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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
“In bridging the different policies of the Patents Act and the Trade Practices Act, s 51(3) recognizes that a patentee is justly entitled to impose conditions on the granting of a licence or assignment of a patent in order to protect the patentee’s legal monopoly. Even under American antitrust law, where there is no equivalent exception to s 51(3), the patentee is entitled to exercise some measure of control over the licensee consistent with the scope of the patent monopoly, though there has been some controversy as to the scope of permissible control: [treatises cited] … Section 51(3) determines the scope of restrictions the patentee may properly impose on the use of the patent. Conditions which seem to gain advantages collateral to the patent are not covered by s 51(3).” According to Mason J., it is clear that when determining the nature of an imposed condition: (1) a “proper” scope of the legitimate use of IP rights must be identified, and (2) the “condition” relating to the subject-matter of IP should be distinguished from the “collateral” matters relating to the subject-matter of IP. 64 It seems that Mason’s “collateral advantage” test may help to clarify certain issues, such as the legitimacy of territorial restraints. Since dividing the relevant IP into territories or fields of use does not extend the scope of IPR, it seems to fall under the immunity of s.51(3). However, the legitimacy of many other issues, such as exclusive grant-backs and minimum price stipulation, remains unclear. 65 The difficulty of explaining the meaning of “relate to” was also evidenced by a review report produced by the National Competition Council (NCC) in 1999. The NCC conducted a special review on the effects of s.51(3). 66 Nearly 20 years after Transfield, the NCC still could not provide a clear interpretation of the meaning of “relate to”. In its review report the NCC set out three possible interpretations: • Narrow interpretation: a condition relates to IP or the goods produced using it if it relates directly to the goods produced. On this view, a territorial restriction on where the licensee could sell would not relate to the goods, because it relates to the market for the goods rather than the goods themselves. • Intermediate interpretation: a condition relates to IP or the goods produced using it if the condition seeks to protect and exploit the patentee’s exclusive rights or to secure an advantage that is not collateral to the patentee’s exclusive rights. On this view, a territorial restriction would fall within the section. • Broad interpretation: a condition relates to the IP or goods produced using it unless it seeks to apply to an almost entirely unrelated transaction or arrangement. On this view, if there is some link between the condition and the IP or the goods then it will be covered by s.51(3). On the broad view, territorial restrictions, exclusive grant-backs, and non-challenge provisions would all fall within the section. 67 64 Lindgren, “The Interface between Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal 76, 78. 65 The Trade Practices Commission released a paper in 1991 identifying the types of restrictive conditions that might “relate to” the subject-matter of the IPRs, and therefore fall within the exemption in s.51(3), such as exclusive licences and sole licences; territorial restrictions; best endeavours clauses; price restrictions; and quantity restrictions. Nevertheless the TPC does not suggest that these conditions are necessarily anti-competitive, but that in some circumstances they may be anti-competitive. See TPC, Application of the Trade Practices Act to Intellectual Property: Background Paper (1991), p.13, cited by NCC, Review of Section 51(2) and 51(3), 1999, pp.185–186, at http://www.globalcompetitionforum.org/regions/Oceania/Australia /LESe-001.pdf [Accessed March 30, 2011]. 66 NCC, Review of Section 51(2) and 51(3), 1999, at http://www.globalcompetitionforum.org/regions/Oceania/Australia/LESe-001.pdf [Accessed March 30, 2011]. 67 NCC, Review of Section 51(2) and 51(3), 1999, p.184, at http://www.globalcompetitionforum.org/regions/Oceania/Australia/LESe-001.pdf [Accessed March 30, 2011]. Competition Law and IP Abuse Prevention in Australia 227 (2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited
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THE WIPO JOURNAL: ANALYSIS OF INTEL
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The WIPO Journal Table of Contents
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The Juridification of Indigenous Kn
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Indigenous knowledge systems and ex
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One of the unresolved issues was wh
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The Juridification of Indigenous Kn
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Registration of traditional knowled
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ight to equitable remuneration and
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Asia and America where it is sold c
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The Economic Effects of Geographica
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minimum quality standards for regio
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Belletti et al. used a case-study a
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Sensitivity analysis As shown in Ta
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the domestic perspective. This addi
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Filing date requirements under the
Page 37 and 38: Filing date requirements under the
Page 39 and 40: • while some provisions of the PL
Page 41 and 42: If an applicant files the internati
Page 43 and 44: However, it was noted in the Workin
Page 47 and 48: Before the Reform of the PCT in vie
Page 49 and 50: — where the priority application
Page 53 and 54: “Bending” of PCT articles in th
Page 57 and 58: Not introducing the PLT requirement
Page 59 and 60: on the future direction of global I
Page 61 and 62: IP in Global Governance: A Venture
Page 63 and 64: negotiated. 28 Similarly, the WIPO
Page 65 and 66: IP overreach: The dangers of a boom
Page 67 and 68: As part of the social cost or the
Page 73 and 74: “geographical, historical and reg
Page 75 and 76: facilitated the integration of the
Page 79 and 80: Competition Law and IP Abuse Preven
Page 81 and 82: Although the TRIPS Agreement has be
Page 83 and 84: vertical licensing agreements; and
Page 85 and 86: “• the refusal relates to a pro
Page 87: Nevertheless, so far as s.51(1) is
Page 91 and 92: a third party’s access to their I
Page 93 and 94: Competition Law and IP Abuse Preven
Page 95 and 96: should further take into account
Page 97 and 98: Cumulative Index This index has bee
Page 99 and 100: Parallel imports economics and law,
Page 101: *412409* 2011 VOLUME 2 ISSUE 2 THE
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