Harper review calls for scrutiny of intellectual property regime

Competition Policy Review recommends Productivity Commission inquiry into IP

The 56 recommendations in the final report of the Competition Policy Review include proposals that could have a significant impact on Australia's intellectual property landscape.

The recommendations in the review, which was led by Professor Ian Harper, include that the government should direct the Productivity Commission to conduct a 12-month overarching review of intellectual property.

"Australia’s intellectual property regime is a priority for review," the report, released yesterday, argues.

The review should address IP-related competition policy issues "arising from new developments in technology and markets" and the principles that guide the inclusion of IP provisions in trade agreements Australia signs up to.

"Technology is expanding the geographic boundaries of markets, digital delivery of content is becoming more common and connected technologies are increasingly integrated as global communication networks mature," the review argues.

"Disruptive technologies have put intellectual property ... rights in the spotlight. Although IP rights can create incentives for innovation and disseminating ideas, they also have the potential to restrict market entry by preventing access to technologies."

Trade agreements and IP

The competition review echoes a Productivity Commission research report (PDF) that argued Australia assess the value of IP provisions in bilateral and regional trade agreements.

"[A]ny IP provisions that are proposed for a particular agreement should only be included after an economic assessment of the impacts, including on consumers, in Australia and partner countries," the 2010 PC report stated.

"Trade negotiations should be informed by an independent and transparent analysis of the costs and benefits to Australia of any proposed intellectual property provisions. Such an analysis should be undertaken and published before negotiations are concluded," the Harper review argues in a similar vein.

A number of existing and prospective trade agreements involving Australia, such as the Trans-Pacific Partnership Agreement, have raised the ire of copyright reform advocates because of the potential to tighten IP laws.

The Australian government has previously cited international obligations as a reason for its online copyright enforcement crackdown (which earlier this month led to the introduction in parliament of a bill to allow rights holders to in some cases force ISPs to block websites).

A PC review of intellectual property could potentially cover some ground previously gone over by past reviews such as the Australian Law Reform Commission's review of copyright and the digital economy led by Professor Jill McKeough, and the Ergas Committee's review of the interaction between IP and competition law

Despite that, it is a "good recommendation in the sense that previous inquiries have not followed through in relation to the recommendations upon competition policy," said Dr Matthew Rimmer, an associate professor at the ANU College of Law and an Australian Research Council Future Fellow.

"There’s a great concern about distortions in relation to intellectual property regimes and the rise of anti-competitive conduct by monopolists, and also abusive behaviour by copyright trolls, patent trolls and trademark bullies."

Past IP reviews have only been "partial examinations," the Harper review argues.

"We remain concerned that there is no overarching IP policy framework or objective guiding changes to IP protection and therefore see a need for an overarching review of IP."

"Ideally we should be designing an intellectual property regime so that they promote competition rather than restrict competition," Rimmer said.

"At the moment I’m concerned that we’ve set up IP regimes that are contemptuous towards consumer rights and competition policy.

"As a result, there are some very distorted impacts in relation to intellectual property – particularly with longer terms of protection and stronger rights and remedies. There doesn’t necessarily seem to be a lot of balance in terms of the regime at the moment."

IP licensing

The Harper review also recommends repeal of subsection 51(3) of the Competition and Consumer Act 2010 (CCA) which exempts certain conditions of IP licences or assignments from many of the act's anti-competitive-conduct provisions.

Support for the repeal of the section has previously come from the Australian Competition and Consumer Commission, consumer advocates and the report of the parliamentary inquiry into IT pricing.

“Essentially it provides limited sorts of immunities in relation to actions for competition review," Rimmer said.

"So it provides a limited protection to intellectual property owners from actions by competition regulators. It really deals with the 'meta' question about the relationship between the intellectual property regime and the competition regime. At the moment it enables there to be a certain amount of latitude in respect of intellectual property."

"There are ... circumstances in which a conditional licence can substantially lessen competition," the Harper review argued.

"In fields in which there are multiple and competing IP rights, such as the pharmaceutical or communications industries, cross-licensing arrangements can be entered into to resolve disputes but which impose anti-competitive restrictions on each licensee. Subsection 51(3) can operate to exempt those arrangements from the competition law."

The subsection's repeal was backed by submissions from the Australian Digital Alliance and Australian Libraries Copyright Committee, the Australian Industry, National Seniors Australia, the Australian Communications Consumer Action Network, and Electronic Frontiers Australia

In its submission on the draft report, Internet service provider iiNet said that in the telecommunications industry content licensing deals were increasingly important for ISPs and could be a source of anti-competitive conduct.

"This aspect of competition in telecommunications markets will become increasingly relevant as the industry transitions to predominantly NBN based services," the ISP argued.

"Competitors will have limited opportunity to differentiate based on their voice and internet service offerings because they are limited to NBN Co's standardised wholesale services."

"Large scale providers of content services enjoy a significant amount of power in markets for those services due to their ability to 'lock-up' content in exclusive agreements with content providers," iiNet argued.

"Historically the problem has been that in Australia the competition regulator has only focussed on some quite limited matters in relation to questions of intellectual property," Rimmer said.

"They’ve been involved in a lot of the debates over parallel importation and technological protection measures but the ACCC hasn’t been as active as it might be in copyright law and certainly not in relation to patent law.

"I think there's real problem in terms of our current regime in relation to copyright law, patent law and trademark law not placing a great enough emphasis on competition and not [being] subject to regulatory review by competition regulators in the way that it could be."

Parallel imports

The Harper review also backed the IT pricing inquiry's proposal to remove restrictions on parallel imports.

The review supports "ensuring that consumers are able to take lawful steps to circumvent attempts to prevent their access to cheaper legitimate goods" but did not recommend introducing a CCA provision to prevent price discrimination.

The report also notes the IT pricing inquiry's recommendation that the Copyright Act be amended to explicitly support anti-geoblocking measures by consumers.

"The Panel favours encouraging the use of market-based mechanisms to address international price discrimination rather than attempting to introduce a legislative solution," the report states.

"The legality of [anti-geoblocking mechanisms such as VPNs] is the subject of some debate and is likely to depend on the specific circumstances and the terms and conditions relating to the transaction," the review states.

"The Panel notes that the Australian Government has issued guidance pointing out that ‘The Copyright Act does not make it illegal to use a [virtual private network] to access overseas content’."

"Perhaps the report will give a bit more vigour to the fair IT for Australia movement in terms of trying to address some of the issues in relation to IT pricing problems," Rimmer said, although he added the report is "a bit wishy-washy" with its proposals on price discrimination.

"There are a couple of options they support there, but if the market is not working well what are they going to do?"

Overall Rimmer said in his view the report's recommendations are positive and "perhaps present the promise of a more principled and empirically driven approach" to IP.

"But there’s a big question about whether or not they will be implemented," he added.

"I think the general tenor of the report is good in terms its recommendations on IP and the IP-competition interface, and trade agreements and addressing consumer rights and IT pricing.

"My concern on all those issues is that we’re well into he first term of the Abbott government and there has been no progress on any of those issues, so I’ll be interested to see who might be a champion [within the government] for the Harper review reforms."

Join the Computerworld newsletter!

Error: Please check your email address.

Tags patentscopyrightintellectual property

More about Australian Competition and Consumer CommissionAustralian Law Reform CommissionAustralian Research CouncilCollege of LawElectronic Frontiers AustraliaNBN CoProductivity CommissionTechnology

Show Comments

Market Place