WIPO Journal - World Intellectual Property Organization

a third party’s access to their IP or set a very high licensing fee for potential licensees. Although this type
of cross-licence agreement entails IP licences, it also contains a restrictive arrangement (on the third party’s
access to IP) which exists independently from IP licences. Therefore, even if the “condition” in these
types of agreements were exempted as a condition that “relates to” the subject-matter of IP, these agreements
would still be subject to the horizontal prohibition under s.45.
As such, it seems that the exemption for IP related condition under s.51(3) may have a narrow application
in practice. In fact, a “narrow” application itself is not necessarily “bad” for market competition. It may
help to prevent major ICT companies from abusing their IPRs to disadvantage their potential/existing
competitors. For example, although Microsoft and Yahoo may form strategic allies in searching engine
market by cross-licensing their patents, theoretically, they cannot restrict a third party (such as their
potential competitors) to access these patents—either a refusal to licence or through a forbidden high
licensing fee. Otherwise, they may breach s.45 (per se prohibition on exclusionary provision). Nevertheless,
in the absence of a clear enforcement guideline, it often makes it hard for ICT companies to understand
the real boundary of the TPA exemption for IP-related “condition”, and in what circumstances the effects
of such an exemption may be extended to the whole IP-related agreement. This arguably brings some
legal uncertainties for the business operations of both IP holders and IP litigants.
Narrow application and inconsistent treatments
Competition Law and IP Abuse Prevention in Australia 229
Section 51(3) also has some other inherent problems. First, the exemption provided by s.51(3) only applies
to limited statutory IP—patent, copyright, eligible layout right, design and registered trade mark (TM). It
does not cover plant breeders’ right and some other important rights protected by common law or equity,
such as unregistered TM, confidential information, trade secrets and know-how. Some commentators
assumed that “these omissions are deliberate” because “non statutory rights are less certain” in application
scope than statutory IPRs. 75 Nevertheless, the absence of any reference to plant breeders’ right is often
deemed as a “failure to monitor and update within the bureaucracy”. 76
Secondly, s.51(3) has not provided a unified application standard. Various forms of IPRs under s.51(3)
have been treated differently. 77 It seems that s.51(3) has set up different conditions for various IPRs to
access the immunity of s.51(3). This may arguably cause both uncertainty and ineffectiveness for the
application of the exemption. For example, with respect to patents, s.51(3)(a)(iii) provides that to obtain
the immunity of s.51(3) the alleged conditions must “relate to the invention to the patent or articles made
by use of that invention”. With respect to designs, s.51(3)(a)(iv) further provides that the conditions must
“relate to goods in respect of which the design is … registered and to which it is applied”. In other words,
so long as the condition relates to products (articles or goods) which contain patent or design, the immunity
of s.51(3) will apply.
However, with respect to copyright—another important IPR—s.51(3)(a)(v) requires that the conditions
must “relate to the work or other subject matter in which the copyright subsists”. As we know, copyright
only subsists in the works or subject-matter in their first material form rather than in reproductions or
copies. Consequently, it seems that the “condition” that relates to copyright products (copies or
reproductions of copyright works) has been excluded from the s.51(3) immunity. As the University of
Melbourne Law Professor Sam Ricketson observed, within s.51(3), the condition must “relate to the first
material embodiment of the work in which copyright subsists and not to any reproductions or copies of
75 Ian Eagles and Louise Longdin, “Competition in Information and Computer Technology Markets: Intellectual Property Licensing and s.51(3) of
the Trade Practices Act 1974” (2003) Vol.3(1) Queensland University of Technology Law and Justice Journal 28 at Section II.B.
76 Ian Eagles and Louise Longdin, “Competition in Information and Computer Technology Markets: Intellectual Property Licensing and s.51(3) of
the Trade Practices Act 1974” (2003) Vol.3(1) Queensland University of Technology Law and Justice Journal 28 at Section II.B.
77 Lindgren, “The Interface between Intellectual Property and Antitrust” (2005) 16(2) Australian Intellectual Property Journal 76, 87.
(2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited