Implications of “Raising the Bar” in Australia and New Zealand

Due to globalization, intellectual property (IP) protection has become an international policy concern. IP owners are increasingly being threatened by the risk of imitation not only in domestic markets but also in foreign markets, more so in less developed countries (Park & Ginarte, 1997, p. 51). Global negotiations have in the recent past called for higher levels of IP protection and the harmonization of IP protection standards. Advocates of these measures have argued that stronger IP protection will result in a myriad of economic benefits ranging from enhanced world innovation to higher trade volumes and direct foreign investment. They however also point out that these benefits will not be achieved merely by codifying such protection into law. Instead, they can only be achieved by availing more investment opportunities through research and development, which will in turn translate to investment in both tangible and intangible capital hence stimulating long term growth.

The Intellectual Property Laws Amendment will result in a number of changes that will have a profound impact on IP protection in Australia and New Zealand. The Act mainly aims at providing a more simplified and streamlined IP system in Australia. Perhaps the most significant outcome of the Act is the fact that innovators and investors will be in a better position to patent the same invention in Australia and New Zealand through a single application and a single examination process. This will:

• Promote growth in Gross Domestic Product (GDP)
• Enhance research and development
• Promote investor confidence, which will enhance both domestic investment and foreign direct investment

On the other end of the spectrum the Act will:

• Result in unhealthy competition
• Increase the cost of doing business hence reducing efficiency in production.
• Not suffice without relevant economic policies to promote the realization of IP protection benefits

From a trade marks stand point, the most significant implication of the IPA Act is its influence on the conduct of opposition proceedings. The Act will for instance reduce the amount of time stipulated for an opponent to file a notice of intention to oppose an application. Particularly, the opponent will be required to make this notice within two months of the advertisement date as opposed to three months, which had been prescribed by the former Act. Other than that, the registrar will resolve doubtful issues involving the distinction of trademarks in the favour of the applicant. There will also be increased punishment for the misuse of trademarks including a maximum of five years imprisonment and a maximum fine of AUD 60,500 for individuals and AUD 302,500 for corporations. Finally, Australian Customs will be required to disclose pertinent information about the owners of confiscated counterfeit goods and any other third parties caught handling such goods to the relevant trademark owners.

The Act will also result in a number of changes in the standards applicable to Australian Patent Applications, which will primarily involve raising the bar for the amendment and examination of the latter. One of the most significant patent changes resulting from the Act include the removal of the geographical limitation imposed for Common General Knowledge (CGK) to expand the knowledge base from information considered as CGK only in Australia to a global level. Additionally, the Act will facilitate greater disclosure of patent details, limit further complete specification of patent details after the deadline, limit divisional application to a three month period after an application has been accepted, broaden examination to cover utility and introduce a search fee, which will be payable if a search is deemed necessary at the time of application.

Several authors have explored the implication of IP rights on economic growth and development (Park & Ginarte, 1997; Maskus, 2000; Bagchi & Roy, 2012; Hamister & Braunscheidel, 2013; Park & Lippoldt, 2008; Hudgins, 2014). Park & Ginarte (1997, p. 51) found out that while research and development are an important determinant of economic growth rate in both developed and developing countries, IP rights play a critical role in motivating research and development, especially in developed countries. It particularly promotes innovation as opposed to imitation, which enhances the overall efficiency of production processes hence resulting in gross domestic product (GDP) growth. While Bagchi & Roy (2012) concur that this is the case, they argue that there must be optimal patent length and optimal patent breadth for there to be a positive relationship between IP protection and economic development. Park & Lippoldt (2008) and Hudgins (2014) further observed that increased IP protection promotes foreign direct investment due to increased investor confidence in the domestic market.

In a paper that sought to investigate the impact of effective IP rights on economic development, Maskus (2000, p. 471) pointed out that IP rights can play a significant role in encouraging new business development, rationalizing inefficient industry and inducing technology creation and acquisition. The author however also acknowledged the fact that IP rights could have negative implications on economic growth and development. The empirical research carried out by Maskus (2000) revealed that the limited evidence available on the relationship between IP rights and economic development suggested that this relationship was positive but it was also dependent on other factors that aid in promoting the benefits accrued from IP protection.

Generally, IP protection is an effective market based mechanism for overcoming challenges inherent in markets for information creation and dissemination (Maskus, 2000; Hamister & Braunscheidel, 2013). Nonetheless, the existence of the latter could have negative impacts in terms of the potential for costs and anticompetitive abuse. Moreover, modern IP rights systems might not suffice to promote effective technology transition without a coherent and broad set of complementary policies that have the capacity to enhance the potential for IP rights to promote dynamic competition. Such policies include, strengthening the acquisition of human capital and skill, facilitating flexibility in enterprise organization, and promoting healthy, non-discriminatory, and transparent competition in domestic markets.

To conclude, strengthening IP rights can have both positive and negative impacts on economic development. Some of the major benefits include growth in GDP, promotion of research and development and increased investor confidence. On the other hand, it can also result in unfair competition and increase the cost of doing business by requiring some businesses to pay royalties to patent holders. Notwithstanding, the benefits outweigh the costs and as such, the Act should be implemented. It should however be noted that for there to be any tangible benefits arising from IP protection, a myriad of policies have to be implemented to strengthen the acquisition of human capital and skill, facilitate flexibility in enterprise organization and promote healthy competition.

References

Bagchi, A. & Roy, A., 2012. Endogenous Research and Development and Intellectual Property Laws in Developed and Emerging Economies. Southern Economic Journal, 78(3), pp. 895-930.

Hamister, J. & Braunscheidel, M., 2013. Software piracy and intellectual property rights protection. Academy of Information and Management Sciences Journal, 16(1), pp. 15-35.

Hudgins, M. R., 2014. The Impact of Intellectual Capital on the Performance of U.S. Property-Casualty Insurance Companies. Business and Economics Journal, 5(4).

Maskus, K. E., 2000. Intellectual property rights and economic development. Case Western Reserve Journal of International Law, 32`(3), pp. 471-506.

Park, W. G. & Ginarte, J. C., 1997. Intellectual property rights and economic growth. Contemporary Economic Policy, 15(3), pp. 51-61.

Park, W. G. & Lippoldt, D. C., 2008. Technology Transfer and the Economic Implications of the Strengthening of Intellectual Property Rights in Developing Coutries. OECD Trade Policy Working Papers, Volume 62.