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Australian Productivity Commission Recommends Copyright Reform

On By stuartefstathisIn copyrightLeave a comment

This article was based on a news post written by the author for Creative Commons Australia.

The Australian Productivity Commission has recommended important changes to Australian copyright law that support content creators and users in the digital age. On 29 April 2016, the Commission released a Draft Report which received support from intellectual property organisations like Digital Rights Watch and Creative Commons Australia.

KEY RECOMMENDATIONS

The Productivity Commission concluded that “Australia’s IP system is out of kilter, favouring rights holders over users and does not align with how people use IP in the modern era”. The Draft Report contained a number of recommendations, including the following (among many others):

  • Australia should introduce a fair use exception to copyright. Fair use should replace the current fair dealing exceptions and ensure copyright laws regulate “only those instances of infringement that would undermine the ordinary exploitation of a work at the time of the infringement”;
  • The term of copyright has been extended as a result of international trade agreements involving Australia;
  • Circumvention of technologies designed to control geographic markets for digital content should not be unlawful. The law requires clarification;
  • Copyright safe harbours should be expanded to include all online service providers without an expansion of liability for copyright authorisation.

The passage of the Copyright Amendment (Disability and Other Measures) Bill 2016 is crucial to these reforms. That Bill will introduce the extensions to copyright safe harbours and remove the perpetual copyright protection currently afforded to unpublished works. The introduction of a fair use exception in the Copyright Act must be implemented by similar amending legislation to be drafted by the next Australian Government.

I. FAIR USE

There is wide support for the introduction of a fair use exception into Australian copyright law. Fair use is a defence to copyright infringement that allows the use of portions of copyright material under circumstances considered to be ‘fair’. Fair use allows the creation of new content that builds upon existing knowledge, culture, and expression.

Fair use can address the needs of consumers and creators of content in a digital market. For example, US copyright law allows for fair use, which has seen platforms like YouTube grow exponentially into a thriving source of content.

Currently, the Copyright Act contains a ‘fair dealing’ exception. Fair dealing allows copyright content to be used for the limited to purposes of research or study. Fair use is a more flexible exception which is better suited to the digital age. The Australian Law Reform Commission has issued an extensive report recommending the introduction of fair use and the Productivity Commission has supported this. Fair use is also strongly advocated for by both Creative Commons Australia and Digital Rights Watch.

II. COPYRIGHT TERM AND INTERNATIONAL LAW

Australian copyright law has steadily increased its focus on protecting rights holders over the last two decades. The Productivity Commission suggests that this is reflected in the recent extension of copyright terms from life of the author plus 50 years, to life plus 70 years. Extending the term of copyright has no public benefit and merely increases costs to consumers and businesses for use of the copyright material.

However, the copyright term is entrenched in an overlapping web of international agreements to which Australia is a party (including the Berne Convention, TRIPS, the Australian-US Free Trade Agreement and the Trans-Pacific Partnership Agreement). As a result, Australia does not presently have the ability to independently determine whether the extension of the term is appropriate or in the nation’s best interests.

III. GEO-BLOCKING AND THE ‘AUSTRALIA TAX’

Australian consumers often experience higher prices, long delays, and a lack of competition in digital content distribution markets. An example of this is the disparity in content between Netflix’s Australian service and its US service…or the inflated prices Australians pay for imported music, movies and video games…or the months of waiting for the newest season of Game of Thrones to be released in Australia. This is known as the ‘Australia Tax’.

Under current law, it is not always clear whether Australians have the right to circumvent geo-blocking technology to access media goods and services sold in other markets. For example, by using a virtual private network (VPN) to watch Netflix US content from your lounge room in suburban Brisbane. The Productivity Commission recommended clarification of the law in this regard so that Australian consumers can encourage a more competitive digital market.

IV. SAFE HARBOURS

Copyright safe harbours protect intermediaries from liability where one of their users infringes copyright. The exception in Australian law currently applies to service providers and content hosts like iiNet, Google and Yahoo. Safe harbours are important as they provide the legal certainty required for content hosts to distribute creator content.

Under Australian law, these exceptions only apply to certain internet service providers in certain circumstances. The result is that Australian consumers are disadvantaged by safe harbours that are too narrow to allow distribution of content in the digital market. The Productivity Commission recommended the extension of safe harbours to all online service providers.

Header Image: Copyright by Flickr User Dennis Skley licensed [CC BY-ND 2.0]

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High Court Says Genetic ‘Information’ Not Patentable

On By stuartefstathisIn PatentsLeave a comment

Yesterday, in the landmark decision of D’Arcy v Myriad Genetics Inc, the High Court of Australia unanimously invalidated isolated gene sequences as patentable subject matter within the meaning of the Patents Act 1990 (Cth).

The majority of the High Court found that the ‘useful’ part of the gene was the information it encoded and not its molecular structure. The Court held that isolation of the gene by altering its molecular structure did not fall within the meaning of the test for patentability under Australian law. This is because what Myriad had done to alter the BRCA1 gene did not alter the information it encoded by it, meaning it was ‘not chemically, structurally and functionally different to what occurs in nature’.

The test for ‘patentability’ under Australian law requires an invention to be something which would not otherwise exist but for human intervention.

In arriving at that conclusion, which has been publicly lauded as a win for cancer patients and medical research, Chief Justice French expressed concern at the ‘size of the class of products’ which Myriad had claimed in their BRCA1 patent. His Honour believed there was a ‘real risk’ that upholding the claim would ‘lead to the creation of an exorbitant and unwarranted de facto monopoly on all methods of isolating nucleic acids’. His Honour considered this to be ‘at odds with the purposes of the patent system’ bearing in mind that the technology could be used in the future for entirely different medical procedures.

In an earlier case, the US Supreme Court also excluded isolated genes from patentability under their law.

It is clear from their reasoning that the High Court has considered the ‘chilling effect’ that a grant of monopoly rights can have on legitimate innovation and research. The effect of the High Court’s decision is that Australian patent law is now consistent with one of our biggest trading partners, the USA, but its effect on growth and investment in the biotechnology sector is yet to be seen. Some academics have also predicted a global policy shift towards increasing resources available to medical researchers as a result of the High Court’s decision, when considering the effect the US and Australian decisions may have on a current gene patent challenge in Canada.

But that may not be the end of the gene patent debate in Australia. In his reasons, Chief Justice French put the onus back onto the Australia government to legislate on the interpretation of the Patents Act. The Australian Parliament has considered amendments to the Patents Act on the subject of gene patents in the past and declined to specifically exclude gene patents from eligibility under the Patents Act.

Chief Justice French believed that ‘far-reaching questions of public policy’ considering ‘encouragement of industry, employment and growth’ when balanced against ‘rewarding legitimate innovators and inventors’ may be ‘best left to legislative determination’.

Instead, Parliament chose to raise the threshold test for patentability to prevent patents over genes that were not sufficiently inventive, novel or useful. The intended effect of the amendments was to monitor the implications of gene patents for research and healthcare, while simultaneously allowing for their commercialisation. However, they were criticised by some policy-makers for being too narrow to have any practical effect. As some commentators have warned, international pharmaceutical and biotechnology companies could now push for further legislative reform to nullify the effect of the High Court’s decision.

As Ms D’Arcy claims, the effect of the decision on cancer patients is that the costs of the BRCA1 test are lowered due to competition offered by a diversity of diagnostic centres able to perform the test. The decision also allows medical research to be performed that utilises the BRCA1 gene without the threat of a patent infringement claim or license fee hanging over the head of researchers. Biotech companies, like Myriad Genetics, must now look to downstream products like gene tests and DNA arrays derived from the BRCA1 sequence to remain profitable in the Australian biotechnology industry, which may see growth from US based investment as a result of the now-consistent patent policy in place.

Also posted to Hyperconnected.org, a blog for innovation and technology law run by QUT-IP in Brisbane.

DNA Lab by University of Michigan School of Natural Resources & Environment (https://www.flickr.com/photos/snre/6946913449) licensed [CC BY 2.0](https://creativecommons.org/licenses/by/2.0/)

A Myriad of Concerns for Australian Gene Patents

On By stuartefstathisIn Patents2 Comments

This week, the full bench of the High Court of Australia will return its verdict on the issue of whether artificially isolated human genes are patentable.

The case was an appeal from the full Federal Court by Ms Yvonne D’Arcy, a survivor of breast cancer, who sought to invalidate the patent held by Myriad Genetics for the isolated mutant gene sequence of the BRCA1 gene. BRCA1 has been the subject of much research by Myriad Genetics and other biomedical researcher companies because of correlations observed that link mutation in BRCA1 to an increased risk of developing breast and ovarian cancer. By analysing a patient’s genome for mutations in the BRCA1 gene, medical diagnostics companies can offer early detection of cancers associated with the gene, which can give patients a head-start on treatment.

According to commentators, upholding Myriad’s patent would have the flow-on effect that all other patent claims over isolated gene sequences are proper subject matter under Australia’s ‘manner of manufacture’ test for patent eligibility. Australian patent owners would welcome such a conclusion which would provide security in the biotechnology sector, as medical researchers would retain their incentive to continue to develop and commercialise diagnostic methods that utilise these patents.

The counter-argument often advanced by critics, and publicly by Ms D’Arcy, is that allowing gene sequences to remain patentable subject matter limits access to genetic testing by cancer sufferers. This is because monopolisation of the rights to use the gene means that diagnostic companies, like Myriad Genetics, can charge whatever price for the test that they see fit, without competition.

Prior to the ban on gene patents instigated by the US Supreme Court, American cancer patients were made to pay around $4000 for BRCA1 diagnostic testing.

While the arguments advanced in Ms D’Arcy’s case relate specifically to patent eligibility and do not challenge the patentability of processes using isolated genes for testing or treatment, the decision could still have a profound effect on Australia’s position in the global biotechnology market. In the US, a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated. However, in Europe, biotechnological inventions are protected by the Biotechnology Patent Directive which specifically allows for the patenting of a gene sequence and its industrial application. It will be interesting to see how the High Court considers these inconsistencies when the Australian Government has, in the past, declined to expressly exclude isolated genes from patentability under the Patents Act 1990 (Cth).

Upholding Myriad’s patent could lead to inconsistencies in patent law across our major trading partners.

The case represents an opportunity for the High Court to add to the growing precedent explaining the ‘manner of manufacture’ test as it applies to emerging technologies. The case also has important implications for the growth of local Australian biotechnology companies, as well as for attracting investment in the sector from big international players.

The question that remains is: how much weight does the High Court give to these issues and which of those issues should prevail to form part of Australian patent law? We will know on Wednesday, when the High Court delivers its reasons for judgment on this highly-anticipated case.

Also posted to Hyperconnected.org, a blog for innovation and technology law run out of QUT in Brisbane.

Header Image: DNA Lab by University of Michigan School of Natural Resources & Environment licensed [CC BY 2.0]

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Google Inc: Troll-Slayer

On By stuartefstathisIn PatentsLeave a comment

Every startup has a story. From university dorms to mothers’ basements and neighbour’s garages, the startup culture is often founded upon humble beginnings and Google Inc is no exception.

In recognition of the importance of startups to global technological innovation, Google announced last month that it would be giving eligible startups access to two of its own patents at no cost as a means of giving those smaller companies a friendly leg-up in the competitive technology industry.

This news comes after Google spent the last few months adding relevant patents to its own portfolio from smaller companies who could no longer afford to keep them or which were due to expire under US patent law.

Google’s plan was to buy-up those patents before they fell into the hands of patent trolls. Patent litigation is costly and burdensome on small startups that need all their resources just to get their ideas off the ground. As a result, patent trolls represent a serious threat to startups and their actions strike at the core principles of the patents system and innovation sector.

‘Patent trolls’ are businesses that make money primarily by litigating infringements of the patents they own.

In recognising the key role startups play in their industry and the blockade to innovation caused by patent trolls, Google is now conditionally giving away certain patents to 50 eligible startups. So what’s the catch? What does Google get out of all this? A condition of the program is that each startup joins the License of Transfer (LOT) Network.

The LOT Network is a country club of sorts for patent owners big and small. Indeed, smaller companies from various sectors, including energy and biotechnology, have now joined LOT as a means of gaining a foothold in the ever-expanding US technology market. Members of the LOT Network are granted royalty-free cross-licenses to other members’ patents upon commercial license to a non-member, or alternatively, can buy the patent from the other member. Put simply, the goal of LOT is to keep the patents in the family so that trolls aren’t fed to begin with.

Google, Canon, DropBox, Uber and other larger tech companies are already members of the LOT Network.

Encouraging licenses to other member companies allows the collective patent pool to grow over time, as the mechanism provides companies with an incentive to hold onto their patents until they expire. However, well-established companies who join LOT may see their patents diminish in value should they wish to sell the patent to a non-member. This is largely due to the mandatory royalty-free cross-license all LOT members receive if a member sells their patent to a non-member. Such a mechanism has an obvious adverse effect on the patent’s value, as the license diminishes the exclusivity of the rights conferred by the patent and would subsist in the patent even after its’ owner left the LOT Network.

Membership to LOT has been relatively steady by larger industry players, while the smaller startups Google have purported to target are yet to jump on board.

It is clear that Google is attempting to change the patent market, at least in the technology sector, by importing long term defensive strategies into the LOT agreement. While Google claims this is for the greater good of the patent system, it is easy to see Google has championed the fight against patent trolls in this way in a move to reduce its own annual spending on patent litigation. Many commentators have also accused Google and friends of simply shifting the power base of patent ownership control.

While this is certainly the case as a matter of practicality, Google argues that LOT provides for responsible management of patents, rather than leaving these resources (and the seemingly defenceless startups that hold them) as free game for the trolls. Despite Google’s best efforts to project a public perception of corporate responsibility, the LOT Network still leaves some feeling uneasy.

Other tech companies have taken the divergent philosophy of giving away patents for free. Last year, Tesla Motors CEO Elon Musk announced his company would be treating its patents as open source in a move to encourage innovation in the automotive industry. It was Musk’s belief that his battle was against the internal combustion engine, rather than the other companies in his industry. Organisations like LOT and DPL have a similar goal to foster innovation in their industries, albeit, while taking a more defensive approach.

Google’s plan for the LOT network, while beneficial to the technology industry, undoubtedly has its motives in preventing costly litigation for the technology giant. Although patent litigation is expensive and time-consuming for all patent-holders, it remains to be seen whether the finely sharpened axe of the patent trolls will be enough to encourage smaller startups to side with Google, as membership has been relatively slow since the announcement. Likewise, it will be interesting to see just how effective the LOT network will be at changing the US technology patents market as Google so boldly claims.

Also posted to Hyperconnected.org, a blog for innovation and technology law run out of QUT in Brisbane.

An Introduction to What This Is

On By stuartefstathisIn About1 Comment

“The best things in life make you sweaty.”

― Edgar Allan Poe

Intellectual Property law represents an area of interest and increasing relevance in a tech-driven society. It is one of the few bodies of law that can truly be said to tackle issues at the forefront of science, technology and innovation. IP Lawyers are the Bear Grylls of the legal profession.

https://www.flickr.com/photos/lwpkommunikacio/8447407965

Photo by Flickr User Lwp Kommunikáció under CC BY 2.0

In a graduate employment market that promotes doing everything you can (except actually study) to set yourself apart from the next aspiring lawyer, it would be easy to fall into the trap of deciding on a specialty area too early. I am reminded of the words of His Honour Chief Justice French in his address to the Australian Law Student’s Association in 2013:

“I told your predecessors that to specialise too early, or for too long, would rot their brains. That message met with general approbation. However, when I returned to the official table one of the students at the table, who was about to graduate, told me that she expected to practice initially as a tax generalist and only later to specialise in GST. Dinner table politeness masked my inner despair. Fortunately the soup was not deep enough for me to consider drowning myself in it.”

― Chief Justice French

While I share French CJ’s sentiments regarding the appeal of generalist tax law, there is an undeniable broader issue. Accordingly, the goal of this blog is to accumulate IP subject matter of interest and convey it to you, dear reader.

Don’t forget to head on over to the About page. Alternatively, you can say hello!