Australian Gov't Commission Also Wants To Fix Patent Laws Down Under

from the another-wow dept

So we already wrote about the Australian government’s Productivity Commission’s Draft Report on Intellectual Property Arrangements, talking about what was said about copyright law, but the report also goes into other areas of intellectual property as well, with some pretty good ideas on patent law as well (on this one I think they could go even further, but most of the recommendations in the report are a good start).

Once again, they offer up a nice infographic demonstrating the key points, which focuses on the serious problems of allowing patents on obvious ideas:

The Productivity Commission clearly recognizes that too many patents stifle innovation. In fact, they note that the only time patents really should be issued are in cases where those inventions would not occur without that incentive. And thus, since so much public policy around innovation always seems to focus on figuring out ways to increase patent numbers, the authors of the report recognize that patent policy is probably harming, not helping innovation:

Indeed, it appears to have become accepted wisdom that because patenting plays some role in promoting innovation, more and stronger patents are always better. But research reveals that greater patenting activity is not always associated with more innovation and that a non-trivial number of patented inventions have low social value, or would have occurred anyway.

Low-value patents impede innovation by frustrating the efforts of follow-on innovators and researchers. In some cases, low-value patents can be used as a strategic tool for stalling or excluding market entry, and can contribute to ?patent thickets?, which potential market entrants must ?hack? their way through in order to compete in a particular technology space.

And thus, they suggest that Australia’s entire patent system should be rethought and refocused towards trying to encourage things that are socially beneficial. That is, the system should be set up not with the inventors as the sole focus, but rather what will lead to the greatest possible public benefit. And the failure to do so is creating “substantial costs” on the public.

While the incidence of some low?value patents does not come as a surprise, a multitude of such patents imposes substantial costs on the community. Low-value patents impede innovation by frustrating the efforts of follow?on innovators and researchers.

To fix this, they have a few suggestions — all of which seem worthwhile. First, they say the bar is way too low for granting patents, so Australia should raise the bar for what’s considered “inventive.” They suggest the standard should be changed to if the invention or solution “would have been obvious for a person skilled in the art to try with a reasonable expectation of success.” They even consider going beyond that, but recognize that some patent holders outside of Australia may freak out at such a suggestion and avoid the Australian market.

The second suggestion is giving an “overarching objective” to patent law, which examiners can use as a sort of guiding light or touchstone. Basically, allow Australia to reject patents by arguing that granting such patents would go against the public interest.

The objects clause should describe the purposes of the legislation as being to enhance the wellbeing of Australians by providing patent protection to socially valuable innovations that would not have otherwise occurred and by promoting the dissemination of technology. In doing so, the patent system should balance the interests of patent applicants and patent owners, the users of technology ? including follow?on innovators and researchers ? and Australian society as a whole.

The Australian Government should amend the Patents Act such that, when making a decision in relation to a patent application or an existing patent, the Commissioner of Patents and the Courts must have regard to the objects of the Patents Act.

That would be a big and wonderful change to the patent system.

Next up, they suggest increasing the fees associated with patents (both for applying and for renewals — which would escalate), which acts as a mechanism to better ensure that a patent is valuable (i.e., making it less worthwhile if the patent holder isn’t actually going to do something with it). It also encourages patent holders to stop renewing the patent and push the info into the public domain sooner if the patent itself is no longer making an economic return.

The report doesn’t spend much time on patent trolls, noting that they’re not a big problem down under, and suggests that the existing “loser pays” litigation structure probably helps keep patent trolling at a lower level there. At the very least, that seems like an important data point for folks here in the US looking to add a “loser pays” provision in patent reform.

How about business method and software (BM&S) patents — which make up many of the most abused patents in the US? The Commission is not impressed by the arguments in favor of such patents and suggests making those things unpatentable. They point out that there’s little evidence that such patents encourage innovation, and that most innovation associated with them almost certainly would have happened without the patents, because the focus was on building products (and that there would be first mover advantages for those who got there first, so the copycat issue isn’t that big a deal). Furthermore, they point out that BM&S patents can often hold back important follow-on innovations. Quoting Nobel prize winning economist Eric Maskin, the report notes:

Specifically, in the software industry, progress is highly sequential: progress is typically made through a large number of small steps, each building on the previous ones. If one of those steps is patentable, then the patent holder can effectively block (or at least slow down) subsequent progress by setting high license fees. ? Thus, in an industry with highly sequential innovation, it may be better for society to scrap patents altogether than try to tighten them.

And they conclude:

On balance, the Commission considers it unlikely that granting patents in the area of BM&S increases the welfare of the community. BM&S patents likely compensate activity that would have occurred in any event (are nonadditional) and reward low? (or even no?) value innovations. BM&S patents can also frustrate would?be competitors and follow?on innovators. While broader changes to patents, particularly around the inventive step and dispensing with innovation patents (chapters 6 and 7), may ?knock out? a large share of BM&S patents, the Commission still considers that there is value in making clear that BM&S should not be considered patentable subject matter.

There’s a separate section on pharmaceutical patents, recognizing that the market factors there are somewhat different. Obviously, the pharma industry relies more heavily on patents. But they also note that Australia has a public policy need to “improve the health of all Australians.” They suggest that the government shouldn’t be as willing to hand over “extensions of terms” on phama patents, and should only do so in specific cases.

On the related question around data protection and biologics (a key sticking point in the TPP negotiations), the report finds that the policy should be designed to encourage much more openness and information sharing, rather than locking up information and biologics for too long.

There should be no extension of the period of data protection, including that applicable to biologics.

Further, in the context of international negotiations, the Australian Government should work with other nations towards a system of eventual publication of clinical trial data in exchange for statutory data protection.

These all seem like decent suggestions, though I still think they could go further. For years I’ve pushed for an independent inventor defense and for independent invention being a sign of obviousness (such that it might invalidate a related patent from someone else). That concept doesn’t seem to make it into the report.

Still, as with copyright, the report’s authors do seem to understand the key problems of the patent system in working against innovation.

And, once again, this is fairly amazing. The stunning thing about this report is that it pushes back on a lot of the accepted — but bogus — wisdom around copyright and patents that just gets repeated without question in most government reports. Kudos to the authors of the report.

Filed Under: australia, business method patents, innovation, inventiveness, obviousness, patent trolls, patents, public benefit, software patents