Source: https://www.legislation.gov.au/Details/C2019B00136/Explanatory%20Memorandum/Text
Timestamp: 2020-08-04 02:59:34
Document Index: 685874

Matched Legal Cases: ['art 2', 'art 1', 'art 2', 'art 1', 'art 2', 'art 1', 'art 2', 'art 1', 'art 1', 'art 2', 'art 2', 'art 3']

Statement of compatibility with human rights. 5
Notes on clauses. 10
Schedule 1 - Responses to the Productivity Commission. 11
Part 2 – Innovation patents. 14
Schedule 2 - Crown use of patents. 16
Part 1 - Amendments. 16
Part 2 - Application and transitional provisions. 27
Schedule 3 - Crown use of designs. 29
Part 1 - Amendments. 29
Part 2 - Application and transitional provisions. 38
Schedule 4 - Compulsory licenses. 40
Schedule 5 - Seals. 48
Schedule 6 - Specifications. 49
Schedule 7 - Protection of information. 51
Schedule 8 – International applications. 53
The Productivity Commission (PC) completed its public inquiry into Australia’s IP Arrangements and published the final inquiry report on 18 August 2016 (2016 PC Report).[1] The Government asked the PC in its inquiry to consider whether current IP arrangements provide an appropriate balance between access to ideas and products, and encouraging innovation, investment and the production of creative works. The then Minister for Industry, Innovation and Science and the Minister for Communications announced the release of the Government’s response to the 2016 PC Report on 25 August 2017. The 2016 PC Report included a number of recommendations on IP matters, which received support from the Government.[2]
· Schedule 1 – Responses to the Productivity Commission
· Schedule 2 – Crown use of patents
· Schedule 3 – Crown use of designs
· Schedule 4 – Compulsory licences
· Schedule 5 – Seals
· Schedule 6 – Specifications
· Schedule 7 – Protection of information
· Schedule 8 – International applications
The PC recommended that an objects clause be included in the Patents Act.[3] An objects clause is a provision, usually found at the beginning of legislation, which gives readers a general understanding of the legislation’s purpose, or sets out general aims or principles that help readers to interpret its detailed provisions. The PC considered that inclusion of an objects clause would help ensure that the patent system remains adaptable and fit-for-purpose, particularly as new technologies emerge and as economies and business models evolve. The PC also considered that an objects clause would help frame policy debates and reform. Part 1 of Schedule 1 to the Bill will insert an objects clause into the Patents Act.
The PC[4] and the former Advisory Council on Intellectual Property (ACIP)[5] have recommended that the innovation patent system be abolished. Both found that the innovation patent system is unlikely to provide net benefits to the Australian community or to the small and medium sized enterprises (SMEs) who are the intended beneficiaries of the system. The PC found that the majority of SMEs who use the innovation patent system do not obtain value from it, and that the system imposes significant costs on third parties and the broader Australian community. Given the overall lack of net benefits, the Government made the decision to abolish the innovation patent system.
The Government’s response to the 2016 PC Report also noted that the Government would consult further on the following recommendation made by an earlier report by the PC, Compulsory Licensing of Patents in 2013 (2013 PC Report)[6]:
Details of the amendments to the Patents Act and the Designs Act are set out below in the notes on Schedules 2 and 3 to the Bill respectively.
Compulsory licencing is one of several safeguards in the Patents Act that allow a patented invention to be used without the authorisation of its owner. These safeguards can be invoked in exceptional circumstances where exercising the exclusive rights associated with a patent would not serve the best interests of the community.[7] The 2013 PC report and other reviews have raised issues with, and recommended amendments to, the compulsory licensing provisions.
· Schedule 5 – Seals (both Acts)
· Schedule 6 – Specifications (Patents Act only)
· Schedule 7 – Protection of information (Patents Act only)
· Schedule 8 – International applications (Patents Act only)
Details of the amendments to the Patents Act and the Trade Marks Act are set out below in the notes on those Schedules.
Schedule 1: Responses to the Productivity Commission[8]
· the right to enjoy the benefits of scientific progress and its applications – Article 15(1)(b) of the International Covenant on Economic, Social and Cultural Rights (ICESCR)
· the right to the protection of interests resulting from one’s scientific and artistic production – Article 15(1)(c) of the ICESCR
Schedule 7 – Protection of information
Schedule 1, Part 2 – Innovation patents
The IPS was established with the intention of promoting innovation by protecting those innovations or inventions that would not meet the threshold of a standard patent. The policy intention of the IPS was to encourage SMEs to innovate and benefit from their scientific progress. In practice however, the innovation patent system has been found to have limited use by SMEs as 74 per cent of SMEs and private inventors filed once and never again; 83 per cent never received an enforceable right; and 78 per cent let their innovation patent expire early rather than pay the minor cost of the renewal fee.[9] The Productivity Commission found that the majority of SMEs who use the innovation patent system do not obtain value from it, and that the system imposes significant costs on third parties and the broader Australian community.[10] Given this, the innovation patent system has shown to be unlikely to provide net benefits to the Australian community or to the SMEs who are the intended beneficiaries of the system.
Schedule 2, Part 1– Crown use of patents
Schedule 3, Part 1 – Crown use of designs
Schedule 4 – Compulsory licences
1. Upon enactment, the Bill will be known as the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2019.
9. Currently the Patents Act does not contain an objects clause. A number of reports,[11] including the 2016 PC Report, have recommended the introduction of an objects clause into the Patents Act, which the Australian Government has accepted.[12] These reports found that the patent system lacked a clear objective or overarching framework to guide decision makers and the community.
16. The term ‘economic wellbeing’ is intended to indicate that the benefits of the patents system are primarily economic in nature. This limits the application of the objects clause to only economic factors and excludes ethical and social considerations. It has been suggested,[13] and not specifically addressed or rebutted in other reports,[14] that the objects clause should impute ethical and social considerations into the patents system. However, ethical matters are difficult to consider objectively and including subjective considerations may lead to unintended adverse outcomes, particularly where the moral standard in which to judge an ethical matter is not defined or changes over time.
21. The use of the term ‘technological’ or ‘technical’ is used internationally in the context of objects of IP systems. For example, the Agreement on Trade-Related Aspects of Intellectual Property refers to ‘technological innovation’[15] and that patents ‘shall be available…in all fields of technology’[16].
Part 2 – Innovation patents
40. The provisions were reviewed by the 2013 PC Report.[17] The PC was concerned that aspects of the process in using these provisions created uncertainty and that there was also a lack of transparency in the way in which they operated.
43. At the moment, Crown use can be invoked without any prior notice to the patentee – although there is provision for subsequent discussion about remuneration. To improve transparency and accountability, the amendments will provide that governments are required to first seek a negotiated outcome (such as a licence to use the patent) with the patent owner. These requirements to first attempt to negotiate with the patent owner do not apply in an emergency.
non-government entities providing public services.[18] The amendments made by this item addresses this uncertainty by making clear that the term ‘services’ in relation to the Commonwealth, a State or a Territory includes services primarily provided or funded by government. The intention is that this primary responsibility test will take account of all providers of similar services to those provided or funded by a government, including non-government providers.
68. Previous reviews have contended that there was a lack of clarity about which entities constituted the Crown.[19] A number of entities could potentially qualify as the Crown, including: employees; commissions; statutory authorities; statutory corporations; government business entities; government owned corporations; and private corporations under contract to the government. Similar concerns of ambiguity relate to whether some research institutes have sufficient government involvement to be considered the Crown.[20]This lack of clarity about which entities constituted the Crown may also lead to a lack of certainty as to who may authorise exploitation by non-government entities under the Crown use provisions.
74. New subsection 163(4) provides that the instrument of approval made by the relevant Minister under paragraph 163(3)(b) is not a legislative instrument under paragraph 8(6)(a) of the Legislation Act 2003. This subsection is intended as a declaratory statement of the law rather than representing a departure from the requirements of the Legislation Act. The instrument of approval has the effect of approving a particular person to take a particular action or act in a particular way. As such, the approvals are administrative in character; they facilitate the carrying out of particular powers and functions. This is aligned with item 4 of regulation 6 of the Legislation (Exemptions and Other Matters) Regulation 2015 which provides that an instrument that has the effect of authorising or approving a particular person to take a particular action is not legislative in character.
75. New subsection 163(5) introduces a new definition into the Act. The subsection defines “relevant Minister” which is referred to in section 163 and in several following sections. In the case of exploitation by or on behalf of the Commonwealth, the relevant Minister is the Minister responsible for the administration of the Patents Act, as provided for in Section 19 of the Acts Interpretation Act 1901. In the case of exploitation by or on behalf of a State or Territory, the relevant Minister is the appropriate State or Territory Attorney-General.
79. An emergency would include an unforeseen occurrence or a sudden and urgent occasion for action[21]. It could include a public health crisis such as a plague or epidemic, or a medical emergency such as a pandemic. It could also include war, national security situations, perceived threats to law and order, natural disasters and other situations of urgency. It includes, but is not limited to, situations where a state of emergency has been declared by a government. The amendments do not specify any considerations as to what constitutes an emergency, as the nature of emergency situations is inherently unpredictable, and in such situations it is important that a government can act quickly and that all possible situations are covered by the legislation.
80. It is expected that this would be a rarely exercised power, particularly given that there have only been two reported cases in which Crown use has been contested in court.[22] Given this and the urgency inherent in the situation, a decision to authorise Crown use in an emergency is not subject to merits review.
83. New subsection 163A(5) provides that the instrument of approval made by the relevant Minister under paragraph 163A(3)(b) is not a legislative instrument under paragraph 8(6)(a) of the Legislation Act 2003. This subsection is intended as a declaratory statement of the law rather than representing a departure from the requirements of the Legislation Act. The instrument of approval has the effect of approving a particular person to take a particular action or act in a particular way. As such, the approvals are administrative in character; they facilitate the carrying out of particular powers and functions. This is aligned with item 4 of regulation 6 of the Legislation (Exemptions and Other Matters) Regulation 2015 which provides that an instrument that has the effect of authorising or approving a particular person to take a particular action is not legislative in character.
88. Currently, section 165 gives no guidance how remuneration is to be determined.[23] Existing subsection 165(2) provides that, when parties fail to come to an agreement, either party can apply to a prescribed court for a determination on any terms of the exploitation, including remuneration. In the 2013 PC Report, the PC referred to previous reviews of the Crown use provisions[24], where it was contended that the lack of guidance on pricing can leave patentees disadvantaged, and that the lack of an applied standard or criterion to refer to in negotiations could weaken their bargaining position in seeking to obtain fair and equitable agreement. This was particularly the case for small and medium enterprises, which did not have the negotiating power or skills of large businesses.[25]
91. New subsection 165(2) provides that in determining the amount of remuneration, the prescribed court must determine an amount of remuneration that is just and reasonable and must take into account the economic value of the exploitation of the invention and any other matter the court considers relevant. This remuneration standard is a combination of the standard recommended by the PC[26] and that of the former ACIP.[27] It strikes an appropriate balance between ensuring compliance with international requirements as well as being sufficiently wide to take account of other considerations apparent in the circumstances of each case.
Item 24: Schedule 1 (definition of exploited for Crown purposes)
Item 25: Schedule 1 (definition of relevant authority)
Item 26: Schedule 1 (definition of relevant Minister and services)
Item 27: Schedule 1 (definition of State)
134. Previous reviews of the Crown use provisions in the Patents Act (and which are also applicable to the designs system) have identified uncertainty about the extent to which the infringement exemption arising under Crown use would extend to third-party non-government entities providing public services.[28] The amendments made by this item addresses this uncertainty by making clear that the term ‘services’ in relation to the Commonwealth, a State or a Territory includes services primarily provided or funded by government. The intention is that this primary responsibility test will take account of all providers of similar services to those provided or funded by a government, including non-government providers.
149. Previous reviews have contended that there was a lack of clarity about which entities constituted the Crown[29] in the Patents Act (and these concerns are equally applicable to the Designs system). A number of entities could potentially qualify as the Crown, including: employees; commissions; statutory authorities; statutory corporations; government business entities; government owned corporations; and private corporations under contract to the government. Similar concerns of ambiguity relate to whether some research institutes have sufficient government involvement to be considered the Crown.[30] This lack of clarity about which entities constituted the Crown may also lead to a lack of certainty as to who may authorise use by non-government entities under the Crown use provisions.
155. New subsection 96(4) has been included to assist readers. The subsection provides that the instrument of approval made by the relevant Minister under paragraph 96(3)(b) is not a legislative instrument, as it is exempt under item 4 of regulation 6 of the Legislation (Exemptions and Other Matters) Regulation 2015. Subsection 96(4) is a declaratory statement of the law in the Legislation (Exemptions and Other Matters) Regulation 2015, rather than representing a departure from the requirements of the Legislation Act 2003.
156. New subsection 96(5) introduces a new definition into the Act. The subsection defines ‘relevant Minister’ which is referred to in section 96 and in several following sections. In the case of use by or on behalf of the Commonwealth, the relevant Minister is the Minister responsible for the administration of the Designs Act, as provided for in Section 19 of the Acts Interpretation Act 1901. In the case of use by or on behalf of a State or Territory, the relevant Minister is the appropriate State or Territory Attorney-General.
161. An emergency would include an unforeseen occurrence or a sudden and urgent occasion for action[31]. It could include a public health crisis such as a plague or epidemic, or a medical emergency such as a pandemic. It could also include war, national security situations, perceived threats to law and order, natural disasters and other situations of urgency. It includes but is not limited to situations where a state of emergency has been declared by a government. The amendments do not specify any considerations as to what constitutes an emergency, as the nature of emergency situations is inherently unpredictable, and in such situations it is important that a government can act quickly and that all possible situations are covered by the legislation.
165. New subsection 96A(5) has been included to assist readers. The subsection provides that the instrument of approval made by the relevant Minister under paragraph 96A(3)(b) is not a legislative instrument, as it is exempt under item 4 of regulation 6 of the Legislation (Exemptions and Other Matters) Regulation 2015. Subsection 96A(5) is a declaratory statement of the law in the Legislation (Exemptions and Other Matters) Regulation 2015, rather than representing a departure from the requirements of the Legislation Act 2003.
169. Currently, section 98 gives no guidance on how remuneration is to be determined[32]. Existing subsection 98(1) provides that, when parties fail to come to an agreement, either party can apply to a prescribed court for a determination on any terms of the use, including remuneration. The PC referred to previous reviews of the Crown exploitation provisions in the Patents Act[33], where it was contended that the lack of guidance on pricing can leave patentees disadvantaged, and that the lack of an applied standard or criterion to refer to in negotiations could weaken their bargaining position in seeking to obtain fair and equitable agreement. This was particularly the case for small and medium enterprises, which did not have the negotiating power or skills of large businesses.[34] These considerations of the Crown exploitation provisions in the Patents Act are equally applicable to the designs system.
172. New subsection 98(2) provides that in determining the amount of remuneration, the prescribed court must determine an amount of remuneration that is just and reasonable and must take into account the economic value of the use of the design and any other matter the court considers relevant. This remuneration standard is a combination of the standard recommended by the PC[35] and that of the former ACIP[36] in considering Crown use of patents. It strikes an appropriate balance between ensuring compliance with international requirements as well as being sufficiently wide to take account of other considerations apparent in the circumstances of each case.
207. As currently drafted, subsection 133(3B) of the Patents Act does not limit who can apply for a compulsory licence in order to exploit a ‘dependent patent’ – one which can only be exploited by also exploiting an earlier patent (the ‘original patent’) . This has the effect that a third party can apply for a compulsory licence in relation to a dependent patent, leading to inequitable and illogical outcomes:
211. This item inserts the subheading ‘Application for an order granting a compulsory licence’. This change has been made to assist in reading section 133.
213. This item inserts the term ‘(the original invention)’ after ‘patented invention’. This change is consequential to amendments made by item 6.
220. New paragraph 133(3)(c) retains the condition in current subparagraph 133(2)(a)(i) that the applicant must have attempted, for a reasonable amount of time, but without success, to obtain authority from the patentee to use the invention. However, under the new paragraph 133(3)(c) the requirement has changed from obtaining authority to work the invention to obtaining authority to exploit the original invention. This has been amended for consistency with other parts of the Act, including Part 3 of Chapter 12.
226. The intent of the ‘public interest’ test is to recognise the balance required between the rights of the patent holder and the interests of the broader public.[37] New paragraph 133(3)(e) sets out three factors for the court to have regard to when considering the public interest:
242. This item inserts the subheading ‘Revocation of licence’ before subsection 133(6) to assist in the reading of section 133.
Item 2 – Electronic seal – new provision
Item 3 – Seal of Trade Marks Office
Item 4 – Electronic seal – new provision
270. To avoid having to publish this information for patent applications under the PCT, the Patents Regulations were amended in 2016 by the Intellectual Property Legislation Amendment (Single Economic Market and Other Measures) Regulation 2016. The amendments allow both the International Bureau of WIPO and IP Australia to omit this sensitive information from publication for PCT applications, and instead allow publishing redacted versions.
Item 1 – Documents open to public inspection
Item 2 – Certain documents and information not to be published or open to public inspection
Item 3 – Certain documents and information not to be published or open to public inspection – new provision
Schedule 8 – International applications
[1] Productivity Commission 2016, Intellectual Property Arrangements, Inquiry Report No. 78, Canberra.
[6] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, Accessed 30 January 2018
[8] Productivity Commission, 2016, Intellectual Property Arrangements, Inquiry Report No. 78, Canberra, pp 257
[9] IP Australia, The Economic Impact of Innovation Patents, IP Australia Economic Research Paper 05, 2015, p 3
[10] Productivity Commission 2016, Intellectual Property Arrangements, Inquiry Report No. 78, Canberra, pp 239-262
[11] The Senate Community Affairs References Committee, 2010, Gene Patents, Canberra; Advisory Council on Intellectual Property, 2010, Patentable Subject Matter; Productivity Commission, 2016, Intellectual Property Arrangements, Inquiry Report No. 78, Canberra.
[12] Department of Industry, Innovation and Science, 2017, Australian Government Response to the Productivity Commission Inquiry into Intellectual Property Arrangements, p. 8.
[13] Advisory Council on Intellectual Property, 2010, Patentable Subject Matter, pp. 27-28.
[14] Productivity Commission, 2016, Intellectual Property Arrangements, Inquiry Report No. 78, Canberra.
[15] Article 7 of the Agreement on Trade-Related Aspects of Intellectual Property.
[16] Article 27 of the Agreement on Trade-Related Aspects of Intellectual Property.
[17] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra.
[18] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p. 173.
[19] Advisory Council on Intellectual Property 2005, Review of Crown Use Provisions for Patents and Designs, Australian Government, Canberra.
[20] Australian Law Reform Commission 2004, Genes and Ingenuity: Gene Patenting and Human Health, Report no. 99.
[22] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, pp. 165-166.
[24] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p.178.
[26] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p.181.
[28] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p. 173.
[29] Advisory Council on Intellectual Property 2005, Review of Crown Use Provisions for Patents and Designs, Australian Government, Canberra.
[30] Australian Law Reform Commission 2004, Genes and Ingenuity: Gene Patenting and Human Health, Report no. 99.
[33] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p.178.
[35] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, p.181.
[36] Advisory Council on Intellectual Property, 2005, Review of Crown Use Provisions for Patents and Designs, p. 4.
[37] Productivity Commission 2013, Compulsory Licensing of Patents, Inquiry Report No. 61, Canberra, Accessed 30 January 2018, p 151