Australia's Productivity Commission recommends sweeping changes to systems for protection of intellectual property

Article  \  6 May 2016

Australia’s Productivity Commission has issued a draft report which recommends sweeping changes to the patent system as well as to the systems for protecting trade marks, copyright, plant varieties and designs in Australia.  A key theme of the report is that intellectual property arrangements need to balance the interests of rights holders with users. IP arrangements should encourage investment in IP that would not otherwise occur and resist impeding follow-on innovation.

The recommendations for change to the patent system including the following:

  • the abolition of Australia’s second-tier innovation patent system;
  • excluding business methods and software from being patentable subject matter;
  • raising the inventive height for patents;
  • changes to the extension of term regime for pharmaceutical patents; and
  • altering the structure of patent fees.

There are many other changes suggested but among them are:

  • a reduction in the term of copyright protection;
  • the introduction of a ‘fair use’ exception to copyright infringement;
  • amending the Copyright Act to make clear that it is not an infringement for consumers to circumvent geo-blocking technology;
  • restrictions on parallel importation of books should be removed;
  • changes to the Court system to improve dispute resolution;
  • Australia should not join the Hague Agreement until an evidence-based case is made;
  • the abolition of defensive trade marks;
  • amending the Plant Breeder’s Rights Act to enable essentially derived variety declarations to be made in respect of any variety; and
  • that all Australian, and State and Territory Governments should implement an open access policy for publicly funded research.


The Commission found that Australia’s patent system granted protection too easily, resulting in a ‘proliferation of low-quality patents’ which impede innovation and stymie competition.

A key recommendation is to raise the ‘inventive step’ threshold by amending section 7(2) and 7(3) of the Patents Act 1990 (Cth), such that an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the art. The test should be applied by asking whether a course of action required to arrive at the invention or solution to the problem would have been obvious for a person skilled in the art to try with a reasonable expectation of success.

There is a recommendation to incorporate an objects clause into the Patents Act. The objects clause should describe the purposes of the legislation as being to enhance the wellbeing of Australians by providing patent protection to socially-valuable innovations that would not have otherwise occurred, and by promoting the dissemination of technology. This reflects the view of the Commission that the patent system should balance the interests of patent applicants and patent owners, the users of technology — including follow–on innovators and researchers — and Australian society as a whole.

The Commission recommends the abolition of the innovation patent system. The Commission found that the innovation patent system makes it harder for small and medium-sized enterprises to innovate and that mere reform of the innovation patent system would be insufficient.

An amendment to the Patents Act to exclude business methods and software from being patentable subject matter is proposed. The Commission found that the protection afforded to business method and software patents has been ‘excessive, ineffective and not in the interests of the community’.

The report suggests that IP Australia should increase the cost of patent renewal fees later in the life of a standard patent and making greater use of excess claim fees to limit the breadth of patent protection.

The report also seeks information as to whether the patent application process should be amended to elicit better information from applicants, such as by requiring applicants to set out how their invention improves on the current state of technology, or requiring patent applicants to explain why their invention is not obvious. Likewise information is sought as to whether there should be a broader exception from patent infringement for experimental activities.

Pharmaceutical patents

Specifically for pharmaceutical patents, the Commission recommended that extensions of term should be calculated based on the time taken for regulatory approval by the Therapeutic Goods Administration (TGA) over and above one year. The Commission also recommended that manufacture for export should be permitted during the extension period.

The Commission recommended that there should be no extension of the period of data protection for data submitted in support of regulatory approval processes, including that applicable to biologics. The Commission also found that there was a case for making the data more widely available, and suggested that the Australian Government should work with other nations for a system of publication of trial data in exchange for statutory data protection.

The establishment of a reporting and monitoring system to detect any pay-for-delay settlements between originator and generic pharmaceutical companies was also recommended.

International treaties

The report acknowledges the benefits of increasing harmonisation though international agreements and treaties but indicates that these agreements constrain domestic IP policy flexibility. As a net importer of technology, the report considers the ‘overly generous’ system of IP rights which results as being ‘costly for Australia’ and examines measures Australia should take to redress this situation.


An opportunity to respond has been provided with a deadline of 3 June 2016. The full report may be reviewed here. Alternatively, a shorter summary document outlining the Commission’s draft findings and recommendations can be found here.