15 Oct 2015

Striking the right balance: Australia's intellectual property arrangements under review

by Richard Hoad, Rebecca Lobb

All businesses operating in Australia are affected by Australia's IP laws and should therefore consider whether they wish to make a submission to the Productivity Commission's inquiry.

The Productivity Commission has just released an Issues Paper outlining some of the areas that will be a focus in its current inquiry into Australia's intellectual property (IP) laws. We look at some of the headline areas that the Productivity Commission intends to put under the microscope.

What is under review?

We explained the background to the inquiry and outlined its Terms of Reference in August. The Issues Paper confirms that this will be a wholesale review of the way in which IP is protected and enforced in Australia.

The inquiry's overarching objective is to maximise the wellbeing of Australians by ensuring that an appropriate balance is struck between two sometimes competing policy goals:

  • providing incentives for innovation and investment; and
  • ensuring competition and access to goods and services.

The Productivity Commission says that its review will be guided by four key principles:

  • effectiveness – whether IP rights promote innovation;
  • efficiency – whether the above balance is right;
  • adaptability – whether IP rights are adaptable to a changing world; and
  • accountability – whether the policies and institutions that govern IP are appropriate.

The Issues Paper raises a very large number of questions for investigation. We have picked out a few of the most interesting issues below.

Some common themes

Consistent with the above guiding principles, a common theme running through the Issues Paper is whether the current level of IP protection is appropriate. This is reflected in specific questions raised in relation to patents, copyright, trade marks, designs, plant breeder's rights and circuit layouts.

In this context, one of the factors which the inquiry will consider is Australia's international commitments under various bilateral and multilateral arrangements. To a large extent, Australia's IP laws reflect an international consensus from which Australia cannot depart without becoming an international pariah. In other words, in practical terms, there are limits to what the inquiry can sensibly recommend in terms of law reform.

A related question which the Issues Paper confronts is whether there should be some guiding principles for negotiations regarding future international arrangements. This is a very topical question given the recently concluded Trans-Pacific Partnership Agreement (TPP) and the proposed free trade agreement with China. One of the aspects of the TPP which has attracted some significant media attention is the investor-state dispute mechanism. On that front, the Issues Paper asks the following question: "To what extent do investor state dispute settlement provisions impede or prevent changes to domestic IP legislation?" The answer to that question will be keenly anticipated – for its political implications as much as for its legal consequences.


Some of the specific questions raised in the Issues Paper in relation to patents are:

  • What evidence is there that patents have facilitated innovations that would not have otherwise occurred, or have imposed costs on the community, including by impeding follow-on innovation? Are there aspects of Australia's patent system that act as a barrier to innovation and growth? If so, how could these barriers be addressed?
  • Is the patent system sufficiently flexible to accommodate changes in technology and business practices? Is the existing coverage of patents optimal? Are there areas of innovation that should be included/excluded?
  • Do the criteria for patentability in the Patents Act help the patent system to meet is objectives? Would introducing economic criteria for patentability and/or gradually reducing the duration of patent protection substantially improve the efficiency and effectiveness of the patent system?
  • Should the duration of patent protection take into account how the development of IP was funded?
  • How does Australia's current protection of regulatory test data affect innovation and the diffusion of new products?

The protection of regulatory data is another issue which was a focus of media attention during the negotiation of the TPP. It appears that Australia managed to avoid a longer period of data protection being imposed under the TPP at least partly based on the assertion that the scope of patent protection in Australia is broader than in many other countries. Whether that remains true following the High Court's recent decision in D'Arcy v Myriad Genetics Inc [2015] HCA 35 is debatable.

The questions posed by the inquiry regarding the appropriate scope of patentable subject matter are also timely, given that the Myriad decision could have the effect of constraining the patent system's flexibility to accommodate technological change.

The Issues Paper also refers to the review into the innovation patent system and notes that IP Australia is currently consulting with stakeholders as to whether the system should be abolished. Whether the Commission separately considers this issue as part of its inquiry is yet to be seen.


Some of the specific questions raised in the Issues Paper in relation to copyright are:

  • Are moral rights necessary, or do they duplicate protections already provided elsewhere (such as in prohibitions on misleading and deceptive conduct)? What is the economic impact of providing moral rights?
  • How should the balance be struck between creators and consumers in the digital era? What role can fair dealing and/or fair use provisions play in striking a better balance?
  • Do existing restrictions on parallel imports still fulfil their intended goals in the digital era? (The issue of parallel imports is also raised in the context of trade marks.)

There have long been calls for Australia to introduce a broad US-style "fair use" exemption. Currently, there are a number of specific "fair dealing" exemptions relating to certain types of activities. In February 2014, the Australian Law Reform Commission's Final Report on Copyright and the Digital Economy recommended the introduction of a broad and flexible fair use exemption. The Productivity Commission inquiry is likely to revive the momentum for this stalled law reform proposal.

Where to from here?

The Commission is seeking submissions from interested parties by 30 November 2015. All businesses operating in Australia are affected by Australia's IP laws and should therefore consider whether they wish to make a submission to this inquiry. After considering these submissions, the inquiry will publish a draft report in March or April 2016. This will be followed by a series of public hearings in April or May 2016, with a final report to be issued by 18 August 2016.

We will keep you updated as the inquiry progresses. If you would like assistance in preparing your own submission to the inquiry, we would be happy to help.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.