Dump innovation patents and apply safe harbour to all online services: Productivity Commission

In its report on Australia's intellectual property arrangements, the Productivity Commission has said innovation patents should be dumped.

The Productivity Commission has recommended Australia get rid of its innovation patent system, and said the system was little used and encouraged low-value patents such as a pizza box that turns into a bib.

The commission dismissed ideas of reforming the system in its report [PDF], since it would essentially be a return to petty patents, which it stated was lacking.

"The community's interests, and the interests of SMEs [small and medium businesses], would be better served by abolishing innovation patents and directly tackling the IP issues of greatest concern to SMEs, such as patent infringement and enforcement costs," the report said.

Innovation patents made up fewer than 5 percent of all patents in force, the commission said.

It was also recommended that existing safe harbour provision be expanded to cover all online service providers.

"Online service providers, such as cloud computing firms, would face fewer impediments to establish operations in Australia," the commission said. "The copyright system will be more adaptable as new services and technologies are developed, facilitating greater innovation. Aligning with international systems further reduces business uncertainty."

The commission said Australia's current copyright laws hurt consumers and are skewed in favour of rights owners, but due to international agreements that are against Australia's interest, it was not recommending any changes to the length of copyright terms.

"Evidence (and logic) suggests copyright protection lasts far longer than is needed," the report said.

"International agreements that commit Australia to implement specific IP provisions -- such as the duration of patent or copyright protection -- have worked against Australia's interests. These agreements typically involve trade-offs, and keen to cut a deal, Australia has capitulated too readily."

Following on from the recommendations of the 2013 Inquiry into IT Pricing that copyright laws be amended to protect consumers looking to circumvent geoblocking, the Productivity Commission said Australia should not enter into international agreements that would rule out the practice.

"The Australian government should make clear that it is not an infringement of Australia's copyright system for consumers to circumvent geoblocking technology," it said.

The commission also said the government should adopt the Australian Law Reform Commission's recommendations to implement a fair use provision in the Copyright Act.

"Fair use would similarly allow Australia's copyright arrangements to adapt to new circumstances, technologies, and uses over time," the commission said.

The report contained a warning for those looking to tackle changes to copyright laws, and said vocal interest groups had for a long time been able to shape debate thanks to scare campaigns and misinformation.

"The same tactic has been deployed here, with some parties publishing more fiction than fact about the commission's draft report," it said. "Government will need to show steely resolve to pursue a better balanced IP system in the face of strong vested interests."

Following the Productivity Commission's report, the Department of Communications released its cost benefit analysis to the ALRC recommendations.

"Our analysis of new fair dealing suggests that the ALRC's proposed recommendations should be beneficial, albeit not substantially in some areas. From the standpoint of an 'open-ended' (fair use) or 'closed-ended' (fair dealing) system of exceptions, the former is likely to have the largest net benefit," it said.

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