John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

The Intellectual Property Laws Amendment Bill 2006 proposes many long overdue amendments. The shake-up of intellectual property laws, most noticeably within the Patents Act 1990, gives legislative effect to several outstanding recommendations from the Intellectual Property and Competition Review Committee’s report Review of the intellectual property legislation under the competition principles agreement, as well as recommendations from a report by the Advisory Council on Intellectual Property, Review of enforcement of industrial property rights. It is remarkable that one of the most dynamic fields of law, where the strength, clarity and certainty of its provisions are of utmost importance to both commercial and private entities, has only just seen the necessary strength, clarity and certainty provided to several of its elements.

It is true that this bill does make some amendments to intellectual property laws that may not seem pioneering in the minds of many. Providing the Register of Trade Marks with the power to revoke the registration of a trademark where there has been an administrative oversight or error is a case in point. It is also true that the bill makes a number of minor amendments to the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003, the Plant Breeder’s Rights Act 1994 and the Olympic Insignia Protection Act 1987, many of which may slip under the radar.

However, this bill does not simply address trivial niceties. The bill also proposes highly relevant and substantive provisions, including: new grounds upon which a compulsory licence for patents may be ordered; punitive or exemplary damages to be awarded by a court in patent infringement actions; greater clarity and much-needed certainty for the infringement exemption for prior use rights on a patent; and a broader patent infringement exemption for springboarding.

These are not ancillary provisions which make minor or administrative changes to correct some technical errors. They are essential tools in ensuring the numerous intellectual property acts function as intended. While I give the government credit for making amendments which are both sensible and in the public interest, the amendments ought to have been made years ago, as the member for Shortland just stated. The Review of the intellectual property legislation under the competition principles agreement and Review of enforcement of industrial property rights were handed down in September 2000 and March 1999, respectively. Some of the changes before us today should not have taken seven years to come to fruition.

In any event, I am pleased to finally have an opportunity to speak more specifically on those substantive amendments which I have just mentioned. I will begin with the amendments to the prior use exemption found in section 119 of the Patents Act. It is well understood that the public policy founding the grant of a patent is to encourage the advancement of the innovation process and to grant the public the details and benefits of those innovations by providing the patentees with a right to a limited monopoly over the innovation so as to enable it to be exploited for profit. However, there may often be a need to protect the legitimate interests of third parties who are compromised by the grant of a patent, thereby necessitating exemptions from patent infringements.

It would not be fanciful to imagine cases where these third parties have invested substantially in a product and have kept their research and investment secret for understandable commercial reasons. These parties may not have applied for patent protection for the new product because a large proportion of the patent term would be wasted before the product could reach the market. These parties face every chance that they would be gazumped by a competitor who patents the same or a similar product. Such a scenario would unjustifiably prevent this third party from continuing with the development of the product and they would not be able to recoup the extensive costs of the research and development.

The current provisions in section 119 of the Patents Act are intended to protect such interests by permitting someone to continue using a process or making a product where they were doing so, or were about to do so, at the time a patent application was lodged by someone else—if that prior use was not publicly known. Given the ambiguity in the text of the provisions dealing with prior uses, concerns have, as expected, been raised over the clarity, scope and usefulness of the section 119 defence to patent infringement. Indeed, the review of intellectual property legislation under the competition principles agreement heard from a number of parties who had invested considerable amounts of money into inventions over a long period of time but did not feel adequately protected. Three specific concerns have previously been raised about the prior use defence: (1) whether the defence only operates in relation to the making of a product or the use of a product; (2) whether the defence was available if the prior use occurred overseas and not in Australia; and (3) whether the benefit that may come from the defence may be assigned or licensed.

I am pleased that this bill addresses those concerns by repealing the existing provisions and providing, firstly, that the prior use defence is not merely limited to the making of a product or use of a process. Prior use can also encompass all other acts that may constitute an infringement of a patent, including selling, hiring or otherwise disposing of a product or process. This will provide parties engaged in research and development with much greater confidence that the benefit of their work will not be lost if another party applies to patent an invention before them. This can only provide an incentive for further research and development in Australia, which is naturally a good thing, because an organisation will continue to have the benefits of being able to profit from its work, even where another party has patented the same item or process. We should all be supportive of any proposal that seeks to stimulate further innovation in Australia, which of course is one of the cornerstones of the Patents Act. Secondly, the defence will only be available where the prior use has occurred in Australia. Again, this amendment will serve to protect research and development completed in Australia by ensuring that patents which are subsequently granted are not impaired by earlier work completed overseas, often in obscure jurisdictions. Thirdly, a prior user is able to assign but not license his or her prior use rights. Given that it is common in Australia for the commercial exploitation of products to be carried out by parties separate from those who completed the research and development, this amendment is necessary if the prior use defence is to have any value for many third parties.

In my view, these amendments effectively balance with clarity and certainty the rights of third parties against the right of patentees. Australia is now able to provide parties engaged in research activities with a clear and defined right to develop their inventions and to commercialise those outcomes without major equivocation. This amendment will ensure that people or organisations who have developed an invention that has not gone public and that is not patented will continue to have a right to exploit the invention, even where a subsequent patent has been granted for the same invention.

Given the complexity of technology, the substantial investment that must go into research, and the long lead time to develop an invention, I am appalled that third party rights have been left exposed for so long by the government. This is particularly so given that it was on notice as to the current flaws in the Patents Act.

While concerns may be raised that the amendments come at the expense of the monopoly rights enjoyed by patentees and undermine the inherent value of holding a patent, it would be prudent to be mindful of comments made by the report, Review of intellectual property legislation under the competition principles agreement. I note that the review rightly concluded that intellectual property laws and competition policy are ‘largely complementary’ on the basis that the former promote innovation, ‘which is a key form of competition’.

Given that the community’s interest in competitive markets needs to be protected by preventing abuses of intellectual property rights, I am pleased that this bill provides for strengthened enforcement remedies under the Patents Act. The amendments will add section 122(1A) into the Patents Act, which will allow courts to include an additional amount in any assessment of damages for infringement of a patent if it considers it appropriate to do so in the light of the flagrancy of the infringement, the need to deter similar patent infringement, the conduct of the infringer after notification of a patent infringement, any benefit to the infringer and all other relevant matters. This will fortify the exclusive monopoly rights available under intellectual property law for patent holders against those without a legitimate defence to patent infringement.

That said, the Review of intellectual property legislation under the competition principles agreement also questioned:

… whether exclusive rights available under intellectual property laws need to be reined in because they go beyond what is needed ‘to encourage an efficient level of investment in creative effort …

As I have stated before, it is my belief that the amendments to the ‘prior uses’ section of the Patents Act—which may be said to rein in the exclusive rights of patent holders—will not only continue to promote investment in creative effort, particularly given the substantive protections offered to an even wider variety of research and development conducted in Australia, but also simultaneously promote the goals of competition policy.

This much is clear: sufficiently protecting ‘prior uses’ and allowing investors to exploit their investment in an invention, despite a subsequent patent already being granted to another party for the same invention, will only increase competition in the market for that product. It does not take an economist to realise that, in the long run, consumers could potentially be the beneficiaries of more products being available at lower prices.

This argument could equally be applied to the third substantive amendment in this bill, to which I wish to speak—the compulsory licensing of patents. It is true that a granted patent contains a corollary right not to exploit the invention and a general right to exclude others from exploiting the patent. Though a patentee may choose not to exploit the right for legitimate reasons, such as a lack of resources, there may be occasions where the failure to do so could be contrary to the public interest.

Section 133 of the Patents Act currently allows a court to order a patentee to grant a non-exclusive licence to a third party if it is satisfied that the reasonable requirements of the public, with respect to the patented invention, have not been met and the patentee has not given a satisfactory explanation for its failure to exploit the invention. I note that the Intellectual Property and Competition Review Committee observed that the current provisions which grant these compulsory licences are outdated, poorly aligned to achieve their purpose and deficient. I wholeheartedly support the government’s proposal to incorporate a competition test as one of the grounds on which a compulsory licence can be granted. This will have the effect of allowing a court to grant a compulsory licence if the patentee is in contravention of part IV of the Trade Practices Act because of its anticompetitive conduct.

I am aware of dissenting views on this particular amendment and note that the Law Council of Australia in its submission to the review of intellectual property legislation under the competition principles agreement cited the 1997 Canadian case of Director of Investigation and Research versus Warner Music Canada Ltd et al, 78 C.P.R. 3d 321:1997, which observed that:

... refusal to licence their trade marks falls squarely within their prerogative. Inherent in the very nature of the right to licence a trade mark is the right for the owner of the trade mark to determine whether or not and to whom to grant a licence ...

What is inescapable, however—and this should not be ignored—is the potential for rights granted by intellectual property laws to be used illegitimately for anticompetitive ends. These ends are completely unsatisfactory. They are ends which may impede the early and wide passage of important inventions to the market than otherwise would be the case. These anticompetitive actions are unrelated to and go beyond the extent of granted patent right. This amendment to the compulsory licensing of patents regime strikes a more appropriate balance between the interests of the general public and patent owners.

While I understand why the Law Council would approach this particular amendment with some trepidation, it is important to note that the interests of patentees are adequately protected by existing provisions. These provisions allow patentees an opportunity to provide a satisfactory reason for failing to exploit their inventions. Furthermore, should compulsory licences be granted by a court, a patentee will (1) have access to an agreed court determined payment and (2) maintain rights under the Patents Act which prohibit any other infringement of their patent, including if the compulsory licensee uses the invention outside the terms of the licence.

In concluding, while I am supportive of the spirit and text of the amendments contained within the Intellectual Property Laws Amendment Bill, I remain somewhat disappointed that they have only just come before the House, as I and other speakers have said. That said, the amendments in the bill are sensible improvements to Australia’s intellectual property regime. They are amendments which effectively balance intellectual property policy and competition policy while being attentive to the private interests of intellectual property rights holders and the wider public interest.

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