Reviewing patent policy: an exercise in futility?

Abstract

In 1984, Don Lamberton wrote a two-page disclaimer to a review of the Australian patent system, pointing out that there was nothing economic about the review and that it simply pandered to special interest groups. Some 30 years later, the Productivity Commission has been given a shorter time frame (one year) and a broader remit (all intellectual property). This paper reviews the issues addressed in the Industrial Property Advisory Committee (IPAC) review of 1984. Since it was completed, substantially more empirical evidence has become available, while room for policy improvement has been curtailed by international trade treaties. While the Productivity Commission will take a sound economic approach, the breadth of its remit may prevent full appreciation of the critical issues in patent policy. This paper considers the options remaining to the Commission to recommend improvements in the national interest. Whether these will be taken up depends on the priority given to the interests of small but powerful lobby groups.

Notes

1. The committee was chaired by the manager of patenting and licensing at BHP, with the Commissioner of Patents holding the position of deputy chair. The senior officer from the commercial group of the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and two patent attorneys were also members. When the Commissioner of Patents left, in early 1984, to join the Melbourne branch of international law firm Baker & McKenzie, he remained a member of the committee and the new commissioner, Pat Smith, became an ex officio member.

2. All citations that simply give page numbers are to the IPAC report (IPAC, 1984).

3. IPAC received 90 submissions. Three organisations and one individual lodged three submissions each, 17 organisations and two individuals lodged two submissions each, and 32 organisations and eight individuals lodged a single submission each. Of the 90 submissions, 31 were from chemical or pharmaceutical companies and associations, and 15 from patent attorney or law associations, each including a number of overseas associations or companies. Given the small number of submissions and the particular interests represented, it is unsurprising that no one recommended abolishing the patent system.

4. In addition, IPAC commissioned a major legal report on various aspects of the patent system, and a study of outward licensing by Australian companies undertaken by the licensing executives society.

5. As far as I can establish, the then patent office was allowed to develop and run this position unchallenged by any other part of government or by the public. Because of the breadth of issues considered in the Uruguay Round, TRIPS issues were effectively delegated to the Australian patent office.

6. National Research Development Corporation v. Commissioner of Patents (‘NRDC’) (1959) 102 CLR. 252 (NRDC).

7. Minnesota Mining and Manufacturing v. Beiersdorf (Australia) (1980) 144 CLR 253 (3M).

8. In fact, coding an invention by industry is complex. The only country that has ever done this appears to be Canada and Canada has abandoned this practice. In the new Australian Intellectual Property Government Open Data (IPGOD) database, the patent applicant is coded by one-digit industry (Man, 2014).

9. The phrase ‘powerful exclusive rights’ is from the Explanatory Memorandum to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 at p.42.

10. Certainly, by the early 2000s, stakeholder advisors considered it was inappropriate to require evidence to extend the patent system to business methods as such evidence had not been required for any of the previous extensions (ACIP, 2003, p.33).

11. The terms of reference, the issues paper and submissions received can all be viewed at http://www.pc.gov.au/inquiries/current/intellectual-property#report.

12. This paper was written in February 2016 after the Issues Paper was published but before the Draft Report became available.

13. The major exception being trade secrets.

14. For the final text of the IP chapter of the proposed TPP agreement, see http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/18-intellectual-property.pdf

15. The recent High Court decision that DNA and cDNA are unpatentable (D’Arcy v Myriad Genetics Inc. [2015] HCA 35) and the full federal court decisions that business methods are unpatentable (Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177) are exceptions.

16. The number of R&D-performing firms using patents has fallen sharply from 26% in the period 1972–1977. By 2012–2013, only 4% of innovating firms were using patents (Australian Bureau of Statistics, 2014).