Special interview with Patricia Kelly, Director General of IP Australia

The IPKat recently had the privilege of submitting written questions to Patricia Kelly, Director General of IP Australia, in connection with both the "Intellectual Property Arrangements: Productivity Commission Inquiry Report", which was sent to the Government on September 23, 2016 and publicly released on December 20, 2016, and the "Australian Government Response to the Productivity Commission Inquiry into Intellectual Property Arrangements", which was publicly released on August 25, 2017. Set out below is the full text of this interview.

1. Director General Kelly, permit me to begin this interview with a confession. I have long admired the IP jurisprudence in Australia. Without getting in hot water with Kat readers, my sense has been that your IP case law avoids both the "litigation on steroids" nature of US litigation and the heavy weight of the judicial past in UK judgments. Is this just a fantasy of mine?

I’m sure Australia’s IP courts and judges would be pleased with that assessment and you may be in a better position to compare and judge than I am. It is true that in general Australians are not as litigious as their US counterparts. Our legal system is a common law system, as in the UK, where precedent is observed, however, in my experience that has not led to anomalous outcomes.

Rather than the outcomes of the judicial process with regard to IP, recent focus has been on improving access to the judicial system to pursue IP issues. The Australian Productivity Commission (PC) recently made international comparisons suggesting that Australia has robust IP enforcement arrangements, but that more can be done to improve the ability of rights holders to utilise Australia’s enforcement infrastructure, in particular for small to medium enterprises (SMEs). We have recently seen both the Federal Court of Australia and the Federal Circuit Court of Australia make efforts to improve accessibility and efficiency.

IP Australia is also committed to helping SMEs to understand that alternative methods of dispute resolution are available outside of the courts. We have recently launched an IP Mediation Referral Service, and we are working with the insurance sector to explore possibilities for trade mark defense insurance. It is early days for these initiatives and we continue to look for ways to assist in the enforcement area.

2. The Productivity Commission Report seeks to address what it calls “intellectual property arrangements” against the backdrop of the particular circumstances of Australia. One factor that is mentioned multiple times is that the country is a net importer of IP. What other major factors can you point to that define the context in which IP in Australia takes place?

While Australia is a net importer of IP, this is the case for the vast majority of nations. IP Australia made comment, in its submissions to the Productivity Commission, on the fact that the Australian Government is striving to expand and accelerate domestic innovation (through its National Innovation and Science Agenda) and that we would want to have IP settings that encourage and reward our innovators. It is also worth noting that the importation of IP per se is not a bad thing. It suggests strong adoption and diffusion of technology, which is a positive for the economy.

During the inquiry, there was commentary on this issue by the WTO’s Chief Economist suggesting that Australia should not view itself as an ‘island of IP’ and instead view itself more ‘in a global context and how its position might evolve’. I think that is good advice. Much of the context for IP development in Australia stems from global developments. The advent of global value chains, the development of global brands and the rise of the internet as a trading platform all shape the business models and opportunities available to Australia and have implications for the IP system. We are also on the cusp of a huge and disruptive wave of global technological change. Technologies including artificial intelligence, big data, the internet of things, advanced robotics and biomedical advances such as CRISPR technology promise to reshape business, markets and the workforce. These have implications and challenges for our IP system.

Within governments there is also an increased awareness that IP is an important economic asset which can generate growth and jobs. This leads governments to focus on developing and implementing policies to attract and retain IP and capture benefit. We see this reflected in the international trade agenda where IP is increasingly a focus of negotiations. A counter to these developments comes from those who challenge the overall benefits and impact of the IP system to community welfare. Globalisation has generated a significant backlash and that includes anti-IP sentiment. To secure community and ultimately ongoing political support, the IP system overall must be seen as balanced and fair. This issue of balance between the interests of rights holders and the public was indeed a pivotal consideration in the Productivity Commission’s report.

All of these global issues set the context for the development of IP arrangements in Australia. That said, a well-functioning and effective IP system is recognised as important to underpin Australia’s innovation, trade and investment efforts. For Australia, predicted to remain the 13th largest world economy in 2017, having access to the latest technology and developing cutting-edge innovation relies on a world-class system for IP protection. As mentioned above, Australia’s IP system needs to also be viewed in light of the Government’s National Innovation and Science Agenda, which recognises that innovation and science are critical for Australia to deliver new sources of growth, maintain high-wage jobs and seize the next wave of economic prosperity.

3. The Productivity Commission Report emphasizes the need to achieve a more balanced role for IP within the broader context. What would you say to those who might claim that in effect the Report adopts a low protection approach to IP, such as proposing user’s rights in copyright and seeking to address patent rights that are tipped too much in the direction of the patent owners?

As noted above, I think it’s broadly recognised that the IP system is all about striking the right balance. It is true that the Productivity Commission suggested that the balance in the current Australian system was tipped too far in favour of rights holders. However the final recommendations that have been accepted by the Government will, in my view, not make a dramatic difference to the protection available to rights holders in Australia.

The change to inventive step is designed to ensure consistency with international best practice and put beyond doubt that Australia adopts a standard comparable with the EPO. In practice, following changes to our law in 2012, we believe we already apply standards comparable with the EPO and thus I expect the practical impact of this change to be limited. The introduction of an objects clause into the Patents Act will provide overt guidance for the judiciary in IP cases and hopefully contribute to a continuation of the balanced approach which you so kindly comment on above.

While the phase-out of the innovation patent could be seen as a diminution of rights, this decision was driven in large part by IP Australia research which demonstrated that the innovation patent was not providing net benefit to the group it was designed to assist, i.e. SMEs. The changes are designed to contribute to the overall integrity and balanced reputation of the Australian IP system, however under these changes Australia remains a country with strong protection for rights holders and a world standard IP system.

4. There are a large number of proposals in the Report. How will you prioritize them, and have you developed metrics to evaluate their effectiveness?

It is relevant to note that IP Australia is not responsible for all the reforms recommended in the Productivity Commission’s report. IP Australia is responsible for implementing the changes in relation to patents, trade marks, designs and plant breeder’s rights. We are taking a two-phase approach to the legislative changes endorsed by Government in response to the Productivity Commission’s report. With respect to the innovation patent (where there has already been extensive consultation) and some of the more straightforward reforms relating to trade marks and plant breeders’ rights, we have released draft legislation for comment.

For phase two, we will consult further on the implementation approach for a number of matters including inventive step reform and introduction of an objects clause, plus issues raised by the Productivity Commission in its 2013 review of compulsory licensing, as highlighted in the Government’s response to the 2016 inquiry. Consultation papers on these matters are on our website.

As is standard practice, we are developing an evaluation plan for the legislation which will include looking at impacts on the quantum of patent applications and grants; changes in the nature or characteristics of these; and use of the objects clause in judicial interpretation. However, it will require 3-5 years of data collection post-implementation to provide a solid basis for evaluation. On prioritisation of policy changes more generally, I would like to mention that IP Australia has recently released an online register of IP policy issues and proposed changes under consideration, including the priority we assign to them. This allows anyone to review and provide feedback on IP policy issues and their priority for action. I encourage you to take a look at IP Australia’s policy register.

5. What kind of role does Australia want to play in the international IP community? Aspirations aside, to what extent can Australia play a leadership role in international IP issues?

On the international front we support a more harmonised IP system. As a country that fundamentally relies on exports and which is transitioning away from a reliance on commodities towards more knowledge-based products and services, Australia, or more accurately Australian businesses, would benefit from a simpler, more harmonised global system. As such, in WIPO and other relevant forums we support international harmonisation, work sharing and adoption of best practice. We are currently playing a lead role in Group B+ efforts to achieve progress in the patent harmonisation agenda (I currently chair this group).

We are also active in capacity building in less developed countries. Our geographic location puts us in a unique position as a mature IP office within a region of rapidly evolving IP systems. We have been proactive in mentoring and providing guidance to other offices and working towards basic standards of IP protection across the region. We are also playing a leading role in WIPO in efforts to develop an international agreement on recognition of genetic resources, traditional knowledge and folklore. (Ian Goss from Australia chairs this group.) While we need workable solutions in this space, there is clearly a gap in the system here which denies rights to some of the least well-off groups and, while the gap remains, it provides ammunition to those who point to a lack of balance in the IP system.

Australia continues to work through WIPO and support a multilateral approach to international IP issues and administrative systems, as we see this as the best way to maximise benefits from the system. However we recognise the practical limitations here, and Australia also continues to actively negotiate free trade agreements with our trading partners, in particular in the Asia-Pacific region. By agreeing with our trading partners to provide fair and transparent processes for obtaining and enforcing IP rights, particularly through use of the multilateral treaties, we can ensure that there is certainty in the IP system for businesses operating in a global environment. In prioritising its international engagement efforts, IP Australia looks for opportunities where it can add value and influence the global IP system in the directions outlined above.

6. Having regard to Australia's initiative regarding the plain packaging requirements for cigarettes, how much can Australia be expected to engage in such IP initiatives in the future, as opposed to primarily incorporating elements of IP law taken from other jurisdictions?

Plain packaging is not primarily an IP initiative, but rather a key element in Australia’s comprehensive package of tobacco control measures, aimed at improving public health. So the question is really how do we ensure the IP system develops in a way that complements other areas of public policy, including health, competition, trade and of course innovation policy.

While IP relies on sovereign rights, the IP system is essentially a global system underpinning world trade, investment and technology transfer. In recognition of this, Australia generally seeks to align its IP arrangements with those of our major trading partners and international best practice. This will continue to be the dominant trend; however overall the IP system must serve the public interest and align with key public policy priorities. As demonstrated by our active role in the WIPO Intergovernmental Committee on IP and Genetic Resources, Traditional Knowledge, and Folklore, Australia is also prepared to contribute to the development and evolution of the IP system. We are also exploring domestic initiatives in this area.

7. I cannot help but notice that trademarks receive only scant attention in the Productivity Commission Report. Given that Australia is not usually thought of as a large exporter of international brands, what does this say about the state of trademark law in the country?

I think it is fair to say that there are more contentious issues raised around patent law and policy than around trade mark law and policy in Australia. This is despite the fact that we have far more domestic trade mark rights holders than patents rights holders.The Productivity Commission had a lot of ground to cover in its report and it tended to focus on the more contentious issues and those highlighted in its terms of reference. It did however devote a chapter to trade marks, and, in line with its recommendations, the draft legislation we are currently consulting on includes provisions to clarify the rules around parallel importation of trade marked goods and reduce the grace period for challenging trade mark non-use.

We’ve seen steady growth in both resident and non-resident filings for Australian trade marks since 2009, with a 26 percent increase over that period. In contrast to patents, around two-third of trade mark applicants are Australian residents and the vast majority of these domestic applicants are small to medium enterprises and private individuals, who filed more than 90 per cent of domestic applications in 2016. Many of our new customer-oriented services are targeted at this group. We’ve also seen strong growth in the number of trade marks filed abroad by Australians in recent years, with China and the United States the main destinations. Latest WIPO figures indicate a 20 percent increase in trade mark classes filed by Australians abroad in 2015. Our decision to establish an IP Counsellor at the Australian embassy in Beijing earlier this year was primarily aimed at assisting Australian exporters navigate the Chinese IP system, especially around trade marks.

photo on lower left by Thomas Steiner licensed under Creative Commons Attribution Share-Alike 2.5 Generic License