IP Safe Harbour Provisions removed from Competition and Consumer Law

On 14 February 2019 after some debate about amendments the Senate passed the bill to remove the intellectual property safe harbour provisions from the Competition and Consumer Act 2010 (Cth) (CCA). All intellectual property arrangements, such as licensing agreements and intellectual property assignments are now subject to the anti-competitive conduct restrictions in the CCA, including the sections in the CCA which prohibit:

• Cartel conduct– if the dealing controls or limits the goods or services available for purchase, or its use in specific locations, territories, fields or applications or controlling or maintaining the price of the goods or services;
• Conduct which substantially lessens competition – if the arrangement has the purpose, effect or likely effect of substantially lessening competition in the relevant market; and
• Exclusive dealing – which includes a grant of an exclusive license or assignment of the intellectual property, or prevents the grant or sale of intellectual property to a third party, including competitors if it substantially lessens or is likely to substantially lessen competition in a market.

With the safe harbour provisions now repealed, organisations must now consider whether their intellectual property arrangements and assignments could potentially be caught by these prohibitions as the amendment does not just affect arrangements going forward, it will also affect existing arrangements. Organisations have 6 months to amend any arrangement which contravene these sections to comply.

We strongly recommend that organisations carefully consider their arrangements or dealings which:

1. Restrict the use of intellectual property rights to specific locations or territories;
2. Restrict the use of intellectual property rights to specific fields or applications;
3. Contain an exclusive license or assignment of intellectual property;
4. Prevents the grant of intellectual property rights to competitors including goods and services which require intellectual property rights;
5. Prevents the acquisition of intellectual property from competitors including goods and services which require intellectual property rights;
6. Prevents the grant of intellectual property to specific persons including goods and services which require intellectual property rights;
7. Prevents the production or supply of goods or services; or
8. Substantially lessens competition in your market.

Any intellectual property arrangements that do not comply with the CCA within the required timeframes will be subject to a maximum penalty if prosecuted:

1. $10 million;
2. 3 x the value of the benefit obtained from the breach; or
3. 10% of annual turnover in the last 12 months.

The Australian Competition and Consumer Commission (ACCC) has the power to grant authorisations and class exemptions to arrangements which do fall within the anti-competitive conduct provision in certain circumstances, however with the changes only passed in Parliament on 14 February, we will need to wait to see what, if anything the ACCC may issue in this regard.

Please contact Rachel Sciascia where there is concern that the arrangement may now contravene the anti-competitive conduct prohibitions.

Authored by:
Rachel Sciascia, Partner