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Objects clause
One of the recommendations of
the draft report provides for the
introduction of a broad objects
clause into the Patents Act. The
clause would establish the purpose
of the Act as being to “enhance the
wellbeing of Australians by providing
patent protection to socially valuable
innovations that would not have
otherwise occurred” and “should
balance the interests of patent
applicants and patent owners, the
users of technology… and Australian
society as a whole”.
It is unclear what this objects clause
would add to the existing patentability.
It may introduce a subjective
assessment of “social value” into the
examination of patents requirements.
Furthermore, it may exclude certain
inventions from patentability if they
were subjectively deemed to not be
“socially valuable” or against the
interests of society.
Extension of term (EOT)
The Commission was highly critical
of the EOT regime. To reform
the EOT system, the draft report
recommended that the EOT period
be calculated solely on time taken for
regulatory approval by the Therapeutic
Goods Administration in excess of
one year. This recommendation was
provided in order to ensure that
EOTs were not granted in relation
to a sponsor’s own delay. The
Commission also recommended that,
regardless of how EOTs are calculated,
manufacturing of product for export
should be permitted during the EOT
period.
The Commission considered that any
benefit Australia received from EOTs
was vastly outweighed by the cost of
EOTs to the Australian Government.
The Commission further noted that
EOT policies appear to have been
inadequate in attracting R&D to
Australia. However, the Commission
conceded that Australia’s international
legal obligations dictated policy
flexibility in relation to EOTs.
The Commission also conceded that
allowing manufacture for export could
conflict with Australia’s international
legal obligations, such as the TRIPS
requirements. However, the draft
report included remarks indicating
that granting EOTs to pharmaceutical
patents only may already breach the
technological neutrality requirements
of TRIPS. The Commission proposes
that, given the potential conflict
between the requirements in TRIPS
and the positive requirements to
grant EOTs in other international
agreements such as the TPP and
AUSFTA, Australia should settle any
uncertainty by allowing manufacture
for export during the term of any EOT.
Data exclusivity
Concerns were raised in the draft
report regarding the strategic use of
data protection to artificially extend
patent protection. The Commission
recommended at minimum keeping
the current five years (including for
biologics), and preferably exploring
ways to reduce the exclusivity period.
Inventive step
The Commission has recommended
that the Patents Act be amended so
that an intention 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 relevant
art. Currently the test is whether an
invention would have been obvious
to a person skilled in the relevant art
in the light of the common general
knowledge (CGK) as it existed before
the priority date of the relevant claim,
either alone or combined with prior art
documents.
There are apparently three aims to this
recommendation: (i) to raise the level
of inventiveness required to obtain a
patent; (ii) to shift of the onus of proof
onto applicants; and (iii) to simplify
the test for inventiveness by removing
the distinction between prior art and
common general knowledge.
The Commission’s recommendations
are driven by their desire to ensure
that patents are only granted to
products with a genuine therapeutic
advantage. Although the draft report
discusses that there currently need
only be a “scintilla of invention”
for there to be an inventive step
and seeks to increase the degree
of inventiveness required, this
test is derived from the courts,
not the language of the Act.
Furthermore, given that the Patent
Act was only amended in 2013, this
recommendation may be premature
until the effect of previous reforms has
been fully realised.
IP right enforcement
Australia’s enforcement mechanisms
are noted to work well for ‘large rights
holders’, reforms are necessary to
improve the lot of ‘small and medium-
sized enterprises’. Some of the
changes have already commenced,
including Federal Court reforms
focusing on lower costs and more
informal alternatives. The Federal
Circuit Court is identified as one option
for improvement.
IP policy development and
implementation
Australia lacks a ‘coherent and
integrated approach’ to IP policy.
Increased stakeholder consultation is
identified as necessary.
Speak now or forever hold
your peace
Whether the socially responsible IP
regime that the Report proposes is
achievable in the context of Australia’s
international obligations under various
treaties and agreements, whether
they be specific IP treaties or any of
the many general bi-lateral or regional
trade agreements, will be a key
question. The Commission has also set
out a series of ‘Information Requests’
seeking responses on a broad range of
issues, from patent claim construction
to the possible separation of IP policy
and administration. For the moment it
is contingent on all users of IP to take
an interest in the Report and respond
accordingly.
POSS I BLE
IMPACT ON THE
PHARMACEUT I CAL
INDUSTRY
The Productivity Commission
has released its draft
report into Intellectual
Property Arrangements. Several
recommendations in the report
could, if accepted and implemented,
have a profound impact on the
pharmaceutical industry.
The recommendations could cause:
–– The inventive step bar to the
grant of patents to be raised
further.
–– Uncertainty as to the patentability
of certain inventions.
–– Reductions in the ability to gain
patent term extensions and,
potentially, in the length of the
data exclusivity periods.
–– Increased costs associated with
maintaining patent portfolios.
–– The establishment of a
transparent reporting and
monitoring system to detect ‘pay-
for-delay’ settlements”, similar to
those operating in the US and EU.
The Commission has made it clear
report that it considers
ystem to be more
us to the rights of the
r and to have too low
for inventiveness. To
address this, the draft report provides
a number of recommendations.
They suggested pursuing the earliest
possible publication of data, particularly
for biologics.
The implications of this
recommendation may be serious.
The Australian Government has
recently stated that Australia will not
be extending the data exclusivity
for biologics from five years to eight
years (although it is expected that
the US will keenly push for increased
protection). Furthermore, where
the draft report recommends that
Australia should reduce the exclusivity
period, this would be inconsistent with
Australia’s obligations under the TPP
and AUSFTA.
Costs
The Commission has recommended
restructuring patent fees by steeply
escalating fees towards the end of
a patent term and imposing higher
filing fees to discourage holders from
maintaining patents for their full
term and to reduce speculative or
strategic claims. This has the potential
to disproportionately affect smaller
businesses, as administrative fees are
less likely to deter larger corporates
from establishing and maintaining their
IP rights.
We will keep you informed of
developments in regard to the
Productivity Commission’s Draft
Report on Intellectual Property, which
is expected to be finalised in August
2016 after a review of submissions
from interested parties.