Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Hansard source

Before I turn to the Intellectual Property Laws Amendment Bill 2006, I will take the opportunity, while the member for Paterson is in the chamber, to remind him that last time we were in here he promised me some information. He was going to send it to my office. I eagerly await that. I know he will follow through and keep his commitment.

I am very pleased to speak on the Intellectual Property Laws Amendment Bill 2006 as I think this is an important bill that deals with a whole range of areas and sectors in Australia that are very important to our economic development and growth. Labor support the Intellectual Property Laws Amendment Bill. However, we seek to refer the bill to the Senate Legal and Constitutional Legislation Committee for further consideration and verification of the accuracy of its implementation. The amendments contained in this bill are sensible though long overdue improvements to Australia’s intellectual property regime that enhance efficiency and maintain an appropriate balance between innovation and competitiveness.

Briefly, the bill proposes to broaden the springboard regime for pharmaceutical patents, clarify the rights of a prior user in the granting of patents, add a competition test to the compulsory licensing of patents, allow for exemplary punitive damages to be awarded in patent infringement actions, amend provisions relating to the revocation of trademarks and public access to trademark files and, finally, make minor and technical amendments to the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003 and the Plant Breeder’s Rights Act 1994.

The problem with this bill, though, is that it has taken the government the best part of seven years to get to this point, which is a very long time when we look at the fast growth in development in intellectual property rights. Such a lag in the implementation of this important legislation is unacceptable and is symbolic of this government’s complacency and neglect when it comes to ensuring best practice in Australia’s intellectual property regime and, by extension, our nation’s ability to innovate and compete in a rapidly changing global market. I think the evidence of that is all around us.

The amendments made by the bill give effect to some outstanding aspects of the September 2000 Intellectual Property and Competition Review Committee’s report—Review of the intellectual property legislation under the competition principles agreementand the March 1999 Advisory Council on Intellectual Property’s Review of the enforcement of industrial property rights.

The principle of substantive provisions of the bill relate to schedules 6 to 8, with schedules 6 and 8 of the bill representing the government’s response to recommendations 15 and 18 respectively of the IPCRC report. According to the IPCRC, intellectual property laws and competition policy were viewed as ‘largely complementary’ on the basis that sensible intellectual property arrangements can promote innovation, which is a key form of competition. The committee also acknowledged, however, that the two can also conflict, because intellectual property laws usually confer exclusive rights. The report states:

While conferring intellectual property rights encourages investment in creative effort, it can allow the owners of the results of this effort to unduly restrict the diffusion and use of these results.

The IPCRC report continued:

It must also be recognised that the rights granted by the intellectual property laws can be used for anti-competitive ends. This occurs when the rights are used to claim for the creator not merely a share of the efficiency gains society obtains from the creation, but also super-normal profits that arise from market power unrelated to the creation.

So two questions guided the IPCRC in seeking to harmonise the interests of competition and innovation. The first was: do the exclusive rights available under intellectual property laws need to be curtailed, as they go beyond what is needed to encourage an efficient level of investment in creative effort? The second was: are adequate enforcement remedies available under those laws, as the community’s interest in competitive markets needs to be protected by ensuring that abuse of those rights is prevented? The two key words that come out of that report and out of this amendment are ‘competition’ and ‘innovation’.

The Australian economy, and in fact the global economy, is driven by competition and innovation, and Australia is well served by promoting both those principles and, in so promoting them, protecting people’s rights—whether they be intellectual property rights or other rights or incentives—in terms of fostering competition and fostering innovation. If our industries and our economic gains are to continue into the future, and if the powerful reforms of the Hawke and Keating governments that led to the 15 consecutive years of economic growth in Australia are to be repeated for the next 15 years, action needs to be taken by the government today. The key thing for the government to take note of is the words it uses in the recommendations from its own reports, particularly in regard to competition and innovation.

Schedule 6 of the bill—exemption of continued prior use from patent infringement—seeks to clarify the scope of rights provided under section 119 of the Patents Act 1990 to balance the rights of a patentee and those of a third party. Section 119 of the Patents Act also provides a defence to a patent infringement where a third party has been independently using the invention before the patentee applied for the patent. Submissions to the IPCR committee expressed concerns that the section did not achieve this objective, and consequently had a detrimental effect on competition.

The submissions also identified some lack of clarity as to the scope of the section. In particular, it is not clear whether a number of things were correct. For example, it was not clear whether prior use must be in Australia or whether it can be used anywhere in the world; whether the provision is limited to commercial use, in which case a person who has developed a product or process, but who has not taken definitive steps to commercialise it, will not be protected; and whether the right should be limited to the actual prior use or whether it can be assigned or licensed. As such, schedule 6 provides that the prior user right is not limited solely to the making of a product or the using of a process but is limited to prior use in Australia only. It also permits the assignment rather than the licensing of the prior use right, thereby limiting prior use to a single entity, which balances the patentee’s interests in maintaining an exclusive right over the product.

Schedule 7—springboarding and patents—relates to a limited provision in the Patents Act 1990 that allows generic drug manufacturers to collect information required to obtain regulatory approval for a patented drug during that patent period. This practice is known as springboarding. The springboarding provision was intended to allow earlier regulatory approval for generic pharmaceuticals and faster market entry upon patent expiry, and to prevent originating drug companies from receiving a further de facto extension of patent term.

I put on the record that, in my electorate, the pharmaceutical company Alphapharm does very well. It is very successful. It is an after-market or generic drug producer. It is a great employer, and a hugely successful producer of generic drugs, not only in the domestic market but also, I understand, in the international market. It is companies such as Alphapharm in my electorate that need proper protection and that need the ability to be able to access drug formulas and patents once they expire so that they can continue their work.

Currently, springboarding provisions only allow springboarding on patents that have been extended after the extension has been granted. Patent term extensions of up to five years are available, as new drugs, unlike most other technologies, often require time and effort to obtain regulatory approval before public release and sale. Because this time consumes part of the usual 20-year patent term, an extension is made available. In some circumstances this will mean that local generic companies cannot enter the domestic market on or soon after patent expiry on a drug unless the development work has been conducted overseas. This disadvantages the Australian generics industry and provides an incentive for companies to move their R&D activities offshore. I am sure that government does not want that to happen. Certainly, the Labor Party does not want that to happen.

I would encourage and support any legislation, incentives or other moves that would promote local generic pharmaceutical companies to carry out their R&D activities onshore. That should be supported by government. I think that is a sensible thing. Such provisions are more restrictive than similar provisions overseas, such as in the USA, the EU, Canada, Singapore and New Zealand, where springboarding is allowed on all pharmaceutical patents. Schedule 7 therefore moves to allow springboarding on any pharmaceutical patent at any time for purposes related to generating information necessary to support an application for regulatory approval of a pharmaceutical product in Australia.

Schedule 8—compulsory licensing of patents—relates to section 133 of the Patents Act 1990 and provides that a prescribed court can order a patentee to grant a licence to work their patented invention in certain circumstances. Section 133 allows the court to make the order if the reasonable requirement of the public with respect to the invention has not been satisfied and the patentee has given no satisfactory reason for failing to exploit that invention. The Patents Act provides that the reasonable requirements of the public have not been satisfied if an existing trade or industry is unfairly prejudiced by the patentee’s failure to work the invention or to grant licences on reasonable terms; a trade or industry is unfairly prejudiced by conditions imposed by the patentee on the working of the patent; or if the patent is not being commercially worked in Australia but is capable of being worked.

The IPCR committee considered the conditions currently prescribed for the grant of a compulsory licence to be deficient in that they did not include an explicit competition test and did not sufficiently take the legitimate interest of the patentee into account. Accordingly, in addition to the existing provisions, schedule 8 seeks to include a competition test as one of the grounds on which a compulsory licence can be obtained. Under this test, if the patentee has contravened or is contravening part IV of the Trade Practices Act in connection with a patent, then a compulsory licence is available as a remedy for that contravention. Intellectual property arrangements must seek to strike the appropriate balance between protecting the rights and returns of innovators while also facilitating an open and competitive market.

IP and trade practice law covering copyright and patents must take account of the reality of an increasingly knowledge based economy by balancing creative, social and economic ends. In 1999 and 2000 respectively the government received the Advisory Council on Intellectual Property report, Review of enforcement of industrial property rights and the Intellectual Property and Competition Review Committee report, Review of intellectual property legislation under the competition principles agreement. These reviews were welcome. The problem, however, has been that it has taken nearly six years and three separate bills to achieve some but still not all of the recommendations contained in these reviews. Obviously, those changes are welcome but there is still more to come.

It is little wonder that, according to an Australian Bureau of Statistics report, Innovation in Australian business 2003, intellectual property arrangements were seen as a major barrier to innovation in Australia, with over 75 per cent of Australia’s innovative businesses not using any formal methods of intellectual property protection. Furthermore, more than half of Australia’s innovating businesses reported having no formal or informal protection of their intellectual property and only a little over four per cent of Australia’s innovating businesses reported using patents to protect their work. That is a surprisingly low figure, a figure that I think needs closer attention and scrutiny by government as to what can be done to increase the protections available and the protections used by innovating businesses in the research and the work that they do.

Many businesses, according to the ABS report, resorted to instead using only informal methods of IP protection, such as secrecy, to protect their work and ideas. Amazingly, despite these adverse effects, the intellectual property reform agenda, as outlined by the government’s own advisory council and the IPCRC reports, remains unfinished. The unfinished business includes a number of things. Recommendation 17 of the IPCRC report is that sections 144 to 146 of the Patents Act 1990 be repealed on the basis that tie-in contracts, which tie purchasers to the patentee’s products, are not necessarily anticompetitive and that their adverse effects are better addressed by amending the Trade Practices Act 1974. The government has accepted these recommendations, but to date nothing has been done. My suggestion and my encouragement would be that the government get on with what it said it was going to do and actually move on these issues.

Recommendation 23 of the IPCRC report is that the Federal Magistrates Service be used to overcome rigidities in the enforcement of the rights under the patents system. The government deferred its response to this recommendation and asked the Advisory Council on Intellectual Property, the ACIP, to consider this issue. The ACIP supported the recommendation that the Federal Magistrates Service be given jurisdiction in patents, trademarks and designs. The government, however, is yet to act. Again, I would encourage the government to take on board its own recommendations and move forward on these critical issues. Recommendation 24 of the IPCRC report is that the trademark assignment provisions be amended to ensure they are not used to circumvent the parallel importation of legitimately trademarked goods. This recommendation was accepted in principle by the government but to date no action has been taken. Again, I would encourage the government to follow through on its own recommendations on these very important matters.

I will conclude on just a few points. Intellectual property rights and arrangements are very important issues as, for many Australian companies, IP is not just their only asset but also their only product. As a nation we have a significant weakness in the commercialisation of Australian ideas and innovation. Intellectual property rights and arrangements, both legal and financial, are a key lever in the pursuit of better commercialisation outcomes and thus by extension an integral feature of the broader innovation debate—a debate the Howard-Costello government has entirely missed. The government in conjunction with the Business Council of Australia more than six years ago convened a national innovation summit. It was to:

... identify the optimal mechanisms to enhance Australia’s competitiveness through innovation.

Despite that, the government is still missing the mark on innovation. Obviously, it is not just Labor that says this. In its recent report New concepts in innovation: the keys to a growing Australia, the Business Council of Australia—a good friend of this government—is most damning of the government. The report reads:

... there is ... a lack of understanding in many policy-making circles about how innovation occurs ... and the policy environment required to allow it to thrive.

According to the BCA, this lack of appreciation means that policy development:

... centres on a narrow understanding of how companies are undertaking innovative activities ... and, as a result, leads to a narrow focus for public policies that attempt to foster innovation within the economy.

This is not surprising when one considers the complacent nature of the government in this area, and I do not say that lightly. After 10 years in government we see very little in incentives, new programs or new and innovative ideas from government that will encourage competition and innovation within Australian business and the economy. It has taken the government nearly seven years to advance its intellectual property reform agenda, incomplete though it may be, and more than 10 years to begin to develop a better understanding of business innovation. According to the ABS’s January 2006 report Patterns of innovation in Australian business:

The paper represents the first consolidated analysis of innovation across Australian businesses ...

The government’s so-called central innovation initiative, Backing Australia’s Ability, was initially developed back in 2001 and was designed to represent:

… a commitment to pursue excellence in research, science and technology through the generation of new ideas; the commercial application of ideas; and developing and retaining skills.

Those are all worthy activities to follow through. These failures notwithstanding, the Intellectual Property Laws Amendment Bill 2006 is sensible, and it is a long overdue improvement to Australia’s intellectual property regime. It is, however, disappointing that Australia’s innovating companies and our economy have had to wait so long for any substantive action on these issues and with obviously more action needed and more action deserved by Australian business.

Labor now urges the government to finally complete the intellectual property reform process commenced nearly seven years ago. After 10 years of the Howard government, business in Australia still waits for the proper competitive and innovative environment that it deserves and needs if we are to be a globally competitive economy.

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