Not closed for renovation: Australian IP reform

Australia’s Intellectual Property Laws Amendment Bill 2012 has been dubbed the ‘Raising the Bar’ bill. Branding the bill in this way highlights what legislators hope it will achieve for intellectual property and innovation in Australia. The bill is aimed at raising IP standards in Australia and aligning them with those in other major IP markets, so that Australia can maintain high skilled and high paying jobs in a knowledge economy that innovation of all kinds can sustain.

The Raising the Bar bill is a “comprehensive renovation” of Australia’s IP laws, says Philip Noonan, director general of IP Australia, which administers rights, including patents and trademarks, in Australia. This renovation was necessary because Australia’s IP system has, as does any regulatory system, developed weaknesses.

“These come about through quirks in the legislative drafting, or surprising court decisions, or the system-players get used to the rules and learn how to use some of the procedures to their advantage, but in a way that’s unfair to others,” Noonan explains. “The bill fixes a whole range of problems of this nature.”

Significantly, aspects of Australia’s patent law do not match international standards. The bill borrows wording from similar legislation in Europe and the US to address this problem. Noonan says: “The benefit for Australian applicants is that once they achieve an Australian patent, they should be more confident that they’ll be able to get the same general level of protection in major export markets.

“The other thing that the bill does more generally is reduce costs for all applicants, not only through aligning the standards, but also in other areas where we’re making processes faster and easier and eliminating a whole lot of little traps that can catch people out. Th e overall aim is to enable everyone to spend less time and money on their IP applications and more on actually innovating.”

A trap that has ensnared patent applicants in the past is additional limitations on prior art that can be cited in a patent application, which goes above and beyond the typical ‘publicly available’ requirement. “The prior art had to be ascertained and understood, as well as publicly available,” says Noonan.

“The new bill has taken away those extra glosses which can, arguably, lead applicants to think there’s an extra test in the application process, or even less prior art that’s applicable in Australia. Instead, it’s similar to other national standards. Nowadays, if it’s publicly available, then it’s prior art.”

The bill’s main provisions will come into effect 12 months after the Governor General gives assent to the bill, which is expected to be soon. Once the bill passes this stage, a new research exemption that grants free access to patented inventions for regulatory approvals and research will come into immediate effect.

“The common law allows a certain amount of experimentation on a patented product without the patent being infringed, but the scope of that is quite unclear and we’ve had a couple of awful cases where researchers have been intimidated and prevented from carrying out their research by a cease and desist letter from a patent owner,” explains Noonan.

“The new bill has taken away those extra glosses which can, arguably, lead applicants to think there’s an extra test in the application process, or even less prior art that’s applicable.”

“Ministers have said that we need to ‘set our researchers free’, allowing them to do their research without having to look over their shoulder and worry about infringing a patent. This should help generic drug manufacturers to do the preparatory work they need to do before coming to market with their products.” The exemption has received praise from both Medicines Australia, which represents pharmaceutical originators, and the Generic Medicines Industry Association. Noonan says: “We’ve tried to achieve a balance between the need for researchers to go about their business without fear of litigation and the needs of patent owners.

"The exemption applies only to research, so that once an improved invention has been found and is about to be commercialised, the researcher, or whoever has done the research, must enter into a licensing agreement with the original patent owner. So both the researcher and the patent owner have their legitimate interests protected.”

Quality assurance

IP Australia must examine patent applications quickly and grant quality rights if Australia is going to succeed in becoming more innovative. Noonan has set high standards for his office. “We can never do too well on quality,” he says, and he has emphasised the importance of patent quality with internal initiatives that are designed to improve it.

"IP Australia began using the European Patent Office’s search system in 2008 to give its examiners access to more patent information. It has also implemented a quality system that involves statistically significant samples of matters from every examiner being subject to independent review against comprehensive quality standards.

“We’ve had two years of trials and then full implementation,” says Noonan. “During that time we’ve lifted our results quite considerably. We are now avoiding tier one errors, which tend to affect the validity of a patent, 98 percent of the time.

“The two years of implementation has been a pretty tough process, introducing a level of review that our examiners have not previously been exposed to. I give them great credit for embracing the concept and for working with us as we bed the system down. What we need to do now is to feed back the learnings that we’re getting out of the system in the shape of better training programmes and improvements to our manuals and systems.”

The Raising the Bar bill comes into play here too, as it contains provisions that will affect the quality of Australian patents. The bill will force patent applicants to address all of the grounds for patentability during the application process, which is not currently the case. Noonan says: “My view is that if you want a 20-year monopoly you should be required to make your case on all grounds, at least on the balance of probabilities, and that’s what the bill will introduce.

“Not all grounds are available on examination. For example, currently the question of utility cannot be raised on examination—it can only become relevant during oppositions or court proceedings. We would say that’s a crazy way of going about things.”

Pendency times can come down from 12 months for the first report, according to Noonan. “We want to balance that against bedding in our quality systems, so it will go down further as we can achieve good results on quality at the same time,” he says. “I’d like to reduce it by a few more months.”

Branding and innovation

In its quest for boosting innovation in Australia, the Raising the Bar bill has not left trademarks behind. Far from it, the bill has been written with the importance of branding to innovation in mind. “I think the two go hand-in-hand,” says Noonan. “Innovation without a brand is just a fragile advantage and a brand without innovation is just a fashion trend.”

The new bill makes improvements to Australia’s trademark enforcement mechanisms, which should help brand owners. A problem that brand owners have often faced in Australia is proving that a seller of counterfeit goods is aware that the goods being sold are fake and infringe trademark rights.

“The Raising the Bar bill tackles this by introducing some new offences for trademark infringement with a lower mental requirement in the offence,” says Noonan. “This will make it easier for a trademark owner who finds infringing goods on sale to prosecute the retailer.”

Further afield, Australia has been working with countries from South East Asia and others in its region on the internal trademark treaty the Madrid Protocol. Australia is supportive of its neighbours efforts to sign up to the protocol so that exporters can have a simple process for registering and maintaining their trademarks in the markets that they export to.

Noonan says: “With the countries in our region often being Australian exporters' priority, we have worked with the World Intellectual Property Organization to host seminars for countries in the region on how to implement the Madrid Protocol and encouraging them to sign up.”

But IP professionals in the region have resisted this, says Noonan. He explains: “Sometimes we find the IP profession in all countries can be concerned about loss of income if trademark registration is made too easy through introducing a reform such as the protocol, but we think in an era of increasing electronic transactions change is coming and the profession should get on board.

"Countries can’t afford to be uncompetitive in this or any other area and we think the profession should focus their efforts on adding value by, for instance, being able to advise clients about commercialisation strategies.”

Australia has signalled its intent with the Raising the Bar bill. It wants to create an environment in which businesses and inventors, both national and foreign, can thrive, and a modern IP system is integral to that. But how many of these changes will work in practice still needs to be figured out, and Noonan is keen to make sure this happens as smoothly and as quickly as possible.