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__________________________________________________________ PRODUCTIVITY COMMISSION INQUIRY INTO INTELLECTUAL PROPERTY ARRANGEMENTS MR J COPPEL, Commissioner MS K CHESTER, Deputy Chair & Commissioner TRANSCRIPT OF PROCEEDINGS AT PRODUCTIVITY COMMISSION, MELBOURNE ON FRIDAY, 24 JUNE 2016 AT 8.41 AM IP Arrangements 24/06/16 © C'wlth of Australia INDEX Page MR MARK SUMMERFIELD 557-571 AUSTRALIAN BOOKSELLERS ASSOCIATION MR JOEL BECKER 572-590 MR MARK RUBBO MR TIM WHITE ELECTRONIC FRONTIERS AUSTRALIA MR JON LAWRENCE 591-602 MR PETER DONOUGHUE 602-609 MS DEE WHITE 609-616 MR PETER GLEESON 617-624 ASSOCIATION OF LIQUOR LICENCES MELBOURNE MR CON SARROU 624-632 PENGUIN RANDOM HOUSE AUSTRALIA MS JULIE BURLAND 633-646 MS BRIONY LEWIS LAW COUNCIL OF AUSTRALIA MR RICHARD HAMER 647-659 QUALCOMM INCORPORATED MR ALEX ORANGE 659-672 MR PHIL WADSWORTH IPTA MR MICHAEL CAINE 673-686 TEXT PUBLISHING COMPANY OF AUSTRALIA MR MICHAEL HEYWARD 687-697 MR MARCUS FAZIO MS WENDY ORR 698-704 SCRIBE PUBLICATIONS MR HENRY ROSENBLOOM 705-712 IP Arrangements 24/06/16 © C'wlth of Australia HAPPY FINISH DESIGN MR NICK RENNIE 712-719 MR NICK GRUEN 719-727 MR DAVID DAY 727-730 IP Arrangements 24/06/16 © C'wlth of Australia RESUMED [8.41 am] 5 MR COPPEL: Good morning everybody. Welcome to the public hearings of the Productivity Commission Inquiry in Australia's Intellectual Property Arrangements. My name is Jonathan Coppel and I am one of the Commissioners on the inquiry and my colleague Karen Chester is the other Commissioner. 10 By way of background, the inquiry started with a terms of reference from the Australian Government in August 2015 to examine Australia's IP arrangements including their effect on investment, competition, trade, innovation and consumer welfare. We then released an Issues Paper in 15 early October 2015 and we've talked to a range of organisations and individuals with an interest in the issues. We have also held a number of roundtables, both pre-report, draft report and post-draft report and met with many groups of interested parties to inform the inquiry. 20 We released the draft report in late April, which included over 20 draft recommendations, draft findings and a number of information requests. We have received a large number of submissions in response and now they total well over 500. So we are grateful to all the organisations and individuals who have taken the time to prepare 25 submissions, many of those who are appearing at the hearings both today and in previous days. The purpose of the hearing is to provide an opportunity for interested parties to provide comments and feedback on the draft report; things like 30 where people agree with the draft recommendations and where they may disagree or where there may be differences of opinion on ease of implementation or even factual comments. Prior to this hearing today, hearings have been held in Brisbane, 35 Canberra and Sydney and also yesterday in Melbourne. A further hearing will be held in Sydney next Monday. We will then be working towards completing the final report, having considered all the evidence presented at the hearings and submissions, as well as other informal discussions. The final report will be handed to the Australian Government later this 40 year. All those participants and those who have registered their interest in this inquiry will be advised of the final reports released by government which may be up to 25 parliamentary sitting days after completion. Regarding today's proceedings, we like to conduct all hearings in a 45 reasonably informal manner, but I remind participants that a full transcript .IP Arrangements 24/06/16 556 © C'wlth of Australia is being taken. For this reason, comments from the floor cannot be taken but at the end of today's proceedings we will endeavour, time permitting, to provide an opportunity for anyone who wishes to do so to make a brief presentation 5 Participants are not required to take an oath, but are required under the Productivity Commission Act to be truthful in their remarks. The transcript will be made available to participants and will be available on the Commission's web site following the hearings. Submissions are also 10 available on the web site. If there are any media representatives attending today there are some general ground rules and we ask you see one of our staff concerning those and that member of the staff is there by the door. To comply with the requirements of the Commonwealth Occupational 15 Health and Safety Legislation you are advised than in the unlikely event of an emergency requiring the evacuation of this building that you should follow the green exit signs to the nearest stairwell. Lifts are not to be used and follow the instructions of the floor wardens at all times. If you believe you would be unable to walk down the stairs, it is important that 20 you advise the wardens who will make alternative arrangements for you. If you require assistance, please speak to one of our inquiry team members here today. Unless otherwise advised, the assembly point for the Commission in Melbourne is at Enterprise Park, situated at the end of William Street on the bank of the Yarra River. 25 Participants are invited to make some opening remarks of no more than five minutes, keeping the opening remarks brief will allow us the opportunity to discuss matters in participant's submissions in greater detail. Participants are welcome to comment on the issues raised in other's 30 submissions. Those formalities complete, I would now like to welcome the first participant who is Mark Summerfield. So welcome. If, for the purposes of the transcript, you could give your name and who you represent and then I invite you to make a brief opening statement. Thank you, Mark. 35 MR SUMMERFIELD: I am Mark Summerfield and I am with Watermark Patent and Trademark Attorneys, but I am actually mainly here in a personal capacity, so whatever I say here doesn't necessarily represent the views of my employer, but my feeling is that they're 40 probably fairly well aligned. Just by way of opening I would like to just summarise some of the points in my submission and that submission relates to the recommendation that business methods and software be excluded from the - from patentability under the Patents Act 1990, and there are a number of reasons why I regard that as a poor recommendation 45 and one that should not be carried over into the final report. .IP Arrangements 24/06/16 557 © C'wlth of Australia Primarily, the issue is that this whole category of business methods and software as it appears to have been brought together within the report is extremely broad and at one extreme you have the kinds of business 5 processes that have already, on a number of occasions by the Full Federal Court in Australia been found to be unpatentable in any event. At the other extreme, under heading of software or computer-implemented inventions or inventions that have been implemented partially or wholly by means of programming, rather than 10 preconfigured hardware, you have things such as the CSIRO Wi-Fi technology which is itself largely nowadays implemented in hardware that may or may not be programmed. My background originally is as an electrical engineer. I practised as 15 an electrical engineer for over a decade before entering the patent attorney profession. During that time I worked at Telstra's research laboratories, Telecom at the time. I worked - I did a PhD in optical fibre technology at Melbourne University. I did post-doctoral research at Melbourne University. I worked in a start-up company that was developing hardware 20 and software for telecommunications access networks. I worked in a second start-up company which was developing computer-aided design software for use in the design and development of optical fibre technology systems; everything from devices through to large-scale national telecommunications. 25 Following that, I became a patent attorney and I have worked for a number of clients in related areas in relation to hardware and software, and within the general areas of technology that I've worked in and where I have assisted clients, I would have to say that the decision as to whether 30 something might be implemented in hardware or might be implemented in software or might be implemented using some form of programmable hardware, which again, the tools are used in those cases are very similar to software development tools, they consist of effectively programming languages, that it is entirely an engineering implementation decision. 35 There is no distinction in terms of the end functionality; the distinction is in relation to matters such as cost, performance, miniaturisation - those sorts of things that affect the engineering decisions and the final product design. 40 The general preference nowadays is for implementation to be as far as possible and, at least at the early stages of development, in programmable devices whether that's microprocessors with associated software, whether it is devices that are - there are types of hardware that can themselves be programmed; they are bit like digital stem cell arrays, if you want to think 45 of it that way. They start out having no particular function and you feed .IP Arrangements 24/06/16 558 © C'wlth of Australia them a file and that configures them to perform a particular way. The reason, of course, that that is preferred is because you can then build the hardware once and you can reprogram it in development to adapt it, develop it, correct bugs.