The Productivity Commission recommended that an objects clause be inserted into the Patents Act 1990 that indicates a purpose of enhancing the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology.
The Government supports this recommendation and will amend the Act such that it expresses the legislative intention. However, the Government states that it will give further consideration to the exact wording of the objects clause. This is a major change.
Further, the Government references prior recommendations of the Commission in 2013 favouring an objects clause when it was asked to review the compulsory licensing provisions for patents. Those recommendations were similarly directed at ensuring that there was a balance between the interests of producers, owners and users of technology.The government will consult further on the 2013 recommendations in the implementation of its current response.
In Australia, an invention is taken to involve an inventive step when compared with the prior art base unless it would have been obvious to a person skilled in the relevant art. Under the current approach, an invention is not obvious unless the skilled person would be "directly led as a matter of course" (the modified Cripps test). Alternatively, it has been stated that a "scintilla of invention" is all that is required. The Productivity Commission is of the view that such an approach establishes insufficient thresholds and has noted that the European test "obvious to try" may be a suitable test.
The Government supports this recommendation stating that it intends to make amendments that will "put beyond doubt that the assessment of inventive step in Australia is consistent with the European Patent Office". However, any legislative change and relevant explanatory memoranda will be exposed to public consultation.
The Productivity Commission recommended that the innovation patent system be abolished.
The Government supports this recommendation. The Government notes that the innovation patent system was established to foster innovation for small and medium sized enterprises (SMEs) but that these objectives are not being met. The Government has formed the view that these enterprises would benefit from more targeted assistance and that the costs to third parties and the broader community favour the abolition of innovation patents.
The Government will introduce amendments to abolish the innovation patent system while preserving existing rights.
The Productivity Commission recommended that the patent filing process be reformed to require applicants to identify the technical features of the invention in the set of claims.
The Government supports this recommendation and intends to implement it together with the reforms to inventive step.
The Productivity Commission recommended that patent fees be set to promote broader intellectual property policy objectives rather than to primarily recover costs. This recommendation contemplates:
- an exponential increase in patent renewal fees per year;
- lower threshold for claim fees; and
- increased claim fees for applications with a large number of claims.
The Government notes this recommendation. The Government records that the fees are already directed at a balance between innovation and cost recovery objectives and is not persuaded of a need to move away from this framework. The Government has indicated that IP Australia will have regard to this recommendation in any patent fee review to take place in the future.
Patent term extensions
The Productivity Commission recommended that patent term extensions for pharmaceuticals be reformed such that they are only:
- available for patents covering an active pharmaceutical ingredient; and
- calculated based on the time taken for regulatory approval that exceeds one year
The Government notes this recommendation but stated that there were no plans to proceed with the recommendation in this form. Any reforms to the patent term extension system will be discussed with the pharmaceutical sector. The Government acknowledged the Commission's findings that these extensions prolong exclusivity and impose significant costs on stakeholders. However, it is apparent that the Government was of the view that the approach of the Commission did not strike an appropriate balance between the development of new, safe and effect pharmaceutical products and their accessibility and affordability.
Pay for delay agreements
The Productivity Commission recommended the introduction of a monitoring and reporting system of settlements between originator and generic pharmaceutical companies to detect "pay for delay" arrangements.
The Government supports in principle this recommendation while (oddly) recognising that there is no evidence of any such activity in Australia. The Government has stated that the lack of evidence does not mean that such activities have not occurred and may simply reflect the difficulty of detecting such arrangements.
The Government appears to strongly favour the introduction of a reporting regime and has identified the reporting regime in the Corporations Act 2001 for Australian financial services licensees as a possible framework.