That Ship has Sailed – Removal of IP Safe Harbour Provisions

On 13 September 2019, amendments to the Competition and Consumer Act 2010 (CCA) relating to intellectual property (IP) arrangements came into effect.  Accordingly, IP rights will now be subject to the anti-competitive conduct prohibitions under the CCA.

Prior to its repeal on 13 September 2019, section 51(3) of the CCA exempted IP licence and assignment arrangements from restrictions on anti-competitive trade practices, including:

  • cartel conduct; and
  • contracts, arrangements or understandings that restrict dealings or affect competition.

Consequently, parties in competition with each other could enter into “anti-competitive” IP arrangements.

With the safe harbour now removed, entities tied up in “anti-competitive” IP arrangements could face significant penalties of:

  1. a fine of up to $10 million; or
  2. 3 x the total value of the benefit obtained from the breach; or
  3. 10% of annual turnover for the previous 12 months,

(whichever is the greatest).

In assessing compliance and enforcement with the amendments, the ACCC will have regard to a set of general principles recognising:

  • that IP rights and competition law are not inherently conflicted, in that IP rights do not always create substantial market power; and
  • that not all IP arrangements will substantially lessen competition, or adversely impact on the consumer.

The ACCC recently published guidelines outlining the recent amendments to the CCA. The guidelines are available at [https://www.accc.gov.au/publications/guidelines-on-the-repeal-of-subsection-513-of-the-competition-and-consumer-act-2010-cth].

Lavan comment

It is important to note that the repeal of section 51(3) affects some conduct (granting a licence, making an assignment, or entering into a contract, arrangement or understanding), even where that conduct occurred before the repeal of s51(3).

Whilst the repeal of s51(3) may have far-reaching consequences, businesses do have the option to seek authorisation from, or provide a notification to, the ACCC which can then provide immunity from prosecution, where there is a net public benefit.

In any event, all businesses should review their current IP arrangements, to ensure that they are not partaking in anti-competitive conduct. Failure to do so could see you on the wrong end of an ACCC investigation.

If you wish to have your IP arrangements reviewed, or require advice on the recent amendments to the CCA, please contact Iain Freeman or Andrew Sutton.