Louise Pratt (WA, Australian Labor Party, Shadow Assistant Minister for Manufacturing) Share this | Hansard source

Today, as we discuss the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019, there are a few issues the Labor Party would like to draw to the attention of the Senate. As we know, the bill is a response to the Productivity Commission's inquiry into Australia's intellectual property arrangements—these include patents, trademarks and copyright arrangements—that reported in 2016.

By way of background, back in 2018 the government introduced the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill to this parliament. The bill at that time contained a number of technical amendments to the trademark and plant breeder's rights regimes and was supported by the Labor Party. Most significantly in this bill, the government has, in schedule 1, sought to abolish the innovation patent scheme as part of a broader suite of innovation system reforms. The innovation patent scheme has been a special eight-year patent designed for small and medium enterprise innovations. Small and medium enterprises will leave the standard 20-year patent as the only form of protection.

The Productivity Commission and Intellectual Property Australia did identify that the scheme is underutilised by small and medium enterprises. The Productivity Commission stated in their report that the lower innovation step contributes to a multitude of low-value innovation patents that create uncertainty for other innovators and financiers. Innovation patents are used strategically as a litigation tool to target alleged infringers of standard patents or to increase uncertainty over the scope of rights for competitors. These are important issues that do indeed need to be addressed.

The report also noted that the inventiveness requirement for a standard patent in Australia is too low. They said:

The low innovative threshold has proven more harmful than helpful, including (perversely) for SMEs. It has encouraged a multitude of low value patents, covering everything from a pet bed to a pizza box that converts to a bib. This, in turn, has reduced the credibility that patents provide for attracting finance for commercialisation, and created uncertainty for other innovators who are unsure whether they are infringing on another party's patent. Patent attorneys openly advertise ways in which users can game the system, including to improve their bargaining position in patent disputes and to frustrate entry by competitors.

So Labor understands that the case has indeed been made and that the innovation patent has not been achieving its goals of facilitating cheap and simple intellectual property protection for small and medium enterprises.

Intellect Property Australia have concurred. They've said the innovation patent fails to encourage research and development that would not have otherwise occurred and it is unlikely to provide net benefits to the community. Furthermore, Intellectual Property Australia has identified the problem of low usage. Australian SMEs typically file around 100 innovation patents a year. Approximately 70 innovation patents are certified to achieve enforceable rights. Australian SMEs file between 1,000 and 1,400 standard patents a year. Between 2011 and 2017 Australian small and medium enterprises received between three and 10 times as many enforceable standard patents a year as they received innovation patents. For the past 18 years, Intellectual Property Australia found only 23 Australian SMEs were moderate users of the innovation patent, meaning they obtained at least five innovation patents and certified at least one.

Abolishing the innovation patent scheme without ensuring a fair and affordable access to patent protection will nonetheless negatively impact on SMEs in Australia that require intellectual property protection. SMEs that need patent protection for their innovations will find it more difficult unless Labor's sensible amendments that we've put forward to this chamber are supported and incorporated into this legislation. Abolishing the innovation patent scheme without any alternative mechanism will simply create a significant and serious gap for small to medium enterprises seeking support to access the patent system and to innovate. We note that evidence provided to the Senate Economics Legislation Committee, in its inquiry into this legislation, suggested that there would be a significant gap for SMEs if the innovation patent was removed without an alternative mechanism being put into place to assist these industries, to assist small to medium enterprises to access the patent system and to protect their innovations. Medicines Australia, in their submission, said:

… Australia's innovation ranking has fallen from 20th in 2018 to 22nd in 2019 on the World Intellectual Property Organization's (WIPO) Global Innovation Index. Consequently, there is clearly a need for Australia to develop and maintain a strong and stable intellectual property environment …

Another submitter to this inquiry, the Institute of Patent and Trade Mark Attorneys of Australia, expressed its concern about the government's failure to propose an alternative system to the innovative patent. It said:

… the Government has not provided innovative Australian businesses with an alternative system to replace the Innovation Patent System when it is phased out.

This is exactly why Labor is proposing amendments to this legislation that will extend the grandfathering period for the innovation patent. Our amendments would ensure that a statutory review is undertaken to assess the impact on Australian small to medium enterprises of abolishing the innovation patent scheme and make recommendations to facilitate access to standard patent protection for small business in Australia. Our amendments to this bill would provide small business with additional time before the innovation patent is removed and would provide the opportunity for small to medium enterprises to make their case about how the innovation patent is being used and what can be done to ensure that a simple, affordable and administratively effective system is put in place. We understand, at this point, that the government is supporting our amendments and we welcome the government's commonsense approach to doing so. We also understand the government intends to raise inventive step requirements for standard patents. But, given the government's somewhat complacent approach to scrapping the innovation patent, we will be watching this move closely because we want to ensure that the interests of small to medium enterprises are considered when any future changes are made to the standard patent settings.

Our current patent system is difficult for these small to medium enterprises to access, and, as a general observation, SMEs aren't using the innovation patent very much at all. Meanwhile, on this government's watch, Australia's innovation ranking has fallen. It's fallen on the World Intellectual Property Organization's Global Innovation Index. IP lawyers and innovation system experts must concede that the status quo for Australia isn't good enough. Some stakeholders have acknowledged this inadequate current state of play in discussions with the opposition in recent weeks. This is why the opposition is urging the government to promptly address the need for greater support for Australian SMEs in protecting their intellectual property through the standard patent. The government's response to the Productivity Commission's inquiry into intellectual property arrangements expressed that the innovation patent failed in its objective to stimulate innovation for Australia's SMEs and that targeted assistance would better achieve that objective. We encourage the government to immediately make public the targeted assistance that will stimulate innovation for Australian small to medium enterprises.

In closing, I want to make clear that Labor believes smaller businesses should be given more time before the innovation patent is removed. They should have greater opportunities to present their case to officials about how the innovation patent is being used in their individual cases and what can be done going forward to ensure a replacement system is put in place in a timely way. There is no doubt that Labor supports the overall intent of the bill, because, as my opening remarks made clear, we can see the flaws in the current system. We do recognise the need for change to the existing patents and innovation system. It isn't delivering for smaller and medium sized businesses. We urge the government to support Labor's amendments and in doing so do the right thing by smaller and medium sized businesses that are especially frustrated by the government's approach to date.