PC to review intellectual property laws

By Leith van Onselen

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

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

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

In the lead up to the final round of negotiations for the Trans-Pacific Partnership (TPP) trade agreement, the PC issued a warning that ceding to US demands to extend intellectual property rights could make Australians worse-off:

The history of IP arrangements being addressed in preferential trade deals is not good. Indeed, to the extent that the return to IP holders awarded by more stringent IP laws outweighed the benefits to the broader economy, the provision would also impose a net cost on both partners, lowering trading and growth potential across the bloc.

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, in addition to extending patent protections, which raised the cost of pharmaceuticals in Australia.

Unfortunately, Australia’s Governments have for a long time supported a stronger intellectual property 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.

The essence of which were the 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”.

With these facts in mind, it is good to read today that the PC has been called upon to publicly review Australia’s intellectual property system. From Peter Martin:

Trade Minister Andrew Robb is hostile to the idea of the Productivity Commission anywhere near his trade agreements that contain intellectual property provisions.

Unexpectedly, Joe Hockey has prevailed. On Tuesday the Treasurer asked the commission to examine Australia’s entire intellectual property system and its effect on investment, competition, trade, innovation and consumer welfare.

No one can be certain what it will find. Until now our intellectual property laws have owed more to lobbying than to dispassionate analysis.

The commission is about to be inundated with self-interested submissions from industry telling it that things are just fine as they are. But it is used to such submissions. The inquiry couldn’t be put in better hands.

Well done Joe Hockey. This is great news. At last, one of Australia’s final unexamined monopolies will face public scrutiny. And with it, the role of intellectual property in trade deals, such as the TPP, will be examined once and for all, making it more difficult for governments to sell Australians out in future agreements.

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Unconventional Economist
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  1. Speaking of self-interested lobbying vs dispassionate analysis, why hasn’t the PC assessed the unsubstantiated claims of Joe Hockey re the cost/benefit of a GST on online items<$1000

  2. I hope that it’s a genuine review but if so, it will go against everything that this government stands for and has legislated so far.

  3. Crocodile Chuck

    Why do the Libs repeatedly come down in favour of regulation, trade agreements, etc which make Australia & its citizens worse off?

  4. IMHO the basic underlying problem is that Patents have long ago ceded the moral high ground.. When I was a young (maybe naive) engineer there was a sort of peer reviewed pride in the award of a patent . These days it is flat out embarrassing the rubbish that gets patented AND the BS we need to submit for patents just to stay in the game.Lax standards at the patent office gave raise to the idea of “Patent Thickets” today these are a big part of the problem. Back in the days of innovative patents its was possible to defeat a patent if you could prove prior art but these days it’s pointless trying to defeat a thicket of 20 overlapping patents each one of which will be defended and cost upward of $5M and 2 years to defeat.
    The US gave birth to this patent stupidity and shouldn’t be at all surprised if the rest of the world gives its patents the disrespect they’ve earned.
    Unfortunately incorporating Patents into trade agreements gives the patent holder monopoly legal rights in a country where those effected have no “standing” to even challenge the patent. STUPIDITY!

    • But to play devil’s advocate: If Australia really is to move away from its over-reliance on mining and housing, more IP intensive industries are needed. I agree the USPTO have hardly covered themselves in glory wrt granting weak patents, but this is the game we must play if we are serious about developing IP to leverage against competitors. If we refuse to play this game, on whatever grounds, we will remain firmly on the bottom rug of the league of advanced economies.

      (Disclosure: I am paid to invent in an arena well known for patent thickets).

      • @chrisr I agree as a player you have to play the game, I also have a few (more than a few) patents that are flat out embarrassing, unfortunately (for business and patent horse trading reasons) thickets are absolutely necessary but the necessity does not make the practice moral.
        Without a moral basis for patents (namely the reward for real innovation) patents are at best a comparable to illicit drugs in that you get a quick high but at what long term cost to the society. Defeating Innovative patents (through design) often gives birth to an even more innovative solution and so on and so on, this is the whole rational for public publishing of patents, the greater good arises from seeing the best solutions laid bare (in the disclosure) and then building upon that knowledge or designing around it.
        Patent thickets by comparison are nothing but a tool purpose designed for abuse of the legal system and IMHO should be treated by the courts with the contempt they diverse…….unfortunately Marshal Texas is generally not home to the sharpest tools in the shed, so it’s a joke having international Patent rights determined by a pool of east Texas high school drop outs, it’s not hard to make even the most blatantly obvious method appear innovative when this is the audience.
        OK so to get back to the original premise: What can one do? Players must play the game? yea all true but dont expect respect when this is the game you choose to play, I suspect the disrespect will start at the periphery and spread inwards and were already seeing this wrt many startups choosing to develop product for the rest of the world first and only when they succeed will they attempt to tackle the US market. I know of one very successful Taiwan based company that totally shunned the US market until they basically owned the Rest of the world, its a modern (post 2000) strategy that’s being replicated by many startups today.

      • BTW my favored approach to fixing this problem is to put the responsibility for innovation back onto the Patent applicant. I’d try to do this by allowing for Civil Litigation directly against the Patentee for any ruling of “Inequitable Conduct”. Patents will ultimately be useless unless some honor is restored to the whole process.

      • (Previous reply lost due to dodgy internet connection)
        @China-Bob, id like to discuss at length, but due to time constraints I’ll just make a few quick points 🙂

        I agree the ED Texas venue is very problematic, esp for non – US companies.
        I think companies that innovate while ignoring patents or the US market will sooner or later find themselves having to pay up licensing fees. Even if they avoid the US market, more valuable US filings wil be PCT filed and make their way into other jurisdictions.
        I think that in any area of serious innovation, establishing a decent portfolio is basically the price of admission into that market. And US tech companies are good at keeping that price very high.

        None of the above is intended to meet anyone’s ideas of behaviour deserving respect, it is simply the reality of the world. Andnothing the productivity commission will do can change that.