolition, from those inclined in general towards the limitation of intellectual property rights; and a majority of submissions of those representing users of the system, arguing for the system to be retained (albeit, in most cases, with changes to address some of the problems that have emerged).  It is difficult to imagine how yet another consultation process might produce a different result. 

A cynical person might be caused to suspect that this latest move is more about speeding the passage of less-contentious amendments through parliament than any genuine desire to ‘better understand the needs of innovative SMEs’ that have, in any event, made their position very clear in a number of previous consultations.  It is just as well, then, that I am not such a cynical person!


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