Perin Davey (NSW, National Party) Share this | Hansard source

I rise to speak on the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019. This bill is the second piece of legislation that delivers on the Liberal-National coalition government's commitment to review and reform our intellectual property system. Before I begin my contribution, allow me to address some of the comments that Senator Patrick made earlier. The company to which Senator Patrick referred in his contribution is, as I understand it, an ASX listed company with an annual turnover of $2 billion. This is not a small or family business, which the innovation patent system was designed to support. Indeed, Senator Patrick has highlighted the problem with the broken system: it has been used by large multinational corporations, such as Apple, at the expense of small and family businesses.

Our government makes no apology for standing up for small and family businesses. After all, we are the government for small and medium enterprises and family businesses. These reforms are designed to deliver a system that will work for those businesses. Importantly, the government has undertaken significant consultation with the small business sector, as well as with other industry stakeholders, with respect to our proposed changes. Senator Patrick is way off track when he claims that no consultation has been undertaken. As part of its review into the system, the Productivity Commission held hearings in every capital city in every state, including South Australia, as well as in regional locations. And, in its own review into the innovation patent system, IP Australia undertook consultation as well. This is not rushed reform. That is why it is now the second bill looking to amend our intellectual property laws. This bill is the result of over four years of careful, considered consultation with the industry and with our stakeholders. The intellectual property system is an important element of the economy, because it promotes and incentivises investment in creativity, innovation, research and technology, which is exactly what our government seeks to enable.

In 2015 the Productivity Commission was asked to undertake a review, and that's when the consultation started. The government responded to the Productivity Commission's recommendations in 2017, and we then undertook making the amendments necessary to deliver on our response. The first bill, which was implemented in 2018, was commended on its thorough stakeholder consultation by the Senate and received royal assent on 24 August 2018. This bill builds on the previous bill's stakeholder consultation and addresses the further recommendations by the Productivity Commission to reform the patent system, which is contained in schedule 1 of this bill. The bill also includes amendments in response to a number of other recommendations made in 2013 regarding compulsory licensing of patents. It also makes a number of technical changes to streamline and modernise the administration of Australia's intellectual property systems. As I said before, extensive consultation has been undertaken all the way through, because as a government we want to work with industry, stakeholders and small to medium enterprises to encourage innovation and entrepreneurship.

We have great minds in Australia, including in regional Australia. In fact, the combine harvester was invented in Australia and is now used internationally. That is what our country is capable of and that is what our government wants to support. Many of our best ideas are born from small to medium enterprises and family businesses. But, unfortunately, as found by the Productivity Commission, they are the least likely to benefit from our existing innovation patents system. The cost of the innovation patent system appears to be a barrier for small to medium enterprises, which does exactly the opposite to what the system was designed to do, and that is to encourage innovation. Senator Patrick had a go at my colleague Senator Brockman because he interpreted Senator Brockman's comments that small to medium enterprises would innovate only if there was a patent at the other end. But in saying that, he rightly identified that it's not about the patent for people innovating; it is about making money at the other end. And the best way to enable people to make money from their good ideas is to give them a patent that provides them security without doing so at excessive cost to the industry.

The Productivity Commission found that our current innovation patent system places too much of a cost burden on small to medium enterprises, so as a government we are taking that on board. We have consulted and we are acting. We are not removing people's access to patents. We are streamlining the system so that they have better certainty and better security.

Part 2 of this bill begins the phasing out of the innovation patent system. It is a second-tier patent system that is not working. The government's decision to phase out this system was based on an assessment of its impact on the innovation system and on the economy more broadly.

The government accepts the amendments that are proposed by Senator Pratt. These amendments will require us to review the accessibility of patents with small- to medium-sized enterprises in the 15 months after the bill is enacted, and that is a sensible thing to do, because we are talking about making business for small to medium enterprises easier, better and more efficient, so it is a sensible amendment that we will be supporting.

The phasing out of the innovation patent system will start 18 months after the bill is enacted rather than 12 months after the enactment. They system was originally intended to encourage small to medium enterprises to do more research and development and to protect their smaller inventions. But, as I've said before, the top five applicants over recent years have been Apple and four large Chinese entities. The evidence shows us that our innovation patent system is not doing what it is designed to do. It is not encouraging small to medium enterprises to apply for innovation patents. In fact, the cost burden is actually pushing them out. So, this reform will remove the uncertainty and confusion around granted but unexamined patents in the system. It will prevent firms from using the system as a strategic tool in infringement matters, and it will remove unnecessary costs on third parties and consumers that have been generated by the system.

In drafting this reform, we did take our time—but we took our time to make sure we got it right. A number of possible reforms were considered as an alternative to the complete abolition, but these improvements would have substantially limited the advantages of the system itself. Through our consultation we have identified that just correcting the current flaws of the innovation patent system would have resulted in the reintroduction of a system similar to the petty patent system, which was previously abolished. So this legislation is designed to implement reform that ensures that existing rights are maintained and protected and that there will be no impact on innovation patents filed before the legislation commences.

SMEs will not be disadvantaged by this change, and those few that do use the innovation patent system regularly will receive dedicated support and services from IP Australia to ensure that they are not negatively impacted. Senator Patrick has questioned why the government are doing this if, as per advice he has received, there is no government cost saving from IP Australia in doing so. But for this government it is not about reducing costs; it is about saving businesses money and making it easier for businesses to do business. It is about supporting small to medium enterprises, and it is about making the system better so that those who have good ideas can get the patent protections they need without excessive costs to themselves or third parties. To do so, IP Australia are going to provide services to small to medium enterprises that include the fast-tracking of standard patent applications so that small to medium enterprises that want a fast patent can get their application examined as quickly as possible—as quickly as they could have for an innovation patent, and at no additional cost.

They will also provide access to dedicated IP Australia case managers, which will include support for small businesses to seek fast protection in Australia and in overseas markets. They will provide a purpose-built platform for small businesses to access tailored products and services, including 24/7 assistance, industry advice and intellectual property portfolio management tools. They're also developing dedicated outreach programs to deliver patent education to small businesses in regional areas to support the diversified intellectual property strategies required throughout the business cycle.

The Department of Industry, Innovation and Science has conducted extensive stakeholder consultation to better understand the needs of small to medium enterprises in relation to commercialising their ideas, and all these support networks are designed to realise that. The department of industry and IP Australia are working closely together to explore and develop further opportunities to support small to medium enterprises in doing this. The government does not accept the amendments to the bill that are proposed by Senator Patrick and Centre Alliance to remove the amendments commencing the abolition of this innovation patent system.

I will also briefly address some of the other aspects of the bill. Part I of the bill introduces an objects clause to the Patents Act. A number of inquiries, including that of the Productivity Commission, found that the patent system lacked a clear objective or overarching framework to guide decision-makers and the community and therefore recommended the introduction of an objects clause into the Patents Act—and this certainly is not an unusual clause for a piece of legislation. The objects clause will provide an overall statement of general principle about the purpose of the Patents Act and will provide assistance to the courts to interpret the legislation and to resolve uncertainty and ambiguity. It will ensure the patent system remains adaptable and fit for purpose as new technologies and innovations are developed in the future.

Schedule 2 will improve the transparency and accountability for Crown use of patented technology, while protecting the rights of the patentee. Crown use is a rarely used safeguard in the Patents Act that allows the government to access and use patented technology without authorisation from the patentee. The changes we are proposing today will clarify the circumstances in which Crown use can be invoked. It introduces a level of ministerial oversight and provides a clearly defined standard for the remuneration paid to the patentee—that is, we are going to respect the innovator and the patent holder.

Schedule 4 requires the courts to consider whether it is in the public interest to grant a compulsory licence. Compulsory licensing provides a mechanism to prevent the patentee from restricting others from exploiting the invention in the local market, where the patentee has failed to do so itself. These provisions are rarely used. The changes will amend the compulsory licensing provision to replace the reasonable requirements of the public interest test with a new public interest test, the focus of which will be whether demand for a product or service is being met on reasonable terms and whether access to the patented invention is essential for meeting that demand. The amendments will improve the clarity and certainty of the legislation and strengthen the rights of patentees by allowing access to the patent only when it is in the public interest to do so.

The remaining schedules to the bill make minor technical amendments that will streamline procedures and improve the efficiency of the IP system. They make minor changes to the Patents Act and Trade Marks Act to correct errors, to streamline procedures and, importantly, to reduce red tape when applying for IP rights and applications.

This bill builds on the government's extensive consultation with the sector and with stakeholders and it enhances Australia's IP system. It supports innovation, creativity, businesses and growth. It supports and encourages innovation while making it easier for small-to-medium enterprises to get a standard patent and to have their innovation rewarded without excessive burdens. I commend the bill to the chamber.