TCS Daily

Happy Birthday IP

By Steve Haynes - February 3, 2005 12:00 AM

Intellectual property in Australia has just celebrated an important birthday: the centenary of "IP Australia". IP Australia was first established in 1904 as the Australian Patent Office, to administer Australia's patent law. Few countries have formally defended the principles of intellectual property for as long. Among these countries is the United States: property rights were enshrined in the US Constitution through the Bill of Rights in 1791.

There is no doubt that IP Australia is one of the leading patent offices in the world. As such, the celebrations that marked its centenary are well deserved.

Australia rode the wave of innovation during the 20th century. Without the protection provided by Australian patent law the Australian pharmaceutical industry, for example, would not exist. The industry directly employs 35,000 Australians, spends over $450 million every year on research and development and exports over $2 billion worth of medicines. In addition, the benefits of innovative medicines have driven Australia's economic development through improved health and increased productivity.

It takes a high-risk investment of up to A$1.2 billion to support an innovative medicine on its 10-12 year journey from discovery until it can be made available to the public.

Only one in 5000 compounds that are discovered can actually be turned into a medicine. Only three out of every 10 medicines recover the extensive research and development costs that enabled them to be safe and ready to be used in the treatment of disease.

To ensure there is a return on high-risk investment, new medicines are protected by patents. Without this intellectual property protection there would be no return on investment and no re-investment in research. Intellectual property has underpinned innovation, fuelling economic growth during the 20th century.

However, the term innovation does not describe a single function or task. On the contrary, innovation describes a process characterized by a complex and delicate arrangement of inter-dependent factors. These factors combine to drive economic development. The processes of innovation are in constant motion, as the creation of wealth fuels the development of new ideas.

Governments exert significant influence over these processes, to the extent that they maintain policies, regulations and laws that facilitate the development of ideas. Ill-considered intervention by government at any stage in the process is certain to have direct and often unintended consequences.

Unfortunately, the politicisation of intellectual property protection is driven by a relatively small group of individuals with little experience in, or knowledge of innovation. Sometimes opponents of strong IP rights can be driven by an irrational ideological stance against economic development, globalisation, wealth creation and free-trade. Yet these are all the things that have made it possible for Australia to enjoy one of the highest standards of living in the world. Opponents of strong intellectual property protection frequently oppose Australia's engagement with the global economy.

In August 2004, as the Parliament was debating the passage of legislation to give effect to the US-Australia Free Trade Agreement, the Government agreed to a late amendment proposed by the opposition party that has enshrined in Australian patent law lesser rights for holders of pharmaceutical patents. At the time, many organisations expressed deep concern that a century of bipartisan commitment to strong intellectual property protection had been undone in less than a week.

In the context of the US-Australia Free Trade Agreement, the relevant amendments remain contentious. Prominent Australian IP attorneys, Spruson and Ferguson, pronounced "The amendments generally undermine the strength of patent protection in Australia to the detriment of not only foreign pharmaceutical companies but also any Australian company which has a patent which may be infringed by the marketing of relevant pharmaceutical goods. Implicit is the view that any amendment...would potentially be contrary to a strict reading of the FTA."

And when the US-Australia FTA came into force on 1 January, US Trade Representative Robert Zoellick had made clear the US remained unimpressed: "The United States has raised concerns with Australia that its FTA implementing legislation...did not fully implement a number of commitments it made on intellectual property. Australia has committed to take steps, including legislative and regulatory changes, to address these issues".

In celebration of the IP Australia Centenary, full page advertisements appeared in several newspapers. The advertisements quoted Dr Ian Heath, director-general of IP Australia, saying, "We have an innovative past. We are an innovative country now and we should be an innovative country in the future. [The office] is critically important because intellectual property is the backbone of business."

Patent rights will naturally continue to evolve, but they must remain robust to support innovation. In the pharmaceutical industry less innovation means fewer medicines are developed, limiting growth in the industry and limiting our capacity to tackle disease.

Steve Haynes AM, is Senior Manager for Communications & Strategic Relations, Medicines Australia.


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