Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on the Intellectual Property Laws Amendment Bill 2014. The purpose of this bill is to make a range of improvements to Australia's intellectual property laws to increase their efficiency and effectiveness and to reduce red tape for business, something we need to do more and more of. The amendments in the bill make changes to the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003 and Plant Breeder's Rights Act 1994 and are divided into five schedules.

Schedules 1 and 2 of the bill deal with implementing the TRIPS protocols. Many developing countries simply do not have the economic wealth and have difficulty in manufacturing and accessing patents of pharmaceuticals. They are unable to respond to many of the serious health problems, such as HIV, malaria and tuberculosis, in the world today. Millions of people die from these diseases every year. This bill will amend the Patents Act to allow Australian generic pharmaceutical manufacturers to supply these countries with the patented medicines they need by producing them as a generic. The amendments will deliver on the government's commitment to implement the protocol amendment of the World Trade Organization agreement. Under this protocol the manufacturer is able to apply to the Federal Court for a compulsory licence to manufacture generic versions of patented medicines and export these medicines to developing countries.

The particular drugs that this bill mentions are for malaria. In 2012 the World Health Organization estimated that there were 627,000 deaths from malaria. It also mentions drugs for HIV-AIDS. In 2012, again, the World Health Organization estimated that there were 1.6 million deaths worldwide from HIV-AIDS. For tuberculosis, the World Health Organization estimated there were 1.3 million deaths.

But there is an environmental problem that causes more deaths than those three ailments together, indoor air pollution. In many parts of the world today people are denied access to low-cost and abundant supplies of electricity. They are forced to use renewable sources of energy, such as twigs, dung and crop waste. They burn that inside the house and the resulting indoor air pollution causes 4.3 million deaths annually, the World Health Organization estimates. Yes, it is a great move to make those drugs available to tackle diseases in the Third World, but we need to tackle indoor air pollution in Third World countries, because it is a greater killer than those three diseases combined.

Schedule 3 of the bill deals with plant breeders' rights. It enables people who have an intellectual property right as a plant breeder to take action in the Federal Circuit Court instead of having to go to the Federal Court, which theoretically should lower their costs. The reason we should be encouraging our plant breeders, especially many of our small businesses, is the importance of increasing crop yields. In 1961, over 50 years ago, we were feeding 3.5 billion people. To do so, we were cultivating 1.37 billion hectares of land. Since then the global population has doubled to more than seven billion, but because we have been able to improve our plant breeding we have had greater crop yields. Those greater crop yields have meant that we can feed double the population that we fed 50 years ago with only a 12 percent increase in land. We need to continue those improvements in crop yield. That is why it is important that we encourage plant breeders' rights, so we continue to increase crop yields.

The fourth schedule helps to work to bring Australian and New Zealand economic relations closer. At the moment, patent applications filed in New Zealand have to be filed separately in Australia. There is a duplication of the process. This bill will streamline the process, following a single patent application and examination process in both Australia and New Zealand. It will reduce duplication. It will make it cheaper and easier for both Australian and New Zealand businesses to access both markets. It also provides for a single register of patent attorneys. And I know there are many New Zealand patent attorneys who will have the opportunity to practise their trade here in Australia, and vice versa. This is important. Having closer economic relations with our kiwi cousins benefits both our countries. It is also important that the intellectual property laws in those two countries become more closely aligned. There are a few small differences between Australia's intellectual property laws and those of New Zealand, and we should we working to ensure that those differences are minimised and reduced, and that will benefit both countries.

The fifth and final schedule will simply reduce a bit of the regulatory burden with some unnecessary documentation retention provisions in the patents, trademarks and design act. Repealing those provisions will allow IP Australia to dispose of unnecessary IP documents, saving hundreds of thousands of dollars in warehousing costs. In this economic environment, where every single month our nation has to pay $1 billion just to service the interest, without repaying any of the principal debt that was run up over the past six years, every single cent we can save is important. This is another step that this government is proceeding with in reducing the red and green tape. On the subject of intellectual property laws, we need to remember that the entire reason that the government interferes in the market and has this regulatory system is to drive innovation. The intellectual property laws are not there to create and protect monopolies. It is all about driving innovation. In saying that, we need to recognise that simply making more and more and stronger and more stringent intellectual property rights does not necessarily lead to an increase in innovation.

That is especially true with the fashion industry. A paper was written a few years ago by Kal Raustiala and Christopher Sprigman from the University of California and the New York School of Law. It was called 'The piracy paradox'. In that paper they note that the fashion industry has very low IP protection. Other than trademarks and the designs in a fabric, the simple cut or shape of clothing does not have any intellectual property protection. These authors said that this has actually been to the benefit of the fashion industry and that it has created and has been a driver of innovation. The dilemma is that not having intellectual property protection underpins the economics of the fashion industry. They said that the industry needs to keep growing and, for it to keep growing, customers need to want to keep replacing the clothes they have and buying tomorrow's fashions. To do that, they have to become dissatisfied with the fashions they are currently wearing. Their argument is that the continued copying we see in much of the retail sector in the designs of clothing actually brings in an induced obsolescence. The researchers argue that no-one 'cool' wants to keep wearing something after everyone else is wearing it, so the continual copying drives that obsolescence. They said that this results in an industry where there is more innovation, more competition and probably more sales than there would be if there were strong intellectual property protection rights. The other reason they give for having low intellectual property rights in the fashion industry and for how it actually drives innovation and creates wealth is that it creates what they call 'aspirational utility', where people actually get enjoyment from imitating the lifestyles of the rich and famous. They say it is like a gateway to drugs. Giving people access to a lower-quality version makes them more interested in getting the real stuff and increases the brand value of the real stuff.

For example, several years ago, before I became a member of this House, I was in New York City on business. I was walking down Fifth Avenue, and there was the Louis Vuitton shop, with all the bright lights and the bags in the window—a magnificent example of high-end retailing. When I came back later that night the shop had closed—I think it was after six o'clock—and out the front there were a couple of hawkers on the street, selling knock-off versions of Louis Vuitton bags. You would think that would destroy the brand. But we have seen over the years that all those high-end fashion brands, despite that copying and those knock-offs, are becoming stronger and that their brands are becoming worth more. That is what the Professors Raustiala and Sprigman call the piracy paradox. That brings me to a recent decision of the Federal Court of Australia in a case between Seafolly and its competitor, City Beach. Seafolly had several fabric designs and City Beach was found by the court to have infringed those designs.

I seek leave of the House to table the colour photographs of those designs, because without seeing them it is difficult to make sense of what I am talking about.

Leave granted.

These were rose floral designs, which I think were on many of my grandmother's dinner sets. The courts have found that there are variations in the designs and they have been granted copyright protection. They awarded penalties and costs of over $½ million in this case. I believe this was a very poor decision, and anyone who looks at the two designs will think it is a poor decision. But the court said that City Beach took inspiration from Seafolly, being the market leader.

This decision and these comments show, with the greatest respect to the courts, that their understanding of how consumer products are produced and designed is completely naive. Everyone who is not the market leader is looking to the products the market leader has. No matter what consumer product you look at, whether it be cars, fashion or whatever other product, that is how our system works—companies look to the market leader for inspiration. For the courts to criticise that is very ill-judged and sets a very bad precedent.

I believe this decision is going to cause great difficulty in the fashion industry in Australia. It means that, if a young fashion designer comes up with their own design, something they think is unique and new—and we know most designs are based at least in part on things that have gone before—a large incumbent player can simply have their legal team write to them and say, 'You have infringed our copyright, because it is close to something we do.' While at first blush the young designer may say, 'This is ridiculous', the legal team of the large player can simply pull out the precedents in these decisions and say, 'Take a look at these and withdraw your product from the market.'

The decision of the court in this recent case will reduce competition and reduce innovation. The ultimate losers will be the Australian consumer. I therefore believe this is an issue parliament needs to look at, because we need a vibrant fashion industry. We want to encourage young fashion designers in this country to get out and create new designs—and to market them not just here in Australia but to the world. With that, I commend this bill to the House. It makes a few major improvements to intellectual property right laws, but this recent Federal Court decision means we have more work to do in this area.

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