I present the revised explanatory memorandum to this bill and move:
That this bill be now read a second time.
The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 is the second piece of legislation that delivers on the Morrison government’s commitment to review and reform our intellectual property system.
The intellectual property system, or IP system, is an important part of the economy. It encourages the development of new technologies, products and markets. In 2016 the Productivity Commission undertook a comprehensive review of Australia’s IP system, including copyright, trademarks, patents, designs and plant breeder’s rights. We asked the commission to make recommendations to ensure that the IP system continues to provide incentives for innovation and investment. The IP system should do so without unreasonably impeding competition and access to goods and services.
The Australian government responded to the commission’s recommendations on 25 August 2017, and within a year the first tranche of reforms received royal assent. These changes were supported by the opposition, and updated the trademark and the plant breeder’s rights systems.
This second tranche of reforms updates the patent system. The Productivity Commission stated that its proposed reforms are intended to rebalance the patent system to take more account of the benefits to the broader community and ensure that all Australians benefit from the system.
These reforms have been complex to develop, so the government has taken additional time to consult extensively, giving stakeholders several opportunities to provide feedback and express their views. The government has listened and is confident that the amendments strike the right balance between the needs of inventors, users of technology and the general public.
Schedule 1 to this bill will amend the Patents Act. It gives effect to the recommendations made by the commission, by introducing a statement of the objectives of the Patents Act and phasing out Australia’s second-tier patent.
Part 1 introduces an objects clause into the Patents Act. The objects clause provides a general statement of principle about the purpose of the act. This will make it clear what Australians want from their patent system, specifically a system that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. This will ensure that the patent system remains adaptable and fit for purpose as new technologies are developed in the future.
Part 2 begins the phasing out of the innovation patent system. This second-tier patent was intended to incentivise small to medium-sized Australian businesses to invest in research when it was introduced in 2001. However, in the 18 years since then, it has become clear that the second-tier patent has been more harmful than helpful for SMEs. There is widespread agreement among stakeholders that the system is not fit for purpose. Some people argue that the second-tier patent should be reformed, but there is no agreement on a workable alternative.
Both the Productivity Commission and the former advisory council on IP recommended that the innovation patent system be abolished. Both found there is no evidence that the second-tier patent stimulates innovation or research in Australia. What it does do, according to both bodies, is lead to uncertainty, confusion and a higher regulatory burden, particularly for our Australian SMEs.
The bill will amend the Patents Act to prevent the filing of new applications for innovation patents. The amendments ensure that existing rights, filed before commencement, are maintained and protected, ensuring a balanced phasing out.
Schedules 2, 3 and 4 implement recommendations made by the commission in its 2013 report into the compulsory licensing of patents. These changes will improve the balance between the rights of IP owners and the interests of the public, bringing greater clarity and certainty to the legislation.
Schedule 2 improves the transparency and accountability for Crown use of patented technology. There is some uncertainty about when Crown use can be invoked at the present, and this bill makes it clear that, while it is rarely used, it can be invoked when any Australian federal, state or territory government has the primary responsibility for providing or funding a service. This ensures that Crown use can cover the full range of services that the public expects our government to provide.
Schedule 2 also protects the rights of patent holders, by improving accountability for Crown use as well as providing more guidance for determining the remuneration to be paid to the patent owner. Government agencies will be required to seek to negotiate with the patent owner and to obtain the authorisation of the relevant minister before invoking Crown use. At the Commonwealth level, the relevant minister is the minister responsible for administering the Patents Act, and at the state and territory level, it is the Attorney-General. This will ensure that Crown use is only used in appropriate circumstances.
Schedule 3 will make the same amendments to the Crown use provisions in the Designs Act. Crown use will then operate in the same way for both patents and designs.
Schedule 4 improves the clarity and certainty for compulsory licensing of patents. It requires the courts to consider whether it is in the public interest to grant a compulsory licence. There was concern that the previous test had the potential to protect the interests of a particular industry, at a net cost to the broader community. The new test will ensure that compulsory licences are only granted when there will be an overall net benefit to the Australian community.
Schedule 4 will also clarify the process for compulsory licensing of inventions that build and improve on a previous patent.
The remaining schedules to the bill make minor technical amendments that will streamline procedures and improve the efficiency of the IP system, ensuring the system is fit for purpose and keeps up with today’s accelerated pace of technology.
I am very pleased to introduce this bill, which builds on a broad consultation and enhances Australia’s IP system, supporting innovation, creativity and business growth in this country.