Productivity Commission to probe intellectual property reform

Australian Treasurer Joe Hockey has called for a Productivity Commission inquiry into national intellectual property arrangements in an effort to bring laws into line with technological developments while improving competition, protecting the rights of intellectual property holders, and fulfilling international trade agreements.

"Our intellectual property arrangements can have effects on investment, competition, trade, innovation, and consumer welfare. Our approach to intellectual property is vital to encouraging Australia's future productivity and economic growth," Hockey said on Tuesday.

"We need competitive and flexible arrangements to support businesses to strive for efficiency and innovation."

The Australian Productivity Commission said that in making its recommendations, it will take into account the country's international trade obligations, such as those under the World Trade Organization and the World Intellectual Property Organization, as well as its regional and bilateral trade agreements; innovation and investment incentives within Australia; the economical input of intellectual property; the efficiency and financial impacts of a new intellectual property system; the effect that any recommendations could have on competition and trade; how other regulations may also have to consequently be changed; and any recommendations of other recent reviews into the system.

The inquiry was commissioned upon receiving the Harper Review in March this year. This review highlighted that the laws surrounding competition policy in Australia need to be updated, because "priorities will change as technology changes".

In particular, the review recommended that parallel import restrictions be lifted [PDF] subject to a review by an independent body such as the Productivity Commission.

The Productivity Commission in June expressed reservations about how tighter intellectual property regulations could restrict bypasses to technological protection measures (TPMs), having the effect of encouraging anti-competitive behaviour.

The Trade and Assistance Review 2013-14 report [PDF], which examines recent international trade policy developments and their effect on Australian regulations, pointed toward how the Trans-Pacific Partnership (TPP) could further increase stringent intellectual property rights protections once it is signed off.

"The history of IP arrangements being addressed in preferential trade deals is not good," the commission said.

"Indeed, to the extent that the return to IP holders awarded by more stringent IP laws outweighed the benefits to the broader economy, the provision would also impose a net cost on both partners, lowering trading and growth potential across the bloc."

Agreement on the TPP, which is aimed at regulating trade between Australia, the United States, New Zealand, Canada, Singapore, Vietnam, Malaysia, Japan, Mexico, Peru, Brunei, and Chile, is continuing to stall over digital rights.

In October last year, a leaked TPP draft revealed that although Australia continues to push for internet service providers (ISPs) to be obligated to take steps to promote the copyright infringement of users, the draft agreement stated that ISPs should not have to bear large costs for this.

The Australian government has meanwhile sought a local three-strikes policy for Australians who are caught downloading copyrighted material, which has been released in the form of a draft code [PDF]. ISPs and rights holders were asked to collaborate on the code by Attorney-General George Brandis and Communications Minister Malcolm Turnbull late last year.

The development of this code was ordered despite another TPP leak in November 2013 saying that a three-strikes piracy policy would not be included in the trade agreement.

The federal government has been intent on protecting digital rights of late, also passing a law to allow rights holders to obtain a court order blocking foreign websites that contain copyright-infringing material or facilitate user access to copyright-infringing material.

The government did not order a cost-benefit analysis or detail who would bear the costs of implementing the scheme prior to passing this law, however, but it is projected to cost ISPs more than AU$130,000 per year to implement.

Last week, the Australian Attorney-General's Department also commissioned a cost-benefit analysis into the recommendation by the Australian Law Reform Commission (ALRC) to implement a fair use provision in the amendments that the government is proposing to make to the Copyright Act in order to adapt to the digital world.

The economic analysis will examine the cost effects that fair use would impose on copyright holders along with copyright user groups

In regards to the regulations potentially to be imposed by the TPP, New Zealand's IT industry last week expressed concerns that the NZ government would acquiesce to reintroducing software patent protections.

"We're an export-driven sector, so we love free trade," Ian Taylor, president of IITP and CEO of Dunedin tech firm Animation Research, said in a letter to Trade Minister Tim Groser.

"However, this can't come at the cost of the future of the technology industry, and that's what it will be if New Zealand's current law banning software patents is traded away in the TPP."

The Australian Productivity Commission will consult with industry, the public, and the government, and is due to report its recommendations within a year.