Intellectual property arrangements

All chapter key points and recommendations

• All chapter key points and recommendations (PDF - 362 Kb)
• All chapter key points and recommendations (Word/Zip - 187 Kb)

Main key points

• Intellectual property (IP) arrangements need to balance the interests of rights holders with users. IP arrangements should:
  • encourage investment in IP that would not otherwise occur
  • provide the minimum incentives necessary to encourage that investment
  • resist impeding follow-on innovation, competition and access to goods and services.
• Improvements are needed so Australia's copyright and patent arrangements function effectively and efficiently.
• Australia's patent system grants protection too easily, allowing a proliferation of low-quality patents, frustrating the efforts of follow-on innovators, stymieing competition and raising costs to the community. To raise the quality of patents, the Australian Government should:
  • increase the degree of invention required to receive a patent, abolish the innovation patent, redesign extensions of term for pharmaceutical patents, limit business method and software patents, and use patent fees more effectively.
• Australia's copyright system has progressively expanded and protects works longer than necessary to encourage creative endeavour, with consumers bearing the cost.
  • A new system of user rights, including the introduction of a broad, principles-based fair ;use exception, is needed to help address this imbalance.
  • Better use of digital data and more accessible content are the key to reducing online copyright infringement, rather than increasing enforcement efforts or penalties.
• While Australia's enforcement system works relatively well for large rights holders, reforms can improve outcomes for small- and medium-sized enterprises.
  • Recent Commission-initiated reforms of the Federal Court, with an emphasis on lower costs and informal alternatives, should improve enforcement outcomes and replicate many of the benefits a dedicated IP court would offer.
  • Changes to the Federal Circuit Court are one option for improving dispute resolution options for small- and medium-sized enterprises.
• Commercial transactions involving IP rights should be subject to competition law. The current exemption under the Competition and Consumer Act is based on outdated views and should be repealed.
• Improving IP governance arrangements would help promote a coherent and integrated approach to IP policy development and implementation.
• Multilateral and bilateral trade agreements are the primary determinant of Australia's IP ;arrangements. These agreements substantially constrain domestic IP policy flexibility.
  • An overly generous system of IP rights is particularly costly for Australia — a significant net importer of IP, with a growing trade deficit in IP-intensive goods and services.
  • The Australian Government should focus its international IP engagement on encouraging more balanced policy arrangements for patents and copyright, and reducing transaction and administrative costs for parties seeking IP ;rights in multiple jurisdictions.
  • Improving the evidence base and analysis that informs international engagement (especially trade agreements with IP provisions) would help the Australian Government avoid entering agreements that run counter to Australia's interest.

Australia's intellectual property system has lost sight of users

Action must be taken to rebalance Australia's intellectual property (IP) arrangements, according to a wide-ranging draft report released by the Productivity Commission.

A good IP system balances the interests of rights holders and users, but Australia's system has swung too far in favour of vocal rights holders and influential IP exporting nations.

'No matter how you measure it, Australia overwhelmingly imports more IP than it exports — and this gap is widening. Most of the profits from excessive IP rights flow offshore, while Australian consumers and taxpayers are left to pick up the tab,' said Commissioner Karen Chester.

Many of Australia's IP arrangements are locked-in by trade agreements, frustrating much needed change. Despite these constraints, the Commission has identified a workable bundle of reforms.

'Contrary to views that more patents are always better, Australia's patent system is poorly targeted. Some patented inventions border on trivial and protection can last too long. For pharmaceuticals alone, excessive protection costs the Australian Government, taxpayers and consumers over a quarter of a billion dollars each year,' Commissioner Jonathan Coppel said.

'Only genuine innovations should be granted patent protection and patent fees need to be higher to discourage rights holders from hanging on to patents longer than they need to,' Commissioner Jonathan Coppel said.

Copyright is important for rewarding creative endeavour. But in Australia, it is more a case of 'copy(not)right'. Copyright is pervasive, affecting everyone from hip hop artists sampling music,

school children watching a documentary in class, libraries and museums preserving Australia's history, to innovative researchers accessing databases for data mining.

Copyright protection lasts too long — a book written today by an author who lives for another 50 years will be protected until 2136.

To correct these imbalances, Australia needs a new, principles-based, fair use exception, to protect user rights without undermining the incentive to create.

'Surveys reveal much online copyright infringement is out of sheer frustration from poor access. The best antidote to copyright infringement is accessible and competitively priced online content, not draconian penalties and big brother enforcement.'

'Rights holders and their intermediaries need to do more to deliver timely and accessible content. The Government should also make clear that Australians should be able to circumvent geoblocking technology,' said Commissioner Karen Chester.

The benefits of IP reform would be far reaching. 'True innovation and creativity will be rewarded, while consumers will have better access to new and cheaper goods and services. Australian firms won't have to engage in costly workarounds that hinder follow-on innovation,' Commissioner Jonathan Coppel said.

The Commission is inviting submissions on the draft report by 3 June 2016 and will hold public hearings in June.

Download the infographic

• High resolution - An overview of the draft report (PDF - 1791 Kb)

Intellectual Property Arrangements Draft Report (Text version of infographic)

Intellectual property affects the every day lives of Australians.

We use technology, we wear clothes, we take medicines and we listen to music.

Creativity and innovation are at their best with a flexible, balanced and modern IP system.

But Australia's IP system is out of kilter favouring rights holders over users and does not align with how people use IP in the modern era.

This hurts all users (consumers and follow-on creators), but particularly Australian users.

The Commission has identified a bundle of reforms to help rebalance Australia's IP system.

Our draft report looks at the IP system as a whole, including copyright, patents, trade marks and registered designs.

Read the full report [above] and make a submission.

Download the infographic

• High resolution - Copy(not)right (PDF - 794 Kb)

Copy(not)right (Text version of infographic)

Copyright protection is cast too widely and lasts too long.

Copyright protects works long after the death of the creator. A book which is published in 2016 is protected until 2136 if the author dies in 2066.

Australia should adopt a 'fair use' exception for copyright.

Adopting fair use would benefit Australian consumers, follow-on creators, schools, other educational institutions, libraries and archives.

Fair use can allow teachers to record a TV or radio documentary for use in class...and allow follow-on creators to build new services, providing cheaper goods and services for everyone.

Many complain about online copyright infringement.

Accessible and competitively priced online content is the best deterrent to copyright infringement.

Australian consumers should be able to access the same content as others. The Government should make clear that Australians should be able to circumvent geoblocking.

Make a submission and read the full report available above.

Download the infographic

• High resolution - Limiting the Patently Obvious (PDF - 988 Kb)

Limiting the Patently Obvious (Text version of infographic)

Australia's patent system is poorly targeted.

Australia grants patent protection too easily and for too long.

While the number of active patents in Australia has doubled over the past 25 years... many are for innovations that aren't socially valuable.

At least 40% of Australian patents are of relatively low value... and only 7% of current Australian patents are held by Australian residents.

Too many low value patents clutter the system. This disadvantages those with valuable innovations and impedes follow-on innovators and researchers.

This is particularly harmful for Australian innovators who 'adopt and adapt'.

The Commission is recommending a range of reforms to encourage higher value innovations and limit anti-competitive behaviour.

This will benefit consumers, follow-on innovators and small-medium enterprises (SMEs).

Make a submission and read the full report available above.