WIPO Journal - World Intellectual Property Organization

226 The WIPO Journal
However, sound legislative goals cannot always be achieved in practice. In fact, s.51(3) has incurred
severe criticisms from academics, practitioners, competitive enforcement agencies and courts. In the next
section, the author will examine the major problems and limits of s.51(3), including the uncertainties of
applications of this provision, and its potential impacts on the operations of ICT companies in Australia.
Likely effects and potential limits of Australian competition law in preventing IP abuses
Section 51(3) and other IP related provisions in TPA have been an important subject for legal debates in
the recent two decades. “Poorly drafted”, “bad balance”, “uncertain”, 54 “no effect”, “problematic” 55 and
“inconsistency” are some of the words that critics used with regard to IP-related provisions in the TPA. 56
Concerns mainly focus on the effects of Pt IV of the TPA in balancing the protection of legitimate rights
of IP holders and the protection of fair competition and public interests. Many believe the current TPA
has not provided a clear guideline on how a sound balance can be achieved, and consequently it brings
much uncertainty for business operations of different stakeholders. Generally speaking, the scope of the
current IP exemption in s.51(3) is not clear. In some circumstances, the scope of the IP exemption is too
narrow to provide sufficient protection to the basic rights of IP owner under IP legislation. By contrast,
in some other circumstances, the scope of the exemption is too wide to prevent anti-competitive conducts
and abuses of IPRs. 57
Unclear “relate to” test
The use of the expression “relates to” in s.51(3) creates direct uncertainty for defining the scope of the IP
exemption in this provision. 58 As mentioned above, in order to obtain the immunity in s.51(3), the described
condition in a licence/assignment must “relate to” the subject-matter of the IP. 59 However, the TPA has
not provided a statutory interpretation of the meaning of “relate to”, nor has the Australian Competition
and Consumer Commission (ACCC) provided a guideline or general principles for determining whether
a specific condition “relates to” the subject-matter of IP. 60
In practice, the nature of some conditions may be relatively easy to tell. For example, a condition
defining the qualities of the licensed IP product would normally be deemed to “relate to” the subject-matter
of the IP, and a condition precluding the licensee from dealing in products, which compete with licensed
IP products, would normally not be treated as “relating to” IP subject-matter. 61 However, the nature of
some other conditions, such as a price restraint or a territorial restraint that relates to the licensed products,
would be relatively hard to determine.
Furthermore, there has been very little judicial interpretation on the meaning of “relate to” in s.51(3).
Transfield Pty Ltd v Arlo-International Ltd 62 seems to be the only case to date, in which the court has
considered the meaning of “relate to”. Mason J. said 63 (emphasis added):
54
NCC, Review of Section 51(2) and 51(3), 1999, p.185, at http://www.globalcompetitionforum.org/regions/Oceania/Australia/LESe-001.pdf
[Accessed March 30, 2011].
55
Lindgren, “The Interface between Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal 76, 78.
56
The ACCC guideline 1991 listed eight limitations of s.51(3).
57
IPCRC, Review of IP Legislation Under the Competition Principles Agreement (Final Report, September 2001).
58
As Lindgren observed, the notion of “a condition … to the extent that the condition relate to” the very general matters mentioned in s.51(3)(a) is
problematic. See Lindgren, “The Interface between Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal 76, 78.
59
That is, it “must be one that ‘relates to’ the subject ‘invention’, ‘goods’, ‘work’ or ‘eligible layout’”: see Lindgren, “The Interface between
Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal 76, 78.
60
As Lindgren pointed out in 2005, “The notion of ‘a condition … to the extent that the condition relates to’ the very general matters mentioned in
s51(3)(a) is problematic”. Lindgren, “The Interface between Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal
76, 78.
61
See Hanks, “Intellectual Property Rights and Competition in Australia” in The Interface Between Intellectual Property Rights and Competition
Policy, 2007, p.322. (Such a condition seems to relate to the excluded product rather than the licensed IP.)
62
Transfield Pty Ltd v Arlo-International Ltd (1980) 144 C.L.R. 83.
63 Transfield (1980) 144 C.L.R. 83 at 102–103.
(2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited