The Productivity Commission's Report on Intellectual
Property Arrangements (
the Report) was released on 20 December 2016.
The Report makes a number of "anti-patent"
abolishing the innovation patent system;
introducing an objects clause into the Patents Act;
essentially removing the availability of extensions of patent
term for pharmaceutical patents;
raising the threshold of inventive step; and
significantly raising patent renewal fees.
It appears that, if implemented, the recommendations will
significantly weaken the Australian patent system, introduce
uncertainty into obtaining and enforcing patent rights, and make
the patent system more expensive for innovators.
The report was originally commissioned in 2015, by the
Treasurer, Joe Hockey and Coalition Government. Ironically, the
recommendations of the report appear to be in conflict with the
Coalition Government's Innovation Agenda, which prompted Prime
Minister Malcolm Turnbull to say, in support of innovation,
"we've got to be prepared to have a go and be more
prepared to embrace risk and experimentation". Anathema to the
Prime Minister's sentiments is the Report's statement that
"the system should provide incentives for IP to be created at
the lowest cost to society", a statement which underpins the
recommendations that weaken existing IP rights for innovators.
The Report adopts a unilateral view without evidence that
"Australia's intellectual property arrangements fall short
in many ways and improvement is needed across the spectrum of IP
rights". The Report also appears to agree, in a biased manner,
with certain "participants" that the current patent
system hinders innovation and creativity, but there is a
conspicuous lack of evidence in the Report to support this view.
Further, the report arbitrarily takes a position that the current
patent system results in a multitude of low-value patents without
clear and credible guidance on what constitutes a "low-value
The report also adopts a lofty and unrealistic view that the
patent system should only contribute to socially-valuable
innovation that otherwise would not occur. There is however, no
direction on what socially-valuable innovation is and how to
determine whether such innovation will only occur as a result of
the patent system. The report simplistically considers innovation
from an academic perspective and fails to understand, or even
consider, the necessary financial investment and risk that is
required to commercialise innovation to market for the benefit of
the public – the very reasons why the patent system needs to
offer both rewards and a degree of certainty to innovators and
In making the recommendations, the Productivity Commission has
largely ignored the vast majority of submissions submitted that
raised valid concerns in relation to the draft recommendations.
Australian innovation policy, which encompasses the patent
system, should provide a substantial incentive and compensate
innovators for the risk and financial investment necessary to bring
innovation to the market for the benefit of the general public.
Australia's current innovation policy should not be weakened
based on the academic views of economists who have no proximity to
innovation nor any expertise in relation to commercialisation of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Shelston IP ranked one of Australia's
leading Intellectual Property firms in 2015.
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