Australia's global ranking on providing strong intellectual property protection fell last year, according to a new report, even before taking account of the recent Productivity Commission report that recommended the wholesale winding back of pharmaceutical patents.
The US Chamber of Commerce has released its 5th annual International IP Index, “The Roots of Innovation,” rating 45 world economies on patents, trademarks, copyright, trade secrets, enforcement, and international treaties.
The economies benchmarked in the 2017 Index account for 90 percent of global gross domestic product.
Australia was ranked 12 out of 45. The list was topped by the US, UK, Germany and Japan.
Australia’s overall score dropped from 83 per cent of the total possible score - with a score of 24.79 out of 30 - in the fourth edition of the Index to 77 per cent - 27.07 out of 35 - in the fifth edition.
"This mainly reflects weak performance in some of the new indicators, notably patent opposition, and a setback in measures against online piracy," said the report.
"Australia (together with New Zealand and Israel) is one of the few developed OECD economies that provides a pre-grant form of patent opposition. The system is considered to extend the patent review process significantly, delaying the granting of patents and reducing the available term of protection afforded to patent holders. For example, a 2012 academic study published in the University of New South Wales Law Journal found that Australian opposition filings typically delayed the granting of a patent by close to 2 years (the mean delay found was 2.4 years versus the median of 1.8 years)," it said.
Yet the report sounded a warning about the general direction of intellectual property protection in Australia.
"Though not affecting Australia’s score in the fifth edition, the Productivity Commission’s 2016 review and recommendations on IP could fundamentally curtail IP rights (in some cases, lowering IP standards below those in the TRIPS Agreement), contradict decades of IP policy in Australia, and severely undermine Australia’s knowledge-based economy.
"Proposed measures include introducing new exclusions to patentability and raising renewal fees to discourage use of the full term of protection. The proposals also recommend tackling online piracy by reducing access restrictions and decreasing the current 70-year term of copyright protection significantly. If implemented, these measures could result in a substantial drop in Australia’s Index score."
One of the most controversial recommendations contained in the Productivity Commission’s report is the effective removal of the five year patent term extension for pharmaceuticals. The extension is granted to compensate for long development times, often the result of significant regulatory requirements.
The US Chamber of Commerce also highlights current legal action by the Department of Health against a small number of pharmaceutical companies in which it is pursuing damages - potentially in excess of $1 billion - in relation to failed patent claims.
"Those damages are designed to compensate Australia’s pharmaceutical reimbursement scheme (PBS) for any higher price paid for a patented medicine during the period of a provisional enforcement measure.
"The PBS imposes automatic price cuts on medicines as soon as competing versions enter the market, but the policy entails no corresponding mechanism to compensate innovators for losses if an infringing product is launched prematurely.
"Australia’s market-size damages policy unfairly tips the scales in commercial patent disputes and creates an inappropriate conflict of interest by permitting the same government that examined and granted a patent to seek damages if that patent is later ruled invalid or not infringed.
The continued use of market-sized damages will undermine patent protection and the overall innovative environment in Australia and create greater uncertainty for biopharmaceutical investors."
“Governments from East to West all want the same thing: economic growth. Now more than ever, world economies must choose whether they will grow forward into the future or shrink back from endless innovative potential,” said Mark Elliot, executive vice president of the US Chamber of Commerce's Global Intellectual Property Center.
Mr Elliot started his career in Australia and spent time as an executive at Pfizer Australia.
“Each year, this report attempts to highlight best practices among the world’s intellectual property environments. In 2017, many of the same challenges remain. Emerging markets, such as India, have made incremental gains and embraced positive rhetoric with their IPR policies, but they have not yet followed up with the legislative reforms innovators need. Some developed countries, including Canada and Australia, continue to implement policies that undermine their proud traditions of IP-led innovation. And even world leaders such as the U.S. have room to grow and improve.”