Productivity Commission Response No 2 – No 2

The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 received Royal Assent on 26 February 2020.

The Act as actually passed (with amendments) is available here (to get the text from Austlii when I went there, I had to download the RTF or plain text format). There is also now a Revised Explanatory Memorandum.

As assented to, section 2 now prescribes that the abolition of the innovation patent regime will occur 18 months after Royal Assent — 26 August 2021.

(Remember, this is achieved by specifying an additional ground for “the formalities check” in new s 52(3) – an application for an innovation patent may pass “the formalities check” only if the date of the patent would be before [26 August 2021]. There is presumably a good reason why it doesn’t just say The Commissioner must reject the application for an innovation patent if the date of the patent would be on or after [26 August 2021].)

The Revised Explanatory Memorandum explains that 18 months has been chosen to ensure that persons who have filed a provisional application or a basic application under the PCT are not prejudiced. Such a person has up to 12 months from the filing date to file a complete application in Australia and an additional 6 months has been allowed to allow them enough time to make a decision.

As you will recall both ACIP and the Productivity Commission recommended abolition of the innovation patent. The Revised Explanatory Memorandum explains that the Government has accepted those recommendations because (footnotes omitted):

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. 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. 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.

Section 4 in the Act as passed also requires the Minister to establish a review of the accessibility of patents for small and medium enterprises within 3 months (i.e. by 26 May 2020). Matters the review should consider include:

(a) the cost of applications for patents; and

(b) processing times of patents; and

(c) advice provided by the Australian Government with respect to the patent application process; and

(d) awareness of the patent application process.

The written report from the review must be submitted to the Minister within 12 months of commencement and the Minister must table it in both Houses of Parliament within 15 sitting days of receiving the report.

In addition to these matters, the Act also:

  • introduces an objects clause into the Patents Act 1990 – Sch 1 Part 1;

The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.

  • revises the Crown use provisions in both the Patents Act and the Designs Act – Sch 2 & 3;
  • amends the compulsory licence provisions for patents to be based on a “public interest” test rather than a failure to meet the reasonable requirements of the public in Australia – Sch 4;
  • provides for electronic seals in the Patents and Trade Marks Offices – Sch 5;
  • permits objection to ‘omnibus claims’ to be raised at opposition, re-examination and revocation stages as well as examination – Sch 6;
  • permits the Commissioner of Patents to redact information (i.e. parts of documents) as well as documents where confidentiality requires it – Sch 7; and
  • amends the circumstances a translation of a patent application originally in a foreign language will require a certificate of verification – Sch 8.

All the amendments commenced on 27 February 2020 except for the abolition of innovation patents and Sch 8. The timing of the abolition of innovation patents has been discussed above. Sch. 9 commences on 26 August 2020.

How much to pay for a music download?

The Canadian Federal Court of Appeal has ruled that no royalty is payable for downloads (should that be “streaming”?) of those 30 second previews of music. Apparently, it falls with the fair dealing provisions for “research”. The “1709” blog has the story.

Meanwhile, last year, the Australian Copyright Tribunal accepted that music download services such as iTunes, Bigpond Music, Sony and Universal should pay composers a royalty of:

  • the higher of 9% of retail price or 9 cents per track, for music downloads; and
  • the higher of 8% of retail price or 8 cents per track,

for single track downloads. There is a sliding scale for the track rates where an album, rather than a single track, is downloaded.

As the price on iTunes is typically $1.69 per “song”, I guess the % rate will usually apply for single track downloads.

(This is just what the composers get paid for the transmission and reproduction on the ‘buyer’s’ computer; not what the record companies or performers (will) get.

The composers’ collecting societies, APRA and AMCOS, had started out trying to get 12% but, in the end, the monopolies and the monopsonistic buyer(s) wound up reaching agreement. Even the ACCC, after some twisting and turning seems to have gone along with the deal, perhaps in recognition of the fact that the Copyright Act specifically gives the Copyright Tribunal power to fix these rates.

By way of comparison, the Copyright Tribunal reported that the corresponding rates were:

• United Kingdom – 8%.
• Canada – 11%.
• United States – 9.1 cents.
The rate in the United States is a fixed monetary rate. The vast majority of single track downloads in the United States at present are supplied at a price of 99 cents per download. Thus the monetary rate is equivalent to 9.1% of the sale price.

Australasian Performing Right Association Limited and Australasian Mechanical Copyright Owners Society Limited [2009] ACopyT 2

Recorded music royalties at the gym

The Copyright Tribunal has ordered a very significant increase in the licence fees payable by fitness clubs for the use of recorded music.

At this stage, there seems to be press reports only:

The old fee was 96.8c per person attending the class, capped at $2654 per year. The new fee will be $15 per class or $1 per attendee.

This is just the fee payable to the record company, not the fee for the composition payable to APRA.

Presumably it follows on the striking recalibration effected in the Hotels case.

Pharmaceutical patents

The European Commission has published its preliminary report into its inquiry into the state of competition in the pharmaceutical industry in the EU – comment and links via IPKat.

The IPKat also has links to what they describe as “the powerful speech” delivered by Sir Robin Jacob (aka Jacob LJ) in the Commission’s public meeting on the issue.

Meanwhile, the developing countries are developing a proposal which envisages greater involvement of WHO; see here, while there are also reports of the Director General of the WTO appearing to acknowledge some significance to the issue.