Australian intellectual property laws begin paradigm shift

The Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018 (Cth) (‘the Act') commenced on 25 August 2018. The Act makes a number of changes to existing intellectual property legislation and is the Government’s response to the Productivity Commission’s inquiry into Intellectual Property (IP) arrangements.

The changes can affect a range of industries and are explored below.

What has changed?

The main changes are:

1. Reducing the period of time during which a trade mark owner can commence use of a trade mark, before it becomes susceptible to removal on the grounds of non-use, from five years to three years;
2. Narrowing the scope where parallel importation of goods will infringe trade mark rights;
3. Introducing protection against unjustified threats of infringement relating to plant breeder’s rights; and adding additional damages for unjustified threats of infringement for patents, trade marks, designs and plant breeder’s rights; and
4. Amending the Patents Act 1990 (Cth) ('Patents Act') to reduce procedural requirements for attaining pharmaceutical patent extensions, namely removing the requirement for patentees to provide the Secretary of the Department of Health with some data regarding pharmaceutical patents with an extended term.

Use it or lose it

Traditionally, a removal for non-use application could only be filed if:

1. it could be established there was never an intention to use the trade mark in the course of trade (e.g., a trade mark squatter); or
2. the trade mark hadn’t been unused for a consecutive three-year period, provided the removal for non-use application was filed at least five years after the trade mark application was filed – a far easier ground to establish.

The recent changes will mean that an application can be made after three years instead of five.

This change will affect removal for non-use applications filed on or after the date the amendments come into force, namely:

1. a proclamation to fix a date for the amendments to come into force; or
2. if no date is fixed, 24 February 2019.

A clearer picture of parallel importation

The existing law around the parallel importation of trade marked goods has been hotly contested.

Section 123(1) has been repealed and replaced with section 122A, which sets out the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark. The amendment provides that before the trade mark is used, the parallel importer is to make reasonable inquiries concerning the trade mark.

From a practical perspective, if the parallel importer is satisfied that the trade mark has been applied with the consent of one of the following entities, then the defence will apply:

1. the registered owner of the trade mark;
2. an authorised user of the trade mark;
3. a person permitted to use the trade mark by the registered owner;
4. a person permitted to use the trade mark by an authorised user who has the power to give such permission;
5. a person with significant influence over the use of the trade mark by the registered owner or an authorised user; or
6. an associated entity of the above.

This new section provides parallel importers with the ability to be more confident when importing genuine goods sold in another market, provided they have conducted adequate enquiries (e.g., engaging a trade mark attorney to conduct a search of the Australian Trade Marks Database, and a search of the trade mark database in the country from which the goods are being imported).

The new provision applies to any infringement actions brought on or after 25 August 2018, even if the infringing conduct is alleged to have occurred before that date.

Bolstered protection from unjustified threats of infringement proceedings

The amendments will see new provisions added to the Trade Marks Act 1995 (Cth) ('Trade Marks Act'), Patents Act, Designs Act 2003 (Cth) ('Designs Act'), and Plant Breeder's Rights Act 1994 (Cth), whereby a court with sufficient jurisdiction may award additional damages against a person who makes unjustified threats of proceedings for infringement.

A court may consider several elements when determining the quantum of the additional damages, including the need to deter such behaviour by others and the severity or flagrancy of the conduct.

It is of particular note that the IP owner will no longer be able to use the fact that infringement proceedings have been commenced as a defence against the prospect of a claim of unjustified threats. This amendment closes a loophole left in the legislation which may well have encouraged vexatious proceedings in the hope of avoiding a claim of unjustified threats.

Additionally, it will be made clear in the Trade Marks Act that merely notifying another party of the existence of a trade mark does not constitute a threat to bring infringement proceedings against the party.

These changes will come into force on a date:

1. fixed by proclamation; or
2. if no date is fixed, 24 February 2019.

Pharmaceutical patent extensions

The Federal Government decided section 76A of the Patents Act, which requires patentees to provide the Secretary of the Department of Health with some data regarding pharmaceutical patents obtaining an extension of the patent term, is no longer required.

The justification for this is the Department of Health now has access to the type of information previously sought to be provided from other sources. This amendment removes a step that patentees previously had to take, and therefore is seen as a step toward reducing unnecessary regulation that needlessly distracts patentees from what they do best, innovating. This amendment came into force on 25 August 2018.

Key takeaways

1. If you are an:

   • overseas business looking to enter Australia within the next five years; or
   • an Australian business looking to expand your product range or service offering within the next five years,

   it’s recommended you file trade mark applications prior to the new changes coming into effect to take advantage of the much longer five year window to commence use, rather than having to deal with the new three year window.

2. Trade mark owners need to ensure their distribution agreements reflect and mitigate against the widening of parallel importation options.
3. Businesses need to consider when is the best time to take a planned action in light of upcoming regulatory changes.
4. Businesses need to be prepared for Part 2 of the Government’s suite of changes to the Australian intellectual property landscape.

Macpherson Kelley first published a version of this article, and to the extent that elements of this article are the same as or similar to another version, they are published here with permission.