Productivity Commission’s Report on Intellectual Property Arrangements strikes a blow against innovators

The Productivity Commission’s Report on Intellectual Property Arrangements (the Report) was released on 20 December 2016.


The Report makes a number of “anti-patent” recommendations including:

  • abolishing the innovation patent system;
  • introducing an objects clause into the Patents Act;
  • essentially removing the availability of extensions of patent term for pharmaceutical patents;
  • raising the threshold of inventive step; and
  • significantly raising patent renewal fees.


It appears that, if implemented, the recommendations will significantly weaken the Australian patent system, introduce uncertainty into obtaining and enforcing patent rights, and make the patent system more expensive for innovators.

The report was originally commissioned in 2015, by the Treasurer, Joe Hockey and Coalition Government.  Ironically, the recommendations of the report appear to be in conflict with the Coalition Government’s Innovation Agenda, which prompted Prime Minister Malcolm Turnbull to say, in support of innovation, “we’ve got to be prepared to have a go and be more prepared to embrace risk and experimentation”.  Anathema to the Prime Minister’s sentiments is the Report’s statement that “the system should provide incentives for IP to be created at the lowest cost to society”, a statement which underpins the recommendations that weaken existing IP rights for innovators.

The Report adopts a unilateral view without evidence that “Australia’s intellectual property arrangements fall short in many ways and improvement is needed across the spectrum of IP rights”. The Report also appears to agree, in a biased manner, with certain “participants” that the current patent system hinders innovation and creativity, but there is a conspicuous lack of evidence in the Report to support this view. Further, the report arbitrarily takes a position that the current patent system results in a multitude of low-value patents without clear and credible guidance on what constitutes a “low-value patent”.

The report also adopts a lofty and unrealistic view that the patent system should only contribute to socially-valuable innovation that otherwise would not occur. There is however, no direction on what socially-valuable innovation is and how to determine whether such innovation will only occur as a result of the patent system.  The report simplistically considers innovation from an academic perspective and fails to understand, or even consider, the necessary financial investment and risk that is required to commercialise innovation to market for the benefit of the public – the very reasons why the patent system needs to offer both rewards and a degree of certainty to innovators and investors.

In making the recommendations, the Productivity Commission has largely ignored the vast majority of submissions submitted that raised valid concerns in relation to the draft recommendations.


Australian innovation policy, which encompasses the patent system, should provide a substantial incentive and compensate innovators for the risk and financial investment necessary to bring innovation to the market for the benefit of the general public. Australia’s current innovation policy should not be weakened based on the academic views of economists who have no proximity to innovation nor any expertise in relation to commercialisation of innovation.