Creative Methods Act

(Andrew Downing) #1

Some time ago, Mozart ran a policy development group to radically rethink PPAU Copyright policy.
It resulted in a policy for a new Creative Works Act.
You can see the result here:

As we kicked off Policy Development for the year, there was some grumbling about Patents, and I lament that our position on Patents is just somehow a bit of a jumble. There’s some good ideas in there, but I think we need to go back to basics, and rethink the fundamental premises.

And so, now I’m leading the "Creative Methods Act Working Group".

As a starting principle:
A patent is a grant of a temporary monopoly, enforced by law.
We should only grant such things on the basis of some equitable gain that is acquired by the public in return for that monopoly.

What form might a public “equitable gain” take?
In the current patent system, a key gain is considered to be “disclosure”.
We all get to know how it works, or at least we should if they were forced to a high disclosure standard. In practice, Patents are about the most obfuscated documents I have ever seen. They are just ridiculous.

We’re supposed to gain the benefit of the new technology being brought to market, to improve all of our lives, but in practice a patent holder may not actively pursue product/service based upon the patent. It’s quite common to use patents as a technology blocker; to own the idea so nobody else can do it and thereby challenge your established market position.

Fundamental Technologies
There’s also a big problem around the most fundamental of policies, in key new research areas.
e.g. the CRISPR patents could block massive volumes of productive life saving research.
This really can’t be allowed. There has to be a way to force buy-out such things, equivalent to eminent domain in land issues. Similarly for specific, but lifesaving drug patents.
Public interest has to be at the top of the list of criteria.

How temporary is it really?
Other problems include “Ever greening” - the practice of effectively renewing a patent before it expires, by making changes that are considered significant in the granting of patents, but insignificant in the challenges of a patent in regards to its scope. This can’t stand.

Other fundamental questions

  • Can we promote alternative business models that work without the need for patents and yet still provide disclosure and other benefits?
  • Are there other more fundamental alternatives to patents?
  • How can any proposed solutions fit with our international commitments in intellectual property?
  • Do we need different systems for different industries (pharma, software, hardware, agriculture etc) ?

Discuss …

(Jesse Hermans) #2

Got a pad link?

(Andrew Downing) #3

Not at this time please. I want discussion to happen in one place at a time.
Once there is some content here. I will curate it into a pad, and the working group can proceed from there.

(Andrew Downing) #4

Oi. Pirates!
Read this thing and respond.
I need some prompting on this.
I need some discussion to get to the root of this.

(Kaz) #5

In cases where the medicine or patented item could be considered of ‘invaluable importance’ to the pubic interest, a forced royalty scheme might be appropriate.

That is, the state can compel a company through a mechanism, to license that patented technology to other companies, who will then have to pay a royalty back to the originator. The state could or could not contribute to this royalty amount, I guess depending whether or not this passes the IMF sniff test.

(Frew) #6

I’m trying to not put effort into policy this term because we need to focus our energy outward and policy debates drain energy that should be directed into campaigning. That said, I have worked on patent stuff in the past and should share that info here.

I don’t think our policy is that jumbled, there are the core issues, then specific issues around various applications of patent law. It reflects the legislative (and case-law) environment around patents.

If people want to build a new policy from the ground up to make it somehow more coherent, it would probably make the policy better than what is there. That said, I think most, if not all of the main issues are covered in our current policy.

The big change since our formation was Patents: Raising the Bar amendments in 2012, which fixed some of the problems with patents (explainer is here). The disclosure standard was raised significantly, exemptions carved out for research and I think ever-greening was made more difficult (But I am not certain on that point). This was a bit of a victory for us because patents got less shit.

Transparency over nuclear energy
(Jesse Hermans) #7

Has anyone here seen this before?

In my view it overcomes the problem inherent in monopoly property rights referred to as “allocative efficiency” in this paper:
The concept of a harberger tax on monopoly property rights seems sensible to me, outside of the idea of LVT for land titles.
Basically by forcing people to declare a “liberation” value (which you tax) you provide an avenue to prevent squatting on the property right without using it, as well as an avenue to break the monopoly (for a fee) should that be more beneficial to the public than leaving it intact. The only issue with such a policy is determining the optimal tax rate on the declared value.

(Jesse Hermans) #8

The optimal tax rate may also vary between different sectors e.g. Software.

This paper recommends a tax rate of between 5-10% of the (liberation) value, so I’m guessing that would be a good benchmark for varying the rate between different sectors.

(Jesse Hermans) #9

@AndrewDowning I’m not particularly sure here what it is we are trying to fix in the Patents policy. The only particular area I can think of at face value is “Require patent holders to demonstrate active use of a patent as a pre-condition for any legal enforcement of exclusivity.”

This attempt at direct regulation enforcement of “use it or use it” laws for patents reminds me of the Victorian Government’s introduction of the Vacancy Tax. A Vacancy Tax is beneficial but an inferior tool for solving the problem of vacant properties. The problem in the land market is not just unused sites but also underutilised sites.
To give an example analogy, if I have a vacant paddock zoned for duplex town houses and suddenly a vacancy tax is imposed on me, I can avoid that tax by merely erecting a cheap weatherboard shack which can be knocked down later once I get my rezoning for multi-story apartments. In essence it doesn’t encourage best use, it only encourages better use.
Arguably I could also find legal excuses to make it look like I’m preparing to use a Patent but am still not ready to make it go commercial.

I think that generally speaking the article I linked on imposing a liberation value and (what is technically called) a harberger tax on that value is an addition/replacement for the use it or lose it model which solves most of the other problems you were mentioning before such as


This model is still a “Patent model” and doesn’t reinvent the wheel, so…

are largely unanswered but also arguably unnecessary questions if the declared value system works.

(Jesse Hermans) #10

Also I seem to recall we were going to put out a press release for this:


Is there anything we can use or should include from the PC recommendations?

(miles_w) #11

Had another skim and pulled out some points of note:

  • Decriminalise circumvention of geoblocking (ignored)
  • Implement fair use (ignored until 2018)
  • Limited liability for orphaned works (enacted in the new draft legislation)
  • Expanding the definitive of a transformative (I think?) work with respect to patents (supported)
  • Restructure patent renewal fees to rise with each successive renewal, instead of being focussed on cost recovery and “innovation” (ignored)
  • Patent applications to require information on technical features (supported… why tf was this not already a thing?)
  • Abolish innovation patents (supported… apparently this one was lacking in economic benefits and disproportionately favoring larger businesses).
  • Almost entirely abolish pharmaceutical patent extensions (ignored! “The Commission estimated that the cost to the Government of providing extensions of patent term to pharmaceuticals is approximately $260 million per annum”)
  • Improve reporting requirements around public funding spent on pharmaceutical development (ignored… and the government actually claims there is no convincing rationale for retaining this section so they plan to repeal it!)
  • Improve pharmaceutical sector reporting to the ACCC to prevent anticompetitive behaviour (ignored for now)

(Jesse Hermans) #12

Dem pharamaceutical rents… Shielding companies and handing out corporate welfare like it’s nobody’s business.

From the looks of it the only things in that list which aren’t already covered by our platform are:

The latter two are minor things which can be easily added in with a line on “improve reporting requirements on blah blah blah”, and the former can be fixed with the harberger tax or “declared value system” I mentioned before.
The only thing I wonder about the declared value system is whether the tax should start immediately from the date of the patent, or if there should be a 1 year grace period before the tax kicks in. Probably unnecessary and not a good idea.

(Jesse Hermans) #13

Putting the policy changes from this thread down into a pad and putting it forward as a policy update is next up on my PPAU to-do-list now I’ve finished my first draft of the JG policy.

(Jesse Hermans) #14

I have had a discussion with my uncle (who owns and is utilising a patent) on implementing a declared value system and its effect on patent owners/users.

From my discussion, it appears to me one of the biggest hurdles to legitimate patent owners is not the existing patent fees, but rather the legal fees in defending their patents. Currently we estimated that a patent asset fee of 0.2% would be palatable to the median patent holder and match existing (cost recovery based) fees. So my suggestion is we’d set an initial patent fee somewhere in the vicinity of 0.1 to 0.5% for the first year, payable on the declared liberation value 1 month after the approval of the patent. Every subsequent year the patent fee rate could rise by 0.1 to 0.2%, and the patent holder must re-declare their patent liberation value annually prior to determining and paying fees.

We could potentially allow patent holders to re-adjust their liberation value in response to liberation offers, on the condition they pay the fee difference between their declared new value and previous value. This way patent holders could initially undervalue their patents to pay artificially low fees, but would need to adjust them a market based value if challenged by market forces. However to compensate for that flexibility, we could potentially impose a higher base patent fee e.g. maybe 0.5% to 1%.
No doubt this is something which warrants more investigation, including the tax structure.

My thoughts are if patent fees could be substantially reformed and increased beyond cost recovery principles (under recommendation of the Productivity Commission), we could hypothecate that revenue into subsidised legal aid for SMEs who are defendants in patent disputes, and perhaps R&D generally. This way the beneficiaries of patents would receive the benefit of substantially lower legal costs in maintaining their legitimate patent, while paying proportionally for the benefits of that patent’s value. Another alternative is to cut lawyers out of the picture entirely to radically reduce patent dispute costs, via some sort of tribunal or ombudsman type system like NZ has for workers comp. Although this would put us in direct opposition to the lawyers who profit from these challenges - which might be a good thing, although opens another policy can of worms.

At this point I am opting to write a policy position text to “implement a review into patent fee structure and the feasibility of implementing a declared value system.” Rather than implementation of the system itself or specifying a tax rate.

(Jesse Hermans) #15

Does anyone think it is worth while adding in this recommendation from the PC review into our justice policy?
If so we would need to have policy text for it, if not a line or two of preamble text.

Recommendation 19.2
The Australian Government should introduce a specialist IP list in the Federal Circuit Court, encompassing features similar to those of the United Kingdom Intellectual Property Enterprise Court, including limiting trials to two days, caps on costs and damages, and a small claims procedure.
The jurisdiction of the Federal Circuit Court should be expanded so it can hear all IP matters. This would complement current reforms by the Federal Court for management of IP cases within the National Court Framework, which are likely to benefit parties involved in high value IP disputes.
The Federal Circuit Court should be adequately resourced to ensure that any increase in its workload arising from these reforms does not result in longer resolution times.
The Australian Government should assess the costs and benefits of these reforms five years after implementation, also taking into account the progress of the Federal Court’s proposed reforms to IP case management.

(miles_w) #16

We don’t seem to have anything about enforcement in our current policy, and those all seem reasonable. A cap on costs and damages has always been a major Pirate talking point - who remembers the court cases of people being sued under DMCA etc for millions in lost sales?

(Jesse Hermans) #17

Would this be an amendment to the justice policy or patents policy? It involves the courts and IP more generally, so I was thinking of having it for justice policy.

(miles_w) #18

I think it would make sense to group specific legislative changesets together, even if they are cross-policy.