Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Link to this | Hansard source

I wish to speak briefly on the Intellectual Property Laws Amendment Bill 2006. While Labor support the bill, we feel the need to point out just how long a time it has been between the period in which the Howard government announced it was seeking to take some action in this matter and the presentation of this legislation. We say that the Howard government is characterised by its complacency and neglect when it comes to making Australia a more attractive environment for innovative companies.

Labor understands that appropriate intellectual property arrangements are critical to creating an environment which supports Australian innovation and the commercialisation of Australian ideas. These arrangements must strike the appropriate balance between protecting the rights and returns of innovators and facilitating an open and competitive market. The amendments contained in this bill will improve the intellectual property regime, enhance efficiency and maintain an appropriate balance between innovation and competitive outcomes. But they are long overdue.

The amendments made by this bill give effect to some of the outstanding recommendations of the Intellectual Property and Competition Review Committee, which produced its final report in September 2000. It took six years to get to this point. I cannot for the life of me understand why it took so long. I have had a keen interest in this matter for some time. When I had responsibility for these issues as shadow minister these were questions which were at the forefront of the manufacturing industry in this country. There were demands being made right across the country for action to be taken with regard to these questions, yet this government failed to respond to a report of this importance for some six years. The bill gives effect to some outstanding aspects of the March 1999 report of the Advisory Council on Intellectual Property on its review of the enforcement of industrial property rights. So it has taken 7½ years for the government to act on that particular report.

The bill proposes to: broaden the springboarding regime for pharmaceutical patents; clarify the rights of a prior user in the granting of patents; add a competition test to the compulsory licensing of patents; allow for exemplary—in fact, punitive—damages to be awarded in patent infringement actions; amend provisions relating to the revocation of trademarks and public access to trademark files; and make minor and technical amendments to the Patents Act 1990, Trade Marks Act 1995, Designs Act 2003 and Plant Breeder’s Rights Act 1994.

Intellectual property rights and arrangements are an important issue as, for many Australian companies, IP is not just their only asset but their only product. As a nation, we have significant weaknesses in the commercialisation of Australian ideas and innovation, and the intellectual property regime in this country ought to have been strengthened some time ago. The reality is that the Howard government is anti research and anti innovation. The latest OECD figures make the point, with regard to research and development, that in 2003 Australia ranked 18th of all OECD countries in terms of investment in research and development as a percentage of GDP.

Where Australia spends 1.65 per cent of its GDP on research and development, other OECD countries are up around three per cent. Our major industrial competitors in the north of Asia and the north of Europe leave us for dead on these issues. In today’s Age there is a report on page 8 quoting Monash University Vice-Chancellor, Professor Richard Larkins, as saying:

Everything that is happening is pointing to Australia being more and more of a research and development and high tech backwater.

According to the Age, government figures responded to this criticism by arguing that the strong local economy meant it was not as important to keep up with international research standards. I find it an extraordinary proposition that the spin doctors in the government would say that this is not important. It is an amazing proposition. The same article says:

Eminent medical biologist and former Australian of the Year Gustav Nossal said that industry investment was well behind overseas levels.

The article went on:

But Sir Gustav said the Government also needed to increase its funding and continue to encourage business investment through tax incentive, start-up grants or “plain old jawboning”—talking up the importance of science.

So, at every level, criticism is coming forward of the government’s appalling performance on these issues. In fact, I would argue that there is no better evidence of the Howard government’s failure to secure Australia’s economic future than its failure to invest in research and innovation, which drives productivity.

Intellectual property rights and arrangements, both legal and financial, are a key lever in the pursuit of better commercialisation outcomes and thus, by extension, are an integral feature of the broader innovation debate. They are critical to high-skilled, high-wage jobs in manufacturing in this country. This bill does make the situation a little better but it fails to deal with the fundamental problem—that it has taken the government the better part of seven years just to get this far. Such a lag in the implementation of important legislation is simply unacceptable and it is symbolic of this government’s complacency and neglect.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

The Intellectual Property Laws Amendment Bill 2006 is largely a consequence of the review of intellectual property legislation under the Competition Principles Agreement, which resulted in a report produced by the Intellectual Property and Competition Review Committee chaired by Henry Ergas, which led to the establishment of an interdepartmental committee by the Minister for Industry, Tourism and Resources.

Perhaps it is a mark of the complexity and the extent of the commercial interest involved in this field that it has taken so long for this to reach Senate approval. It is a pity it has taken so long because the matter needs to be addressed. We have to be careful of believing that just because this is in a non-controversial section of the Senate agenda—which means that all parties support it—we can take the view that this is a relatively minor or insignificant bill. It is not. This is quite a substantive bill. It has 16 schedules and it has 41 pages but, unusually, the explanatory memorandum is longer, at 54 pages, indicating that this is a field which requires careful explanation.

Those of us who are familiar with the ways in which laws are developed know that an explanatory memorandum is relied on as part of the view a court should take with respect to particular issues. Perhaps that is one of the reasons that the Senate Scrutiny of Bills Committee has started, in recent years, to pay such attention to the quality of explanatory memorandums and to encourage the government to lift their game in that respect.

Schedules 5 to 10 of the bill amend the Patents Act 1990 to broaden the springboarding regime for pharmaceutical patents, allow for awards for exemplary damages in patent infringement actions and clarify prior users’ rights in the granting of patents. Schedules 1 to 4 amend provisions of the Trade Marks Act 1995 relating to revocation of trade marks and public access to trade mark files. Schedules 11 to 16 make minor technical amendments to the Patents Act 1990, Trade Marks Act 1995, Designs Act 2003 and Plant Breeder’s Rights Act 1994.

Schedule 1 revokes the registration of trademarks. Schedule 2 relates to the nonpayment of fees relating to trademarks. Schedule 3 concerns the registration process for the certification of trademarks. Schedule 4 relates to the availability of documents about trademarks. Schedule 5 covers exemplary damages. Schedule 6 concerns the prior use defence. Schedule 7 covers springboarding and patents. Schedule 8 concerns the compulsory licensing of patents. Schedule 9 and 10 have the minor technical amendments on innovation patents. So it is a comprehensive bill. It is very apparent to me that for those involved it is an area which, because it impacts on their businesses in an integral way, is in fact quite controversial. This field is of massive commercial significance.

Those people who took the time to write submissions and appear before the Senate Economics Legislation Committee had a keen interest in the outcome and there were a number of well-argued views presented to the committee. I think it is unfortunate the committee inquiry was a short one. I think it is unfortunate the committee was only tasked with examining a couple of schedules, because this is the sort of field where you have to be on your toes on a more holistic basis.

I was pleased to receive a fax from the Hon. Bob Baldwin on 12 September to advise me that the government was, to an extent at least, taking up the recommendations of the Senate economics committee, in particular in relation to schedules 7 and 8, which cover the springboarding and patents area and the compulsory licensing of patents. It was heartening to see that the government agency, IP Australia, has initiated a consultation paper to gather a wider range of views concerning the issue of springboarding so that it can have input from a diverse range of industries. This is a rapid response, largely to the submission by Nufarm to the Senate economics committee.

As I said, amendments in schedule 7 initiated a range of responses. Medicines Australia submitted to the committee that the proposals in the bill were likely to undermine Australia’s reputation for encouraging, supporting and rewarding innovation and had the potential to further weaken Australia’s intellectual property framework relative to its competitors. It is important to note, because of that remark, that there are sectors of business and industry that do not view this bill in a wholeheartedly supportive manner. However, the Generic Medicines Industry Association supported the amendments and argued that the proposed section 119A should apply retrospectively and were supported by Nufarm.

These are obviously matters which are hotly contested by different groups in Australia with different financial and commercial interests in the application of intellectual property law. It should be increasingly clear to everyone why one of the most hotly contested and integral parts of the US-Australia Free Trade Agreement and the subsequent debate in this place was the protection of American versus Australian intellectual property rights internationally. They recognise it as the way of the future. It is time that Australia caught up in this field. It is no longer where something is manufactured or what the physical product is which generates a high level of income; it is where the ideas come from and how well they are protected in domestic and international law which is of growing importance in many fields, including that of genetic and DNA research.

With respect to schedule 8, I was also heartened to hear from the Hon. Bob Baldwin in response to the recommendations of the Senate economics committee that IP Australia had had discussions with Professor Corones from the University of Queensland. The professor had made some erudite and effective points about the interaction between the proposed amendments to the Trade Practices Act and the proposed amendments to the Patents Act.

The outcome of those discussions are that IP Australia has prepared—and it has been tabled—an amended or supplementary explanatory memorandum and has more clearly set out the relationships between the provisions of the Trade Practices Act and the Patents Act to assist in any dispute about their interaction. I would make the point, however, that if there is ambiguity you are far better off clarifying it in the statute than in a supplementary explanatory memorandum. I do hope you have not taken the easy way out and that this one is not going to come back and bite us on the posterior.

This process is a reminder that the parliamentary scrutiny system and the interaction with the bureaucracy can work at a very effective level. The Senate economics committee made recommendations, they were promptly acted upon by the responsible parliamentary secretary and his department and an outcome has been achieved, prior to the Senate voting on this bill today. If only this could happen in relation to the Trade Practices Act and the recommendations of the Senate Economics Reference Committee report of March 2004, The effectiveness of the Trade Practices Act 1974 in protecting small businessbut of course that concerns another minister, not this one.

Although the committee did not make any recommendations in relation to schedule 4, I will make some brief comments on this. As many senators are aware, I am an advocate for a stronger Freedom of Information Act and I have a private senator’s bill on the Notice Paper to strengthen that act. I mention this because schedule 4 of this bill amends the Trade Marks Act to make documents relating to trademark applications publicly available. Currently, people have to make applications under the Freedom of Information Act to achieve this.

However, the way in which the amendment is structured has meant that IPTA, the advocacy group in this area, have argued that it is unclear what standard the registrar will be using to determine whether a document should be held confidentially. They point out that, if the applicable standard is unknown or below the standard that is currently applied under the Freedom of Information Act, applicants could be reluctant to lodge commercially sensitive material with IP Australia, and this in turn would make registration difficult. Further, the IPTA argue that, if a trademark applicant claims confidentiality for certain documents and the registrar does not agree that they should be held confidentially, it is unclear from the amendments to the legislation what recourse the applicant has against such a decision. IP Australia has acknowledged that it will be consulting further on this matter, which is prudent and advisable, but it is concerning that legislation is passing prior to the finalisation of the consultation process and without resolving this concern.

Intellectual property is often the lifeblood of corporations, and in this information age it is something which business must be willing to fight to preserve even more than before. Unfortunately that leads to a ‘deep pockets’ mentality. It is a substantial limitation to the effectiveness of the provision I have just outlined that there is a lack of clarity about what is confidential material, and those without deep pockets may be unable to pursue the matter effectively. A lack of clarity about the recourse a company may have if they disagree with the registrar’s decision may result in effective denial of justice. IP Australia have informed the committee that they are in the process of undertaking further consultation on how this will operate, and I assume that IP Australia will then report back to the Senate economics committee on this matter. I am quite sure from my knowledge of the chair and my understanding of the members of the committee that the committee will remain interested in this matter and will be pleased to hear the advice once it is available.

Grant Chapman (SA, Liberal Party) Share this | Link to this | Hansard source

The Intellectual Property Laws Amendment Bill 2006 implements a suite of amendments to Australia’s intellectual property system as recommended by two independent reports—one from the Intellectual Property and Competition Review Committee, known simply as the Ergas report, and the other from the Advisory Council on Intellectual Property. In addition, a set of amendments to the Patents Act 1990, the Trade Marks Act 1995, the Plant Breeder’s Rights Act 1994 and the Olympic Insignia Protection Act 1987 will further fulfil the expectation of the two reports that Australia formulate a succinct intellectual property law that is able to balance the rights of competitors with enforcing the right of innovators over their patents.

An important change will be to the Patents Act 1990. This will see a broadening of the capacity of Australian generic pharmaceutical companies to undertake more comprehensive springboarding activities. This important amendment will provide many benefits to Australia through a more internationally competitive pharmaceutical industry and an increased self-sufficiency of Australia’s medicines industry. Springboarding is a term that refers to using the subject matter of a patent to collect the data required to obtain regulatory approval of a generic version of a patented drug when the patent is still in force. Since the introduction of the Intellectual Property Laws Amendment Act in 1988, in Australia springboarding has only been permissible once a patent has had its term expended.

Only once a patent reaches this stage can pharmaceutical companies begin research and preparation to undertake the production of generic medicines and substitutes. This has held back the potential of our businesses to compete in the international market with overseas competitors who are allowed to undertake springboarding from the commencement of the patent provided that it is for research purposes only and in accordance with World Trade Organisation regulations. This bill addresses the current Australian competitive disadvantage by providing our generic pharmaceutical companies with the capacity to undertake springboarding from the time a patent is initially introduced. This amendment will bring Australian legislation into line with that of America and the European Union on springboarding thereby providing a more competitive and sustainable Australian generic pharmaceuticals industry. Clearly the introduction of this piece of legislation will bring a range of benefits to the Australian economy by providing more incentive for generic pharmaceutical companies to remain in Australia.

The importance of Australia’s pharmaceutical industry cannot be underestimated. Its economic role and the role it plays in national security are both essential. The generic companies make up a third of the pharmaceutical industry export trade and contribute to our economy through strong investment and providing highly skilled employment. This legislation is necessary to ensure these companies do not withdraw their operations from Australia. It provides them with an equal platform to match it with their international competitors. In addition, the broadening of our springboarding laws will encourage generic pharmaceutical development in Australia. This will ensure that in times of national crisis we have an effective regime of pharmaceutical research that will be able to satisfy the needs of all Australians. This expectation that the industry remain sustainable is a responsibility outlined in the national medicines policy, which exemplifies the government stance on developing intelligent policy on patented products within the pharmaceutical industry.

The Senate economics committee—of which I am a member and to which Senator Murray referred—examined the bill and reported on 17 August. The committee recommended that the government pass the legislation but with a couple of qualifications: firstly, that the government consider initiating an interdepartmental committee to consider whether springboarding provisions should be extended to other industries, and in particular to agricultural chemicals. It is pleasing that the government has responded favourably to this recommendation. This week the Parliamentary Secretary to the Minister for Industry, Tourism and Resources, the Hon. Bob Baldwin MP, responded that IP Australia has initiated an interdepartmental committee to formulate the government’s response to the report of the Advisory Council on Intellectual Property entitled Patents and experimental use. The issue of springboarding was raised by Nufarm Ltd in a submission to this Advisory Council on Intellectual Property inquiry, as it was in their submission to the Senate economics committee. Through the interdepartmental committee, IP Australia has recently released a consultation paper which will gather a wider range of views concerning issues from affected industries.

Another recommendation of the Senate committee was that the government reconsider schedule 8 to the bill in order to clarify the relationship between the patent-licensing provisions of the bill and the Trade Practices Act 1974 in light of the concerns raised with the committee by Professor Corones and Mr Clapperton. Again, Mr Baldwin has advised this week that officers of IP Australia have held discussions with Professor Corones to consider this issue in more depth. In those discussions it has been agreed that amendments to the bill are not necessary but a further explanatory memorandum should be tabled to provide greater clarity around this issue. This further explanatory memorandum clarifies that the provision to be inserted in the Patents Act is intended to complement the remedies available under the Trade Practices Act and is not intended to limit the court’s powers under the Trade Practices Act. It also clarifies that a compulsory licence for a patent is available as a remedy under the Patents Act 1990 for any breach of part IV of the Trade Practices Act in addition to any other remedies that are currently available under the Trade Practices Act. As a result, a party affected by a patent holder’s anticompetitive conduct will have a great number of options—either seeking any of the remedies that are currently available under the Trade Practices Act or seeking the remedy of a compulsory licence under the Patents Act.

The government’s positive response to the work of the economics committee again highlights the willingness of the Howard government to consult widely with interested parties on issues before the parliament and also reinforces the value of the work of legislation committees in the Senate.

Legislation that honours our international obligations, especially on such an internationally sensitive issue as intellectual property law, is also important. Australia is a signatory to the World Trade Organisation Agreement on Trade Related Aspects of Intellectual Property Rights, generally known as TRIPS. This agreement does not allow generic pharmaceutical companies to manufacture, stockpile for later sale or export quantities of pharmaceuticals while patents are still in place. This legislation is an appropriate step towards honouring this agreement while remaining sensible about our right to research and develop a sustainable pharmaceutical industry which is able to satisfy our needs. This piece of legislation will keep important knowledge companies in Australia, employing young Australians to undertake research work of the highest strategic importance, whilst not violating our international commitments.

This bill is also an example of the effective ways in which we can balance the rights of the innovator with the expectations of the community to receive the benefits of innovation through competition. It was found by the Ergas report that, although intellectual property law and competition policy were more often than not complementary, as they recognised in recommendation 15:

While conferring intellectual property rights encourages investment in creative effort, it can allow the owners of the results of this effort to unduly restrict the diffusion and use of these results.

The potential for anticompetitive behaviour following patenting requires that we have legislation in place that provides adequate rights and entitlements for all parties involved. This has been satisfied in the bill through a competition test to be undertaken between parties at the Federal Court if it is believed that one who owns their patent is not fully utilising it for the benefit of the broader community or is using it for anticompetitive purposes such as stifling further innovation.

Schedule 6 includes the provision that if one is deemed by the trademarks office to have satisfied the requirements of being a prior user of the patent then they will not be licensed to continue their work but instead assigned that right, provided that they undertake it themselves within Australia. This legislation is effective in its provision for parties who have a genuine claim to prior use recognition. It gives them the potential to continue their work throughout the life of the patent whilst also providing to strategic industries, such as the generic pharmaceutical industry, the concession to research and therefore remain competitive in their industry. This upholds the recommendations of the Ergas report by ensuring a balance between the innovator and their competitors.

In addition, as was recommended by the Advisory Council on Intellectual Property report, intellectual property will now have more effective mechanisms of enforcement to ensure the rights of innovators are respected. The bill provides in schedule 8 that the trademarks office will be able to revoke trademarks due to administrative error or oversight. In addition, schedule 5 outlines that the judicial system, through the Federal Court, will have the capacity to order punitive damages in addition to financial recuperation against those who are in violation of patent law. These considerations made for the rights of the innovator will, however, be regulated by the introduction of further competition tests to ensure patents are being fully utilised as decided by the Federal Court.

Therefore the intellectual property bill that is currently before the Senate is an important piece of legislation that will improve our national health by securing a sustained pharmaceutical industry that can fulfil our requirements in times of emergency and that is also capable of raising investment, employment and training opportunities as well as providing other important reforms with regard to intellectual property. However, it also achieves this while still sensibly balancing the rights of innovators and competitors in a succinct way which will improve the benefits of intellectual property law for all Australians. Therefore I commend it to the Senate, as was recommended by the Senate economics committee.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make some brief remarks on Intellectual Property Laws Amendment Bill 2006, also as a member of the Senate Standing Committee on Economics. First I would like to place on record my thanks to the committee secretariat and members of the committee for what, as Senator Murray has outlined, was a very useful and informative process. As is often the case with the Senate economics committee, we were able to come to a fairly unanimous view in recommending some changes to this legislation.

As a member of that committee, I was particularly moved by the representatives of Nufarm Ltd about the need to progress the issue of the use and manufacture of generics in their industry as well as in the pharmaceutical industry. I was made aware of the large number of Australians who are employed by Nufarm and other companies, and I must say I was therefore a little concerned at the slow progress that has been made through the bureaucracy when it comes to addressing similar issues for that industry. The committee was informed that there is a paper around that addresses similar issues for the agricultural and fertiliser industry. However, that has been with the agency since August last year but as yet we have not had meetings with relevant agencies and actually progressed any draft legislation.

The committee was informed that there was a hope that we might get to see something that addresses the concerns of that industry by the end of this year. It would seem that we make very slow progress when it comes to dealing with these issues. I just want to place on record my concern that we do seem to hasten very slowly in this area—it is an area that is worthy of some reform—and put in a plea that we try to deal with this a bit more quickly than we dealt with the issues that are before us today.

I would also like to thank Professor Corones, who appeared by teleconference before the committee. He pointed out that he had become aware of our inquiry at a very late stage. In fact, it was his evidence that pointed out some of the inconsistencies that we had to deal with; hence the change in the explanatory memorandum. It is useful to note that the government did take the committee’s recommendations on board and gave us a new explanatory memorandum to address our concerns.

However, as Senator Murray has outlined, I do hope that that is all that is needed to address those particular concerns. Not being a lawyer I cannot guarantee that, but I do hope that we are getting this right. It was of some concern to me that it was Professor Corones who knew about the two pieces of government legislation—the proposed bill that we are now dealing with and the amendments that the government were making to their national access regime bill. However, agencies of government did not know about the inconsistencies between the two pieces of legislation. It took members of the economics committee and an outside academic to point out the inconsistencies in approach. When you are looking at aspects of trade practices reform, I think it is really important that all agencies pay attention to what is being done in that area because it affects all of us. Who knows what would have happened if Professor Corones had not got hold of the issue at such a late hour? Who knows what mess we may have ended up in?

I thank him for his evidence and I thank the members of the committee. I put in a plea hoping that we will progress the next stage of this reform for companies like Nufarm perhaps quicker than we have addressed this reform. I hope the new explanatory memorandum does in fact achieve everything that the government claims it does in addressing the committee’s concerns.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

Firstly, I table further explanatory memoranda relating to the Intellectual Property Laws Amendment Bill 2006. In addressing some of the issues that have been raised in the debate, I thank senators for their contribution to the debate on this piece of legislation. I would just like to correct a couple of things that have been put on the record, particularly by Senator Carr, in relation to the Ergas report and the report of the review of enforcement of industrial property rights of the Advisory Council on Intellectual Property.

It is important to note that, contrary to what Senator Carr said, the key recommendations of the Ergas and the ACIP reports were enacted in 2001 by the Patents Amendment Act 2001. These changes to the patents legislation have operated effectively for some years now, and this bill implements the majority of the residual recommendations of those two reports. It is important to put on record that there has in fact been progress since those two reports were brought down in 2000. In 2001, the initial work was done. The implementation of these recommendations that we are looking at today was delayed by the negotiation of the Australia-United States Free Trade Agreement and by other competing government priorities, so there is a legitimate reason for the process that has occurred to this point.

As has been indicated during the debate, there are some recommendations that are outstanding at this point, but that is because recommendations of some other recent reports into the intellectual property system affect the implementation of some of the recommendations. The government continues to do further work on progressing these outstanding recommendations. They are on the government’s legislation program and will be implemented in the near future. Having said that, I commend the bill to the Senate.

Question agreed to.

Bill read a second time.