Mark Dreyfus (Isaacs, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I present the explanatory to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012] and move:

That this bill be now read a second time.

The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012] is a major reform of the intellectual property system. It is the culmination of two years of extensive consultation with interested parties. The bill will improve many parts of the intellectual property system including the patents, trademarks, copyright, designs and plant breeders' rights acts. The bill will ensure that Australia maintains a world-class intellectual property system, an IP system that fosters Australian innovation in the modern global economy.

Australian innovation is critical to the resilience of the economy through changing times. Innovation makes our economy more competitive, but the extent of innovation necessary to keep our economy competitive cannot happen on its own. In addition to requiring support and investment, innovation requires a strong intellectual property system. A strong IP system underpins investment in innovation. This was recognised in Powering ideas, the government's innovation agenda for the 21st century. A strong IP system provides investors an opportunity to recoup the investments necessary to bring their ideas to the marketplace. The IP system also gives the public and innovators the tools necessary for further innovation through published information about new technology. As also recognised in Powering ideas:

The trick is to get the balance right: too little protection will discourage people from innovating because the returns are uncertain; too much protection may discourage people from innovating because the pathways to discovery are blocked by other intellectual property owners.

The reforms set out in this bill seek to improve that balance by addressing six key areas: patent standards, research freedom, reducing delays in resolving patent and trademark applications, improvements to the attorney profession, trademark and copyright infringement, and technical improvements to the IP system.

I turn to schedule 1, Patent standards. First the bill seeks to raise patent standards. This addresses concerns that Australia's standards are lower than standards elsewhere, which discourages export of the technology we develop and inhibits the growth of Australian business. Lower Australian patent standards actually disadvantage Australian patent holders who should be able to take their inventions overseas with confidence that they will qualify for patent protection in Australia's major trading partners. Lower patent standards may also clutter the Australian innovation landscape with broad patents that would not meet the standards of our major trading partners getting in the way of Australians who might otherwise be able to develop inventions in new areas.

A theme in this bill is one of recalibrating and raising Australian standards to align them more closely with those of other major trading partners around the world. Some patent standards around the world have developed to the point where there is an aligned approach internationally. In such cases where there is an aligned global approach, the bill raises Australian patenting standards to that common approach.

The bill raises patent standards in three important areas. First, it raises standards with respect to the information provided in patent applications and specifications. Disclosure is a cornerstone of the patent system. Patents are an exchange between inventors and the public. In exchange for a 20-year monopoly on commercialisation, the innovator must tell the public how their idea works. This disclosure allows for potential follow-on investors to build on initial work to produce even better innovations.

The bill raises standards to require that the patent right is consistent with the information provided in the patent specification. There must be enough information disclosed for the public to make and use the invention. Also, a specific substantial and credible use for the invention must also be disclosed and the scope of the claims for patent protection must not extend beyond what has been disclosed.

Importantly, the amended provisions mirror similar provisions in the United Kingdom and Europe. It is intended that Australian courts will have regard to developments in the law in the courts of these other jurisdictions when interpreting the new provisions and will develop Australian law in a consistent fashion. This will help Australian exporters to have the confidence that a patent granted in Australia is likely to be matched by a patent granted in major overseas markets. Secondly, the bill raises standards for inventiveness. Raising the standards for inventiveness allows the patent system to better recognise the global innovation environment and reflect the modern economy's improved access to information. We must not grant a patent for something that has been done before. The bill ensures that the patent system takes into account all published information that is reasonably available and accessible to the public. It will also ensure that this information is assessed against the background of knowledge of the skilled person, regardless of where that person resides.

Thirdly, the bill ensures that a consistent standard of proof is applied by the Commissioner of Patents in all decisions and expands the grounds that the commissioner can consider during examination and re-examination. Someone who seeks a patent will bear the burden of showing that they are entitled to patent protection. The bill requires the commissioner to be satisfied, on the balance of probabilities, that a patent, if granted, will be valid.

Taken together, these changes ensure that only high-quality patents are granted in Australia. They make sure that the scope of disclosure is commensurate with the monopoly granted. They will make sure that patents are only granted for innovations that warrant patent protection. They will also ensure that the Commissioner of Patents can apply robust standards when assessing whether or not a patent should be granted and whether or not a patent should be revoked.

Schedule 2 —R esearch freedom

The second category of reforms responds to concerns that patent rights can sometimes deter or block innovation by discouraging researchers from developing further innovations or spin-offs. We need to set our researchers free and ensure that the patent system encourages further innovation. The key reform in this category introduces an explicit provision permitting experimentation to be conducted without infringing patent rights. This amendment will give comfort to researchers in Australia and is strongly supported by Australia's research sector.

The amendment strikes a balance between the rights of patentees and the rights of subsequent researchers. The exemption protects researchers and follow-on innovators as long as what they are doing is predominantly for research and experimental purposes. The exemption is intended to allow for some areas of commercial activity—for example, where the researchers are doing their work under contract and are accepting payment to do experiments to improve on or test a patented invention to see how it works. However, if the purpose is primarily commercial—such as where the researcher is seeking to commercialise the patented invention—the amendment protects the interests of patent owners because it will not apply where the main purpose is to commercialise the invention or manufacture it for sale.

A second reform introduces an amendment to exempt research activities necessary for gaining premarket or premanufacturing regulatory approval from infringement. This ensures that a patent owner gets no more than the statutory period of protection. Such an exemption already exists for particular regulatory activities in the pharmaceutical industry. The amendment expands this exemption to apply to all technologies. Currently, a patentee can delay a competitor's entry into the market when the patentee's patent expires by threatening the competitor with infringement proceedings if they seek to do the work necessary to gain regulatory approval during the patent term. This gives the patentee a de facto extension on the term of their patent. The amendments will enable competitors to make the preparations necessary to enter the market as soon as a patent has ceased or expired. The amendments will not, however, allow the competitor to stockpile their product during the patent term, or to make or use it in any way that detracts from the patentee's exclusive rights to commercial advantage from their invention during the term of the patent. The amendments in schedules 1 and 2 also address some of the concerns raised in recent inquires into gene patents.

In 2004 the Australian Law Reform Commission released its report entitled Genes and ingenuity: gene patenting and human health following a two-year inquiry into patenting laws and practices related to genetics and related technologies, including the impact of gene patents on human health and cost-effective provision of health care.

In 2010, the Senate Community Affairs References Committee released its report Gene patents, following its inquiry into the impacts of gene patents on health care and medical research. Both reports recommended technology-neutral changes to raise patent standards and introduce a research exemption. These changes are reflected in schedules 1 and 2 of the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012]. The government has committed to implement further recommendations from the reports. These include a review of existing compulsory licensing provisions and consultation on further reforms to the patent legislation to reword using contemporary language for legislative test for patent eligible subject matter and to introduce a morality exclusion.

Schedule 3—Reducing delays in resolving applications

The third category of reforms is aimed at making the patent and trademark application process more efficient. These changes will speed up the processes for determining applications for IP rights. They will also prevent tactical use of the system by those who profit from delay. The amendments target two key areas.

The first area is the process of opposing patent and trademark applications. Opposition processes permit any person who might be adversely impacted by issue of an IP right to come forward and oppose it. Oppositions are intended to provide for a swift and efficient administrative resolution where a third party has concerns about the grant of an IP right. However, oppositions have become increasingly more complicated and protracted. The bill introduces a series of reforms aimed at resolving opposition proceedings more efficiently while still ensuring a fair outcome, and ensuring that any delays are truly unavoidable ones.

The second area relates to what are called 'divisional' patent applications. Patent systems around the world permit a patent application to be divided into one or more divisional applications, primarily to account for circumstances where more than one invention is claimed in the original application. However, the provisions are not as clear as desirable and sometimes divisional applications are used to delay finalisation of a particular invention or frustrate a third party. The reforms tighten the provisions for divisional applications, particularly time frames for making applications. This will reduce opportunities to delay finalisation of applications.

Schedule 4 — Improvem ents to the attorney profession

A fourth category of reforms improves various aspects of Australia's intellectual property profession. If we expect more from intellectual property attorneys to meet the higher standards provided for in the bill, it is reasonable to extend to them the privileges available to other professions. The bill makes two key changes to the patent and trademarks attorney professions in Australia.

The first change will permit patent and trademark attorneys to conduct all aspects of their business through a corporate structure. Patent and trademark attorneys are currently unable to do this, and this restriction is enforced through criminal sanctions. This is at odds with how other professions are regulated and are able to conduct their businesses in Australia. The bill amends the Patents and Trademarks Acts to allow a company to act and describe itself as a patent attorney. The new provisions are modelled closely on corresponding provisions of the Model Law for the regulation of the legal profession around Australia, with some variations necessitated by the different function and structure of the two professions. This is a reform that has been long sought-after by the patent attorney profession, and aligns that profession more closely with other professions in Australia.

The second change will extend the privilege that attaches to certain communications. At present, only certain communications to and from attorneys who are registered in Australia are privileged. In a globalised economy, in which IP rights are sought and prosecuted around the world, it is important that the privilege in Australia extends more broadly than only to Australian registered attorneys. The bill extends privilege to overseas attorneys who are authorised to provide intellectual property advice and better aligns patent and trademark attorney privilege with that attaching to communications to and from lawyers. Similar amendments, applying to privilege attaching to communications to and from legal practitioners, were introduced by this government through the Evidence Amendment Act 2008.

Schedule 5—Trademark and copyright infringement

The fifth category of reforms introduced by the bill will improve the ability of trademark and copyright owners to enforce their rights. Trademark rights will also be strengthened by improving the remedies available when the rights have been found to have been infringed. We are setting higher standards for the granting of intellectual property rights. It is reasonable that higher standards also apply to their enforcement. There are three areas for improvement. The first relates to the criminal penalties available for infringements of registered trademarks. Criminal penalties play an important role in trademark enforcement, by deterring infringements and punishing infringers. There have been concerns expressed that Australia's criminal penalties are too low to operate as an effective deterrent. The bill addresses this concern by increasing the criminal penalties for existing offences. Higher penalties will be more effective in deterring infringement of trademark rights. The changes also introduce some summary offences, but with lower fault elements and lower penalties. This will provide greater flexibility to law enforcement agencies when prosecuting trademark crimes. These changes also bring the criminal penalties under the Trade Marks Act into closer alignment with those under the Copyright Act.

The second area of improvements to IP enforcement relates to the civil remedies available for infringements of trademarks. These amendments will introduce a further remedy in civil actions for trademark infringement. At the moment, the trademark owner can seek damages, an account of profits, or injunctive relief. This is out of step with the remedies available under other IP laws, which also allow the IP rights owner to obtain what are called 'additional' or 'exemplary' damages. The aim of awarding additional damages is to increase the deterrence for infringers. The bill amends the Trade Marks Act to introduce exemplary damages as an additional remedy to trademark infringement.

The third area of improvements relates to the powers of the Australian Customs and Border Protection Service to intercept goods that infringe copyrights or registered trademarks at the border. The bill improves the existing arrangements by permitting Customs officials to provide more information to copyright and trademark owners about goods that are seized at the border. The bill also requires that Customs only release seized goods if the importer lodges a claim for return, which must include the identity and address of the importer and be filed within a specified time period. These changes will help rights owners in deciding whether or not to commence an infringement action. And then they will also help in the commencement of infringement proceedings.

Schedule 6—Technical improvements to the IP system

The sixth category of reforms is a collection of technical improvements and changes, clarifications and updates to the Patents Act, the Trade Marks Act, the Plant Breeder's Rights Act and the Designs Act. The measures implemented in this category share the common themes of modernising aspects of Australia's IP system, increasing transparency in the decision-making process, and generally making the system easier to use.

In particular, the amendments include a number of changes that improve the flexibility of the IP rights system for users. Examples of changes in this area are the changes to improve processes for resolving ownership disputes. Current processes can be unduly complex, making it difficult for the commissioner to resolve disputes and correct ownership details in the patent register. The changes proposed by the bill will give the commissioner greater flexibility to decide disputes and correct the register, ensuring that the public has correct information about who a patent has been granted to.

Another example is extending the jurisdiction of the Federal Magistrates Court to hear trademark and design matters. This provides innovators with the option of a less formal, more speedy and cost effective alternative for considering less complex trademark and design matters.

This bill represents a comprehensive package of improvements to the IP system. It is the most comprehensive package of reforms in the lifetime of the current Patents Act. These changes bolster support for innovation in Australia and better equip Australians to commercialise their innovations in the evolving modern economy.

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | Link to this | Hansard source

In rising to speak on the Intellectual Property Law Amendments (Raising the Bar) Bill 2011 [2012] I want to begin by acknowledging that this is a highly complex but important area of policy. Often ways of comprehensively and effectively changing Australia's IP system for the better are not immediately obvious. In most respects the aims behind the changes in this legislation are right but, on the other side of the House, we are worried that there are potentially going to be some problems in practice, and that additional changes will therefore need to be made. To that end, the coalition will support the passage of the bill but we also want to flag our concerns in a number of areas.

As my colleague Senator Colbeck outlined in the second reading debate in the Senate, the coalition has consulted with a diversity of stakeholders about the bill and the issues contained within it. Generally, stakeholders do agree that various elements of the changes are positive, but many also believe several important issues remain unaddressed and there is still quite a degree of work to be done. More worryingly, in many cases they also feel the government is not listening to their concerns about the issues they consider to be unresolved but has drawn a line in the sand and is apparently refusing to take reasonable feedback on board.

The coalition's attention has been drawn to many instances where the government essentially appears to have made no effort to consult. The process leading to the introduction of this legislation into parliament has unfortunately provided yet another demonstration of the government's unwillingness to consult with or even listen to many people who happen to have a different point of view and also happen to have great expertise and practical experience in relevant areas. We can only hope that the recent changes in ministerial responsibilities may help resolve some of these problems in the innovation and industry and science and research portfolios in the future and may lead to at least a partial cleaning up of the dog's breakfast left behind by Senator Kim Carr. Although I am sorry to say that I very much doubt that this will happen, we can live in hope. I have absolute confidence it will happen at some future time—when a coalition government is elected we will continue that dialogue we have started with relevant stakeholders.

We need to look at some of the public statements that the new Minister for Industry and Innovation has made about the portfolio stakeholders. I was absolutely stunned when, in his first statement to industry, he said that they needed to lift their game; that they needed to start thinking about the national interest and not their own interest. He implied that they were not mature. These comments were made at the time of that very unseemly, ugly, internecine war within the Labor Party about leadership, but he was telling industry that they were not mature enough! It was not a particularly glorious start; not one draped in the glory of giving great comfort to industry. I hope this is not a sign of things to come, but it does at this time reveal some of the attitude and thought processes of key ministers in the current Gillard Labor government.

One of the many unfortunate consequences of the government's unwillingness to consult is that it has failed to genuinely address a number of concerns relating to the practicality of implementing some of the provisions embedded in the legislation. This includes concerns from a number of eminent members of the legal profession, as Senator Colbeck rather eloquently outlined in the Senate. It would be a significant problem if one of the legacies of this bill, and it seems quite conceivable, is that it increased rather than decreased confusion about the law and the demarcation of legal responsibility for the resolution of IP issues. There are also substantial concerns about the resourcing of Customs. Many stakeholders doubt that the agency is appropriately resourced and equipped to provide the required information to brand owners in respect of Customs seizures in particular. More to the point, they are worried that Customs does not currently possess the administrative and logistical wherewithal to appropriately deal with counterfeiting operations and practices. Nor is its capacity in this area likely to be suitably increased at any time in the short to medium term. The problems inherent in this bill mirror those in many other Customs related bills that have come before the parliament in recent months. Labor has also repeatedly cut Customs budget allocations and staff numbers and severely reduced aerial surveillance, passenger facilitation, cargo screening and air and sea cargo inspections. We have seen in all-too-graphic detail over recent weeks the disastrous, unravelling consequences of this neglect—especially, most recently, on the streets of Sydney. All of this naturally raises a quite ominous spectre about the ongoing capacity and effectiveness of Customs to police threats of to the integrity our IP system, especially at a time when the agency is under ever-increasing pressure because of the complete and utter disarray in which the government finds itself in relation to border protection.

Throughout our interaction with key stakeholders on this bill, we have been routinely advised that section 41 of the Trade Marks Act needs further refinement. We have also heard that there may be some increased pressures on agricultural chemical companies because of the increased capacity for springboarding being facilitated by the provisions of schedule 2 of the bill. I recognise that the intent of relevant changes in schedule 2 is to improve the arrangements relating to the lifespan of patent protection and that it will probably ultimately allow consumers access to a wider range of products, including generics. But the government needs to remain especially mindful of how this might in practice compromise the viability of other products.

There remain a range of views about the appropriateness of the proposed penalties and offences listed in schedule 5, and I am sure there will continue to be a range of further discussions on these penalties into the future. Overall, the coalition takes the view that the legislation should be passed, because some of the changes are beneficial and ultimately some improvements are better than none. But that does not absolve the government of the responsibility to listen to the sensible points of view that have been and will continue to be articulated by many stakeholders. Nor does it mean that the government should not be genuinely and seriously using the feedback to help drive improvements in a range of other areas in relation to IP issues.

Finding and pursuing ways in which governments can help to deliver a better IP regime in Australia, lift the level of encouragement for Australian inventors and innovators, and drive improved commercialisation outcomes are extremely important and worthwhile objectives. They have certainly been the core aims on which the coalition has focused throughout the discussions on this bill, and they are the aims for which we will continue to advocate. I hope that the bill will in some way progress them as well.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

The one thing on which we can certainly agree with the member for Indi is that this is indeed very important legislation. It is important not only because it amends and perhaps updates the intellectual property laws of this country but also because those very laws have a direct effect on our nation's ability to remain competitive in the years ahead. Today, more than ever before, when we compete in a global market with products that are available from around the world, and with copyright ownership of those products resting in the designers of them, our ability to protect our intellectual property and to innovate, develop and design products is going to be fundamental to our ability to remain a competitive nation. In fact, earlier today when we were debating a different matter in this chamber, the question of research and development into our agricultural sector was raised, and quite properly that is also an area where intellectual property can, in the future, make so much difference to what we produce in this country and how competitive we are as opposed to what is being done around the world. The parliamentary secretary outlined the importance of this bill and the details of it, and in my contribution I will try not to go to the same level of detail as he did. Effectively, the bill amends the Patents Act 1990, the Trade Marks Act 1995, the Copyright Act 1968, the Designs Act 2003 and the Plant Breeder's Rights Act 1994. It does that because this legislation will impact on each of those acts. The IP system in general and the patent system in particular protect and encourage innovation in our country. For the system to work effectively, the patent system itself needs to be up to date and in line with what is happening in and around the world. You must have a balance between what the law protects in terms of one person's innovation and design and what another person is doing elsewhere. It would seem that the current laws are very much out of date and therefore these changes are needed.

One of the things that the parliamentary secretary mentioned was that there have been a number of reviews in the last decade which have recognised concerns that the thresholds set for the granting of a patent in Australia are too low and that in turn suppresses competition and discourages follow-on innovation. That is absolutely correct and needs to be addressed, and that is what this legislation partly does. In fact, I understand that this bill is the result of extensive public consultation that commenced in March 2009. The consultation was associated with a number of reviews of the current laws by a number of different organisations. Effectively, the bill seeks to further improve a range of areas in relation to our intellectual property system, such as raising the quality of granted patents, allowing free access to patent inventions for regulatory approvals and research, reducing delays in the resolution of patent and trademark applications, assisting the operations of the intellectual property profession, improving mechanisms for trademark and copyright enforcement, and simplifying the IP system.

This legislation also complements and is supported by a number of other initiatives of this government. In May 2009 the government released the Powering ideas report, which outlined the government's innovation agenda for the following decade. Powering ideas clearly communicated the government's commitment to consider options for reforming Australia's present patent system and, by doing so, develop an environment conducive to innovation, investment and trade. The IP reforms contained in this bill are just part of the government's innovation agenda.

I want to speak particularly about one of those ideas, and that is Enterprise Connect. Enterprise Connect is an important element of the government's innovation agenda. Enterprise Connect provides a range of services to small and medium enterprises, including tailored advisory services and business reviews designed to improve management and business skills as well as organisational processes, assistance to help business access researchers and PhD students through the Researchers in Business program, and assistance to business to protect their IP through the business advisory services and the tailored advisory services. Currently, in my electorate of Makin there are around 46 small and medium enterprises that are being assisted through the Enterprise Connect program. I understand that around the country some 7½ thousand businesses have been assisted since the program was implemented. It is indeed unfortunate that, as I understand it, the opposition is proposing to cut $100 million from Enterprise Connect. This is a program that is working very well and is being accessed by 7½ thousand enterprises around this country, and the opposition proposes to cut $100 million of funding from it.

The government has also reformed the research and development tax concessions through the research and development tax incentive. The government is also promoting research and development by doubling support to small and medium enterprises and has increased the support to other firms as well. Changes have also been made to allow foreign companies to invest in Australia by producing their intellectual property here even in instances where the IP is owned by the parent company overseas. This builds Australia's research and development capability and skills and also increases the likelihood of further innovation. Encouraging business to invest in research and development fosters innovation. The government is supporting research and development partnerships between universities and industry and business in a range of ways. For example, the cooperative research centre program brings together consortiums of researchers and industry. The Australian Research Council linkages program provides grants to higher education institutions engaged in industrial research. An industrial PhD program also brings researchers into business.

The government is further increasing the focus on universities by building partnerships with industry through the negotiation of agreements between each university and the Commonwealth government. These are known as mission based compacts and will further deepen links between universities and industries that will foster innovation. I understand that the University of Adelaide, the University of South Australia and Flinders University, all in my home state of South Australia, have been negotiating with the Commonwealth for mission based compacts.

As I mentioned earlier, the bill comes on the back of several reviews undertaken by a number of organisations, including the Advisory Council on Intellectual Property and its review in respect of patentable subject matter, which was carried out in December 2010; its enforcement of trademarks review, carried out in April 2004; and its patents and experimental use review, carried out in 2005. Several of the recommendations in these reviews have been reflected in the amendments proposed in this bill. Whilst the government wants to ensure that innovators can protect their ideas, it does recognise that patents involve commercial monopolies over inventions and should not be given away too easily. ACIP, in its review on patentable subject matter, concluded:

… the threshold of inventiveness in Australia is too low … the existence of patents hampers innovation in some technological fields …

Low patent standards provide uncertainty for innovators, who cannot be confident that their patent will withstand challenges in Australia or overseas. The reality at the moment is that patent standards are lower in Australia than elsewhere and that this can block follow-on innovation by crowding out the innovation landscape. The bill addresses this by raising key patent requirements to raise the quality of granted patents.

It is also the case that researchers can be threatened with lawsuits by patent owners, and that in turn holds up important research projects and distorts research priorities. This problem is also addressed in the bill, which seeks to provide certainty to researchers by exempting research from patent infringements. The bill will also serve to tighten up processes that have on occasions been abused. For example, some patent applicants profit by delay and uncertainty, as the system allows them to draw out their applications for too long. Again, the bill tightens up the processes for assessing applications to give certainty sooner. I want to refer to that for a moment, because I know the parliamentary secretary did in his own comments about it. Allowing the Federal Magistrates Court to deal with matters and giving the commissioner additional powers to carry out reviews a lot faster, I think, will help everyone involved in this process, and they are certainly very welcome changes to the current legislation.

The other important matter that the parliamentary secretary talked about was the criminal penalties relating to the abuse of trademarks and patents by those who seek to profit from them. I have read submissions from industry groups that were concerned about the level of goods coming into this country that have trademarks on them and that have been smuggled or imported into the country using those trademarks and about how our Customs operations perhaps need to be given greater powers. Again, I think that the ability for Customs to provide information to the owners of those trademarks is an important first step, but the increasing of the criminal penalties is going to be very important in that respect as well.

I want to raise three other matters that I believe need to be taken into consideration when we talk about trademarks and intellectual property laws. It is my view that IP laws should never be used to withhold innovation from the public. There have been claims in the past that business sectors with a vested interest in a particular innovation or new design buy that new design and then shelve it for the deliberate purpose of preventing it from reaching the market. In doing so, what they are doing is preventing the use of that innovation for the rest of society. I believe that is wrong and that at some point we need to find a way of addressing that. It could be a case whereby a new patent or a trademark, once it is registered, would lapse if it is not put into commercial reality. That might be one way of resolving this matter. But there ought to be a process to enable innovations to actually reach the marketplace and to stop those who have a vested interest from blocking innovation from reaching the marketplace simply by taking out the patent rights for 10, 15 or 20 years. This is a matter that concerns me. I think most members of the House would be aware of claims that have been made over the years in respect of that—perhaps the most famous being to do with the Sarich orbital engine, where the patent rights were supposedly bought off and shelved to prevent the engine from reaching the market. The sad thing about that is that the world missed out on a terrific invention at the time.

The other matter that concerns me is something that I am sure happens on very frequent occasions. Two separate research institutions may independently carry out research into a particular matter and, even without the knowledge that the other is carrying out that research, may each come up with a design of a new product. The first one to patent it then gets the rights to it. Part of the reason we have patents laws and trademark laws is to protect the investment made by those organisations in their research and development. Regrettably, the second party, who has also carried out the research and who might come to the same finding ultimately, misses out entirely because they were not the first to register the patent—yet they have also spent real research dollars, real time and real effort on that design, often without any use or abuse of the research of the first company. It seems an injustice that they should be denied any opportunity to use that innovation. It would also apply where someone comes up with an innovation that they would have ultimately found but, because it has now been patented, they simply cannot go ahead and either market it or patent it.

The last point I will quickly raise, because it has been raised with me in the past, is about the situation where the federal government assists a university with some kind of funding, and the university works in conjunction with the private sector. If a department of the university, including perhaps some of its key scientists, works on a design and an innovation arises, the question as to who owns that innovation is an interesting one. It is a complex question but an interesting one, and it has been the cause of grief for people in the past. I raise it in the House as a matter that I believe ought to be addressed at some stage, particularly given that the government has an interest in that innovation through its indirect funding of the universities.

With those comments, I commend this bill to the House.

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

Mr Deputy Speaker Mitchell, I must congratulate you on your appointment to the Speaker's panel. I think this is the first time I have spoken whilst you have been in the chair. I am sure you will bring great wisdom to your role as Deputy Speaker.

I would also like to congratulate the member for Makin on his fine contribution to this debate on the Intellectual Property Law Amendments (Raising the Bar) Bill 2011 [2012]. I actually learned quite a bit listening to what he had to say.

The Intellectual Property Law Amendments (Raising the Bar) Bill 2011 [2012] is very important legislation, which has at the heart of it the fact that the intellectual property rights system is in place to support innovation by encouraging investment in research and technology in Australia and by helping Australian businesses benefit from their good ideas. The purpose of this legislation is to make improvements to IP rights to better meet these objectives. Most members of this parliament will have been approached by constituents who have an invention that they would like to have patented. They work through their research and then they start to go through the process that is involved in registering intellectual property rights on their invention. We all know just how difficult that is and we also all know that there are many problems associated with the current system.

Unlike the original bill that this one is amending, the 1999 bill, this legislation raises equality in the granting of patents—it has been a problem in the past that it was far too easy for a patent to be given on an invention or a product—and allows free access to patent inventions for regulatory approvals and researchers, reduces delays in the resolution of patent and trademark applications, assists the operation of the intellectual property right profession, improves mechanisms for trademark and copyright enforcement and simplifies the IP system. That last one is fairly important, and I will refer to all of them in a little bit more detail as I make my contribution to the debate.

The IP system and the patent system in particular encourage innovation, and innovation is the key to success for Australia as a nation. It is those countries that can be innovative, that can conduct the research, that can invent the next great invention that will be successful in the future, and I think Australia is in a particularly strong position to lead the way as far as—

A division having been called in the House of Representatives—

Sitting suspended from 17:42 to 17:57

Before we were interrupted, I was making the point about how important innovation and research are to the future of our nation. It is innovation and the direction of innovation and invention that are going to position Australia as a power in the world. It is a special niche and unless we have the right legislation in place then this will not occur. I refer to the minister's second reading speech. He talks about how the IP system underpins investment in innovation. He points out that this was recognised in Powering Ideas: An Innovation Agenda for the 21st Century. In that it points out how a strong IP system gives investors the opportunity to recoup the investment that is necessary in bringing their inventions to the marketplace.

Innovation and invention are not things that happen overnight. They are things that take a great deal of effort and a lot of investment. The minister recognised that in his speech. I would like to endorse what he had to say. In order to meet the objective of supporting innovation the patent system must strike a balance. I do not think it actually does that at the moment. It has to provide suitable protection to reward innovation but there must not be so much protection that it will stop future innovation. So it is that fine balance. I have pretty much decided that at the moment the bar is set a little bit too low and it is impacting on Australia's global position in innovation and research. The government recognises that patents involve commercial monopolies over inventions and they should not be given away too easily. If the bar is set too low, if it is too easy to register a patent or intellectual property then that is going to create monopolies. It could create situations like the one that the member for Makin was referring to where patents can be purchased and can be placed on a shelf. Setting the bar too low can work as a disincentive for future innovation. As a nation, innovation is the thing that we should be pursuing vigorously.

Over the last decade concerns have recognised that the threshold set for granting a patent in Australia was too low and that it was suppressing competition, as I mentioned a moment ago. Rather than letting a new invention or new product come onto the market, it is shelved so that somebody, such as a producer or a company, is able to continue to monopolise the market. This is something we should ensure does not happen. It happens right across the field, in medical research, in areas like patenting DNA—which is something that we need to look at very, very carefully—and in the patenting of seeds and plants, which is impacting on food supply. The registering of intellectual property is something that can create great inequalities within our society as well as be a barrier to us entering the global market. By having the bar set very, very low there are enormous implications.

On the other hand the government wants to ensure that innovators can protect their ideas. Low patent standards provide uncertainty for innovators, who cannot be confident their patent will withstand the challenges in Australia of overseas companies, research or innovators. The bill seeks to address patent standards that are too low. They are lower in Australia than elsewhere, which I have touched on, and we really need to address that. We need to make sure that we are up to at least international standards. Researchers can be threatened with lawsuits by patent owners, and the bill addresses this by exempting research from patent infringements. Some applicants can profit by delay and uncertainty. The system allows them draw out the process, and I have seen that with constituents I have worked with. The bill tightens up the process for assessing applications to give certainty sooner.

This is very important legislation. It is legislation that I suspect both sides of this parliament are supporting because they recognise the fact that innovation and research are important to our future. Both sides of this House recognise that if you set the bar too low then it is going to have consequences, such as the development and enhancement of monopolies. It can also lead to certain things being patented that should not be. I think that this legislation is vital. I congratulate Senator Carr, who, as the minister at the time, has done a considerable amount of work in this area. Senator Carr is someone who really understands the importance of patents, innovation, research and placing ourselves in a position in the international sphere as far as science and research are concerned. This bill has my full support and I commend it to the House.

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I wish to speak today to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011. I commend the work of the former Minister for Innovation, Industry, Science and Research, Senator Kim Carr, and the department for the improvements to the intellectual property system that are contained in the bill. I note with respect to the patent system, in particular, that the bill will have the effect of raising standards in a number of respects. However, there are areas of the existing patent system where the bill does not go far enough and there are areas where it does not go at all—and it is those areas that I would like to speak about today.

First I will address the areas where the bill does not go far enough. For example, the section in the bill on experimental use exemption introduces an explicit provision permitting experimentation to be conducted without infringing patent rights. This was said by the minister in his second reading speech in the Senate to respond to 'concerns that patent rights can sometimes deter or block innovation by discouraging researchers from developing further innovations or spin-offs' and 'the need to set our researchers free and ensure that the patent system encourages further innovation'. However, this exemption applies only as long as what researchers are doing is predominantly for non-commercial experimental purposes.

There appear to be five main problems with this provision. Firstly, the scope of the exemption is too narrow; it does not seem to include non-experimental or other non-commercial purposes, such as clinical, educational, teaching or applied scientific purposes. Secondly, it is very difficult to prove that research has no commercial interest. Most universities have commercial objectives. Thirdly, furthermore, if a researcher using a patented genetic material under the experimental use exemption does manage to invent a useful application relating to that material, he or she would need to pay money and obtain a licence to the patent holder in order to commercialise that invention. This would seem to be a significant disincentive to innovation, to improving what already exists. Fourthly, the bill is ambiguous as to when the research exemption will apply and this will consequently be tested in the courts by multinational corporations with deep pockets. To what extent will small research institutions or individual researchers run the risk of carrying out research that may lead to them being dragged to court against large pharmaceutical corporations, for example? Finally, I note that the WTO TRIPS agreement heavily constrains experimental use exemptions.

These factors together mean, I fear, that the experimental use exemption provision, while admirable in its purpose and intent, will not be effective or practicable for scientists and researchers. Secondly, the bill does not deal with patentable subject matter, a subject of significant interest to health professionals, cancer patients and the wider Australian community. It is a bedrock principle of patent law that there must be an invention. In the health field, true inventions such as medicines, vaccines and new methods for diagnosis are patentable subject matter. However, discoveries of nature are not inventions and have never been patentable subject matter, irrespective of how difficult or useful that discovery may be.

Notwithstanding this principle, the practice over the past more than two decades has been to grant patents over human genes where such genes have been isolated from the human body and to grant patents over diagnostic tests that do not result from any invention but involve mere comparisons of genetic sequences. The effect of the practice of granting patents over human genes has been to lock up genes in the hands of a few, mostly foreign, corporations that can then refuse or control access to the genes.

In July 2008 an Australian company, Genetic Technologies, which had acquired the exclusive patent rights to a number of Australian patents granted to Myriad Genetics over breast and ovarian cancer susceptibility, or BRCA, genes, wrote to all of Australia's publicly funded clinical laboratories demanding that they immediately cease providing Australian women with BRCA genetic testing or they would be sued for patent infringement. In September 2010 the ABC Four Corners program Body Corporate highlighted the fact that doctors at Westmead Hospital were sending children's DNA samples to Scotland for epilepsy testing rather than paying the fees and royalties demanded by Genetic Technologies, which holds the patent rights for the epilepsy gene and genetic test.

During the recent Senate Community Affairs References Committee inquiry into gene patents, the Peter MacCallum Cancer Centre gave evidence that its research into breast and ovarian cancer had been delayed by two years and ended up costing three times as much because gene patents holders, Myriad and Genetic Technologies, refused to grant it permission to use the genes in its research. As Professor Bowtell from the Peter MacCallum Cancer Centre said during the inquiry:

We are coming into an era where lots of genes are actually being identified that work in concert to actually cause an outcome, like the risk of developing breast cancer, diabetes, stroke … If the patents for each of those genes are held by different companies then it is going to be extremely difficult to assemble a practical test to test for a particular condition.

The fact is that knowledge about human genes belongs to everyone. This is why when the human genome was decoded 12 years ago US President Clinton and British Prime Minister Blair issued a joint statement that said:

… to realise the full promise of this research, raw fundamental data on the human genome, including the human DNA sequence and its variations, should be made freely available to scientists everywhere. Unencumbered access to this information will promote discoveries that will reduce the burden of disease, improve health around the world and enhance the quality of life for all humankind.

This principle has been recognised by the United States government, which in the past two years has revised its policy on the patentability of genetic material, saying in an amicus curiae submission to a court challenge to Myriad's gene patents:

The extent to which basic discoveries in genetics may be patented is a question of great importance to the national economy, to medical science, and to the public health.

…   …   …

The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is 'isolated' from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth.

…   …   …

Methods of identifying, isolating, and using such DNA molecules may be patented, as may any new and useful alteration of those molecules through human intervention. Genomic DNA itself, however, is a product of nature that is ineligible for patent protection, whether or not claimed in 'isolated' form.

We acknowledge that this conclusion is contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA.

So, the US government now considers that the practice of the US Patent and Trademark Office, which has been followed by IP Australia for more than two decades, is wrong. This is significant.

The US Supreme Court may rule on this in the coming years. A court case by breast cancer patient Yvonne D'Arcy and Cancer Voices Australia is underway in Australia challenging Myriad's patents over the breast and ovarian cancer genes. But it will be some time before it is decided. In my view it is time for this parliament to fix the problem once and for all.

I am told that it is not necessary to amend the Patents Act to make it clear that genes are not patentable, because as a matter of practice IP Australia no longer grants patents over human genes and has not done so for some time. But this is not true. I have in front of me a patent granted by IP Australia in the last three years over the gene CXADR, related to human colon cancer. As an aside I would like to point out that 90 per cent of patents granted by IP Australia are to foreign corporations, so knowledge about the human body, to which Australian scientists and researchers need access so that they can help find cures and treatments for disease and illnesses, knowledge that should be freely available to humankind because no-one invented it, is locked up and controlled in the main by foreign corporations.

With regard to the matter of diagnostic tests that contain no inventiveness or transformative steps but simply involve the mere comparison of genetic sequences, it is clear not just to me but to the Cancer Council of Australia and to the Royal College of Pathologists of Australasia, among others, that such tests should no longer be patentable.

The US federal court of appeal recently ruled—and this aspect of the ruling is not the subject of an appeal to the US Supreme Court—that Myriad's patent claims over a diagnostic test analysing whether a patient's genes had mutations that raised the risk of cancer were not patentable, because they involved only 'patent-ineligible abstract mental steps'. During that case the Association for Molecular Pathology noted:

That pathologists can be excluded from ‘looking at’ or ‘reading’ a patient’s DNA sequence to characterize or assess the risk for disease is akin to prohibiting a physician from taking a patient's pulse to see if his or her heart is beating.

…   …   …

… the fact that patients can be prevented from accessing the information contained in their DNA would offend most people’s conceptions of individual rights and personal liberty.

The fact that gene patents and diagnostic tests that involve the mere comparison of genetic sequences are not excluded as patentable subject matter constitute serious deficiencies in the raising the bar bill that I hope will soon be rectified by separate legislation.

Finally, I would like to pick up on a point made by Senator Nick Xenophon in his speech on the raising the bar bill regarding the need for a provision in the Patents Act that would enable Commonwealth or state governments, companies or individuals who are negatively impacted by a patent that is revoked to recoup the value of their patent monopoly or the damages caused by the patent monopoly. I note an example in this context: Sanofi-Aventis, the owner of a 20-year patent for clopidogrel valid until July 2003. It sought and obtained a second patent for clopidogrel valid until February 2013. This second patent had the effect of evergreening the first patent by extending patent protection over clopidogrel by nearly 10 years. GenRx sought to market a generic version of a drug containing clopidogrel once the first patent of Sanofi-Aventis had expired. Sanofi-Aventis obtained a interlocutory injunction; however, this was overturned by the full Federal Court, which revoked the second evergreen patent on the grounds that the earlier patent had already disclosed the relevant compounds. That is, the second version was not found to be an invention. The High Court refused Sanofi-Aventis's application for special leave to appeal. The cost to the PBS of the unmerited patent protection from July 2003 to 13 March 2010 is an estimated $476 million to $631 million. The estimated recoverable portion of this for the Commonwealth is $60 million, being for the period from September 2007 when the interlocutory injunction was granted to 13 March 2010 when the Federal Court revocation came into effect. This is based on an undertaking by Sanofi-Aventis at the time of being granted the injunction to pay compensation to any party adversely affected by the injunction.

I raise this case to express my general concern about the practice by pharmaceutical companies of evergreening drugs, that is, making very minor changes and getting extensions on their 20-year patents. This makes a mockery out of the patents system, which is supposed to be about offering a limited period of patent protection as a reward for invention that is disclosed to the public. It is not intended to provide a semipermanent monopoly that can milk the tax payer indefinitely. As can be seen from this example, and there are many others like it, the cost to the PBS from such practice is significant. The Australian economy is supposedly dedicated to the principle of competition. A notable exception to this principle is the patents system, which creates 20-year monopolies sanctioned by law as a way of encouraging inventive contributions. However, as we have seen, the vast majority of patents granted in Australia are to foreign corporations and it appears from the practice of evergreening pharmaceuticals, among other things, that a certain amount of gaming the system is taking place. IP Australia, which is self-funded through patent and trademark filing and renewal fees, has a role as facilitator for the industry but I am concerned that it is not able to effectively regulate the industry. I therefore support the notion of introducing provisions to deal with anti-avoidance and anti-competitive conduct so that, if corporations deliberately act in a way that stifles innovation or unfairly knocks out competition, there will be penalties attached to such conduct. Perhaps the ACCC would be best placed to investigate such behaviour.

I would like to finish by quoting from a dissenting statement made by economics professor DM Lamberton in a report by the Industrial Property Advisory Committee, Patents, Innovation and Competition in Australia to the Hon. Barry Jones, then Minister for Science and Technology in 1984. Professor Lamberton noted:

No amount of talk about individual patent successes nor about a future in which the Australian economy has magically become progressive, innovation-oriented, and competitive on the world scene, can hide the facts that Australia exports little in the way of manufactured goods and has few inventions for sale. Most patents are granted to overseas firms.

He said the report:

… is constrained by the very of haze of assumptions about rights and rewards for inventors, special pleading by those directly involved, and a plethora of legal procedures and criteria in the Patents Act that it deplores. Many of its recommendations are for no change; and when change is implemented it is all too often merely procedural or has little prospect of being effective. A good opportunity to adjust an ancient institution to the current needs of the Australian economy has been missed.

Much of what Professor Lambert had to say then remains true today, as confirmed in the 2008 final report of the Cutler Review of the National Innovation System, which noted mounting evidence that the patent system is impeding rather than stimulating innovation. I would like to see the Productivity Commission take this issue up. While the raising the bar bill has some very good elements to it that I support, I believe that in a number of ways, some of which I have tried just now to describe, there is further work to do.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I rise to make some brief remarks on two aspects of the bill. This is an important bill for Australia because science, technology and innovation are so crucial to our current and future prosperity, especially as we transition to a post-carbon economy. Innovation and research are crucial to the health and wellbeing of our citizens as well as to the many people around the world that our world-leading research assists. I would like to see ultimately a national target of at least three per cent of GDP for Australia's research and development expenditure by 2020, including both public and private expenditure on research. But in 2008-09 we had an expenditure of 2.21 per cent, which is below the OECD average of 2.33 per cent. That means that we spend as little as $900 per person per year on research and development, which puts us 14th in the ranking of OECD member countries. We are well behind the next best ranked country, Iceland, which devotes 2.6 per cent of GDP to research and development. At the top of the list is Israel with 4.6 per cent, followed by Finland and Sweden; each of which spends 3.6 per cent. So we have a fair way to go, and intellectual property rights are an important part of this research landscape.

Obviously we need to be supporting innovation by encouraging investment in research and technology and by helping Australians benefit from their good ideas. But there must be a balance. We must provide sufficient protection to reward innovation without stifling it. The Greens share the concerns that have been raised regarding the low threshold for obtaining a patent. I support the measures in the bill which raise the standard for an inventive step before a patent can be obtained. This will make our laws more consistent with other jurisdictions and help to ensure that only genuinely new and useful inventions can be patented.

The Greens also have concerns regarding the lack of an explicit research exemption in the current act. We believe that such an exemption as will be contained in this amending legislation is crucial to encourage investigation free from concerns about patent infringements. If researchers are uncertain about their liability for patent infringement then this leads to inefficiencies and expenses. Patents provide the legal framework for legitimate commercial benefit. They should not stand in the way of legitimate research activities. We welcome broad and clear protection for research to maximise the potential benefits for Australia.

I also recognise that this bill has had a long consultation period and that there is widespread support from many organisations. In addition I made my own investigations in the course of working out whether to support this bill. I note that one of the world-leading health and medical research institutes is in my electorate; it is one of Australia's largest, Walter and Eliza Hall Institute. Professor Doug Hilton, the director of the institute, said that the raising of the bar bill would raise industry standards on patenting without jeopardising human health and the developments for new treatments for disease. He said:

Patents are vital to attracting investment in the discovery and development of new therapies and vaccines due to the extremely high costs associated with the development and natural rate of failure. We are excited about helping to make Australia a supportive environment for drug development and the new and innovative therapeutics and treatments that are to come.

I note that this bill importantly has the support of the Bio21 Cluster, which represents a significant number of the research institutes in my electorate and in broader Melbourne that really do punch well above their weight in world standards to make Melbourne and Australia generally one of the world-leading centres for health and medical research. I support the bill and I commend it to the House.

Mark Dreyfus (Isaacs, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I thank honourable members for their contributions to the debate. I would also like to take a moment to thank all the stakeholders who contributed their thoughts and suggestions on this bill. The proposals in this bill have been the subject of extensive consultation; three separate rounds of public consultation stretching over the last two years. Innovators, researchers, small businesses, big businesses, academic experts, lawyers, patent and trademark attorneys and users of the products of the IP system have all offered their thoughtful comments. These have undoubtedly led to a better bill, and if the bill is passed they will lead to better law. I note that there have been some suggestions that the bill does not go far enough and that further amendments might be required to address the issue of gene patents. Gene patents have been the subject of a number of recent inquiries by two Senate committees, the Australian Law Reform Commission and the Advisory Council on Intellectual Property. Most recently, the Senate Legal and Constitutional Affairs Legislation Committee inquired into the Patent Amendment (Human Genes and Biological Materials) Bill 2010. This was a private member's bill which sought to ban patents for gene and biological materials. The majority report of the committee recommended that the private member's bill not be passed.

Before that, the Senate Community Affairs References Committee conducted a comprehensive review into gene patents and their impacts on access to medical treatment and research. Last November, the government released its response to the committee's report. The committee did not recommend a ban on gene patents, and the government agreed with this. The committee also recommended amending the Patents Act to raise patent standards and introduce a research exemption. These amendments will be implemented through the raising the bar bill. They have widespread support from stakeholders, the research community and industry, including those on both sides of the gene debate, who see the changes as an important step in improving the patent system. The government also agreed to further measures recommended by the committee to address concerns about gene patents. Central to these are a review of existing compulsory licensing provisions and amendments to patents legislation to reword the legislative test for patent-eligible subject matter, using contemporary language, and to introduce a morality exclusion. These measures will be the subject of the same considered and comprehensive full public consultation as the raising the bar bill.

A strong intellectual property system is essential to drive the innovation and research that benefit so many Australians. Robust patent standards ensure that broad patents do not clog the innovation landscape, preventing competition for better ideas and better inventions. By aligning standards with our major trading partners, the bill makes it easy for Australian inventors to take their good ideas overseas. The bill gives clarity and certainty to our researchers so they can experiment free from the shadow of litigation. The bill speeds up the process of resolving patent and trademark applications so that applicants and the public know where they are free to operate and innovate. The bill assists the IP professionals who assist our innovators, making it easier for them to continue to provide quality advice. The bill deters imitators and fakes, with better border protection systems and stronger sanctions for counterfeiters. Finally, the bill simplifies the more technical aspects of the current IP system so that innovators can spend less time prosecuting applications and more time producing innovations.

These measures raise the bar. They raise the quality of our innovation system and so raise the quality of the innovation that benefits all Australians. That is why we need this bill.

Question agreed to.

Bill read a second time.

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