The AFR’s Alan Mitchell has written a good piece today arguing that for the Turnbull Government’s “innovation agenda” to succeed, it must wind-back its patent protections, citing the findings of the Productivity Commission’s (PC) Draft Report on intellectual property:
Like most economists, it [the PC] clearly believes Australian governments have bowed too readily to pressure, much of it from the United States, to grant more and stronger patent rights.
“It appears to have become accepted wisdom that because some patenting plays a role in promoting innovation, more and stronger patents are always better,” it says.
Yet excessively restrictive patent laws stifle competition and innovation… The commission argues that the system, as it now operates in Australia, is “failing to meet the principles of a well functioning intellectual property system”.
The strength of rights provided to patent holders is excessive and businesses are using the system strategically and anti-competitively.
“As a result, the current arrangements are frustrating the efforts of follow-on innovators and researchers and raising the costs of innovation, imposing costs on consumers of technology and the broader community.”
Unfortunately, it will be incredibly difficult for Australia to wind-back its intellectual property protections as these have been ‘set in stone’ by Australia’s so-called free trade agreements (FTAs) signed with the US.
Under the Australia-US FTA (AUSFTA), both patent and copyright terms were extended, which has raised the cost of pharmaceuticals and copyrighted materials, in particular.
As noted by Peter Martin, the extension of pharmaceutical patents under the AUSFTA, from 14 years to 20 years, has “suppressed the development of a generic drugs industry and cost the government $200 million per year by slowing the entry of cheap generic drugs into the pharmaceutical benefits scheme”. Moreover, “generic manufacturers have missed out on an estimated $2 billion over eight years” whereas “70 per cent of drug patents expire later in Australia than in other countries”.
The recently signed Trans-Pacific Partnership (TPP), which was led by the US, further bolstered both patent and copyright protections, thus making meaningful reform all but impossible once ratified.
The end result of which will be the antithesis of “free trade” and the innovative economy spruiked by Malcolm Turnbull.
