Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

I rise to make a contribution to the debate on the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012]. The coalition is broadly supportive of this piece of legislation, but we also recognise that a number of elements remain to be considered in relation to intellectual property in this country.

The opposition has undertaken considerable consultation during considera­tion of its position on this piece of legislation. We have spoken to a broad range of interested parties in relation to the bill. During that consultation a number of issues were raised with us, and I will detail those shortly. I also note that there are a number of issues around intellectual property that concern a number of members of this chamber. However, during our consultations, the bottom line was that this piece of legislation is broadly beneficial; those we consulted with would prefer that this legislation be passed so that work can continue with other elements that remain of concern to those we have spoken to. We have given that commitment to continue to work on those matters.

We understand that government thinks this is the full kit as far as managing issues around intellectual property might be concerned, but it is quite obvious from our consultations that there remains some work to be done.

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. The bill is divided into six schedules.

The first schedule relates to the quality of granted patents and addresses concerns that the threshold in Australia for granting patents is too low, and I am certain some of my colleagues will address some of that later in the debate. I know there are some particular concerns around the granting of patents for human and plant genes. With respect to where Australia sits at the moment, the concern was that the threshold was too low and that patents were granted for inventions that were not sufficiently inventive. So this piece of legislation addresses that to a certain extent.

Schedule 2 provides for free access to patent inventions for regulatory approvals and research. That is an issue that has been discussed at length; it has been the subject of a couple of Senate reports around patenting breast cancer research. The intention of this schedule is to ensure that free access to patent inventions for regulatory approvals and research is freed up.

Schedule 3 looks at reducing delays in resolution of patent and trademark applications.

Schedule 4 looks at assisting the operations of the IP profession. That provides for amendments to the patents and trademarks acts to allow for registration and regulation of incorporated patent attorneys and to extend the same client-attorney professional privileges as currently exist for communications between a lawyer and their client.

Schedule 5 relates to improving mechanisms for trademark and copyright enforcement.

Schedule 6 amends the patents, trademarks, design and plant breeder's rights acts, to remove some procedural hurdles, streamline processes and make improvements to ensure the system is fit for purpose in the increasingly electronic and globalised business environment.

My colleagues and I have heard that—as with other legislation—although there was government consultation, there was a question as to whether it was effective. A number of people have told us that they made submissions but received no response—in other words, their submissions were effectively ignored.

There are some concerns around the practicality of implementing some sections of the legislation, particularly relating to jurisdiction of the courts for criminal matters. It appears that even members of the bench are confused. One submission we received was in respect of a practical issue relating to the mechanics of issuing court proceedings for summary offences and the difficulties in ensuring court or courts have jurisdiction to hear such matters—being in the midst of running a criminal prosecution for breaches of the Trademarks Act 1995—it is clear that there is a considerable amount of doubt amongst the bar and the profession, and even from the bench, on this issue. There is also concern around the ability of Customs to provide the required information to brand owners in respect of Customs seizures. That relates to the sophistication of many businesses involved with counterfeit operations and concerns around Customs regarding the ability of Customs to effectively pull together the threads of deception. We know that some of these counterfeit operations are extremely sophisticated and we have heard concerns expressed in relation to other elements of Customs operations. There is cost shifting within Customs to increase capacity in some regions, but at the expense of others, and that obviously remains a concern for people within this industry in relation to products coming in and the capacity to bring in small quantities of product on a regular basis that might be scoping the system.

We note that there might be a need for further reforms to section 41 of the Trademarks Act, and we will continue to look at that. I also note that in respect of schedule 2 there is some concern from agricultural chemical companies around the capacity for springboarding. I acknowledge that that has some benefits with respect to providing cheaper product in the context of generics into the market, ensuring that the effective time for a patent and the protection that provides is provided to the industry and not too much more, but I do note that there remained some concern about the viability around some particular products coming into the market if that period is shortened too much.

With respect to schedule 5, I note that the Senate Standing Committee for the Scrutiny of Bills has provided comment regarding the proposed penalties and offences under schedule 5, item 27. Notably, the committee leaves to the Senate as a whole the question of whether the provisions under this item are appropriate. The coalition does not have any specific comments to make in relation to this piece of legislation, but, as I said at the outset, given the consultation that we have had, despite the concerns raised by industry that there are a number of issues that remain to be dealt with surrounding the issue of intellectual property in Australia, I know that this will be addressed by colleagues as this debate proceeds. There is no question, given the strength of the submissions that the coalition has received as part of its consultation process, that this legislation in its current form should be allowed to pass the parliament so that the benefits it provides to the operations of IP can be taken advantage of. Some work does need to be done to follow up on the other issues that, I have no doubt, will be raised as this debate proceeds. The coalition will be supporting this legislation, despite some concerns that we continue to have.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

As my colleague Senator Colbeck has pointed out, the coalition is broadly supportive of the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 as a result of not only the inquiries that took place but also the extensive consultation undertaken by the coalition with business, industry representatives and the legal profession. Public consultation on this bill started in May 2009, and there were some issues raised during those consultations, but the majority of industry is urging this parliament to proceed with the bill.

I am a passionate advocate of the Australian intellectual property system. Our system of trademarks, patents and registered designs is the absolute underpinning of industry and service provision in this country. Without it there would be fewer products, less commerce and much less happening in Australia. I took part, as did my colleague Senator Heffernan, in the gene patents inquiry. Whilst I am sure that Senator Heffernan will want to talk a lot more about some of the issues there, there are some very well-intentioned people who have some serious issues with the patent system as it currently is in Australia. In my view, we cannot sacrifice the broad intellectual property system in Australia for the sake of some quite narrow concerns. Not unreasonably, one of the primary issues that has to be dealt with is what constitutes a discovery—which of course is not patentable—and what constitutes an invention. This was certainly dealt with a lot in a narrow context within the gene patents inquiry, but it is a far broader issue than the use of gene patents. It applies right across our entire patents industry.

Other concerns that were raised during the inquiries were around the reasonable use of patented materials for research and looking at better ways to undertake testing. It does not apply just in the gene patents area. Concerns were also raised by academics—who of course are not patent lawyers—about what they could do in terms of legitimate research using patented products and what they could not do. Currently, in the law, there are no statutory provisions clarifying researchers' freedom to conduct experiments. There is uncertainty about the scope of any existing common law protection and this leads to inefficiencies in research. Researchers are discouraged from taking up new lines of research when there is uncertainty about their liability for infringing a patent. That uncertainty can lead to researchers who, in Australia, are not the best resourced people to spend a lot of effort and expense trying to find out whether they are going to be behaving legally or illegally. The bill seeks to actually give them the opportunity to be very certain about where their research sits within this framework.

There was evidence given during the gene patents inquiry that in fact this law was unnecessary because reasonable research was acceptable under the law as it currently stood. However, we heard that evidence from very well resourced, very large medical groups. It was the smaller groups, who perhaps had the best opportunity to come up with some interesting research, who were very worried about whether they could go ahead with that research and simply did not have the in-house resources to know the answer. This bill is designed to fix that aspect.

The other concern that was raised during that inquiry was the interaction of regulatory approval processes with the patent legislation. Obviously, regulatory approval processes are extremely important in ensuring that Australians have good-quality, high-standard, safe products in every aspect. But we did not want unintended consequences of the interaction of those regulatory processes with patents law, which basically meant that in some cases patent terms could be extended well beyond the maximum 20 years. This activity was known in other places as 'evergreen'. It is an unintended consequence that a company, by somehow tweaking a patent, may have the opportunity to extend that patent well beyond the original 20 years they were given for the patent.

We need to think about why patents exist. What are they there for? They are there to encourage and reward innovation and clever invention. No company is going to spend the money that is required in researching and developing new products, new technologies and new ways of doing things without some sort of sense that they can recoup their investment by having what is effectively a monopoly in a field for a certain length of time. In the majority of cases this is up to 20 years.

I hoped to speak a little bit about the history of intellectual property in Australia, because we are very good at it. We introduced the first prepaid postal system in 1838; the first combine harvester in 1882; the first automated locomotive brake system in 1904, which was in fact the first-ever patent that was issued under Australia's law; and the first electric drill. How would half of Australia cope at the weekend without the invention of the first electric drill, which was patented in Australia in 1889? In 1926 we patented the world's first electronic pacemaker. Think about that: 1926. There have been improvements on that since. There are hosts more: the tank used in warfare, the box kite, the wine cask. We were even the first people in the world to codify and afterwards copyright a kicking ball game. That was in 1875 when the 10 basic rules of Aussie Rules were developed and, as I said, copyrighted. Vegemite is another creation that was protected by IP statutes in 1922.

The Australian Patent Office in fact opened in Melbourne in 1904, but the Australian government's involvement in protecting Australian innovation and development began in the previous century with the individual state registers of trademarks, patents and copyrights. It was in 1904 that we got our act together nationally. I was quite interested to look at some of the statistics provided by Intellectual Property Australia, which is the organisation we have to thank for the impetus behind the amendments proposed in the Raising the Bar bill. In 2010 the United States, perhaps not unsurprisingly, led the world with over 10,500 patent applications. But we came second. There were 2,409 patent applications in 2010 from Australia. In the world of trademarks, as opposed to patents, we came first with 68,241. There may well be an argument to say that this simply means that it is too easy to trademark something in Australia. There may be some truth in that. But it is not just about that. It is also about the fact that we are a very innovative and inventive nation. Without legal support for that, it is not going to continue.

I am indebted to IPA who used the Sydney to Hobart Yacht Race as an example of how intellectual property underpins so many aspects of our lives. What do you see as the race starts? You see brand names, logos and trademarks. The race is core marketing for major corporations. But without those brand names, logos and trademarks and the safety, protection and security of them, this would not exist. We are talking millions of dollars when you add in naming rights, broadcast rights and the brand-naming sponsorship of crews. Whether this marketing investment would happen without the protection of the intellectual property of those companies through their registered trademarks is another question.

Philip Noonan, the Director General of IP Australia, said:

A registered trade mark is bit like putting a barbed wire fence around your brand. You're warning competitors to stay away as you own the rights to that word, image or logo.

I know that there are views that people should not actually be able to own words, images or logos to patent inventions or to trademark names and products. But without this Australia is not going to survive as a commercial or industrial society. Without the money trademarks create, the Sydney to Hobart yacht race broadcast itself would be of poorer quality. There would not be live satellite crosses, onboard yacht cameras or views from helicopters, because all the technology used to create all of those is in many cases patented. It would not happen without a patent system.

Stan Honey, a legend in the international sailing community and part of the Investec crew for last year's race, has 21 patents for TV special effects and eight for navigational systems. A world without intellectual property, without patents, would mean slower boats. Racing yachts are in fact made from patented materials that are also used in the aeronautical and motor racing industries. The locator beacons, the Gore-Tex, and I should probably draw the little circle with the 'R' in the middle, the foul weather gear, the Spectra and Dyneema ropes, and the Kevlar sails are used—and, again, we need all those registered trademarks—and are all supported by trademarks and by intellectual property.

Patents, as I have said, are granted across a very, very broad array of products and processes, from industrial machinery to pharmaceuticals and even to toys. They represent innovation, improvement and advancement. They apply in every part of our lives, and it is quite interesting sometimes to look at some of the history of them. The can-opener, for example, was a patented product. The seatbelt was a patented product. In 1879, a 'parachute hat' that was designed to allow the wearer to leap safely from a burning building was patented. I presume from the fact that we are not all running around with a parachute hat in our back pocket suggests that this was not one of the world's greater inventions.

According to a 2009 report by the Department of Foreign Affairs and Trade, Australia now ranks—and I think I earlier gave the figures on our trademark and patent applications—amongst the top innovative economies in the world, with the total value of Australia's intellectual property standing at about A$30 billion. One of the key components of our innovative economy is our intellectual property regime. I could go on to talk considerably more about the intellectual property regime in Australia, but I want to congratulate IPA on the work that they have done to develop the amendments to our legislation that are contained in the bill and to acknowledge that intellectual property in Australia applies across a very broad field of activity. It is not limited to one or two products.

I congratulate IPA on the work they have done in getting this to the stage where it becomes legislation in this house and the fact that we now have the chance to pass legislation that will not just support and underpin research and further invention but also ensure that the activities that are undertaken by people who hold patents are legitimate and recognise honestly their need to make a profit out of their product without it giving them the opportunity to pork-barrel those inventions into the future. I think this legislation is a good start. There are some concerns about it, but it is a balanced approach to underwriting, supporting and strengthening an absolutely crucial part of the structure of our economy.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Well, where do I start? That was a fairly off-the-subject sort of way of working out what is discovery and what is invention. Can I say that this bill does not address the core problem. There is a lot of gutless rhetoric that has been given by government bureaucrats and people who have spoken on this which does not address the question: why are we allowing the patenting of discoverable material to be included in inventive patents? So as to highlight the fundamental flaw, which is not addressed by this bill, Senator Boyce talked about a can-opener being patented, the point being that the steel that the can-opener was made of is not itself patented; the inventive use of the steel is. The problem we have in the patent world—and Australia is a soft entry point for patents globally—is that we have included in the patents, which have now been challenged in Australian and American courts, the discoverable material. No-one was allowed to discover and patent the moon and, Senator Scullion, you cannot patent the wood in a tree—but you, being a clever bushie, might be able to patent a use of the wood. You might have been able to make a smart boomerang, but you could not actually patent the wood that the boomerang was made out of. This argument is as simple as that, and there is a lot of gutless political cover given to that. Politicians have been intimidated by the commercial world, and I have to say they are winning the argument.

When the minister last rose to speak in support of this bill last June, he described it as 'a major reform of the intellectual property system'. He also said it would 'ensure that Australia maintains a world-class intellectual property system'. But, at the same time, he did not have the courage politically to define the line between discovery and invention, so who is he kidding? The legislation does absolutely nothing of the kind. It really only feathers the nest of patent lawyers—and we have had plenty of them through the inquiry—patent attorneys and their mostly foreign owned clients. Australia is a soft entry point. The legislation ignores the opportunity to make real and lasting reforms. Why wouldn't you allow the freeing up of access to the discoverable material—that is, the gene? This bureaucratic—I will not say BS argument, but it is—

Jacinta Collins (Victoria, Australian Labor Party, Parliamentary Secretary for School Education and Workplace Relations) Share this | Link to this | Hansard source

Through the chair.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

The bureaucratic argument that has been put by a whole lot of people ducking for cover is that somehow—through you, Madam Acting Deputy President Fisher, and it is good to see you up there—discoverable material is included in the patent because the precedent has been set over 30 years. The patent system is steeped in a quagmire in this area, and it has been misused, misapplied and misappropriated. This legislation is not going to fix that. I have to say that, until we have the courage to understand that, as the bill demonstrates—and there is probably no harm in the bill, but there is no use in the bill—

You may laugh, Madam Acting Deputy President, and the bureaucrat may think it is laughable material, but I do not think it is. I think your attitude is gutless. This is all about whether we have the courage to say—

Honourable senators interjecting—

Yes, ignore it—that discoverable material is patented or not. This is all about saying, 'Well, we'll give an exemption for research.' All right. Suppose I am a laboratory and, Madam Acting Deputy President, I apply to you for research because you hold the patent on the gene that I want to research. I have a smarter laboratory and a smarter technician than you, and I beat you to the commercialisation prize. So then do I go back to you and say, 'Can I now have an exemption so I can commercialise my research?' You will say no. If you do not say no, why did you have the patent on the gene in the first place? It is an absurdity to say that you will give an exemption for research when it naturally follows that you will need an exemption for the commercialisation of that research.

The argument put by all the phoneys in the debate is that, if you do this, you will somehow have a decline in research. You will not at all. This is not about banning inventive work to be patented—work that has an inventive step and a commercial and useful purpose. You can certainly patent it. This bill is about nullifying the argument through some phoney clause that you can give an exemption for research, which does not address the question of how you then proceed to give an exemption for the commercialisation when someone else is holding the patent. Most people, when you talk to them, say, 'How in God's name can you patent something that is naturally occurring in your body?' This is the bureaucratic answer to the minister—certainly in the case of the Department of Innovation, Industry, Science and Research as opposed to the Department of Health and Ageing. By the way, just for the record, the department of health is seriously opposed to the view of the department of industry on this, because the department of health knows the added cost to health care in the case of biological materials for pharmaceuticals. We have not even begun to talk about the cartel that is growing in the seed world for food production; we will get to that. Do not ask me what this has to do with a tin-opener, as demonstrated, or the Sydney to Hobart yacht race.

This is about having the guts to say—which is clearly demonstrated at law—that discoverable material is not patented. What is in your body no-one invented, but people did discover it. We now have medical opportunities for research and enhancement of human life, which includes multiple series of genetic sequences. So, if you are tucked away in the back of Westmead Hospital in a little room on a six-month contract because the hospital cannot guarantee you any longer than six months—which is actually a fact of how it works—how can you mount a case against a bunch of lawyers and a multinational to defend your rights to do research on a gene that is naturally occurring? The phoney argument is, 'Oh, well, we've isolated it; therefore it's materially different from what's in your body.' That is absolute rubbish. It is identically the same. There is no material difference. We demonstrated that through estimates, and IP Australia was up there versus the health department, and they were fundamentally opposed during the hearing. This is just cheap political cover.

I just take you to an example. I have asked to table some documents of a court case which I am about to address, and hopefully they can be tabled. The government have those documents and they have said that it is okay to table them. I raised this in estimates the other day. A French pharmaceutical company called Sanofi-Aventis succeeded in absolutely hoodwinking Australia and the patent office into giving an extension—one of these evergreening patents—for a drug called clopidogrel. As a result, the total period of the patent protection, which was due to expire in 2013, was nearly 30 years. The second patent, however, was revoked in 2009 by the full Federal Court. The High Court refused to interfere. These are the problems here. First is the cost to the PBS. When the pharmaceutical company took out the injunction to go to the High Court against the generic company in 2007, it said in the injunction—and the documents back this up—that it would recompense the Commonwealth for any loss to it through the extra funding of the PBS, instead of having the generic brand. The reality was that the cost to the Commonwealth in that time was $60 million. The High Court refused and the pharmaceutical company lost, but the Commonwealth has not collected, and I presume it will probably spend $60 million in legal fees to try to get it. The cost from when the original patent ran out to the present time is somewhere between $480 million and $600 million extra because of the evergreening effect of the patent, which has been declared invalid. And who in the government has got the guts to go to the pharmaceutical company and say, 'We would like compensation for that?' This is just one pharmaceutical line. It is because of the flaws in the patent law, where patents are allowed to include the genetic material which is naturally occurring.

I assure you that, if you thought about it, without biotech and patent lawyers whispering—as they do around this building—you would agree that no-one invented the BRCA genetic mutations linked to breast and ovarian cancers, but they were certainly a discoverable material. Yet here we are about to vote on a bill that the minister says makes all the problems about the patent system, including the ones I have just talked about, go away. That is as big a furphy as Myriad's claim to have invented the BRCA human genes that cause breast cancer. There is a legal process and, as we all know, the courts are not actually about truth. If you have ever been to court you will discover that the courts are about the law. If you are guilty, you get a good solicitor or a lawyer or a barrister, not to tell a lie but to use the law to avoid the truth. It goes on all the time. It happened the other day. I had better not mention the case, but if you take a trip to The Gap you will find the case. Rather than give research scientists an exemption from patent infringement, which is one of the things this bill's so-called improvements do, wouldn't it be better and more efficient if the scientists' knew upfront that any discoveries of nature, such as the BRCA human genes, are simply not patentable? Everyone agrees that you cannot patent discoverable material but no-one wants to draw the line between discovery and invention. As for raising the inventive step threshold—it is actually lowering the bar—what is the point of the exercise when IP Australia, the patent attorneys and the patent pharmaceutical companies can drive a truck through the loophole? It is as simple as that. This bill may be well intended but it does not address the problems.

I would just like to go to Senate estimates and define this one pharmaceutical item. In March 2010, two years ago, the High Court of Australia rejected an application for leave to appeal in a patent case concerning the drug Clopidogrel. Until then, the drug had been subject to two Australian patents. The original patent over the chemical compound expired in 2003. Sanofi-Aventis, the patent owner, had applied for and was granted a second patent—as we call an evergreening patent—over virtually the same chemical compound. The difference was immaterial, so the full Federal Court found. The second patent was due to expire in 2013 because the Federal Court held that it was invalid. A decision of the High Court was not prepared to interfere with it and the second patent came to a premature end in March 2010. This saved the PBS and the Australian taxpayers tens of millions of dollars and is a good example of the issue of lax patents being granted by IP Australia. Globally we are known as a soft entry point for patents.

Here is the problem. As part of the legal proceedings, the pharmaceutical company Sanofi sought and was granted an interim injunction to prevent Apotex, a generic medicines company, from marketing a generic version of this particular pharmaceutical. That was back in September 2007. As a result of the injunction, the generic company Apotex was enjoined from marketing the generic version and this resulted in two things. First was the automatic price reduction of 12½ per cent, which, by the way, is now 16 per cent, that applies to any PBS listed drug on market entry or if a generic version does not happen. This is why the Department of Health and Ageing are really concerned about the patent law, whereas the Department of Innovation, Industry, Science and Research, which is driven by all the lawyers and their promoters and the people who creep around this building giving you stuff and getting paid good money to do it, have a different view. This meant the PBS had to keep paying the same price to Sanofi-Aventis that it agreed to under the PBS while a patent was alive. Secondly, it was a condition of the grant of the interim injunction that Sanofi-Aventis agreed to compensate any party, which included the Commonwealth, adversely affected by the interim injunction. This means that when the High Court of Australia refused the application for special leave to appeal, that condition to the interim injunction took effect. No-one has done anything about it.

The estimated cost of the interim injunction between September 2007, when the injunction was granted, and March 2010, when the injunction was lifted, to the Commonwealth PBS—and therefore taxpayers—is some $60 million. That figure does not take into account the benefit of the illegal patent monopoly that this company had since the first patent expired in July 2003, which has been estimated to have cost between $480 million and $600 million for one pharmaceutical item.

So my question to the Department of Health and Ageing was: what have you done, what are you doing or what are you planning to do to collect at least the $60 million from the pharmaceutical company? At five per cent per annum on the debt, which has not been collected, it certainly starts to compound. I would also like to know what involvement the Department of Health and Ageing had in the patent litigation between Apotech and Sanofi-Aventis. I understand that any patent law suits must be served under IP Australia under the Patents Act. IP Australia has the right to be heard by the court. Would the department care to enlighten me in this chamber on what steps were taken to ensure that IP Australia intervened in these proceedings so as to protect Australian taxpayers from overpaying this pharmaceutical company? You may smile, Madam Acting Deputy President Fisher; this is a serious issue. We are talking about $600 million because of a slack patent law interpretation.

I also understand that one of many patent cases inviting what we might call evergreening is this one: that is to say patents over some pharmaceuticals renew the period of patent protection for so-called innovations that often amount to little more than a new cover around a pill or tinkering, as in the case of clenbuterol, which the High Court has rejected. It is hardly what you call inventive.

I would like to know what protection Australian taxpayers have against this sort of behaviour. In this debate we have the patients, the people locked away in those little rooms on six months wages, universities, people driven not by money but by vocation against lawyers, attorneys and bankers who are trying to avoid the question for the betterment of human health and the future of humans on the planet to an affordable access to health remedies by absolutely having the guts which this bill does not address. It does not address the fundamental problem of why we have allowed the patenting of discovery. We have allowed discovery through the broad interpretation of patent law to be included in the inventive side. Why can't we say, 'Sure, you've have got the gene there. You've twigged it. You've done something with it which is inventive, commercially useful and patentable, but let everyone have access to the original gene'? They say it is because you will reduce research; you will actually increase research, and no snarly, smiling legal advice can get around that. I seek leave to table these documents.

Leave granted.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I endorse the remarks of Senator Heffernan and I think we need to put this in perspective. Senator Heffernan indicated just one example: it did not cost taxpayers tens of millions of dollars but hundreds of millions of dollars. That is something that should be addressed in the government's response to the quite serious allegations that Senator Heffernan made in relation to how the patent system in this country is and has been abused. I think Senator Heffernan is right: you see a difference of opinion in the way that these matters ought to be dealt with in terms of our patent laws between the Department of Health and Ageing and IP Australia, which is of course part of the Department of Innovation, Industry, Science and Research and has portfolio responsibility for Australia's IP system. There is a huge gulf between the two. I have seen it in Senate inquiries on related matters to gene patenting. I am a co-sponsor of the bill, along with a number of other senators—coalition and Australian Greens senators and, without verballing Senator Madigan, I think he shares similar concerns in relation to this.

These are important issues. I think it is widely agreed that Australia's patenting system is in need of an urgent overhaul. It could be argued that this bill takes the first steps towards that but does not go far enough. It does not deal with the fundamental issues that have been outlined by Senator Heffernan and additional issues that I will refer to shortly.

I support the government's intention of raising the standard of patents in Australia and I also support the provisions for the bill relating to research, but, again, I wonder whether it actually provides the protection that needs to be provided. Supporting Innovation Australia is vital. If we continue to fail to provide a research exemption in relation to patents, we face more and more companies taking their research work offshore. In particular, it hampers those medical researchers who for altruistic reasons are doing all they can to improve the lives of others through medical breakthroughs. They are tied up. Patents can tie them up in a way that is quite destructive that winds back the cause of genuine medical research. It fetters our science and innovation.

We need to take into account the remarks and tremendous work of Dr Luigi Palombi of the Australian National University Centre for Governance of Knowledge and Development in his submission to the Senate community affairs committee and its inquiry into gene patents. Dr Palombi made it very clear how gene patents negatively impact on the provision and cost of health care, progress and medical research, and the health and wellbeing of Australian people. We should heed his warning and legislate to ensure that genes cannot be patented as an invention. This will ensure that researchers are not impeded in medical research and that Australians are not denied access to healthcare treatments. My question to the parliamentary secretary in relation to this is: to what extent does the government consider that this bill would adequately deal with these issues so that medical research is not fettered, is not impeded, by the unfair use or abuse of patent laws?

I believe that the government needs to consider this bill as only a first step in reforming Australia's patent system. The consultation process for this bill revealed major concerns within interest groups about how the current patent system operates. The general consensus seems to be that this bill is better than no reform at all, but without further reforms we run the risk of losing even more of our best and brightest overseas.

I would like to reflect on some of the concerns that have been outlined by Dr Palumbi. He acknowledges that there are aspects of this bill that are long overdue and positive. It is not all bad, but, really, it is just tinkering around the real problems. I share Dr Palumbi's concern that this bill may not make any real practical difference to how the Australian patent system works, which is currently pathetically poor. I agree with Dr Palumbi's concern about the way the Patents Act 1990 is written. It was drafted by IP Australia, with the help of senior patent attorneys and patent licensing executives from major corporations, so I wonder about issues of potential conflict within the patent system in terms of how the bill was structured.

What are the matters that I think need to be addressed in any future bills? We ought to have all patent applications and granted patents define one single invention in the patent specification. That would be an important reform. Under the current legislation, the patent ability requirements in subsection 18(1) are that the presence of a patentable subject matter, novelty, an inventive step and utility are assessed against each and every claim. Again, I am borrowing directly from the concerns outlined by Dr Palumbi. His concern is that, if a patent has 50 claims, the patent examiners have to look at each and every claim. How much time should that take in order to do it properly? I am concerned that not enough time is being taken. The problem, as we know from IP staffers, is that they do not have the time, and the tendency for patent examiners is to allow the claim rather than to rigorously apply the rules. I do not blame the patent examiners, who I believe diligently do their very best to enforce the law, but they simply do not have the resources or the time to go through some of these applications properly.

The BRCA patents are a perfect example. What is it that Myriad Genetics invented? Was it the BRCA genetic mutations linked to breast cancer? Was it the genetic sequence of the BRCA genetic mutations? Was it the genetic test for BRCA gene mutations? Or was it something else? I agree with Dr Palumbi that by looking at one of the four BRCA patents you can see that they are apparently all related to one invention. I think there is an issue there. Every patent should define clearly and simply what it is that the inventor says the invention is. In the BRCA patent example, why did Myriad have four patents if the invention was a BRCA genetic test? Why did they have 30 claims alone in just the first of the four patents? And why did they include claims to BRCA genes and proteins if they did not invent them? These are the questions posed by Dr Palumbi and I believe they ought to be answered.

There are other matters that need to be dealt with. The test should be that all patent ability thresholds are assessed against the one invention, as defined in the patent specification. This will save much time, as the patent examiners can then focus on that invention. That is a necessary and important reform. There ought to be antiavoidance provisions inserted in our patent laws. It is a bit like the tax act in that, if patent attorneys know that they are crossing the line, if they are overreaching in a way that stifles innovation or in a way that unfairly knocks out competition, then they could be subject to prosecution and fines at the very least. There needs to be a definition of patent abuse and it needs to be a crime to be involved in patent abuse. It is a controversial issue that has been raised by Dr Palumbi and I agree with him. If you hold back essential research when dealing with breast cancer, or any cancer, to me that is untenable. We need to have clear antiavoidance provisions. Patents are like taxes in reverse in that, unlike the tax act, in which the government gets the money, it is private individuals and companies who get the money. Without a patent abuse provision there is no disincentive not to game the system, and my fear is that the system is being gamed.

There ought to be a meaningful objects clause in the Patents Act. There ought to be a meaningful damages provision that enables the Commonwealth or state governments and individuals who are negatively impacted on by a patent that is revoked to recoup the value of the patent monopoly or the damages caused by the patent monopoly. That is what a patent is: it is a monopoly sanctioned by law. It is the only circumstance where a monopoly is allowed by virtue of a patent. So if we are going to grant a monopoly we need to be very careful about the circumstances in which that monopoly is granted. I still remember that quote by Rupert Murdoch, who said, 'A monopoly is a terrible thing, unless you happen to have it.' I think that is something we need to bear in mind in the context of patent law. This is the only form of a sanctioned, legislated monopoly protected by statute that private individuals are allowed to have, and we must grant monopolies for patents very carefully. We must have antiavoidance provisions. We must have a provision to allow for damages following an abuse of that monopoly for those who have been damaged by that monopolistic abuse of this provision.

These are just some of the issues that need to be dealt with. Again, I have borrowed heavily from the wise research and work of Dr Palumbi. We need to heed his concerns regarding the abuses occurring within our Patents Act. This piece of legislation is not unwelcome, but I believe it ought to have gone much further. I would like to think that this is the beginning of further reforms. We should note the tension between the Department of Health and Ageing and IP Australia. The department of health understands what the cost will be to the public health system unless we address these issues comprehensively and unless we comprehensively tackle the issue of abuse of the patent system. I think it was Senator Madigan who helpfully mentioned that we need to look at the cost to people. The cost to people could actually be their lives if we hold back unnecessary research and the cost of essential life-saving medication is much higher than it ought to be because of abuses in the patents system. I commend the work of Minister Carr in relation to this, but I believe we need to go further. I fear that, unless the warnings of Dr Palumbi and others are heeded, unnecessary abuses of our patent laws will continue to lead to adverse outcomes for the Australian people.

Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

I want to make a brief contribution to this debate. I participated in the Senate community affairs committee inquiry into the private member's legislation that proposed to deal with the way in which patents relating to genetic material are dealt with. I think all the participants in that inquiry—and it was a very substantial inquiry—came away with somewhat more knowledge of the patents laws of Australia than perhaps they really wanted to have. But it did demonstrate very amply, I think, to those who participated in the inquiry that intellectual property laws in Australia are creaking and groaning, are in need of overhaul, have not kept up with the changing way in which technology is impacting on the process of industrial manufacture and invention and that there needs to be a revision of some of the concepts within our legislation.

Many pointers to those findings were available to the committee, particularly things like the report of the Advisory Council on Intellectual Property and at least one report by the Australian Law Reform Commission. The fact that it had been quite some time since these reports had been tabled—in the case of the ALRC report, at least—suggested not only that these were important and complex issues but also that the difficulties associated with understanding the implications of the changes recommended had caused some lack of movement on the part of those in government who are responsible for progressing the sorts of reforms which have been identified.

So the legislation that we see before us today has been brought forward. I welcome this legislation. Although, as other senators have said, it does not solve the sorts of problems I have just referred to with respect to Australia's intellectual property laws, particularly its patent laws, there are welcome steps forward in this legislation and it does deserve the attention which the Senate now gives it to ensure that issues such as research are addressed in a more contemporary way than is evident in the existing legislation.

I particularly welcome the provisions relating to research. There is claimed to be uncertainty about the scope of protection at common law for those who seek to use existing patent material or patents as the basis for their ongoing research. The fear that a person might conduct research, make a significant finding and then find that they are unable to use that discovery because they have infringed someone else's patents is alleged to be a significant barrier towards proper research in Australian companies and, in particular, not-for-profit organisation such as universities and research institutes. The evidence of that barrier to research is not as plentiful as some have suggested. But I suggest that some clarification of what a person may do when they are conducting research in an area where patents already exist does need to occur. As such, the step forward in this legislation is important.

This bill provides an exemption for activities undertaken solely for the purpose of gaining regulatory approval to market or manufacture a patented technology. The effect of this expands the existing exemption for pharmaceutical inventions to all technologies. That provides a measure of certainty, which is important, and I welcome that very much.

There is more precision required from patent applications than has been the case in the past. Senator Xenophon made reference to the ambit claim approach which so many patent applications appear to have made in the past—and, I think, fairly did make in the past. This legislation appropriately limits the scope of that and requires more to be demonstrated by the patent applicant than has been the case in the past.

I think it also needs to be recorded, however, that Australia's intellectual property laws do not operate as an invention of the Australian legal system. Our intellectual property laws are very much a reflection of international property regimes around the whole world—and we depart from those norms at our peril. We have to acknowledge that most of the companies around the world that use patents to bring products to market—products which are efficacious to health, agricultural production, manufacturing and all sorts of other purposes—will generally want to own patents in every country where their products might be produced or sold. If the regime applying in Australia is dramatically different from the regimes applying elsewhere, it is hard to do that, and Australians might miss out because we do not share the common approach, broadly speaking, of other countries in the world.

I do not want to use this debate to rehearse the many arguments that took place in the community affairs committee about the patenting of genetic material. I would simply say that some clarification of the law needs to occur. It is provided for here, at least in part. I want to associate myself very much with Senator Colbeck's remarks that further work needs to be done and the concerns of a number of parties who submitted to the examination of this legislation that it has not been addressed fully and does need to be addressed. I look forward to this legislation being an important first step in getting a better state, a better functioning intellectual property system, than Australia currently enjoys.

Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

I thank the senators for their contribution to this debate. As I understand it, there is broad support in the chamber for this bill and I thank senators for that. Let me take this opportunity, in response, to try to answer some of the questions that have been raised. My understanding is that Senator Heffernan and Senator Xenophon have raised the case involving Sanofi-Aventis, where the High Court invalidated a patent. As I understand this particular case, or the suggestion has been made—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

That was Senator Heffernan, I think.

Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

You did not raise it? I see. My understanding then is that Senator Heffernan raised the issue about an undertaking to compensate the Commonwealth in regard to the court's actions in invalidating a patent. It has been suggested that money was lost to the PBS system because of the extended patent but it has not been repaid to the Commonwealth. The officers who are here tonight do not have the detail of that matter. It is the responsibility of the health department, as I understand it. The officers will take the questions on notice and provide further information to Senator Heffernan.

There have been a number of issues raised by the stakeholders. Senator Colbeck, I am sure you would appreciate this point. The bill is one that the community values and wants passed. I support the point that Senator Boyce made on the importance of the IP system. These are changes that have been under negotiation through a very broad range of consultations since 2009. It is a project that I had the opportunity to work on with the community to ensure significant advances to the IP system as a result of consultations.

I believe the effect of the three separate rounds of discussions over the past two years have seen innovators, researchers, small businesses, large corporations, lawyers, and patent and trademark attorneys make very useful contributions. The bill before the chamber is now a much better piece of legislation. A strong intellectual property system is critical to our capacity to drive innovation and research in this country. It directly benefits Australians. A robust patent system ensures that we have a proper system to protect intellectual property, but the administrative arrangements are undertaken in such a way as to not clog up the system. It allows proper competition in regard to the development of new ideas and better inventions.

This bill provides us with an opportunity to align standards with our major trading partners, to modernise the system. It allows us to be more competitive for Australian inventors, so they do not have to take their work overseas. It provides clarity, it provides certainty for our researchers and it means that if there is any suggestion—and the argument has been put that it is not presented with great evidence to sustain it—that litigation might be used as an impediment to research then that will be removed as a result of this legislation.

This bill when enacted will speed up the process of resolving patent and trademark applications. It will provide applications and the public with much better opportunities to ensure that they have the protections of patent law. The law helps IP professionals to assist those who seek to take advantage of the patent system. It makes it easier for them to secure a patent, but not for trivial things. It provides a much stronger quality of advice by making it easier to ensure that we can secure the necessary legal protections for people. It protects people from imitations and fakes. It provides better border protection systems and stronger sanctions against counterfeits.

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 innovating. That is why the bill is so named: raising the bar. It raises the quality of the innovation system to raise the quality of innovation and to benefit all Australians. That is why I argue we ought to support this bill and we ought to give it rapid passage.

Question agreed to.

Bill read a second time.