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Friday, 7 September 1984
Page: 646

Senator WATSON(10.54) —The Patents Amendment Bill is potentially a very timely piece of legislation. I think we must all deplore the Government's lethargic attitude in not putting it through a lot quicker. Australia must be prepared to meet the challenges proposed by changes in technology overseas. Biotechnology research is a new and very important area. In fact, I look forward to the passage, in a similar area, of the Commonwealth Scientific and Industrial Research Organisation's biological control Bill.

The encouragement of a commercial realisation, one aspect of the developments in this area, is the reason for this Patents Amendment Bill. The Bill makes possible our accession to the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure. Patents, as such, cannot apply in the area of micro-organism biotechnology. Hence, the signatories to the Budapest Treaty agreed to the storing of a sample of viable cells as an authentic description and source. The Bill, which will amend the Patents Act 1982, will virtually enable such a procedure to suffice as a patent. In effect, it is a manipulation or an extension of patent amendment laws-a development of existing law.

I think it is somewhat ironical that the Minister for Science and Technology ( Mr Barry Jones), in identifying a lack of financial support for research and development from the private sector, did this in view of his Government's almost continual undermining of the private sector in favour of the public sector. I think this crowding out effect of the private sector was very vividly demonstrated in the recent Budget. It is also interesting to note that the principal loser in the last Labor Budget in terms of funds was the Department of Science and Technology. We must all recognise that the Minister, Mr Barry Jones, has done much within the community to demonstrate the benefits of research and development. He has told academics and laymen alike that Australia's future lies in these new developments. In retrospect, I think he must now acknowledge that some of his effort could have been better applied to convincing some of the members of Caucus, indeed some of his Cabinet colleagues, on the benefits rather than telling the rest of Australia. The Government has not realised that it can only expect private sector financing for what can be termed the 'risk development of technology' if it provides an environment in which incentives and rewards are adequate. This is not the case in Australia. In the Opposition's view, so far this has not been forthcoming.

The Bill is welcome but it must be seen in a very limited context. The Government has tended to talk very much around the subject. While identifying the need to create an environment for high technology to develop it has not really provided the legislative framework or the finance to enable this to come about. As I have said, the Bill is welcome but it must be seen in a fairly limited context. It offers no method by which our rather poor performance in this area, when compared with smaller nations such as Switzerland, Austria and Sweden, can be improved significantly.

Although the creation of a depository of micro-organisms in Australia would be handy, we have to acknowledge that it would be at great cost considering that there would be a small number of Australian users. However, it has been acknowledged that, in order to overcome the situation in the middle 1970s, there was pressure on the Commonwealth to sign and ratify the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms. But the slowness with which governments in Australia move is seen by the fact that three-quarters of the way through 1984 we are now debating a Bill to make possible Australia's accession to the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms. It has taken far too long.

Basically, the Bill before the Senate today amends the Patents Act 1982 and sets out additional procedures for compulsory deposition of micro-organisms as part of a patent application. It is timely that we should give a warning. Community interest in this subject and the law is very much lagging behind the work of scientists in their development of genetic engineering and new forms of life. These developments create a whole range of moral issues with which I think the community must concern itself much more closely.

The Minister for Science and Technology, in his second reading speech in the other place, lamented on the crises of Australian industries falling behind the rest of the world and he stressed the need to develop new technologies. I believe that he should adopt a much more positive approach rather than espouse the gloom and doom which he has tended to espouse since becoming a Minister. Additional resources and positive encouragement are required from the Government . For example, we need to see a lot more of the universities and the colleges of advance education setting up foundations or colleges to provide close links between university research and market needs. I am pleased to be able to say that the university in my State of Tasmania has recently set up such an organisation. These foundations or companies, which are attached to universities and colleges of advanced education, provide a facility for easier private sector access to all the work that is done in the academic area.

I acknowledge that one pleasing aspect of the Budget was the financial support given to SIROTECH. I am surprised that so little emphasis has been given by Government speakers to the work of this organisation whose function is to promote commercialisation of academic research. I congratulate the Government for that boost in funding despite the paucity of funding going to science and technology in other areas.

This Bill demonstrates the wider application to which patent law could be applied if we directed our minds to it. Although originally intended for manufacture in industrial applications, we now find the term 'manufacture' has a very wide meaning and has been interpreted broadly to give encouragement to national development. Living organisms can be patented; for example, methods of modifying reproductive processes in plants by using chemical agents or horticultural techniques, including genetic selection, are patentable. We seem to have lost sight of reality. Products containing living organisms, vaccines, yeasts and starter cultures for yogurt are also patentable. But the significant criteria must be an invention as distinct from a discovery. It is surprising that plant breeders have not moved into this area of patent protection rather than waiting for the Commonwealth to legislate for plant variety rights. Patent legislation is distinctly different from plant variety rights legislation. In patent legislation performance proof is a prerequisite prior to acceptance. When we consider the wide range of soil types, climatic conditions and the geography of Australia we can understand why people in the plant area are a bit concerned about making claims which would have to apply to the whole of Australia. Problems of litigation would inevitably arise.

This biotechnology debate opens up a whole new contentious field of whether new life forms should be patentable. If legislators had the will to proceed further- here is the warning-all that would be required would be a widening of the term ' manufacture'. It could be done very easily if we are not careful. As legislators we have a responsibility to inform the community of just how easy it would be, if the Government desired to move into this area, simply by using existing law by widening the term 'manufacture'. Some scientists, for example, are already stating that the distinction between, for instance, a chemical reaction and a biological process is fairly nebulous. That is how far science is moving. The function of a patent system is to provide an incentive for people to devote resources to innovative activity.

I think we must acknowledge that many economists dispute the value of the patent system, particularly in Australia. Some of our foremost scientists are disputing it. Compared with other countries, we must acknowledge that Australia has a low share of international patent property. This fact is to be deplored. In fact, most patents registered in Australia are granted to overseas inventors- again, a deplorable fact. Let us look at some figures. In the three years to June 1977, 92 per cent of patents sealed were issued to applicants domiciled overseas, and the figures since 1977 have not changed appreciably. They have improved somewhat, and the situation in 1984 looks like being very much the same . The Australian Industries Development Association research centre has reported that the proportion of sealed patents issued to foreigners reflected the flow of technology from the major industrial countries to smaller economies, and increasing international transfers. Unfortunately, Australia in 1982 imported $ 126m worth of technology, yet it exported only $22m worth, or one-fifth of its value. The gap between those figures illustrates the dangers of an over- dependence in this country on imported technology.

While economic growth can be linked with transfers of technology, it appears that Australia places far too much reliance upon the importation of foreign technology. Let us examine our major exports. They do not require a great deal of patent protection. Some have argued, including the CSIRO, that as the country is a net importer of technology the patent system has served little purpose for Australia's export industry to date. However, if Australia is to press ahead with high technology industries, as recommended by all parties, a withdrawal from patents protection would have a major impact on the so-called sunrise industries. In fact, the new technological industries require a greater protection in this area than do the established firms. In the latter enterprises much of the research and development activity is given over to rendering more efficient the existing processes.

However, to improve the potential in this area it is first necessary to change the direction of much of the university research. In Australia less than 5 per cent of domestic patent applications are made by government and higher educational sectors. These are the sectors that one would think would be putting in a lot of applications. Both of these groups-the universities and government- tend to concentrate on basic research, and this has been the problem. We have been a world leader in basic research, but much of this is not patentable. In regard to the CRIRO, which patents only its most promising innovations, about half of its lodged patents fail to attract industry attention and even greater numbers do not even reach the marketing stage. That is the big tragedy that Australia is facing. We are failing to grasp the work of our scientists and bring their work to commercial reality. Unfortunately, far too much of their work tends to find its way overseas. It is commendable, however, that the CSIRO takes the view that patents are not a reward for its own inventions, but are a community benefit.

One of the major problems with the patent system in Australia is the inaccessibility of patent attorneys to small inventors, particularly those outside the large capital cities, and also the high cost and the time which is associated with patent registration. To overcome this, the Government of Ontario in Canada has set up an ideas corporation which, incidentally, is presided over by an Australian doctor of philosophy. I must acknowledge that some work is being done at Technology Park in South Australia, but I believe this sort of approach must be taken in Australia by a national institution.

Let us look at some of the objectives of the Ideas Corporation in Canada because I think it is an appropriate time for us to model a national institution on a far-seeing development in Canada. The Ideas Corporation is a statutory authority established to encourage and finance the commercial development of technological development. In fulfilling those objectives, the Corporation has power to acquire, develop and deal in industrial property, including licences, inventions and processes, and the royalties and benefits flowing from such work. They are very desirable objectives. Industrial property covers all patents of inventions, copyrights, industrial designs and so on. I believe that this Canadian action is a very positive way of overcoming the rising costs of research and development. Government debt and high foreign ownership result in research and development effort being concentrated in the parent firms rather than the subsidiaries in Canada. All these factors are very similar to the situation in Australia. I think Australia's problems are very similar to those in Canada and we could well follow the Canadian initiative. Australia must develop mechanisms to speed up the slow diffusion of new production technologies . Again, to use the Canadian example, we find that for more than 50 years the Province of Ontario has operated a research foundation providing contact to research to industry. We have only recently, in the last 10 years, moved into those sorts of fields.

From my background in industry I see very clearly the need to develop in Australia appropriate mechanisms to improve the diffusion of research into commercial application to meet market needs. There are a number of problems. One of the pitfalls confronting many organisations is that in top management's zeal to introduce new technology into an old organisational structure, the managers often fail to implement the necessary changes to the organisational framework of authority, communication and changed work responsibilities and patterns. Thus new technology, if it is not comprehensively planned, can be quite incompatible with the old organisational framework. The result can be a disaffected work force, industrial dislocations, loss of productivity, high labour turnover, increased accident rates, and personal resentment by workers and middle line management as a reaction to working within new and more specialised functions. But in these times of high unemployment the outward feeling of discontent could be restricted by the fear of loss of job. That insecurity and frustration could well manifest itself in other ways-the worker may take out the problems on his family rather than the working place.

I therefore emphasise that adapting to technological change is not without a wide range of community problems for the employer, the employee and their families. For the employee there is the threat of job loss and adapting to new work patterns. There is a vital need for training. Responsibilities are often given without adequate training. The employer must ensure that there is a pay- back or adequate return for investing in the new technology. The impact of new technology presents both challenges and problems for industry, but those who adapt to recognise the potential will succeed in the market-place. I commend the Bill to the Senate.