Productivity Commission

Intellectual Property Laws Amendment Bill 2012 – exposure draft

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IP Australia has released for public comment an exposure draft of the proposed Intellectual Property Laws Amendment Bill 2012. The Bill has 2 purposes:

  1. to amend the Patents Act 1990 in light of the DOHA Declaration / TRIPS Protocol; and
  2. to confer original jurisdiction in matters arising under the Plant Breeder’s Rights Act 1994 on the Federal Magistrates Court in addition to the Federal Court’s existing jurisdiction.

DOHA Declaration[1] / TRIPS Protocol

Article 31 (scroll down) of the TRIPS Agreement permits members of the WTO to permit the use of patented inventions without the permission of the rightholder in the circumstances set out in the article.

The HIV/Aids crisis in Africa revealed a problem in this regime in that a number of countries which needed to rely on these provisions did not have the infrastructure, or were otherwise unable effectively, to take advantage of this regime. The basic idea underlying, first, the DOHA Declaration and, then, the TRIPS Protocol is to enable such countries to take advantage of the facilities and expertise in other countries by having the relevant drug made under compulsory licence in the foreign country.

So far, only Canada has notified the WTO pursuant to the DOHA Declaration that it has granted a compulsory licence to Apotex to export TriAvir[2] to Rwanda.[3]

Following on from consultations begun in 2010, the Government announced its intention to amend the Patents Act to implement the DOHA regime in March last year. The object of the proposed amendments is to introduce a regime for the grant of compulsory licences of pharmaceutical products on public health grounds for export to least-developed or developing countries (to be defined in the Bill as “eligible importing countries”).
As the TRIPS Protocol is not yet in force,[4] schedule 1 of the Bill is intended to implement the interim regime adopted under the DOHA Declaration. When the TRIPS Protocol does come into force, the regime in schedule 1 will be superseded by the regime to be enacted by schedule 2 of the Bill.

In either case, the regime will be separate from, and independent of, the existing compulsory licensing regime relating to domestic non-use which is currently the subject of a reference to the Productivity Commission.

As with the existing “non-use” regime, any compulsory licences would be granted only on application to the Federal Court, and not the Commissioner of Patents. If the patents in question are innovation patents, it would be necessary to apply for certification (where that has not occurred already).

Federal Magistrates Court

The extension of jurisdiction over PBR matters to the Federal Magistrates Court, which “is designed to deal with less complex matters more quickly and informally than the Federal Court”, follows several years experience with copyright matters and the extension of jurisdiction over patent, trade mark and registered design matters enacted by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, which comes into effect on 15 April 2013.

Onus in trade mark oppositions

I wonder why the bill doesn’t fix up the onus for oppositions to the registration of trade marks to the “balance of probabilities” standard in line with the amendments – see Part 2 – that will apply in patent oppositions from 1 April 2013?

Submissions should be made by 1 October 2012.

Intellectual Property Laws Amendment Bill 2012 – exposure draft

Exposure draft Explanatory Memorandum

IP Australia’s Home Page for the exposure draft process.

  1. This is not strictly accurate terminology: I am using it as shorthand to refer to the WTO Council decision in December 2003 on paragraph 6 of the DOHA Declaration made in 2001. The WTO’s overview page is here.  ?
  2. A fixed-dose combination product of Zidovudine, Lamivudine and Nevirapine, according to Rwanda’s notification: see View Notifications.  ?
  3. The compulsory licence was issued by the Commissioner of Patents on 19 September 2007 for a period of 2 years: click on View notifications.  ?
  4. Australia has already accepted the TRIPS Protocol, but it does not come into force until two thirds of WTO’s 155 members accept it. If one counts the EU as “one” member – not sure on the politics of this as there are currently 27 members of the EU, as at May this year 44 members had accepted the TRIPS Protocol.  ?

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Compulsory licensing of patents

2 Comments / Enforcement, Patents / / / , , , , , , ,

The Assistant Treasurer has referred the operation of the compulsory licence regime within the Patents Act 1990 to the Productivity Commission for review.

At present, sections 133 to 140 of the Patents Act provide for applications to be made to the Federal Court for a compulsory licence to work a patent where

(i) the applicant has tried for a reasonable period, but without success, to obtain from the patentee an authorisation to work the invention on reasonable terms and conditions;

>(ii) the reasonable requirements of the public with respect to the patented invention have not been satisfied;

(iii) the patentee has given no satisfactory reason for failing to exploit the patent; or

the patentee has contravened the anti-competitive provisions in Part IV of the Competition and Consumer Act 2010.

The Terms of Reference require the Productivity Commission to:

  1. Assess whether the current Australian provisions can be invoked efficiently and effectively to deal with circumstances where reasonable requirements of the public are not being met or where the patentee engages in anti-competitive conduct. This includes, but is not limited to, consideration of concerns that gene patents may hinder access to affordable healthcare, including access to medical advice that relies on the identification and use of gene sequences related to human health and disease.
  2. Advise on the frequency, and impact, of the issue of compulsory licences in comparable markets and the common features in such compulsory licenses.
  3. Recommend any measures that may be required to efficiently and effectively exercise these safeguard provisions and invoke their use in a manner consistent with Australia’s international obligations, without limiting access to overseas technologies, technology transfer, research and development investments or substantially reducing the patent incentive for innovation.
  4. Recommend any alternative mechanisms deemed necessary to ensure that the balance between incentives to innovate and access to technology best reflect objectives of ensuring reasonable access to health care solutions, maximising economic growth and growing the Australian manufacturing industry.
  5. Recommend measures to raise awareness of these provisions and their purpose, including the specific challenges of raising awareness among small businesses and the healthcare sector.

The genesis of the reference seems to lie in the uproar resulting from the attempt to charge licence fees for diagnostic kits based on the BRCA 1 patent and, more recently, the smartphone wars.[1]

A number of submissions to the Senate’s Community Affairs committee claimed that there were a range of deficiencies with the present scheme. In addition, IP Australia told the Senate’s Community Affairs committee when it was investigating these (and other matters) that, in the 100+ years our law has had such provision, there had been only 3 applications for the grant of a compulsory licence. The ALRC had also recommended that the scope of ‘reasonable requirements of the public’ be clarified (the recommendation to make the competition test a basis for licensing having been sort of implemented when s 133(2)(b) was inserted in 2006.

The Terms of Reference also note that Australia is a net importer of technology with, for example, only 1,178 (or 8%) of the 14,557 patents granted in 2010 being granted to Australian residents.

The TRIPS Agreement allows us to do something in this sphere. See art. 40 and art. 27.2 even goes so far as to allow us to exclude from patentability things necessary to protect ordre public “including to protect human … life or health”.

Of course, the multi-million dollar question in all of this is what that elastic word “reasonable” might mean?

Do also note paragraph 4 of art. 40, which gives a country that is concerned its nationals are being prejudiced by the exercise of such rights an “opportunity for consultations”. Of course, such a country might just move straight to the dispute resolution processes. I wonder how a more liberal use of compulsory licensing, or the threat of it, would play with those of our trading partners who consider compulsory licences of patents to be anathema?

According to the Productivity Commission’s website:

1 an issues paper will be released in August;
2 initial submissions will be due by 28 September;
3 there will be a draft report released in early December;
4 public hearings will be held in February 2013; and
5 the final report will be delivered to the government on 29 March 2013.

  1. According to the Press Release amongst other things: “Of concern to government is a perception that patents over genetic technologies, or a perceived lack of licences to use these patents in Australia, unreasonably restricts or delays patient access to medical advice based on the latest diagnostic tests. Other areas of sensitivity include climate change mitigation, food security and alternative energy technologies, and technical standards essential patents (for example, in telecommunication technologies).”  ?

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Parallel imports, books and Australia

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The Australian Government has announced today that it will not be changing the limitations in the Copyright Act on the parallel importation of books.

According to the Press Release:

Australian book printing and publishing is under strong competitive pressure from international online booksellers such as Amazon and The Book Depository and the Government has formed the view that that this pressure is likely to intensify.
In addition, the technology of electronic books (e-books) like Kindle Books will continue to improve with further innovations and price reductions expected.
The Government has not accepted the Productivity Commission’s recommendation to remove the parallel importation restrictions on books.

Australian book printing and publishing is under strong competitive pressure from international online booksellers such as Amazon and The Book Depository and the Government has formed the view that that this pressure is likely to intensify.

In addition, the technology of electronic books (e-books) like Kindle Books will continue to improve with further innovations and price reductions expected.

The Government has not accepted the Productivity Commission’s recommendation to remove the parallel importation restrictions on books.

You could write a book on the rules governing parallel importation of books so I won’t attempt to summarise them here.

The Productivity Commission’s report. I still don’t think there has been any answer to the question whether the prices of music CDs or computer software fell after open markets were introduced for those products.

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Productivity Commission on parallel imports (books)

1 Comment / Copyright / / / , , , , ,

The Productivity Commission’s report has been released:

Copyright Restrictions on the Parallel Importation of Books

Key Points

Media Release

On a quick view, now they recommend repeal after a 3 year transition period:

Whereas the Commission’s draft report had proposed a partial liberalisation of the import restrictions, following further evidence, the final report recommends their repeal, with the industry having a period of three years to adjust before the changes take effect. The report recommends that the current range of grants and other financial assistance be refined to better target the local writing and publishing that adds cultural value to Australian society.

The Commission estimates that, while Australian authors and publishers do benefit from the restrictions, overseas authors and publishers benefit by a factor of 1.5 times. In addition to the transfer from consumers to authors/publishers (including those foreigners whom we could easily free ride on), there are also other inefficiencies.

On the question of subsidies:

For the reasons set out in chapter 7, the Commission has not recommended that the assistance provided by the PIRs [that’s parallel import restrictions] be replaced by subsidies.

It has, however, recommended that current subsidies for the local books industry be reviewed ahead of the abolition of the PIRs, and that the arrangements be reviewed again five years after their repeal. These reviews will provide an opportunity to consider the appropriateness of the existing subsidies and whether they might be improved. Among other things, such reviews could examine the case for changing some of the current subsidies to more directly assist outputs that generate cultural externalities.

For the reasons set out in chapter 7, the Commission has not recommended that the
assistance provided by the PIRs be replaced by subsidies.
It has, however, recommended that current subsidies for the local books industry be
reviewed ahead of the abolition of the PIRs, and that the arrangements be reviewed
again five years after their repeal. These reviews will provide an opportunity to
consider the appropriateness of the existing subsidies and whether they might be
improved. Among other things, such reviews could examine the case for changing
some of the current subsidies to more directly assist outputs that generate cultural
externalities.

I wonder, has anyone done a study of how far the price of CDs or computer software fell after they became open markets? Speaking purely ad hoc, and unempirically, it always seems that computer programs, at least, are cheaper “over there”. Don’t have any experience with music.

Lid dip: Peter AP Clarke

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Parallel imports and books

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The Productivity Commission has published its issues paper on its reference relating to the parallel importation of books.  You can download the pdf here.  At present:

(1) anyone may “parallel” import a book for their own use (i.e., not to resell or distribute it);

(2) books first published after 22 December 1991 and not published first simultaneously in Australia may be parallel imported;

(3) for any other books, however, there is a very convoluted regime,

see Copyright Act 1968 s 44A and 112A.

Things have apparently changed since all the earlier studies by the then Prices Surveillance Authority, the ACCC and the Ergas Committee as now they would have us believe:

While requiring the Commission to examine options for reform, the terms of reference should not be taken as meaning that the current restrictions are necessarily inappropriate. That is a matter to be examined in this study.

Nonetheless, the Productivity Commission appears to have started from the former Prices Surveillance Authority’s proposition that the right to control imports is some how additional or extraneous to copyright:

It has been argued that restrictions on the parallel importation of books provide an incentive, additional to that provided by copyright alone, for people to create literary works.

At an impressionistic level, one clear benefit under the current regime has been the faster availability of paper-back editions. My recollection is that the Prices Surveillance Authority found paperbacks were usually not published until at least one year after the publication of the hardback edition in Australia – and often longer.  Walk into any Dymocks, Borders or whatever these days and you will often see 2 or even 3 different versions of the same book – the UK paperback, the US paperback and often the trade or mass market versions as well (the ones that smudge when you press your thumb too hard on the page).

It will be very interesting to see how the Productivity Commission explains its competition theory to support repeal when anyone with an internet connection can jump online and order the book from overseas (for their own use).

The sector most affected by the current regime might be thought to be the booksellers who can’t use this form of arbitrage (at least for books first published simultaneously in Australia – unless they already have a written or verifiable telephone order).  Would we all be better off if the booksellers could use the threat of parallel importing in volume to negotiate a better price from the the local publisher/distributor?

It will also be interesting to see how the Productivity Commission deals with possible cultural considerations, which have proved so powerful in Canada in trying to block parallel imports.  The Productivity Commission raises the possibility, however, that such issues can be better addressed by direct subsidies – so in the interests of market forces operating, the Government would have a more active role in trying to pick ‘winners’ and taxpayers generally would subsidise readers.

Your comments should be submitted to the Productivity Commission by 20 January 2009.

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