House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Attorney-General, the Honourable Robert Mcclelland Mp

6. Schedule 2 - Intellectual property legislation

Schedule 2 amends the Designs Act 2003, Trade Marks Act 1995 and Patents Act 1990 to remove the effect of security interests registered on the registers established under those Acts. The amendments will continue to allow PPSA security interests to be registered under the relevant intellectual property legislation after the PPS Act registration commencement time, but will provide that such registration may have no effect on the rights of the registered owner.

Schedule 2 also amends the Plant Breeder's Rights Act 1994 to acknowledge that a security interest can be granted over a plant breeder's right.

Commencement

6.1 Schedule 2 will commence on the PPS Act registration commencement time. The PPS Act registration commencement time is the first day of the month that is 26 months after the month in which the PPS Bill is given Royal Assent, or an earlier time determined by the Minister. The Government expect the registration commencement time will be in May 2011.

Amendment of the Designs Act 2003

Definition of a PPSA security interest

Item 1

6.2 This item inserts a definition of a 'PPSA security interest' into the definitions section (section 5) of the Designs Act. The definition includes a security interest to which the PPS Act applies and a transitional security interest to which Division 4 of Part 9.4 of the PPS Act applies.

6.3 The definition has been included to clarify references to PPSA security interests in the amendments to the Designs Act.

Amendment of section 12

Item 2

6.4 Subsection 12(1) of the Designs Act provides that the rights of a registered owner of a design are subject to any rights appearing in the Register of Designs.

6.5 PPSA security interests will continue to be recordable on the Register of Designs. This is to enable such registrants to receive notifications, given an opportunity to be heard, or given the opportunity to make submissions under subsections 50(2), 52(3) and (5), 67(2) and (3), 68(2) and 68(4) of the Designs Act.

6.6 However, item 2 will have the effect that interests that appear on the Register of Designs and meet the definition of a PPSA security interest, will not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 7 for the application of this rule). This amendment will encourage registration of PPSA security interests on the PPS Register after the PPS Act registration commencement time and will assist in ensuring that priority issues between PPSA security interests registered on either the Register of Designs or the PPS Register are avoided.

Item 3

6.7 Subsection 12(3) of the Designs Act currently provides that equities, in relation to a registered design may be enforced against the registered owner, except to the prejudice of a purchaser in good faith for value.

6.8 Item 3 will have the effect that the rule in subsection 12(3) will not apply in relation to a PPSA security interest. This is because the PPS Act will govern dealings with PPSA security interests over registered designs, including enforcement and taking a registered design free of an existing PPSA security interest (taking-free). The note to be added further assists readers in identifying the relevant provisions in the PPS Act relating to enforcement and taking-free of an existing PPSA security interest.

Amendment of section 118

Items 4

6.9 Section 118 of the Designs Act currently provides that the Register of Designs is prima facie evidence of any particulars entered in it.

6.10 This item amends section 118 of the Designs Act so that this section does not apply in relation to any particulars recorded in the Register of Designs in relation to a PPSA security interest. This amendment is required because whilst PPSA security interests are registrable on the Register of Designs, such interests will not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 2). Consequently, from the PPS Act registration commencement time onwards, the Register of Designs will not be prima facie evidence of PPSA security interests registered in it.

Amendment of section 119

Items 5 and 6

6.11 Section 119 of the Designs Act currently provides that a document, in relation to which particulars have not been entered in the Register of Designs, is not admissible in any proceedings as proof of the title to a design or to an interest in a design, unless circumstances outlined in paragraphs (a) or (b) of section 119 exist.

6.12 These items amend section 119 so that this section would not apply to PPSA security interests. This amendment will allow for the operation of section 174 of the PPS Act, which provides that certain particulars relating to registrations on the PPS Register are admissible as evidence.

Application of amendments

Item 7

6.13 This item clarifies that parties with a dealing, enforcement action, or court proceedings in relation to a registered design (or an interest in a registered design) which have already started (but not yet finished) as at the PPS Act registration commencement time, should be able to rely on the rules which apply prior to the PPS Act registration commencement time.

6.14 A practical application of this amendment may be in relation to an interest holder that has a registration on the Register of Designs prior to the PPS Act registration commencement time. That interest holder would consider that their interests recorded on the Register of Designs would constrain the registered owner's rights and that such recordings would be admissible as evidence. Item 7 will ensure that this understanding remains valid.

Amendments to the Patents Act

Definition of a PPSA security interest

Items 8 and 14

6.15 These items insert the term 'PPSA security interest' into the list of expressions in section 3 for the term to be defined in the Dictionary in Schedule 1 of the Patents Act. The definition includes a security interest to which the PPS Act applies and a transitional security interest to which Division 4 of Part 9.4 of the PPS Act applies.

6.16 The definition has been included to clarify references to 'PPSA security interests' in the amendments to the Patents Act.

Amendment of section 189

Item 9

6.17 Subsection 189(1) of the Patents Act provides that the rights of a registered owner of a patent are subject to any rights appearing in the Register of Patents.

6.18 PPSA security interests will continue to be recordable on the Register of Patents. However, item 9 will have the effect that interests that appear on the Register of Patents, and meet the definition of a PPSA security interest, will not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 15 for the application of this rule). This amendment will encourage registration of PPSA security interests on the PPS Register after the PPS Act registration commencement time, and will assist in ensuring that priority issues between PPSA security interest registered on either the Register of Patents and PPS Register are avoided.

Item 10

6.19 Subsection 189(3) of the Patents Act currently provides that equities, in relation to a patent may be enforced against the registered owner, except to the prejudice of a purchaser in good faith for value.

6.20 Item 10 will have the effect that the rule in subsection 189(3) would not apply in relation to a PPSA security interest. This is because the PPS Act will govern dealings with PPSA security interests over patents, including enforcement and taking-free of an existing PPSA security interest. The note to be added further assists readers in identifying the relevant provisions in the PPS Act relating to enforcement and taking-free of an existing PPSA security interest.

Amendment of section 195

Item 11

6.21 Section 195 of the Patents Act currently provides that the Register of Patents is prima facie evidence of any particulars entered in it.

6.22 This item amends section 195 of the Patents Act so that this section will no longer apply to PPSA security interests. This amendment is required because whilst PPSA security interests will continue to be recordable on the Register of Patents, such interests that appear on the Register of Patents will not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 9). Consequently, from the PPS Act registration commencement time onwards, the Register of Patents will not provide prima facie evidence when it comes to PPSA security interests over patents.

Amendment of section 196

Items 12-13

6.23 Section 196 of the Patents Act currently provides that a document, of which particulars have not been entered in the Register of Patents, is not admissible to any proceedings as proof of title to a patent or to an interest in a patent, unless circumstances outlined in paragraphs (a) or (b) of section 196 exists.

6.24 These items amend section 196 so that this section would not apply to PPSA security interests. This amendment will allow for the operation of section 174 of the PPS Act, which provides that certain particulars relating to registrations on the PPS Register are admissible as evidence.

Application of amendments

Item 15

6.25 This item clarifies that parties with a dealing, enforcement action, or court proceedings in relation to a patent (or an interest in a patent) which have already started (but not yet finished) as at the PPS Act registration commencement time, should be able to rely on the rules which apply prior to the PPS Act registration commencement time.

6.26 A practical application of this amendment may be in relation to an interest holder that has a registration on the Register of Patents prior to the PPS Act registration commencement time. That interest holder would consider that their interests recorded on the Register of Patents would constrain the registered owner's rights and that such recordings would be admissible as evidence. Item 15 will ensure that this understanding remains valid.

Amendment of the Plant Breeder's Rights Act

Application of the PPS Act

Item 16

6.27 Section 20 of the Plant Breeder's Rights Act provides that the plant breeder's right is personal property.

6.28 This item inserts notes after section 20. Note 1 clarifies that the PPS Act applies to the plant breeder's right, and any licence in the plant breeder's right, as intellectual property. Note 2 informs readers that section 106 of the PPS Act corresponds to subsection 20(3) of the Plant Breeder's Rights Act.

Item 17

6.29 Section 25 of the Plant Breeder's Rights Act provides that the right to apply for the plant breeder's right is personal property.

6.30 This item inserts a note after section 25 informing readers that the PPS Act deals with security interests in personal property, including a right to apply for the plant breeder's right.

6.31 The PPS Act will apply of its own force over personal property. The inclusion of items 16 and 17 should not be used to support the argument that the PPS Act does not apply to personal property provided under certain legislation if similar notes are not inserted in those pieces of legislation.

Amendment of the Trade Marks Act

Definition of a PPSA security interest

Item 18

6.32 This item inserts a definition of a 'PPSA security interest' into the definitions section (section 6) of the Trade Marks Act. The definition includes a security interest to which the PPS Act applies and a transitional security interest to which Division 4 of Part 9.4 of the PPS Act applies.

6.33 The definition has been included to clarify references to PPSA security interests in the amendments to the Trade Marks Act.

Amendment of section 22

Item 19

6.34 Subsection 22(1) provides that the trade mark owner can deal with the trade mark as absolute owner and give good discharges subject only to any rights appearing on the Register of Trade Marks.

6.35 PPSA security interests will continue to be recordable on the Register of Trade Marks. This is to enable such registrants to receive notifications, given an opportunity to be heard, or given the opportunity to make submissions under sections 84(2), 84A(4), 84A (5) and 111 of the Trade Marks Act.

6.36 However, item 19 will have the effect that interests that appear on the Register of Trade Marks and meet the definition of a PPSA security interest, will not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 24 for the application of this rule). This amendment will encourage registration of PPSA security interests on the PPS Register after the PPS Act registration commencement time, and will assist in ensuring that priority issues between PPSA security interests registered on either the Register of Trade Marks and the PPS Register are avoided.

Item 20

6.37 Subsection 22(3) of the Trade Marks Act currently provides that equities, in relation to a registered trade mark may be enforced against the registered owner, except to the prejudice of a purchaser in good faith for value.

6.38 This item will have the effect that the rule in subsection 22(3) would not apply in relation to a PPSA security interest. This is because the PPS Act will govern dealings with PPSA security interests over registered trade marks, including enforcement and taking-free of an existing PPSA security interest. The note to be added further assists readers in identifying the relevant provisions in the PPS Act relating to enforcement and taking-free of an existing PPSA security interest.

6.39 It should be noted that although subsection 21(2) is somewhat similar to subsection 22(3) - in that both subsections are concerned with enforcement of equities - the former has not been amended whereas the latter has. The reason for this is that subsection 21(2) recognises that there are different types of equities and that these equities will have their own enforcement rules. This does not contradict the operation of the enforcement rules in the PPS Act.

6.40 If the equity is a PPSA security interest, then under subsection 21(2) the PPS Act enforcement rules will operate in relation to that equity.

6.41 Subsection 22(3) on the other hand authorises enforcement of an equity in a trade mark, subject to a restriction stated in terms of a general principle. The PPS Act adequately authorises the enforcement of PPS Act equities in trade marks, subject to particular rules (not the general principle) that do not necessarily apply in relation to equities that are PPSA security interests. Therefore, equities that are PPSA security interests are expressly excluded from the operation of subsection 22(3) to avoid any inconsistency between subsection 22(3) and the PPS Act.

Amendment of section 113

Item 21

6.42 Section 113 of the Trade Marks Act currently provides that if a person (other than the registered owner) claims to have an interest that is not recordable under Part 10 of the Trade Marks Act 1995 (i.e. not an assignment or transmission of title), the person and the registered owner may together apply to have the interest recorded on the Register of Trade Marks.

6.43 This item amends section 113 so that any person can apply to the Registrar of Trade Marks to have the particulars of a claim to an interest that is not recordable under Part 10 to be recorded in the Register of Trade Marks. The application must contain evidence of the claim asserted.

6.44 This item will allow a security interest holder to apply to have their interest recorded on the Trade Marks Register without the joinder of the registered owner of the trade mark.

Amendment of section 117

Item 22

6.45 Section 117 of the Trade Marks Act currently provides that if a person has applied for the registration of a trade mark, and another person claims to have an interest in, or a right in respect of, the trade mark, they may together apply to the Registrar of Trade Marks for a record to be kept of the other person's claim.

6.46 This item amends section 117 so that any person can apply to the Registrar of Trade Marks to have the particulars of a claim to an interest recorded on the Register of Trade Marks without the joinder of the applicant for the trade mark. Consequently, a security interest holder can apply to have their interest recorded on the Trade Marks Register without the joinder of the person who has applied for the registration of the trade mark.

Amendment of section 210

Item 23

6.47 Section 210 of the Trade Marks Act currently provides that the Register of Trade Marks is prima facie evidence of any particulars entered in it.

6.48 This item amends sections 210 so that this section would no longer apply to PPSA security interests. This amendment is required because whilst PPSA security interests are registrable on the Register of Trade Marks, such interests would not have any effect on the rights of the registered owner after the PPS Act registration commencement time (see item 19). Consequently, from the PPS Act registration commencement time onwards, the Register of Trade Marks will not be prima facie evidence of PPSA security interests registered on it.

Application of amendments

Item 24

6.49 This item clarifies that parties with a dealing, enforcement action, or court proceedings in relation to a registered trade mark (or an interest in a registered trade mark) which have already started (but not yet finished) as at the PPS Act registration commencement time, should be able to rely on the rules which apply prior to the PPS Act registration commencement time.

6.50 A practical application of this amendment may be in relation to an interest holder that has a registration on the Register of Trade Marks prior to the PPS Act registration commencement time. That interest holder would consider that their interests recorded on the Register of Trade Marks would constrain the registered owner's rights and that such recordings would be admissible as evidence. Item 24 would ensure that this understanding remains valid.

Explanation of items