Bills Digest No. 121   1997-98 Intellectual Property Laws Amendment Bill 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Intellectual Property Laws Amendment Bill 1997

Date Introduced: 26 November 1997
House: House of Representatives
Portfolio: Industry, Science & Tourism
Commencement: Upon Royal Assent with the exception of:

Schedules 1 & 2 - which commence on a day fixed by Proclamation or 6 months after this Act receives Royal Assent.

Schedule 3 - as specified.

Purpose

To extend patent protection on certain pharmaceutical products and to introduce a new regime for regulating patent attorneys and trade mark attorneys.

Background

Intellectual property(1) is 'a generic term for the various rights or bundles of rights which the law accords for the protection of creative effort - or, more especially, for the protection of economic investment in creative effort.'(2) Intellectual property law had its origins centuries ago.For example,the first enactment to protect one form of intellectual property, namely copyright, was the British Statute of Anne of 1709.(3) Since then much of the UK law (and hence the Australian law) relating to intellectual property developed from the Patents, Designs and Trade Marks Act 1883 (UK).

The Australian Industrial Property Organisation (AIPO) is the federal body that regulates trademarks, designs and patents.The difference between the three types of property rights covered by the bill, patents, trade marks and designs is that:

  • Patents are granted for discoveries and inventions, and give the patent owner a temporary monopoly to exploit the discovery or invention and to authorise others to exploit them;
  • Trade marks are unique identifying marks that link the owner with, and thereby identify the source or origin of, the particular goods or services provided. Registration of a trade mark gives the owner the exclusive right to use that mark on those goods or services for which it is registered; and
  • Designs are the identifying features of shape, configuration, pattern or ornamentation which can be judged by the eye in a finished article.Design registration gives the owner the exclusive rights to make, use and sell articles incorporating the registered design.

Applications for registering intellectual property rights are made to AIPO which is a 'fully cost-recovered division of the department' of Industry, Science & Tourism.AIPO incorporates the Patents Office, Trade Marks Office and Designs Office.(4) The 1995-96 Annual Report notes that:

Total patent applications grew by 10 per cent to 39 843, designs were up by 1.5 per cent to 4 384, and trade marks were up by nearly 7.5 per cent to 34 166.(5)

Constitutional Provisions

Section 51(xviii) of the Constitution gives the Commonwealth Parliament legislative power to make laws with respect to some forms of intellectual property:

Copyrights, patents of inventions and designs, and trade marks

However, intellectual property law has expanded somewhat since the Constitution was drafted and many of the newer forms of intellectual property (see below) are not directly covered by those words.Regimes that do not fall within the above power may still fall within the scope of the external affairs power and therefore be within the Commonwealth Parliament's legislative power.

Relevant International Treaties

There are a number of international instruments that deal with intellectual property.One that is relevant to this bill is the 1967 Convention Establishing the World Intellectual Property Organization [WIPO].Australia acceded to WIPO on 10 May 1972 and WIPO entered into force for Australia on 10 August 1972.Article 2 defines intellectual property in the following manner:

(viii) 'intellectual property' shall include the rights relating to:

- literary, artistic and scientific works,

- performances of performing artists, phonograms, and broadcasts,

- inventions in all fields of human endeavour,

- scientific discoveries,

- industrial designs,

- trademarks, service marks, and commercial names and designations,

- protection against unfair competition,

and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.

Australian legislation does not protect all of the above 'rights'.For example, scientific discoveries, once published are not eligible for protection.(6)

The more recent Trade Related Aspects of Intellectual Property (TRIPS) Agreement does cover many aspects of intellectual property but does not attempt a comprehensive definition of the term.(7) TRIPS aims to tighten protection of intellectual property by ensuring widespread mechanisms for the protection of intellectual property rights whilst aiming not to unduly impede international trade.

Relevant Australian and New Zealand Case Law

The Bill, among other things, will extend the patent protection on certain pharmaceutical products.The courts have discussed the arguments for and against this and have found both humanitarian and economic grounds for allowing such patents.

In the case of Anaesthetic Supplies Pty Ltd v Rescare Ltd 122 ALR 141 the Federal Court considered the fundamental question as to whether a patent may be granted in Australia for a method of treatment of disease or sickness in human beings.The court noted that there were arguments for and against allowing the granting of a patent in such circumstances:

On both humanitarian and economic grounds the search for medical advance is to be encouraged.The award of limited monopolies is a standard way of helping to compensate for the expense of research. Ultimately the resolution of this question is a balancing exercise. There is on the one hand a need to encourage research in connection with methods of medical treatment and on the other hand the need not unduly to restrict the activities of those who engage in the therapy of humans..... There is no statutory provision in Australia prohibiting the grant of a patent for a process of medical treatment of a human ailment or disease in a human being.It is noteworthy that the Parliament had the opportunity to exclude methods of treating the human body when it enacted the 1990 Act, but the limit of the exclusion was s. 18(2), namely:'human beings, and the biological processes for their generation, are not patentable inventions' cf. s.4, Patents Act 1977 (UK).

The New Zealand Court of Appeal held in the Commissioner of Patents v The Wellcome Foundation Limited (1983) 2 IPR 156(8) (Somers, McMullin and Cooke JJ) that patents could be given for methods of treating patients.The case concerned a patent for an invention which related to the use of a drug, previously used for the treatment of malaria, for the purpose of treating leukaemia. McMullin J as quoted by the High Court said:

that there was much to be said for developing the law to allow the grant of patents for methods of treatment of human illness by the putting of known compounds to new therapeutic uses. Human suffering may thereby be alleviated to the greater good of mankind.Research may be encouraged by the knowledge that what is discovered or invented will be protected from competition and assured of a reward.But, he said, there is another side to the picture.The grant of a patent is the grant of a monopoly.In recognition of this feature, the patents legislation aims to balance the desirability of encouraging and protecting technological advances against the restrictions, impediments and even abuse which may result from monopolies.A shift in emphasis which favours one interest will probably be achieved only at the expense of the other.Whether and to what extent any significant innovative movement is justifiable is not a matter for the courts.His Honour said that patent law is a rather artificial, highly complex and somewhat refined subject.It involves scientific and commercial features outside every day experience and the knowledge of the courts.Any major thrust should be left to Parliament.

Intellectual Property Rights - Arguments For

Intellectual property rights are private rights and are designed to encourage the invention or discovery of items that are useful or desirable.There are economic arguments in favour of supporting these private rights:

  • 'Well-defined property rights foster productive behaviour such as investment and innovation'.(9)
  • Intellectual property rights also promote research, technology and domestic industries by providing an economic incentive for individuals to put their efforts into innovative activities.(10)
  • In the case of pharmaceuticals, many companies would not put in the amount of money required to screen potential chemicals for their possible uses, identify those that may have useful properties and then clinically test them to satisfy health and safety standards, if there was not the guarantee that at the end of a 'successful' process, they would make a profit.Such profit of course would have to cover their costs in developing the pharmaceutical product and attaining its registration as a therapeutic good.For example, Mr Pat Clear, Chief Executive Officer of the Australian Pharmaceutical Manufacturers Association said in April 1997:

The extension to patent life guarantees greater return for companies that have spent millions of dollars and years developing new medicines, while allowing manufacturers of generic products to 'springboard'. [Springboard being a term for the generic copying of drugs].(11)

Intellectual Property Rights - Arguments Against

While few people would argue against intellectual property rights generally, there are a few categories of intellectual property rights to which some sectors of the community have voiced objections:

  • One argument against conferring intellectual property rights over medical research is that there are other incentives such as awards, prizes and government funded R&D that can stimulate innovative research and activities.(12)
  • Some argue against affording such protection given by patents to individuals or, more commonly, companies.For example, some groups claim that their knowledge of indigenous species is being exploited with large multinational companies being allowed to expropriate the knowledge, patent the chemical extract or derivative and then exploit this for their own profit, often at the expense of the indigenous groups.Shiva and Holla-Bhar claim that this has occurred with the Neem Tree, which has been used by Indian residents for centuries as a panacea for a variety of medical conditions.Whilst the Neem tree is not the subject of any patent protection in India (that country having legislation which does not permit the patenting of life forms), a number of extracts of Neem have been patented in the USA by multinationals.(13)
  • Whilst some are not opposed to intellectual property rights for discoveries, inventions or other specified works, they nevertheless argue that it is morally and religiously repugnant to patent 'life' or portions of 'life forms' such as DNA and object to intellectual property rights extending to these things.For example, in April 1997 it was reported that an American company, Biocyte, had been granted a Europe-wide patent on blood from human umbilical cords.That blood is used to treat people with diseased bone marrow.Biocyte argued that they had spent more than $8 million on developing the process of freezing the blood.However, opponents from the medical profession claimed that it was immoral and unethical to patent cord blood.(14)
  • Intellectual property rights do not always recognise 'collective works' or collective ideas and therefore arguably do not provide adequate recognition and protection of their cultural products and expressions of indigenous people.(15)
  • The community as a whole may have their access to better medication limited by the monopolies created by patents.
  • Current patent-holders, who arguably priced their pharmaceutical products so as to recover their R & D costs and make a profit over the 15 year patent, will get a windfall.

Other matters

The existing Commonwealth legislation prevents patent attorneys and solicitors from being in a multi-disciplinary partnership.The Bill will relax this rule.

The Bill will extend patent protection for pharmaceutical products and will also establish a Professional Standards Board for Patent and Trade Mark Attorneys.This Board will replace the Patent Attorneys Professional Standards Board and will allow universities to take over some of the education and examination functions previously done by the Board.One intended outcome is to make it cheaper and easier to protect new ideas and to lodge trade mark applications.(16)

Design Law

The Australian Law Reform Commission circulated an issues paper on Designs in 1993 and then reported on the state of Australian Design Law in 1995.The report No. 74 Designs contained 188 recommendations.

Main Provisions

Schedule 1 - Extension of pharmaceutical patents

Item 3 inserts a new Division into the Patents Act 1990 which allows for the applications by pharmaceutical patent owners for an extension of their patent.The product must be listed on the Australian Register of Therapeutic Goods and the date of the first regulatory approval must be at least 5 years after the date of the patent.Thus only those products which have had a lead-in time of at least 5 years can have their patent extended.

The regulations will specify what form the application for extension will take and what documents or information it must be accompanied by.

Proposed section 75 allows the Minister or 'any other person' to object to the granting of a patent extension but only if the application is in the form specified by proposed sections 70 and 71.

The term of the patent extension is to be equal to the lead in time less five years (proposed section 77) and for a maximum of five years.Currently the maximum term of patents is 15 years and this will increase to 20 years as a result of the proposed changes.

Schedule 2 - Patent attorneys and trade marks attorneys

Item 1 amends the Copyright Act 1968 so as to include as a fair dealing with a literary, dramatic, musical or artistic work, discussions with a duly registered trade marks attorney for the purpose of getting their professional advice.

Item 9 proposes to insert a new section in the Designs Act 1906 which gives patent attorneys and trade marks attorneys a right of lien over documents and property of their clients.A right of lien is traditionally something held by a solicitor or barrister.It arises when the solicitor or barrister has done work for a client but has not been paid for that work.In such cases the solicitor or barrister can retain the client's documents and file until their account is paid.

Item 13 inserts proposed section 198 which will amend the Patents Act 1990 so as to require the Register of Patent Attorneys, currently kept at the Patent Office, to be kept by the Designated Manager (defined in proposed section 200A as the person declared to be a specified Senior Executive or someone in the position and performing the duties of that Senior Executive, by the Secretary to the Department).In addition, the requirements for being registered as a patent attorney are being changed.There will no longer be a requirement to be an Australian citizen (just a person who is ordinarily resident in Australia) but there is a new requirement to be of'good fame, integrity and character' and not to have been convicted of a prescribed offence within the previous 5 years.

Item 16 inserts a definition of intellectual property at the end of existing section 200 (which deals with the privileges given to patent attorneys).The definition of intellectual property differs from the definition in the international agreements.

Item 20 amends subsection 201(7) so that employees are not liable for offences against the Patents Act 1990 committed by their employers or by them in their capacity as employees.Companies within a related company group are not taken to have committed an offence just because one of their related companies has.

Items 18 and 19 relax the requirement that all partners in a partnership be qualified as patent attorneys if the partnership does that type of work, however, proposed section 202A makes it an offence to a non-registered patent attorney partner to do the work of a patent attorney.The penalty is 30 penalty units (under section 4AA(1) of the Crimes Act 1914 one penalty unit is currently $110.00).

Item 26 establishes the Professional Standards Board for Patent and Trade Marks Attorneys.This Board will oversee the regulation of patent attorneys and trade mark attorneys with respect to their qualifications, registration and professional conduct.

Existing section 155 prevents unauthorised persons from working on trade mark related matters.Similarly the current provisions of the Trade Marks Act 1995 require a trade marks attorney to have certain qualifications.Item 36 repeals existing section 155 thereby removing restrictions on who can practice.(17) Although proposed subsection 156(1) will still make it an offence for an unregistered person to hold themselves out as a trade marks attorney.

Proposed subsection 228A provides for the Register of Trade Marks Attorneys to be kept by the Designated Manager (see item 13 above).Persons applying to be registered as trade mark attorneys must be registered provided that they meet the criteria set out in proposed subsection 228A(4) which include that the person has not been convicted of a prescribed offence within the previous 5 years.Other qualifications may be prescribed by regulations or examinations may be required by the Professional Standards Board, although the Second Reading Speech anticipates there being no technical qualification required:

Qualifications for registration as a trade marks attorney will be less rigorous than those required for registration as a patent attorney as there will be no requirement for a technical qualification.(18)

Proposed section 229 gives registered trade mark attorneys the same protections as a solicitor with respect to communications with their clients.They are given the same right of lien that a solicitor would have over the documents and property of their clients as well.

Item 46 will extend the power of the Governor-General to make regulations under the Trade Marks Act 1995. The regulations will be able to cover the making of complaints and hearing of charges against registered trade mark attorneys and associated matters.

Endnotes

  1. For a more comprehensive discussion about intellectual property see Bailey, B New Ideas, Old Laws: Copyright, Patents Trade Marks and Designs, and How To Avoid Plagiarism Parliamentary Library Background Paper No. 12 1995/96.
  2. McKeough, Stewart, Intellectual Property in Australia (2nd ed) 1997: 1.
  3. Golvan, C An Introduction to Intellectual Property Law (1992): vii.
  4. Annual Report 1995-96, Department of Industry, Science & Tourism: 110.
  5. Ibid: 113.
  6. McKeough, Stewart, Intellectual Property in Australia (2nd ed) 1997: 9.
  7. Article 1(2) of TRIPS describes intellectual property as encompassing all the rights described in sections 1 to 7 of Part II of the Convention.
  8. Cited with approval in the Federal Court case of Anaesthetic Supplies Pty Ltd v Rescare Ltd 122 ALR 141.
  9. Rapp, R & Rozek, R, Benefits and Costs of Intellectual Property Protection in Developing Countries Oct 1990 Journal of World Trade v24(5) 75-102 at 78.
  10. Ibid: 81.
  11. Reported in The Age (Melb) on 9 April 1997, story by Paul Chamberlin.
  12. Ibid: 89.
  13. Shiva, V & Holla-Bhar, R Intellectual Piracy and the Neem Tree, Ecologist v23(6) Nov/Dec 1993: 223-227 at 223.
  14. Reported in the Sydney Morning Herald, p 10, 15 April 1997, story by Andrew Gilligan.
  15. See Davis, M Indigenous Peoples and Intellectual Property Rights Parliamentary Library Research Paper No. 20 of 1996/97.
  16. Reported in The Australian, p 23, 12 March 1997, story by Madeleine Goorey.
  17. Second Reading Speech, The Hon Warren Truss MP, Minister for Customs and Consumer Affairs.
  18. Ibid.

Contact Officer and Copyright Details

Susan Downing
4 December 1997
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library, 1997

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