Why the PC’s IP inquiry is a lame duck

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By Leith van Onselen

Australia’s Productivity Commission (PC) has long been opposed to strengthening Australia’s intellectual property (IP) rules.

Essentially, the PC’s empirical work on IP has found that, as a net importer, Australia would lose more than it gained by granting stronger IP rights, whether that involves:

  • lengthening the period of the protection;
  • broadening the scope of IP rights; and/or
  • easing requirements for obtaining IP rights.

Today, Fairfax’s Adele Ferguson has penned an interesting piece on the PC’s review of Australia’s IP system, which is due to hand down its final report next month. In the article, Ferguson weighs-up the arguments for and against liberalising copyright, before concluding that the issue has huge ramifications for society and that the Government must get reform right:

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When the Productivity Commission hits the send button next month on its final report into intellectual property arrangements, it will ignite a political and cultural debate on the protection of copyright that has been simmering for years…

These proposals include replacing the current “fair dealing” model with the highly contentious and legally fraught ‘fair use’ exceptions model that operates in the United States; a model that allows the use of copyright material for any purpose if the use is “fair”.

Another is a reduction in the copyright term from the current 70 years after death to 15 to 25 years after creation.

The stakes are high…

There is no doubt that copyright laws need to be reviewed in light of the digital age and globalisation. But copyright is complex, steeped in politics and wraps around our national identity…

The Turnbull government has backed away from the Productivity Commission’s sentiment that “copyright protection lasts too long” that “a book written today by an author who lives for another 50 years will be protected until 2136”. But it is yet to reveal its hand on some of the other proposals, which could be a backdoor way of achieving the same thing…

Let’s hope the government gets it right.

There’s no need to worry about “getting it right”, Adele, because there is unlikely to be any meaningful reform.

Successive Coalition Governments have already negotiated away most areas of Australian IP policy in international “free trade” agreements, starting with the 2005 the US-Australia Free Trade Agreement, and more recently the 2015 Trans-Pacific Partnership (TPP), which is yet to be ratified.

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Indeed, one of the worst things to come out of the Australia-US FTA was that it extended copyright terms from creator’s life plus 50 years to creator’s life plus 70 years, in addition to extending patent protections, which have raised the cost of pharmaceuticals in Australia. The TPP effectively augments these IP extentions, thereby precluding Australia from undertaking meaningful reform even if it wanted to.

Unfortunately, Coalition Governments have for a long time supported a stronger IP system. For example, with regards to the Australia-US FTA, the former Howard Government argued:

The inclusion of the Intellectual Property Chapter recognises the importance of a strong intellectual property regime to economic growth through trade and investment. Australians will benefit through closer harmonisation of our already strong intellectual property regime with that of the largest intellectual property market in the world.

Closer alignment in intellectual property laws and practices will provide Australian exporters with a more familiar and certain legal environment for the export of value-added goods to the US. Likewise, the ability of Australian innovators to attract investment from the US will be enhanced through greater familiarity and confidence of those investors with our legal system.

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The essence of which were the erroneous assumptions that:

  • a stronger intellectual property regime will encourage growth through trade and investment;
  • closer alignment of intellectual property rights would increase exports to the US; and
  • closer alignment of intellectual property rights would increase US investment in Australia.

For his part, Australia’s current Attorney-General, George Brandis, has argued that strong intellectual property rights are “central to ensuring” the “ongoing success” of “Australian art, music, literature, film and television”.

Perhaps the only useful thing to come out of the PC’s review is that it will examine the role of IP in trade deals, such as the TPP, hopefully making it more difficult for governments to sell Australians out in future agreements.

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Even so, much of the damage has already been done.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.