Creative thinking not evident in plans to abolish the IPS
This bill, amongst other things, seeks to end Australia’s Innovation Patent System (IPS).
IP Australia draws upon a range of studies which argue that the current IPS does not deliver for Australian small- to medium-sized enterprises (SMEs). This is in direct contradiction to submissions by SMEs and certainly does not reflect the view and experience of a number of South Australian innovation-based companies that spoke to me personally on the issue.
IP Australia also suggested that the IPS does not deliver on the intended purpose for which it was established—to incentivise research, development and innovation in Australia. Such commentary shows a disturbing lack of understanding by IP Australia of commercial reality. Companies are motivated to conduct research and development (R&D) for two predominant reasons: because they have an idea that will likely make them money; and because the government offers companies R&D tax concessions which help alleviate the costs and risks associated with research, development and innovation.
The evidence provided by Mr Gibbs at the hearing was comprehensive and rather disturbing.
Mr Gibbs provided evidence showing how patent applicants from Asia have risen from obscurity to dominance in the international patent application system over the course of the last 20 years. He stated, 'China is now the biggest player in Asia, although Japan and South Korea are also big players'.
Mr Gibbs further stated that 'China recognised the importance of controlling intellectual property ownership', before advising the committee that China has a regime similar to Australia’s IPS: utility model applications. He said:
They are cheap and quick to obtain and they last for a shorter term, whereas standard patents are expensive, take a long time to be granted and last for up to 20 years. By providing both types of patents and encouraging citizens to use them, China has succeeded spectacularly in growing its local ownership of patent rights, and this has translated into extensive ownership of international patent rights.
It is clear from the Chinese experience that there is something other than IPS patents that actively discourages R&D in Australia.
Australia needs to be using every tool at its disposal to facilitate the protection of innovations. Mr Gibbs provided concerning evidence on the patent take up rates in Australia. He advised the committee:
In China, each year, 21 patent applications are filed for every 10,000 residents. In Germany it's 10 per 10,000, in the US it's nine, in the UK it's three, in New Zealand it's two and in Australia it's just 1.44, including innovation patents. If innovation patents were abolished, the figure for Australia would drop to 1.02.
Importantly, he went on to say:
In my opinion, the Australian government should be taking steps to improve Australia's future economic position by increasing the ownership of patents by Australians. If you're looking for reasons why Australia's productivity has been stagnating, then the number of Australian owned patents per capita is a key indicator. In my opinion, the abolition of innovation patents would be a step in the wrong direction.
I and many South Australian companies agree with Mr Gibbs. In response to direct questioning, IP Australia confirmed there are no financial savings with shutting down the IPS.
Senator Gallacher: Is there a cost here, a saving, if you get rid of the innovation patents? Do you save money?
Dr Mitra-Kahn: We don't save money.
It makes no sense to shut down the IPS when it is useful and valued by SMEs and, especially, if retaining the IPS costs nothing.
There’s a certain arrogance of officials, or indeed many politicians for that matter, who have little if any experience of research, development or business and who enjoy regular pay in their bank accounts courtesy of the taxpayer, dictating to entrepreneurs and businesses what’s best for them.
That provisions repealing the IPS be removed from the bill.
Senator for South Australia