Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I note the comments that were just made by Senator Rex Patrick. Obviously the good senator is extremely passionate about innovation and the ability of small and medium enterprises both in his home of South Australia and across the country to pursue innovation and unleash that entrepreneurial and innovative spirit, which I believe Australia is still renowned for.

In defence of my colleague Senator Brockman, from Western Australia, I think Senator Brockman is aware of the commercial realities underlying the development of patents and the small and medium sized enterprises who develop ideas and seek to take those ideas, through an intellectual property process, to the market and generate revenues, ultimately producing and deriving profit for the benefit of themselves. From my experience of dealing with innovators in the small and medium sized enterprise sector—and I'll come to that in a moment—there's also that spirit of wanting to pursue an idea and commercialise it so that people both in this country and around the world have the benefit of it. In my experience, it isn't just about money. Money is extraordinarily important to it; the profit is extraordinarily important to forming the basis of a sustainable business, but there is that desire to also commercialise an idea so people across the world can have the benefit of that idea. And I've seen that in the context of the mining industry.

I worked for 12 years in a mid-tier mining company that set up two mines in one of the poorest countries in the world, in Laos—a copper and gold mine, and a gold and silver mine. In that company, we actually used intellectual property that was designed right here in Australia by small and medium sized enterprises. I would always say to people when they talked about mining that mining is not, as it is sometimes characterised by certain stakeholders, simply digging a big hole in the ground and operating that hole like a quarry. I am not intending in any way to cast aspersions upon my friends who run quarries—very important business in this country. But the reality is that mining relies on innovation and technology. And I saw, in my previous life outside of this place, the great work that companies are doing in this country in that space. This includes things like environmental monitoring systems. It includes things like tyre management systems, which mean mining companies can utilise their tyres and maintain them so they get greater use out of those tyres. That's what being a sustainable business is about, and there are a lot of great things which are being done in that space.

In relation to that sector, there are difficulties with the current system. Senator Brockman did a good job, I think, outlining some of those real practical issues for those small and medium sized enterprises, which Senator Patrick is passionate about—and I recognise his passion in standing up and fighting for them. The protection for low-level incremental innovation will no longer be available with the abolition of this category of a provisional patent. That's important because the Productivity Commission actually found that that low threshold allows for a proliferation of low-value patents and what's referred to as patent thickets. What's the result of that? I can tell you what the result of that is. I have an example. It's a quote from a submission from a company in the resources space, an SME who supplies the mining industry—an industry I was involved with and am a passionate supporter of. It's been de-identified for privacy reasons. The SME was disadvantaged by the innovation patent system, disadvantaged by the occurrence of what's referred to as patent thickets—the proliferation of low-value patents. Who uses that flaw in the system? It's the big companies seeking to crush that small and medium sized enterprise entrepreneurial spirit, which Senator Patrick spoke so passionately for.

Here's a direct quote from one of those SMEs: 'We've been recently threatened by a big corporation with a letter of cease and desist for'—a certain product—'which has been widely used in the mining industry for almost 30 years and regarded by some of the leading experts as common knowledge. Fortunately, I've gathered enough evidence and had the money to be ready for a potential court action. However, there are so many other small-business owners who could not afford the $1,000-plus per hour legal fees from a decent IP solicitor, and I think that sort of IP system is the antithesis of fair competition.'

So, whilst I respect Senator Patrick coming into this chamber and defending businesses that form part of his constituency in South Australia, the reality is that there are, equally, small and medium-sized enterprises who are currently being disadvantaged by the system, which this bill is seeking to address. Again, I reiterate: it is the protection of low-level incremental innovation that's causing this issue of low-value patents and patent thickets for small and medium-sized enterprises in the mining sector. And it's not just the mining sector. Many small software firms wrote to the Productivity Commission and the former Advisory Council on Intellectual Property stating, for example, that 'innovation patents make innovation in the software industry much more difficult because of the low threshold and uncertainty about freedom to operate'.

Again, I'm quoting from the actual submissions. There was consultation. If there hadn't been appropriate consultation, I wouldn't be able to stand in this chamber today and quote from them, to be quite frank. Here are some examples of submissions from software firms: 'The innovation patent system provides a high financial legal risk to incidental infringement'; 'protection for fairly unsubstantial ideas'; 'a tool in legalised anti-competitive practices benefitting only market-dominant companies'—I'll repeat that: a tool in legalised anti-competitive practices benefitting only market-dominant companies—'and hence, a detriment to consumers.' Senator Patrick maybe needs to take some care that he is not going to throw out the baby with the proverbial bathwater in this debate, because there are small and medium-sized enterprises in the mining sector, as I've referred to, and in the software space, who will be affected. My home state of Queensland has a great history of software development and IT innovation. There are small software firms who are concerned that the current system provides—and I'll quote again—'a tool in legalised anti-competitive practices benefitting only market-dominant companies'. I personally think that's something this Senate needs to address, and this bill seeks to do exactly that.

Let me give you another quote from a submission, another quote from the product of the consultation that occurred in relation to this legislation: 'Patents have damaged innovation in the software industry, and I personally have been involved in an innovative software project that was cancelled due to concerns of undiscoverable patents.' This player in the small and medium-sized software space actually cancelled the project because of concerns about what the current system was producing—cancelled the project. That's crushing innovation. That's actually crushing the innovation which Senator Patrick speaks so passionately about. So I think we need to be careful before coming to hasty judgements with respect to this matter.

I'll go further. Innovative Australian company iSignthis supports the phasing out of the innovation patent system, giving an example of a software innovation from a competitor that was rejected for a patent in the USA due to iSignthis's own pre-existing patent. I mean, any system that produces an outcome like that has to be cast into question. However, the competitor's innovation was able to be protected in Australia as an innovation rather than a standard patent. This curtailed iSignthis's freedom to operate. It substantially increased its costs and impinged upon its freedom to operate—an innovative Australian company, iSignthis.

Lastly, I'll give you another example. Innovative Australian companies ResMed, Cochlear and Mylan all support the phasing-out of the innovation patent for similar reasons. These are great Australian companies. These are wonderful Australian companies that, on the basis of ideas in Australia, innovation in Australia, research and development in Australia, have commercialised their IP, their products, taken them to the market, provided a wonderful service to countless people all over the world and are listed on our Australian Securities Exchange. What did they say? 'Innovation patents can be a disincentive to invest in Australian R&D and expand or maintain manufacturing in Australia.' That's exactly what we want to do. We want to not just maintain manufacturing but expand manufacturing in this country. Why do they say this? Because of the way they can be strategically used by competitors. I must say, when a senator refers to innovations in the People's Republic of China with respect to intellectual property, I think that needs to be taken with a grain of salt. I would be very, very happy to put our patent, innovation and intellectual property protections against some other countries in the world any day.

This is what ResMed, Cochlear and Mylan are saying: 'Innovation patents can be a disincentive to invest in Australian R&D and extend or maintain manufacturing in Australia. The disincentive to invest in Australia and potential enforcement of innovation patents against Australian manufacturers has the ripple effect of reducing Australia's tax base.' Again, that should be something this chamber is fighting against. We should be conducting the research and innovation in this country. We should be conducting the manufacturing and expanding that manufacturing in this country. The creation of that wealth should lead to a higher tax base in this country, which will provide the services that the Australian people have a right to expect when living in this country. There are some material issues with the current patent system. Substantial consultation took place and that consultation did discover those concerns from actual operators—small operators, medium sized enterprises and the larger doyens of the research and enterprise sector in this country, who have provided such an inspiration to all of us.

Can I also say: there are alternatives. The provisional patent system provides one of those alternatives. SMEs will not be disadvantaged, or should not be disadvantaged, by this change. The few who do use innovation patents regularly will receive dedicated support and services from IP Australia to ensure they are not negatively impacted. If they are, we should all come back to this chamber. We should go to our ministers and raise those concerns. That's exactly the reason I put my hand up to serve in this place: to make it easier, not harder, for small and medium sized enterprises to be innovative, engage in that research and establish manufacturing bases in this country. Some of the services that IP Australia will provide include fast-tracking of standard patent applications, access to dedicated IP Australia case managers, a purpose-built platform for small businesses to access tailored products and dedicated outreach programs which will deliver patent education to small businesses in regional areas. Those services are extremely important and need to be provided.

I would like to finish on a positive note. I was delighted last month to attend a STEM camp for grade 11 students in my home state of Queensland, at the Queensland University of Technology—one of our great universities in the state of Queensland. It was an absolutely inspiring day. There were grade 11 students from all parts of Queensland in the camp for the course of a week, working with some of the smartest minds in my home state of Queensland in the STEM field.

The one workshop I attended, which left a longstanding resonance with me, was in relation to industrial design, intellectual property. There were six teams of grade 11 students who were asked to design a stool. I don't know about you, Mr Acting Deputy President Brockman, but I find it easier talking about this workshop than I would have found participating in it, and I said that to the students themselves. These students were asked to design a stool that would carry 75 kilograms of weight, although I must thank one of the students—when I approached his stool, he said, 'It's okay, Senator, it will actually take 200 kilograms.' Maybe it was over-engineered but it was safe and prudent to be so!

I was so impressed by these students' intellect, ingenuity and innovation. They showed me prototypes. One showed me on his laptop how they'd used design features on his computer to design the stool. There were artistic flares and flourishes with the stools. My favourite—the one that would take a 200-kilogram senator—had decidedly art deco flourishes. It was quite an inspiration. I said to those students and I say to this chamber today, I think this country has a fantastic future when we've got such talented students, in all of our home states, who are being supported by educational institutions and those of us seeking to make it easier, not harder, for them to realise all of their opportunity and full potential. Thank you.