Your Intellectual Property rights were less protected from 13 September 2019!

Australian corporations might once have entered intellectual property license agreements and registered trademarks without being overly concerned with competition compliance. This relaxed attitude was supported by the Competition and Consumer Act 2010 (the CCA) that provided a “safe haven” for such transactions, at least in relation to cartel conduct, exclusive dealing and anti-competitive arrangements.

However, since 13 September 2019, the Treasury Laws Amendment (2018 Measures No. 5) Act 2019 repealed subsection 51(3) of the CCA that previously protected Intellectual Property (IP) owners from the following anti-competitive conduct:

• Cartel conduct: When businesses agree to act in consort instead of competing and this conduct increases the profits of cartel members while maintaining the illusion of competition. Examples include price fixing, sharing markets, restricting goods and services and bid rigging.
• Exclusive dealing arrangements: When the choice of suppliers, customers, place of business or product is restricted, being illegal when it substantially lessens competition.
• Anti-competitive arrangements: contracts, arrangements or understandings that include a provision that has the purpose, effect or likely effect of substantially lessening competition in a market.

These recent changes now mean that such conduct is subject to the full force of the competition law in Part IV of the CCA.

What does this mean for you?

If you have or license IP and may be able control a market and stifle competitive behaviour, you should reconsider arrangements from which you may have previously benefitted.

The lifting of the safe harbour protection was not “grandfathered” – that is, it means that conduct previously exempted is now liable to prosecution. You must now, as for your other commercial transactions, analyse your IP transactions just as you would with any other transaction that may offend the Competition and Consumer Act.  If you license technology – whether it is telecommunications, pharmaceuticals or biotechology – you should review your IP licenses to check that their territorial, volume or use limitations do not breach competition laws. 

Authorisation, Notification, Class Exemptions

You can manage the risk of breaching the competition laws by seeking three main types of exemptions.

1. Authorisation: If you are concerned about proposed conduct, you can seek “Authorisation” from the ACCC. This gives you statutory protection from legal action under the CCA for that conduct. You cannot get retrospective authorisation. Examples of the types of conduct or arrangements that the ACCC can authorise include collective bargaining, industry levies and certain codes of conduct, joint ventures or alliances.
2. Notification: The alternative process of “Notification” is also available where parties propose to engage in small business collective bargaining, exclusive dealing or resale price maintenance. For example, Notification is required where suppliers like manufacturers or wholesalers specify a minimum price below which a reseller must not on-sell or advertise goods and services for sale. Alternatively, there are some situations where lodging an application for Authorisation is more suitable than Notification, for instance in collective bargaining where the applicant is a trade union or where the transaction thresholds are exceeded. 
3. Class Order Exemption: Class exemptions remove the need for business to lodge individual applications for Authorisation or Notifications with the ACCC. The ACCC has the power to issue a Class Exemption under section 95AA of the CCA to a class of persons, such as participants of a particular industry, for one or more provisions of Part IV. The ACCC is currently considering proposed class exemptions that provide legal protection for the following:

• Small Businesses (with an annual turnover of less than $10 million) to collectively bargain with customers or suppliers;
• Franchisees and fuel retailers to collectively bargain with franchisors or fuel wholesalers; and
• International liner cargo shipping carriers to collectively bargain with suppliers.

Intellectual Property an important part of your business?

Check out another one of our articles on IP rights and preliminary discovery!

Contact Peter McNamara today if you require advice on your intellectual property rights.