Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.

Wednesday, December 21, 2016

Productivity Commission's Final Report on Intellectual Property Arrangements Now Available

By Lev Gutkin, Lawyer

The Productivity Commission IP marathon was completed yesterday with the publication of the Final Report on IP Arrangements.

Unsurprisingly, given the wide scope and limited time, the Final Report is a mixture of good and bad. Some of the more concerning themes evident in the Draft Report published in April (discussed in our prior post) have not been changed by intense lobbying or, indeed, by evidence. Despite covering a huge volume of material (the report is over 700 pages), many of the individual sections are superficial, showing that in-depth understanding of the nuances of the more complex areas of law considered may not have been fully achieved.

Instead of providing high level recommendations, the Final Report often descends to individual and quite specific detail, including legal drafting recommendations. For example, the effect of recommendation 7.2 is to specify the detail of legislative wording, down as far as the detail of the matters to be mentioned in the Explanatory Memorandum.

Of particular concern is the section on the patents system, in which some of the recommendations suggest a misunderstanding of the existing law. In its attempt to prevent the grant of what it labels as 'low-value' patents, the Commission has recommended further revisions to the test for obviousness, notwithstanding the relatively recent enactment of the Raising the Bar reforms. The current law of obviousness has been refined through numerous judicial decisions, and modification of it through legislative intervention of the nature proposed by the Commission will be difficult to properly carry out, with unintended consequences likely.

On the other hand, many of the recommendations are quite sensible, particularly those which adopt the considered recommendations of previous detailed reviews.

The notable recommendations made in the Final Report are listed below.


The Commission has maintained its recommendations that:

  • A broad fair use exception to copyright infringement be introduced.
  • Circumvention of geoblocking technology be permitted.
  • The restrictions on parallel importation of books be repealed.

The Commission has also recommended that:

  • Parts of agreements that restrict or prevent use of copyright that would otherwise be permitted by a statutory exception be made unenforceable. The Commission also recommended that circumvention of technological protection measures for 'legitimate uses', (an example would appear to be the carrying out of acts allowed by statutory exceptions to infringement), be permitted.
  • The governance and transparency requirements for collecting societies be improved.
  • There should be limited liability for the use of orphan works where a diligent search to locate the rights holder has been carried out. 


The Commission has maintained its recommendations that:

  • The obviousness threshold ought to be raised. The Commission further recommended the following specific wording be included in the Explanatory Memorandum to the amending act:
    • a ‘scintilla’ of invention, or a scenario where the skilled person would not ‘directly be led as a matter of course’, are insufficient thresholds for meeting the inventive step.
    • the ‘obvious to try’ test applied in Europe would in some instances be a suitable test.
  • An objects clause be added to the Patents Act 1990 (Cth). 
  • The innovation patent system be abolished.
  • Extensions of term should be calculated based on the time taken for regulatory approval over and above one year, and the data collection requirements of s 76A of the Patents Act 1990 (Cth) be strengthened. The Commission also specified that extensions should only be possible for patents covering an active pharmaceutical ingredient.
  • There be larger increases in patent renewal fees. The Commission also specified there should be higher fees for patents with a large number of claims.
  • A system be established for the reporting and monitoring of settlement agreements between originator pharmaceutical companies and generics to check for pay-for-delay agreements.
  • There not be extensions made to the period of data protection for any pharmaceutical products, including that applicable to biologics.

The Draft Report included a recommendation that  manufacture for export during a period of patent extension be allowed, but, noting that such a change could be challenged under the Australia–United States Free Trade Agreement, the Final Report instead recommends that Australia pursue in international forums the steps needed to make such a change possible.

The Commission has also recommended that IP Australia change the patent filing process so that the 'technical features' of the invention are identified in the claims. It was also recommended that the Australian Patent Office Manual of Practice and Procedure be updated to specify that it is the 'technical features' that will be assessed for the purposes of inventive step and novelty. Precisely how 'technical features' would be delineated from non-technical features was not made plain.

The Commission has removed its recommendation that patents over business methods and software be expressly not allowed.

Trade Marks

The Commission has maintained its recommendations that:

  • The presumption of registrability at application should not apply to assessments of whether a mark is misleading or confusing.
  • The Trade Marks Office return to its previous practice of routinely challenging applications for marks that contain contemporary geographical references.
  • The ATMOSS database and ASIC business names register should be linked, so that a warning is issued if a business registration may infringe an existing trade mark.
  • Section 123 of the Trade Marks Act 1995 (Cth) be amended to ensure parallel imports of marked goods do not infringe an Australian registered trade mark when the marked good has been brought to market elsewhere by the owner of the mark or its licensee, possibly by using s 97A of the Trade Marks Act 2002 (New Zealand) as a model.

The Commission has also recommended that:

  • The period for which new trade mark registrations cannot be challenged for non-use be reduced to 3 years from 5 years.
  • Applicants be required to state whether they are using or intending to use a trade mark when applying for registration, and IP Australia should subsequently confirm that applicants that state that they are intending to use the trade mark have actually done so. It was also recommended this information be publically recorded on the ATMOSS website.
  • The Australian Grape and Wine Authority Act 2013 (Cth) be amended to permit the Geographical Indications Committee to amend or omit Geographical Indications, using similar processes to those used for determining Geographical Indications.

The Commission chose to remove its recommendation for the reintroduction of mandatory disclaimers to trade mark applications, due to the possible high administrative costs. The Commission also chose not to proceed with its recommendation that defensive trade marks be abolished. The draft recommendation that higher fees apply to marks spanning multiple classes or entire classes was not carried across, the Commission noting that this would disproportionately impact smaller filers.

Plant Breeder's Rights

The Commission has maintained its recommendation that changes be made enabling essentially derived variety declarations to be made in respect of any variety.

Competition, Compliance and Enforcement

The Commission has repeated its call for repeal of s 51(3) of the Competition and Consumer Act 2010 (Cth), which provides some competition-law exceptions for IP assignments and licences. The Commission however also endorsed the recommendations of the Harper Review regarding amendment or repeal of the 'per se' competition related prohibitions.

The Commission reiterated its call for the expansion of the copyright law safe harbour scheme so that it applies to providers of online services in general, not only to Carriage Service Providers.

Also carried across were the recommendations that an open access policy be introduced for publically-funded research.

The Commission added a recommendation that a specialist IP list be introduced to the Federal Circuit Court, with trials limited to two days, caps on costs and damages, a small claims procedure, and jurisdiction to hear all IP matters.

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