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

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

It is very interesting to hear the Australian Labor Party wax lyrical about innovation and patents and trademarks et cetera. The closest I can remember them ever getting to anything in this area was producing a spaghetti-like diagram that said: ‘That is where our future is going.’ As for dealing with patents or trademarks, I cannot remember one initiative, one piece of legislation—anything—that the Australian Labor Party produced during their term in office to deal with innovation and these issues.

The government has had a number of inquiries, and over a period of time has been acting on those inquiries and the reports it has received. The process has been gradual, admittedly, but it has been safe and sure, with wide consultation. As the previous speaker, the member for Oxley, said, there are still a couple of elements to go, but they are not points to remark on or invoke criticism of. It is a continual evolutionary process, as Australia moves into a competitive global market. Australia is performing extremely well; we are punching well above our weight in all areas.

The Intellectual Property Laws Amendment Bill 2006 deals with three or four issues. The first is to provide exemplary damages to be awarded in cases of blatant or wilful infringement of a patent to increase the strength of granted patents. This strengthening process, one can say, is a good move. There have been criticisms within the Australian community, particularly amongst software providers, that it is too tough, but I do not believe so. I believe that Australian innovators and creative people need to have their creativity protected by strong patent laws. I think this is a good measure, one that needs to be implemented and one that I am delighted to see the government bring forward.

The second issue dealt with in the bill is to clarify the prior user defence in the Patents Act, which ensures that third parties who had used the invention before the patent was filed are not unduly adversely affected by the grant of a patent. Somebody who may have been working in the back shed and came up with a patent and made announcements of it but did not proceed to the legal processes could find that somebody comes in underneath them and claims it as their patent. The bill provides for a fairer assessment process with the granting of such a patent. There is a very wise and sensible process to ensure that there is fairness and that those who have innovative and creative minds are properly recognised and honoured by receiving the patent.

The third issue is to provide a competition test as an additional ground on which a compulsory licence to use a patent may be granted. That is an interesting provision and one that I will deal with a little later. I should add that other amendments included in the legislation will give effect to the outcomes of the recently concluded trademarks legislation review, but they will allow the Registrar of Trademarks to revoke the registration of trademarks in certain circumstances, providing a quick and inexpensive means of addressing incorrectly registered trademarks. There are a number of other minor amendments.

The bill implements wider springboard provisions. These are provisions that use the subject matter of a patent to collect the data required to obtain regulatory approval of a generic version of a product to which the patent relates during its life. That means getting ready to launch into a generic before a patent has expired. That will mean, on the immediate date of the cessation of the patent, a generic product can be produced. It has been said by elements within the pharmaceutical industry that this is a bit unfair. It is not unfair because Australia, on the day of the cessation of a patent in Australia, can immediately be confronted with generic imports hitting the market on the day that the patent ceases. All this does is allow Australian manufacturers to compete fairly and to be ready to manufacture on the date of cessation of the patent.

I think this is a sensible springboarding approach. It will not damage Australian industry. In fact, it tends to support Australian industry and Australian generic pharmaceutical manufacturers. It does not diminish recompense for the investment and research that has been entered into by drug companies in the development of pharmaceuticals. This is a process that is supportive of Australian industry and one that I believe will be successfully applied. It is the same sort of provision that competing nations, such as the US and the EU, have in place already—this is somewhat similar to their current regulatory processes.

One of the things of interest is the granting of a compulsory licence. It caught my attention because it seeks to redress anticompetitive conduct in the marketplace by using a right of a patent to freeze somebody out or to try to prevent the use of a product. Currently, the rights given to a patent owner do not include the right to behave in an anticompetitive manner that breaches other laws regulating anticompetitive conduct; therefore, the inclusion of a compulsory licence is a remedy. The law does not allow anticompetitive use, but this is an additional remedy that addresses the anticompetitive conduct relating to the patent and it will not weaken the legislative rights of the patent holder. In other places, such as Canada and the US, compulsory licences are available as a remedy to redress a patent owner’s anticompetitive conduct. So the test that covers this situation is where there is a non-working of an invention that has a negative impact on the public interest. But, where this does not relate to a competitive marketplace, a compulsory licence can also be issued in those circumstances.

In this area, we have had some criticism from both sides of the argument. Some have said that this raises the bar too high in allowing competition against patent holders; it just makes the lives of patent holders too difficult. But, on the other hand, the government really does need to address access to information and a product. The government has done this by setting a standard. It has aligned the standards for anticompetitive conduct under the Patents Act with those under the Trade Practices Act. That linking together has not been done elsewhere in the world. Patents legislation stands in its own right in most places, but in Australia we have linked it with the Trade Practices Act. That will make it clearer for patent owners what sort of conduct could give rise to a compulsory licence being granted. I think that innovation will be welcomed, as it is more widely understood.

I wish to draw to the attention of the House some of the wonderful innovation that is occurring in Australia and the patent and trademark processes which may apply to them. In particular, the type of work that I think demonstrates Australian capacity in these areas is contained in the Spatial Interoperability Demonstration Project. This project has been entered into by a range of Australian industry groups, including the Australian Spatial Information Business Association—surveyors, geographers and people like that; the Open Geospatial Consortium; CSIRO Land and Water and its strategy division; Emergency Management of Australia; Geoscience Australia; Aurora Australis; and Shared Land Services, from the WA Department of Land Information. These groups have come together and said, ‘We are using completely different systems of information, and the lack of interoperability of our systems is hampering the development and use of geospatial information.’ So, to cut across the different databases, forms and styles of keeping information, this project has drawn together for the first time anywhere in the world, I believe, the processes of interoperability—that is, the ability to link together spatial data, information and processing tools between different applications, regardless of software and hardware. I think I have used before in the House the example of what might have occurred in the Canberra bushfires had such a system been available at that time.

An example of interoperability in the spatial environment has been adopted by the Bureau of Meteorology. Its web services provide access to spatial data products by actively participating in several interoperability projects and in the development of a live, real-world demonstration of applications that access spatial information on demand. For instance, the bureau’s involvement in the Australian Water Data Infrastructure Project has enabled it to build the required infrastructure utilising existing hardware and open-source software and aligning the system architecture with the existing set-up of web servers. To me, that is a great advance. That is just one example of the way in which Australia needs to be able to move into the era of intellectual property and the protection of it.

I am delighted that the government is moving in these areas. I really value the intellectual strength of the Australian endeavour, and we need to protect it. It does not matter whether it is in the field of music—and that is something we are particularly dealing with today—or in science, medicine, the creation of computer aids or even in something as crucial as weather and geospatial information. I just want to see Australian work protected properly by patents and trademarks that are of world-class standard and that will make sure that the creativity of our people will stand against everyone.

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

The Intellectual Property Laws Amendment Bill 2006 is a grab bag of measures covering a series of different areas in intellectual property law. They run to trademarks. They run to the springboarding regime and changes to that in the pharmaceutical area. There is also a series of other changes. If you look at the bill as a whole, you cannot deal with it in terms of any central theme because the changes are cast over a broad area; indeed, significantly different areas in intellectual property. If there is any theme at all—which is not centrally seen in the bill—it is the fact that it has taken a hell of a long time to make these changes.

This government have been in office for 10 years. They have taken seven of those 10 years—fully 70 per cent of that time—to make these changes. It is not as though the government did not have assistance from a number of committees of review which looked at what needed to be done and made very specific recommendations—some of which, many years after, have been taken up in this bill. What have the government been about all this time? The changes here are significant enough to be indicated by the government to be important, particularly their effect on competition in Australia between Australian generics pharmaceutical companies and overseas pharmaceutical companies. This bill changes the balance between those two sectors of the Australian pharmaceutical economy. All 10 of the companies based here argued against the changes in the bill—changes that will have a significant impact on what happens from here. Why has this bill taken so long? You would have to question the thrust of this bill and why the government want to do it.

There are provisions relating to trademarks and all those areas, but I am not interested in them. I want to concentrate specifically on schedule 7 of the bill—schedule 10 also is tangentially associated with this—and on the question of springboarding. What is it? You have to go back and have a look at what our regime is like, and has been like, in the treatment of the innovative production of pharmaceuticals in Australia—how they have been treated previously—how the generics industry has developed in Australia and what effect that has had on the price of pharmaceuticals in Australia.

It has been argued by some that there is an imbalance in Australia between the pharmaceutical companies and the generics companies and that, in fact, those who innovate Australian based international pharmaceutical organisations do not get enough return for their innovation and that the return is too high to generics companies. I say that because the question of the intellectual property of those who innovate here is protected under the basic provisions of the key legislation, which is the Patents Act 1990. What does that give innovative companies? They are granted exclusive rights to make, hire, sell or otherwise dispose of their invention for up to 20 years and an exclusive right to manufacture a potential product for sale in Australia or for export.

It was recognised that you needed to make an adjustment for that 20-year period, because it could take five years or so for global companies to do the research and development to start off with and then move into the full approval stages. You cannot just do the work in one country; you cannot take research that has been done in the United States, Singapore or somewhere and just incorporate it in Australia and get a big tick for it. In particular, you cannot do that if you have done the innovative work in Australia—and we have had significant innovative work in pharmaceuticals. The most important developments in that area came, you will not be surprised to hear, from the Hawke-Keating government. This government has made changes to intellectual property rights in this bill and hopes to have them passed. Members of this government, if you listen to the member for Mitchell, even if they were there as backbenchers when the Hawke-Keating government was in play, have diluted the program we had in place.

The program is very simple. It was a major and significant change that boosted Australia’s capacity to support Australian based international pharmaceutical companies to undertake research and development and to massively innovate for the benefit of Australian workers who worked for the pharmaceutical companies and for the benefit of Australia because these companies are paying taxes in Australia. It was for the benefit of Australia because we could build up an Australian capacity to operate here on a national basis and to export regionally and become a regional power in the pharmaceutical area and extend that to a worldwide presence. The government cut that capacity to pieces when it destroyed the factor F program that Labor brought into being. Factor F said, ‘If you really are interested in going out and starting to do full-blown research and development in Australia and then export that product, and if you take up this challenge, we will support you with this program to invest in Australian pharmaceutical companies by giving you a series of tax breaks and so on.’

The effect of that was this. Merck Sharp and Dohme is located in the neighbouring electorate to mine of Reid and has a number of people from my electorate of Blaxland working there. Merck Sharp and Dohme was able to kick off its first major research in Australia directed towards the major export of a product. There was $400 million worth of product exported in a single year. They built that to over $2 billion worth of exports, all on the back of factor F. When this government came to power, they hacked that program to pieces. What did they put in its place? PIP. What was left was just like a small pip in a piece of fruit. What we had in capacity went from a watermelon down to a small, frazzled apricot or peach through the government’s push to have Australia’s pharmaceutical industry innovate product here, make it, have it protected under our intellectual property laws and then push it into the world.

I really do not think this government understands at all the importance of supporting companies that are locally based and doing research and exporting from here. If you think of them just as international pharmaceutical companies, you do not understand the dynamics of the companies themselves. They are competing globally against other elements of their companies. They work regionally. Our great task is to look at this from a different perspective and ask, ‘How can we build a pharmaceutical industry in this country and build the innovators—the overseas and Australian based innovators—into a much more significant exporting industry that supplies not only our needs but those of the region and the world?’ Why shouldn’t we support Australian based international companies to compete from an Australian regional basis with their operations in Belgium, Singapore or the United States? That is what we did with factor F and it had a multifold benefit to the Australian people. It built muscle and capacity within the pharmaceutical industry. That has been stripped away in the government’s 10 years.

What do we have in this bill? We have somebody’s really bright idea that the best thing that you could do to pull down the cost of pharmaceuticals in the Pharmaceutical Benefits Scheme is to push forward the generics manufacturers. You could do that by taking the springboarding provisions in this bill. There was a 1998 bill that gave a bit of a run to the pharmaceutical companies and said: ‘Well, you’ve got 20 years protection. We realise that you put the arguments and that it takes up to five years or so before you can actually get your product to market, so we’ll give you an extension. We’ll allow for the period of time it took you to develop the product and effectively give you a full 20 years of protection. At the end of that 20 years, local or overseas generics companies can then come in and produce product. The exclusive use will then be finished and we will get a benefit, where the generics companies can come in and match that product. There would then be a fall in the price of that product.’ That would be a terrific thing.

There would be a fall in price, less impact on our Pharmaceutical Benefits Scheme, a hope for greater competition and so on. But you also have to ask these questions. This is a significant boost to the generics companies. How much innovative capacity is there in local generics companies? Are they actually springboarding? As far as I know, there is not a single generics company in Australia that is doing research and development of its own. They take the IP of another company. The springboarding provisions in schedule 7 and the associated one in schedule 10 allow them to go in early, before the 20 years has expired, to take the intellectual property rights of a company, to access that information and to have the generics prepared so that from day one—that is, as soon as they have finished—they can go.

The arguments that have been made before the committees that have looked at this include that, if you look at our competitor countries, springboarding is available not just on a limited range of pharmaceuticals, as this bill allows for, but on all pharmaceutical products. Those provisions are current in Canada, the United States, the European Union and Singapore. That is four of the five or so with those provisions.

Australia faces a massive competitive problem with Singapore. Singapore have determined to become the pharmaceutical hub for the Asia-Pacific. They have decided to do that. And once they have decided to do something, they go ahead and do it and they do it in a world-class way. They have determined that they will build a pharmaceutical industry in Singapore that will match and beat us and will match and beat anyone else in the world. And they will back it to make sure that it provides returns for the Singaporean people. What is the effect of this bill on this? If you look at the Bills Digest and at the evidence given before the Ergas committee and others, you will see that the effect is that the pharmaceutical companies that are here in Australia will probably litigate to try to protect themselves and to try to stop the generics companies from having a benefit from the use of their IP. They do not like the provisions of this bill, and they might do that.

There is another thing that these companies might do. They might say, ‘Let’s have a look at the landscape in Australia. Let’s have a look at the factor F program.’ Its destruction and replacement by the minor PIIP program has made it harder for big pharma to operate in Australia and to build capacity here and then to export drugs to that world market. It has made it harder for them to regionally compete with the other elements of their companies, and they may be getting the big message that they might not be wanted as much here as elsewhere.

This bill resets the balance in Australia between the generics companies and the innovators. We could all wish that the innovation was always Australian. We have significant Australian innovators that have become world forces because of the products they have developed—against most of Australia’s history, because in fact they have gone out and commercialised those products effectively.

We can think of a product in the flu area that is not being supported by this government. We face a profound problem in the form of an international flu epidemic. This government has decided that it will put its money into building up stocks of Tamiflu rather than building up stocks of the Australian Relenza, which is a brilliant product to try to stop major flu outbreaks. That product was developed by a company that did the R&D, innovated, built itself and realised that it had to go worldwide in order to make it. It is an entirely brilliant product. Is it supported by this Australian government? The answer is no. They do not understand the effectiveness and capacity of Relenza. They do not understand that you can build up stocks of Tamiflu but there will not be enough and it will only operate for a maximum period of three months or so, when you need six months coverage. They will not support that local innovation; they would rather import that.

With this bill the government have effectively said, ‘What we are most concerned about is those companies that do not innovate and with changing the intellectual property regime to reset the balance to try to lower the cost because, if you are producing generics, you can not only produce them here but you can flog them overseas.’ We might be able to flog those generics, but we will do so in strict competition with countries that are supporting their industries—some far more than others. So there is a real problem here. There is a real problem here with the lack of understanding of the dynamics. There is a problem if you take a simplistic approach to this area. You can say, ‘These are Australian companies producing drugs: we want them to produce here, we want to lower our costs here and we want them to flog the stuff overseas.’

What happens if the major investments of overseas farmer companies in Australia either dry up or cease—if those companies decide, because of the environment that exists in Australia, where innovation is not being properly rewarded, to relocate to Singapore, because the Singaporeans give them a better deal? We have seen this before; we have seen it in Malaysia and elsewhere. But the capacity of the Singaporeans to design and then implement a grand scheme has been demonstrated time and again in a whole range of different industries. They can take the great advantage we have got here and just strip it away from us. We will then have another major set of Australian producers—locally based, using locally based employees and researchers—who can be gone within a wink. If you think that that is stretching it too much, I ask you where Ericsson’s R&D centre is now. I will tell you where it is not: it is not in Australia. The most significant R&D centre that we have seen in the telecommunications area, with in the order of 300 researchers, just up and closed overnight. They moved back offshore. They moved back home. We can lose it—we can lose the local advantage. We can just have a narrow focus with regard to this.

What if the government had been properly apprised of what the potential is here—and you would have to expect that they should have been—and if they had listened to evidence given to the Ergas committee or they had listened to what had been said by Australian based industry generally? Certainly they listened to the generics and they said, ‘This is a wonderful thing and you should go with it.’ But what did Paul Jones in the patents and trademarks practice at Freehills say about the changes? They may make innovative pharmaceutical companies more willing to litigate to protect their market share. He sums it up:

Clearly this new provision favours generic companies over innovators. The springboarding amendment will raise the stakes for innovators with generic pharmaceutical products likely to be on the market sooner after patent expiry and in greater numbers. Consequently, innovators may be more willing to litigate to protect their market share.

As I have argued, they can not just litigate; they can go or they can wind back what they are doing here. The normal approach that Australians would have to overseas companies and to major multinationals over the whole length of our history is: (1) to be fearful of them; (2) to think that they are just here to grab everything they can get; or (3) to think that they may be part of some grand conspiracy to rip us off. All companies go after profits. All companies seek to maximise their position. All companies need to be constrained by government regulation. All companies cannot get ambit claims that they put up and cannot win all that they might want to win.

But this is a major 21st century industry. The government says it is on about innovation, but it has not backed Australia’s ability. It has had the report, but the recommendations in the report are not in this bill. Instead of that, it has actually gone backwards and said: ‘We’ll take the normal sort of nationalistic approach. We’ll just think of Australian based generics. We’ll just think of how we can pull that amount we might be paying down here—how we can sort of mix it with the overseas companies producing generics.’ It has not supported Australian based pharmaceutical companies. It does not understand the capacity to have great wins for Australia by taking the right approach. We need to be really careful of what is happening here.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Intellectual property rights are the gold of the future. Intellectual property rights are the hope of the future. Intellectual property rights are the power of the future. I think it is very important that we recognise that and enshrine that within legislation. I think it is very important that the government is highly mindful of the importance of intellectual property rights and, in doing so, places the importance on them that is needed and deserved.

When I hear that it has taken seven years to develop this legislation, I shudder, because that means it has taken seven years for the government to get its act together and legislate in an area that is about Australia’s future. It is about our position within the global market. The government, through being lazy and failing to act when it needed to act, has jeopardised the development of innovation within Australia. It has also affected our ability as a nation to compete. Protecting intellectual property rights is all about competition and innovation, and without proper protection you will find that companies do not make the investment that they need to. Intellectual property rights are of vital importance to Australia’s future.

The legislation we have before us today, the Intellectual Property Laws Amendment Bill 2006, broadens the springboarding regime for pharmaceutical patents, clarifies the rights of a prior user in the granting of patents, adds a competition test to the compulsory licensing of patents, allows for exemplary and punitive damages to be awarded in patent infringement actions, amends provisions relating to the revocation of trademarks and public access to trademark files and makes 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.

At this stage, I would like to comment about plant breeders rights and the importance of ensuring that we get it right. People sometimes forget the importance of plant breeders rights, but the rights that companies like Aventis and Yates have had to particular intellectual properties in relation to plants have been very significant. They have had an impact in Third World countries and can be used to manipulate the market and the supply of certain foods and certain plants, which can have wider ramifications than might be envisaged. Whilst that does not come under this legislation, I think it is a really good example of the importance of intellectual property rights—how they can be used in an anticompetitive way to manipulate situations and in a way that is not for the general good.

I will come back to the legislation. This bill gives effect to some of the outstanding aspects of the government’s response to the Intellectual Property and Competition Review Committee report Review of the intellectual property legislation under the competition principles agreement and Review of the enforcement of industrial property rights. The bill is divided into 16 schedules and amends 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. The bill is quite technical in nature and amends a number of schedules.

Like previous speakers, I would like to turn to schedule 7, which deals with springboarding and patents. It allows for springboarding as an exception to patent infringement on any pharmaceutical patent—redefined to encompass both product and process patents—at any time for purposes solely in connection with gaining regulatory approval of a pharmaceutical product in Australia or another territory. ‘Springboarding’ refers to using the subject matter of a patent to collect data required to obtain regulatory approval of a generic version of the patent product, when the patent is selling first.

When we were debating the free trade agreement in this parliament, I expressed some concerns about how that would impinge on patents. I know that the US wanted a much more liberal system on patents on pharmaceuticals, and I always have concerns about patents and drug companies’ ability to manipulate those patents. We have heard that there is currently the ability for a five-year extension on patents, given that the patent runs for 20 years, and there is a lead-up time so that that five years extension is granted. My understanding is that the US would have liked a much longer period of extension of the patent.

Pharmaceutical companies have been known to make minor changes to drugs by just adding an extra component—the drug is basically the same—and then they can renew their patent. I think that we need to monitor the area of pharmaceuticals very closely in relation to patents. Given that the development of drugs does take a long period of time, patents are needed. It is once again a very good example of how investing in research and development leads to products that are very beneficial. The ownership of those intellectual property rights is essential for the development of those properties, but we have to be very careful that there is no exploitation within the process.

Further, on the issues surrounding springboarding: as I was mentioning, the limited provisions in the Patents Act 1990 allow generic manufacturers to collect information required to obtain regulatory approval for a patent during the patent period. The springboarding provision was intended to allow earlier regulatory approval for generic pharmaceuticals and faster market entry upon the patent expiry and to prevent originating drug companies from receiving further de facto extensions of patents, which, as you can gather from what I have already said, I believe is imperative.

Current 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 often new drugs, unlike other technologies, require that time and effort that I was talking about—the time to not only develop the drug but get it listed. The member for Banks this morning made a member’s statement about Herceptin, a drug that many of us have fought to have listed on the PBS, but it has taken time, and that time is reflected in the need for the extension of the patent. The points that I wanted to make related to pharmaceutical patents, and I needed to just place on record my words of caution on plant breeders rights.

In conclusion, I would like to emphasise the importance of intellectual property rights. Often they are the only asset and product of a company; that is what their existence is about. Their legal and financial extension is important in relation to the broader innovation debate. I think innovation is very important to us as a nation. It is very important for research and development. I would encourage the government to expand their research and development because I see that as the way of the future. There is little incentive under this government for new ideas and innovation.

This government have been very tardy in the development of this legislation. Seven years is far too long when it comes to something as important as intellectual property rights. For that I think they stand condemned. I also believe that they need to be a lot more active in encouraging companies in the area of research and development.

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

Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Link to this | Hansard source

Following on from the contributions made by my colleagues, including the member for Lowe, in this debate on the Intellectual Property Laws Amendment Bill 2006, I want to begin by noting that these amendments are very much overdue and that the reform process that has been undertaken in relation to copyright has been pretty stilted. Copyright has an importance which not only goes to the heart of the authorship of works inasmuch as all creative artists and authors of works have copyright on the material and the work that they create but also extends to patents in the material that inventors, individuals and companies and others develop over time.

As we move into a digital age where most material, particularly knowledge and information, will be transmitted by the internet, where the digital economy will become increasingly important and where there is the necessity for us to have clarity for those communities, those companies and those individuals who are participating in the digital economy, the need for a framework for the conduct of their activities within the digital economy becomes much more urgent. So the need for this government to move in a much more speedy and expeditious manner to deal with the many complexities in terms of considering copyright review and copyright generally is self-evident, I think.

We need a discussion about copyright into the longer term. I invite the government to consider that the next phase of its copyright review process in broad policy terms is the need to have a much more open discussion about the nature of copyright and how copyright will be asserted, regulated, protected and exploited in the digital age. I am not sure whether the House would be aware that there is now a significant discussion being undertaken in other jurisdictions, particularly in Europe, around the notion of what is called a creative commons.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. I am not wishing to consume the honourable member’s time, but this bill has absolutely nothing to do with copyright amendments. This bill is on intellectual property, springboarding and medicines.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! I will make that order.

Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Link to this | Hansard source

I would just make the point that a creative commons is all about intellectual property, the way in which intellectual property is protected and the various means for it. It goes very much to the heart of this legislation that is in front of us, including the fact that this legislation has taken some time to reach us. So I will continue my remarks. There are discussions now on policy considerations, which open up the idea and the notion that there are copyright alternatives altogether. There are a number of creative commons projects under way, including one in the United Kingdom, where those who wish to seek an alternative way of allowing people to use or modify their work—for example, to maximise the exposure of their work to increase distribution or to use innovative business models rather than fully-fledged copyrights to secure a return on their investments—are looking at an alternative to the existing framework. This is very much something that the Attorney-General and the government should be looking to.

In particular, a creative commons offers the opportunity for a set of free public licences which could withstand court scrutiny and where the language is simple enough for nonlawyers and nonparliamentarians to understand but sophisticated enough to be identified by various web applications. In the whole of the copyright debate, those people who are working in the pioneer and path-taking areas of digital art, digital culture and digital business are very interested to see whether the debate and the policy considerations are going to go in this direction. On that basis, I will make this additional comment. If you want to offer the creators of intellectual work a set of copyright licences that, in some senses, are freed from the constrictors of existing legislation but do not impact upon the rights of those people who hold copyright in the work they create then a licence along the lines suggested in the debate on a creative commons would be particularly useful for the government to consider.

The Intellectual Property Laws Amendment Bill 2006 incorporates a number of aspects of intellectual property and implements the government’s response to the Intellectual Property and Competition Review Committee’s report Review of intellectual property legislation under the competition principles agreement and the Advisory Council on Intellectual Property’s Review of enforcement of industrial property rights. The Intellectual Property and Competition Review report, which is commonly known as the Ergas report, focused on Australia’s intellectual property laws. It did that in the light of the competition principles agreement, which forms part of the compendium of National Competition Policy agreements. It is in that context that we are debating and considering the Intellectual Property Laws Amendment Bill.

In April 1995, all Australian governments reached agreement on a national competition policy. That came on the back of the microeconomic reforms that were initiated by the Hawke and Keating Labor governments in the 1980s and the early 1990s. The review of enforcement of industrial property rights recommended that a number of issues, including public education of intellectual property, enforcement issues and legal uncertainty in the field, needed to be addressed. On the question of public education, I have to say that there is a very strong need—an urgent need, in fact—for the government to increase the amount of public education in the area of intellectual property. To be fair, I do not think this area is well understood by the public. However, increasingly as people create and produce work online, in particular, their understanding of copyright will need to be made much more comprehensive, and the government has an important role to play there. The report stated that the main objective is to provide a cost effective patent system that reduces the incidence of infringement and gives greater certainty to patent owners and licensees enforcing their patent rights without damaging the public interest. I think there is absolutely no doubt that that is an important and very necessary public policy goal.

This legislation broadens the springboarding regime for pharmaceutical patents and it clarifies the rights of a prior user in the granting of patents—and that is important and necessary. In addition, because it came on the back of the COAG reforms, it adopts a competition test for the compulsory licensing of patents. It also amends provisions relating to the revocation of trademarks and public access to trademark files. Additionally, it makes minor and technical amendments to the Patents Act.

Labor understands that this is worthy and sensible legislation. Comments have been made in the House that it has been too slow in coming. But, importantly, by giving effect to the government’s response to the Intellectual Property and Competition Review Committee report, there will now be some certainty for those parties who have been waiting for the government to act on this issue.

The bill is divided into 16 schedules. It amends the Patents Act, the Trade Marks Act, the Design Act, the Plant Breeder’s Rights Act and the Olympic Insignia Protection Act. Schedule 1, which revokes registration of trademarks, proposes to amend the Trade Marks Act to allow the Registrar of Trademarks to revoke the registration of a trademark where there has been an administrative oversight or error. There are a number of other schedules of this order that are very much in the manner of tidying up and ensuring more efficacy in the legislation.

Schedule 2—the non-payment of fees relating to trademarks—sets out fee payment requirements and brings the fee payment provisions of the Trade Marks Act into line with those of the Patents Act and the Designs Act. Schedule 3—the registration process for certification of trademarks under the Trade Marks Act 1995—changes the administrative aspects of how applications for certifications are processed and affect the internal workings of the Trademarks Office and the ACCC. There are a number of other schedules of some importance. Schedule 6—the exemption of continued prior use—clarifies the prior use right, which the member for Lowe spoke about previously. To this extent, the clarification is valid only in Australia and extends to the exploitation—that is, the sale—of the product and it can be assigned and not licensed.

Schedule 7—springboarding and patents of the Patents Acts 1990—allows springboarding and its exemption to patent infringement on any pharmaceutical patent at any time but only for purposes in connection with gaining regulatory approval. This is consistent with FTA obligations. The schedule provides that generic medicines can only be exported if the term of the patent has been extended. It is pretty important, given the debate that has surrounded generic medicines, that these forms of clarification under the schedules are included in this bill.

Additionally, schedule 8—compulsory licensing of patents—proposes to include a competition test, whereby a patent may be compulsorily licensed if a person has been found guilty of anticompetitive conduct under part IV of the Trade Practices Act. Schedule 9 clarifies that the claims of an innovation patent define the intention. Schedule 10 proposes that a divisional application from a granted innovation patent may only be made in accordance with the regulations and during the life of the first innovation patent. Schedules 11 and 12 as set out similarly contain measures which would make for more efficacy in relation to this legislation. Schedule 14—approving forms: Plant Breeder’s Rights Act 1994—provides that approved forms under the Plant Breeder’s Rights Act no longer stand as legislative instruments for the purposes of the Legislative Instruments Act as they are essentially of an administrative rather than a legislative nature. I do not propose to speak in any more detail on the strength of these schedules, other than to note that all of them are necessary and to say that they will make this legislation more effective.

On the question of copyright review and copyright reform more generally, I want to draw to the attention of the House that, as this review process has been undergone and reflected in the legislation we have before us, there are additional aspects of the review process, including those that relate to intellectual property, that the government needs to be mindful of. In particular, I note the recommendation in the Intellectual Property and Competition Review Committee’s report that there be an amendment of the Copyright Act to remove special provisions which provide for the government rather than individual creators to be the first owners of copyright material created or first published under its direction or control.

What tends to happen is that the creator of material, where the government itself has been the contracting party, loses their copyright in the material and the government, in effect, takes it. Evidence was given only yesterday, at a hearing of the Standing Committee on Aboriginal and Torres Straight Islander Affairs, of Aboriginal artists, authors and writers who find themselves in this situation, whereby they are in receipt of grants or they are producing material which the government has contracted for them but, as a consequence of producing that material, they lose the capacity for their copyright. That is important in the light of this debate because governments ought to be providing legislation which enables individuals who create work to be able to properly, prudently and legally exploit their work. So their rights in terms of creating work should not be reduced. Their rights should actually be asserted. And that is an important function of what governments do in relation to legislation of this kind.

Additionally, I draw attention to the proposals that the government has afoot about copyright reform—and I think particularly of something like moral rights and communal rights. It may be said that these rights are of a vaguer nature and are not necessarily as easy to legislate for, and I think there is some truth in that. When former Democrats senator, Senator Ridgeway, wanted the parliament and the government to give more attention to the question of communal rights, particularly for Indigenous communities, I must admit the question was raised in my mind as to how easy that would be under the existing legislative framework and in fact under the one that is included essentially in what we are discussing here today in the House.

If we open up our minds in policy terms to what the creation of work is about and how those people who create work can be confident that they have some protection over it, whether it is through a specific legal instrument, such as a bill and copyright, or whether it is through a consideration by the government of additional sorts of rights—either those which might come by way of considering creative commons or essentially expanding on and making a bigger frame, in effect, for moral rights and communal rights to exist—then I think there would be some confidence that we would know the direction in which the government is going in its consideration of issues like patenting, copyright and intellectual property.

The report by the Standing Committee on Science and Innovation, Pathways to technological innovation, examined the need for an effective intellectual property regime in order to encourage innovation. Recommendation 9 stated that:

The Committee recommends that the Australian Government review Intellectual Property legislation according to the National Competition Policy Agreements and establish an Intellectual Property legislation system of periodic re-review.

There is provision in the bill before us for review of some of the schedules that I have identified. But the bigger issue, of reviewing intellectual property and intellectual copyright in the longer term, is a critical one for this government.

Australia hitherto has relied on the very generous provision of natural resources and the natural advantages that we have to exploit those resources, but in the 21st century we will be increasingly required to rely on our innovation and our intellectual resources, and our intellectual resources have become embodied in intellectual property, in the intellectual property of the country and in our capacity to export that intellectual property to other parts of the world. I am particularly keen to see that the government’s digital action agenda plan comes before us, and we know what Senator Coonan has in mind with regard to that policy. I am particularly keen to see that, in our consideration of innovation, we recognise how important intellectual property actually is.

Unless and until we significantly increase the capacity not only to generate intellectual property but also to export it into international trading frameworks and domains, we are going to be the lesser for it. The amounts of money generally involved not only in patents, which are important, but, more importantly, in intellectual property and intellectual property export over time are very large. This is not a small beer economy; this is an economic area which has the potential to earn this country great amounts of foreign income. But at the moment we run trade deficits on cultural goods and in the digital area in terms of digital content. The government needs to harness in a much more vigorous and robust way the intellectual abilities and talents of young Australians and those working in the new areas of the digital economy by not only developing better, more effective and more transparent regulatory frameworks in the copyright and patents domains but by giving consideration to the kind of environment in which intellectual innovation is going to operate in the longer term, in particular whether we ought to consider something as open-ended as open source software. But in this case a creative commons for copyright consideration— (Time expired)

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

in reply—In summing up the second reading debate on the Intellectual Property Laws Amendment Bill 2006, I would like to thank all of the members who have contributed to this debate, in particular the members for Oxley, Mitchell, Blaxland, Shortland, Lowe and Kingsford-Smith. There were a number of points raised, particularly by members of the opposition, about the length of time the government has taken to introduce this bill. The thing to note is that the key recommendations of the IPCRC report were enacted in 2001 by the Patents Amendment Act 2001. These changes to the patents legislation have operated effectively for some years now, and this bill implements the majority of the residual recommendations.

Implementation of these recommendations was delayed by negotiation of the Australia-US Free Trade Agreement and by other competing government priorities. The government has not been able to implement all of the recommendations at this stage. This is because of other urgent government priorities that have arisen and also because of recommendations from some other recent reports into the Australian IP system that will affect the implementation of these recommendations. Outstanding recommendations are on the government’s legislative program and will be implemented in the near future.

This omnibus bill amends several pieces of intellectual property legislation. Many of the amendments are of a minor or technical nature and some of the more significant amendments implement recommendations of two reports into the intellectual property system. One of these, by the Intellectual Property and Competition Review Committee, considered the balance between Australia’s intellectual property and competition policy. The other, by the Advisory Council on Intellectual Property, considered issues relating to the enforcement of patents rights. However, the most significant amendment made by the bill is to the pharmaceuticals springboarding provisions of the Patents Act. I note that the opposition, as mentioned by the member for Oxley, is supporting the bill and referring it to the Senate Legal and Constitutional Legislation Committee. We welcome the committee’s review of this bill; as soon as they review it they will understand its benefits to Australia.

The amendments we are putting forward will enable generic companies to undertake more generic medicine research and development in Australia and remove disincentives for undertaking those activities that currently exist. The term ‘springboarding’ refers to the research and development of a generic pharmaceutical that a manufacturer needs to undertake in order to obtain regulatory approval for a generic version of a patented drug. The springboarding exemption allows generic manufacturers to undertake research and development during the term of a patent that would normally constitute an infringement of the patent, provided the work is limited to obtaining the regulatory approval.

It was quite rightly said by the member for Mitchell that this bill will allow Australian generic manufacturers to compete fairly with overseas countries. For too long Australian generic medicine manufacturers have been disadvantaged by the fact that overseas countries and their intellectual property laws have placed them in the position that when the patent runs out they are able to hit the marketplace in Australia within a very short period of time, whereas Australian companies are delayed.

The generic medicine industry is important to Australia. It employs around 3,000 people and is estimated to make up around 33 per cent of Australia’s $2.8 billion pharmaceutical export trade. There are eight generic medicine companies currently operating in Australia, and three main companies currently doing generic research and development: Alphapharm, Mayne Pharma and Arrow Laboratories. All three companies have made significant investments in Australia in recent years. It is estimated that combined they spend around $36 million a year on generics research and development.

The Patents Act currently allows generic medicine companies to springboard off patents for some pharmaceutical substances; however, springboarding is only available for a narrow class of patents that relate to pharmaceutical substances, and is only possible after the term of the patent has been extended. Other countries, such as Europe, the US and New Zealand, have more generous springboarding provisions in their patents legislation than Australia has at present. This has the potential to provide a powerful economic incentive for Australian based generics companies to conduct their generics research and development, and subsequent manufacturing, overseas rather than in Australia.

To prevent Australia losing generic drug development work overseas it is important that Australia introduce comparable springboarding provisions. During the debate the member for Banks criticised the Intellectual Property Laws Amendment Bill 2006 for tipping the balance between the big pharmaceutical industries and the generics industries too far in favour of the generics industries. What that does is allow the generics industries to be competitive, and in a more rapid time frame, than those companies from overseas that would bring generic product to Australia.

The amendments that the bill proposes to make to the springboarding provisions of the Patents Act achieve all that I have mentioned. Other markets, such as Europe, are introducing more generous springboarding provisions. As that happens, Australia will continue to lose generics drug development work overseas unless it introduces similar provisions. With the development work happening offshore there is a high chance that manufacturing will also be done offshore, so Australia could lose its manufacturing work overseas as well. I thought that the members of the Labor Party that supported jobs in Australia, rather than attacking the provisions of this bill, would be asking for it to be expedited so that jobs can be created.

With these provisions there will be scope for companies in Australia to do research and development work not only for the Australian market but also, importantly, for the export market. In this way, the Australian industry can benefit from the large number of patent expiries due in the coming years. Australian generic companies have come out strongly in support of these provisions. In fact, John Montgomery, the chair of the Generics Medicine Industry Association, has said that the widening of the springboarding provisions enables local industries to compete more fairly with overseas players.

Australian generics companies are making decisions now about the work they can do in Australia versus the work they will need to undertake overseas. Any delay in the passage of this bill could result in work being lost overseas. In summary, the Intellectual Property Laws Amendment Bill 2006 reflects the government’s commitment to encouraging innovation and providing Australia with a strong intellectual property system that meets the needs of all Australians. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.