Government seeks further comment on Productivity Commission’s intellectual property report

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The Federal Government has invited stakeholder views after releasing the final report of the Productivity Commission’s (PC) inquiry into Australia's intellectual property arrangements. The report contains many areas of concern and AusBiotech seeks member comment to contribute to an industry submission.

The Government is reviewing the previous submissions to the PC and considering its response to the report, with further comment due by 14 February 2017.

The key concerns include the recommendations to reform the ‘inventive step’, the recommendation to seriously limit patent term extensions, the proposed review of TRIPS and the abolition of innovation patents. The suggestion that “renewal fees are underutilised” as a policy lever, may result in increased costs, which would adversely impact SMEs.  There is a continued lack of recognition of the difference between a generic and a biologic in the report and concerns that the presentation of selective data ‘paints’ the value of the patent system as a community cost.

A number of the recommendations made in the Commission’s report revisit issues and past proposals, which have already been given detailed consideration, stand-alone reviews and inquiries. Many of the issues raised in the report were assessed in the period leading up to the implementation of the “Raising the Bar” Act in 2013. The Act raised the quality of granted patents to more closely align Australia patentability standards with international standards. It enshrined a broad research use exemption so this country’s researchers and industry may be confident as they strive to innovate. It is unclear why the Bill has not been given sufficient time to take affect and be properly assessed, before changes are sought.

The report, however, does offer one point of interest, proposing a more accessible court system for SMEs. The report states: “While Australia’s enforcement system works relatively well, reform is needed to improve access, especially for small– and medium–sized enterprises… Introducing (and resourcing) a specialist IP list within the Federal Circuit Court (akin to the UK model) would provide a timely and low cost option for resolving IP disputes.”

Patent extensions

Extensions to patent life for health technologies like pharmaceuticals are important because the regulatory and reimbursement processes consume years of patent life - and the period or the possible period of the patent influences the decisions of investors.

IP protection is the fundamental source of value that is used by companies to attract the substantial, multi-million dollar investment it takes to bring therapeutics to patients. If these small companies are to be successful in reaching the market, and therefore able to contribute back to the Australian economy, they do not need any further disincentive or barrier to attracting investment. AusBiotech contends that the removal or reduction of the patent extension term, will impact investment decisions and make the attraction of investment even harder than it is now. While the patent term extension is obviously not the only factor on which an investor will make a decision, the total term available does in fact influence the risk profile and affect decisions.

Data exclusivity provisions

Australian patents provide a formal 20 years of protection to certain types of pharmaceutical inventions (or longer if an extension of term is granted), but the average effective patent life is between 11 and 12 years once the development time is consumed. Meanwhile the invention’s value becomes less and less. While data exclusivity runs independently from a patent protection period and often concurrently, it plays an important role in the situation where a patent has almost (or has) lapsed by the time regulatory approval is sought or where no or poor protection is available due to the type of technology. In the area of biologics, this is critical as the ‘method of manufacture’ is the focus of the IP rather than a pharmaceutical molecule. Nuances of developing biologics and protecting biologic IP is greatly complicated, and very different, and in some cases makes patents alone inadequate for safeguarding this IP.

To maintain a reasonable level of protection, the system needs to be updated to support the introduction of biologics into Australia. Australia’s five-year data exclusivity provision lags global competitors and collaborators such as the US (up to 12 years), Canada (eight years), the EU (up to 11 years), Japan (eight years) and even countries like Russia and China (six years). This puts at risk investment in Australia’s rapidly growing domestic pharmaceutical and biotechnology sectors.

Harmonisation with international standards

Australia maintains a number of international trade agreements, including TRIPS and the US-Australia Free Trade Agreement. This international harmonisation is beneficial for Australian developers and for attracting IP into the Australia for clinical trials.

While Australia might decide to walk away from its obligations under these international trade agreements, such a move would be unprecedented and disadvantage Australian biotechnology developer - and would almost certainly attract trade reprisals from other countries.

Changing ‘inventive step’ standard

AusBiotech is surprised by the Commission's recommendation to amend the definition of an inventive step in Australia to bring it into line with the definition used in Europe, as the ‘Raising the Bar’ legislation was enacted in 2013 to align with Europe.