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Concerns around the repeal of a longstanding intellectual property exemption in Australian competition laws have been raised, with its impact on small businesses questioned.
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IPA expresses concerns over repeal of IP exemption
29 July 2019
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The Institute of Public Accountants has expressed some concerns about the upcoming repeal of section 51(3) of the Competition and Consumer Act 2010 (CCA) and its potential impact on small business.
The repeal, to commence on 13 September 2019, will mean that conduct involving intellectual property rights (IPR) will no longer be exempt from certain provisions in Part IV of the CCA, particularly in relation to granting a licence, making an assignment or entering into a contract, arrangement or understanding.
IPA chief executive Andrew Conway said the repeal may have a direct impact on section 45 of the CCA and, as a result, could stifle competition rather than encourage it.
Section 45 of the CCA prohibits contracts, arrangements, understandings or concerted practices that have the purpose, effect or likely effect of substantially lessening competition in a market, even if that conduct does not meet the stricter definitions of other anti-competitive conduct such as cartels.
“Without the ability to control how intellectual property is to be used, a licensor may be reluctant to license the intellectual property at all. This will be detrimental for downstream competition and may also deter innovation,” Mr Conway said.
“Small businesses will not be in a position to determine whether such a condition is likely to substantially lessen competition in the relevant market, in order to have certainty about their legal position.
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“To prevent small business taking an overly cautious approach, the ACCC could introduce a class exemption that would create some certainty in how to deal with licensing and transfers of IPR so as not to infringe the CCA. The European Commission has a block exemption that applies to technology transfer agreements, and a similar approach could be taken here in Australia.”
The Australia Competition and Consumer Commission has encouraged parties to consider their existing contracts and arrangements prior to the repeal commencing on 13 September 2019, but Mr Conway has called for a simplified guideline for small business owners.
“While there are guidelines in relation to the repeal, these are for professional advisers and not aimed at small business people. We urge the ACCC to produce a simplified version accessible to small business operators. It is essential that small businesses that may be impacted by the repeal clearly understand the implications and seek the appropriate legal advice as to their particular intellectual property needs,” he said.
“The IPA supports innovation as a means to boost small business productivity, and intellectual property protection plays a major part in innovation and entrepreneurialism.
“Therefore, we remain cautious over the repeal and we encourage the ACCC to raise awareness amongst the small business community as to the consequences that may impact the sector.”
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