House of Representatives Speech- Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012]

The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012] is a major reform of the intellectual property system. It is the culmination of two years of extensive consultation with interested parties. The bill will improve many parts of the intellectual property system including the patents, trademarks, copyright, designs and plant breeders' rights acts. The bill will ensure that Australia maintains a world-class intellectual property system, an IP system that fosters Australian innovation in the modern global economy.

I present the explanatory to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012] and move:

That this bill be now read a second time.

The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012] is a major reform of the intellectual property system. It is the culmination of two years of extensive consultation with interested parties. The bill will improve many parts of the intellectual property system including the patents, trademarks, copyright, designs and plant breeders' rights acts. The bill will ensure that Australia maintains a world-class intellectual property system, an IP system that fosters Australian innovation in the modern global economy.

Australian innovation is critical to the resilience of the economy through changing times. Innovation makes our economy more competitive, but the extent of innovation necessary to keep our economy competitive cannot happen on its own. In addition to requiring support and investment, innovation requires a strong intellectual property system. A strong IP system underpins investment in innovation. This was recognised in Powering ideas, the government's innovation agenda for the 21st century. A strong IP system provides investors an opportunity to recoup the investments necessary to bring their ideas to the marketplace. The IP system also gives the public and innovators the tools necessary for further innovation through published information about new technology. As also recognised in Powering ideas:

The trick is to get the balance right: too little protection will discourage people from innovating because the returns are uncertain; too much protection may discourage people from innovating because the pathways to discovery are blocked by other intellectual property owners.

The reforms set out in this bill seek to improve that balance by addressing six key areas: patent standards, research freedom, reducing delays in resolving patent and trademark applications, improvements to the attorney profession, trademark and copyright infringement, and technical improvements to the IP system.

I turn to schedule 1, Patent standards. First the bill seeks to raise patent standards. This addresses concerns that Australia's standards are lower than standards elsewhere, which discourages export of the technology we develop and inhibits the growth of Australian business. Lower Australian patent standards actually disadvantage Australian patent holders who should be able to take their inventions overseas with confidence that they will qualify for patent protection in Australia's major trading partners. Lower patent standards may also clutter the Australian innovation landscape with broad patents that would not meet the standards of our major trading partners getting in the way of Australians who might otherwise be able to develop inventions in new areas.

A theme in this bill is one of recalibrating and raising Australian standards to align them more closely with those of other major trading partners around the world. Some patent standards around the world have developed to the point where there is an aligned approach internationally. In such cases where there is an aligned global approach, the bill raises Australian patenting standards to that common approach.

The bill raises patent standards in three important areas. First, it raises standards with respect to the information provided in patent applications and specifications. Disclosure is a cornerstone of the patent system. Patents are an exchange between inventors and the public. In exchange for a 20-year monopoly on commercialisation, the innovator must tell the public how their idea works. This disclosure allows for potential follow-on investors to build on initial work to produce even better innovations.

The bill raises standards to require that the patent right is consistent with the information provided in the patent specification. There must be enough information disclosed for the public to make and use the invention. Also, a specific substantial and credible use for the invention must also be disclosed and the scope of the claims for patent protection must not extend beyond what has been disclosed.

Importantly, the amended provisions mirror similar provisions in the United Kingdom and Europe. It is intended that Australian courts will have regard to developments in the law in the courts of these other jurisdictions when interpreting the new provisions and will develop Australian law in a consistent fashion. This will help Australian exporters to have the confidence that a patent granted in Australia is likely to be matched by a patent granted in major overseas markets. Secondly, the bill raises standards for inventiveness. Raising the standards for inventiveness allows the patent system to better recognise the global innovation environment and reflect the modern economy's improved access to information. We must not grant a patent for something that has been done before. The bill ensures that the patent system takes into account all published information that is reasonably available and accessible to the public. It will also ensure that this information is assessed against the background of knowledge of the skilled person, regardless of where that person resides.

Thirdly, the bill ensures that a consistent standard of proof is applied by the Commissioner of Patents in all decisions and expands the grounds that the commissioner can consider during examination and re-examination. Someone who seeks a patent will bear the burden of showing that they are entitled to patent protection. The bill requires the commissioner to be satisfied, on the balance of probabilities, that a patent, if granted, will be valid.

Taken together, these changes ensure that only high-quality patents are granted in Australia. They make sure that the scope of disclosure is commensurate with the monopoly granted. They will make sure that patents are only granted for innovations that warrant patent protection. They will also ensure that the Commissioner of Patents can apply robust standards when assessing whether or not a patent should be granted and whether or not a patent should be revoked.

Schedule 2 —R esearch freedom

The second category of reforms responds to concerns that patent rights can sometimes deter or block innovation by discouraging researchers from developing further innovations or spin-offs. We need to set our researchers free and ensure that the patent system encourages further innovation. The key reform in this category introduces an explicit provision permitting experimentation to be conducted without infringing patent rights. This amendment will give comfort to researchers in Australia and is strongly supported by Australia's research sector.

The amendment strikes a balance between the rights of patentees and the rights of subsequent researchers. The exemption protects researchers and follow-on innovators as long as what they are doing is predominantly for research and experimental purposes. The exemption is intended to allow for some areas of commercial activity—for example, where the researchers are doing their work under contract and are accepting payment to do experiments to improve on or test a patented invention to see how it works. However, if the purpose is primarily commercial—such as where the researcher is seeking to commercialise the patented invention—the amendment protects the interests of patent owners because it will not apply where the main purpose is to commercialise the invention or manufacture it for sale.

A second reform introduces an amendment to exempt research activities necessary for gaining premarket or premanufacturing regulatory approval from infringement. This ensures that a patent owner gets no more than the statutory period of protection. Such an exemption already exists for particular regulatory activities in the pharmaceutical industry. The amendment expands this exemption to apply to all technologies. Currently, a patentee can delay a competitor's entry into the market when the patentee's patent expires by threatening the competitor with infringement proceedings if they seek to do the work necessary to gain regulatory approval during the patent term. This gives the patentee a de facto extension on the term of their patent. The amendments will enable competitors to make the preparations necessary to enter the market as soon as a patent has ceased or expired. The amendments will not, however, allow the competitor to stockpile their product during the patent term, or to make or use it in any way that detracts from the patentee's exclusive rights to commercial advantage from their invention during the term of the patent. The amendments in schedules 1 and 2 also address some of the concerns raised in recent inquires into gene patents.

In 2004 the Australian Law Reform Commission released its report entitled Genes and ingenuity: gene patenting and human health following a two-year inquiry into patenting laws and practices related to genetics and related technologies, including the impact of gene patents on human health and cost-effective provision of health care.

In 2010, the Senate Community Affairs References Committee released its report Gene patents, following its inquiry into the impacts of gene patents on health care and medical research. Both reports recommended technology-neutral changes to raise patent standards and introduce a research exemption. These changes are reflected in schedules 1 and 2 of the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 [2012]. The government has committed to implement further recommendations from the reports. These include a review of existing compulsory licensing provisions and consultation on further reforms to the patent legislation to reword using contemporary language for legislative test for patent eligible subject matter and to introduce a morality exclusion.

Schedule 3—Reducing delays in resolving applications

The third category of reforms is aimed at making the patent and trademark application process more efficient. These changes will speed up the processes for determining applications for IP rights. They will also prevent tactical use of the system by those who profit from delay. The amendments target two key areas.

The first area is the process of opposing patent and trademark applications. Opposition processes permit any person who might be adversely impacted by issue of an IP right to come forward and oppose it. Oppositions are intended to provide for a swift and efficient administrative resolution where a third party has concerns about the grant of an IP right. However, oppositions have become increasingly more complicated and protracted. The bill introduces a series of reforms aimed at resolving opposition proceedings more efficiently while still ensuring a fair outcome, and ensuring that any delays are truly unavoidable ones.

The second area relates to what are called 'divisional' patent applications. Patent systems around the world permit a patent application to be divided into one or more divisional applications, primarily to account for circumstances where more than one invention is claimed in the original application. However, the provisions are not as clear as desirable and sometimes divisional applications are used to delay finalisation of a particular invention or frustrate a third party. The reforms tighten the provisions for divisional applications, particularly time frames for making applications. This will reduce opportunities to delay finalisation of applications.

Schedule 4 Improvem ents to the attorney profession

A fourth category of reforms improves various aspects of Australia's intellectual property profession. If we expect more from intellectual property attorneys to meet the higher standards provided for in the bill, it is reasonable to extend to them the privileges available to other professions. The bill makes two key changes to the patent and trademarks attorney professions in Australia.

The first change will permit patent and trademark attorneys to conduct all aspects of their business through a corporate structure. Patent and trademark attorneys are currently unable to do this, and this restriction is enforced through criminal sanctions. This is at odds with how other professions are regulated and are able to conduct their businesses in Australia. The bill amends the Patents and Trademarks Acts to allow a company to act and describe itself as a patent attorney. The new provisions are modelled closely on corresponding provisions of the Model Law for the regulation of the legal profession around Australia, with some variations necessitated by the different function and structure of the two professions. This is a reform that has been long sought-after by the patent attorney profession, and aligns that profession more closely with other professions in Australia.

The second change will extend the privilege that attaches to certain communications. At present, only certain communications to and from attorneys who are registered in Australia are privileged. In a globalised economy, in which IP rights are sought and prosecuted around the world, it is important that the privilege in Australia extends more broadly than only to Australian registered attorneys. The bill extends privilege to overseas attorneys who are authorised to provide intellectual property advice and better aligns patent and trademark attorney privilege with that attaching to communications to and from lawyers. Similar amendments, applying to privilege attaching to communications to and from legal practitioners, were introduced by this government through the Evidence Amendment Act 2008.

Schedule 5—Trademark and copyright infringement

The fifth category of reforms introduced by the bill will improve the ability of trademark and copyright owners to enforce their rights. Trademark rights will also be strengthened by improving the remedies available when the rights have been found to have been infringed. We are setting higher standards for the granting of intellectual property rights. It is reasonable that higher standards also apply to their enforcement. There are three areas for improvement. The first relates to the criminal penalties available for infringements of registered trademarks. Criminal penalties play an important role in trademark enforcement, by deterring infringements and punishing infringers. There have been concerns expressed that Australia's criminal penalties are too low to operate as an effective deterrent. The bill addresses this concern by increasing the criminal penalties for existing offences. Higher penalties will be more effective in deterring infringement of trademark rights. The changes also introduce some summary offences, but with lower fault elements and lower penalties. This will provide greater flexibility to law enforcement agencies when prosecuting trademark crimes. These changes also bring the criminal penalties under the Trade Marks Act into closer alignment with those under the Copyright Act.

The second area of improvements to IP enforcement relates to the civil remedies available for infringements of trademarks. These amendments will introduce a further remedy in civil actions for trademark infringement. At the moment, the trademark owner can seek damages, an account of profits, or injunctive relief. This is out of step with the remedies available under other IP laws, which also allow the IP rights owner to obtain what are called 'additional' or 'exemplary' damages. The aim of awarding additional damages is to increase the deterrence for infringers. The bill amends the Trade Marks Act to introduce exemplary damages as an additional remedy to trademark infringement.

The third area of improvements relates to the powers of the Australian Customs and Border Protection Service to intercept goods that infringe copyrights or registered trademarks at the border. The bill improves the existing arrangements by permitting Customs officials to provide more information to copyright and trademark owners about goods that are seized at the border. The bill also requires that Customs only release seized goods if the importer lodges a claim for return, which must include the identity and address of the importer and be filed within a specified time period. These changes will help rights owners in deciding whether or not to commence an infringement action. And then they will also help in the commencement of infringement proceedings.

Schedule 6—Technical improvements to the IP system

The sixth category of reforms is a collection of technical improvements and changes, clarifications and updates to the Patents Act, the Trade Marks Act, the Plant Breeder's Rights Act and the Designs Act. The measures implemented in this category share the common themes of modernising aspects of Australia's IP system, increasing transparency in the decision-making process, and generally making the system easier to use.

In particular, the amendments include a number of changes that improve the flexibility of the IP rights system for users. Examples of changes in this area are the changes to improve processes for resolving ownership disputes. Current processes can be unduly complex, making it difficult for the commissioner to resolve disputes and correct ownership details in the patent register. The changes proposed by the bill will give the commissioner greater flexibility to decide disputes and correct the register, ensuring that the public has correct information about who a patent has been granted to.

Another example is extending the jurisdiction of the Federal Magistrates Court to hear trademark and design matters. This provides innovators with the option of a less formal, more speedy and cost effective alternative for considering less complex trademark and design matters.

This bill represents a comprehensive package of improvements to the IP system. It is the most comprehensive package of reforms in the lifetime of the current Patents Act. These changes bolster support for innovation in Australia and better equip Australians to commercialise their innovations in the evolving modern economy.