Reinvigorating the dead parrot - IP and the right to repair

This article follows our earlier reports on the decision of the High Court of Australia in Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41, in which spent printer cartridges were likened to the unfortunate dead parrot of Monty Python fame.

Productivity Commission inquiry

As set out in the terms of reference of the inquiry, ‘right to repair’ “describes a consumer's ability to repair faulty goods, or access repair services, at a competitive price...this may include a repair by a manufacturer, a third-party, or a self-repair option through available replacement parts and repair information”.¹

A paper outlining a range of issues on which the Productivity Commission has been seeking information and feedback was released in December 2020. The inquiry has been instigated in response to “concerns…raised around the world that repairs of consumer products are becoming more difficult (sometimes impossible), and that this is resulting in costly and wasteful outcomes for both consumers and broader society”.² The inquiry is examining the barriers and enablers of competition in repair markets in Australia, the costs and benefits of a regulated ‘right to repair’ to consumers, suppliers and manufacturers, and the impact that regulatory or policy changes could have on market offerings for repair services and replacement products.

‘Right to repair’ encompasses a complex series of issues including data access, consumer guarantee rights and intellectual property, each of which play their part in the right of and ability of the Australian consumer to repair purchased products.

The impact of intellectual property

From an intellectual property perspective, two main issues arise:

• the use of products that are covered by patent and/or registered design rights
• the use of copyright material such as proprietary software and repair manuals.

The Australian Consumer Law has a role to play in consumer protections relating to agreements around the use of copyright material.

Patents and the re-use of printer cartridges

Manufacturers use patent rights to protect the unauthorised use of their technology, but the line between repair of a patented product and remaking of the patented product has been uncertain for a long time. In November 2020, the decision of the High Court of Australia in Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41, reported by us in our article, High Court of Australia Confirms Dead Parrot’s View, signalled a shift in the legal approach to this issue by abandoning the doctrine of implied license that had been in place for over 100 years. The doctrine of implied license “seeks to provide the purchaser of patented goods with the full rights of ownership, but leaves open the possibility that there may be other restrictions which have been notified by the patentee”.³ The High Court instead favoured a doctrine of exhaustion of rights in patented products. Under the doctrine of exhaustion of rights, the right of the patentee under the Patents Act 1990 (Cth) to exert restrictions and conditions on the use of a patented product is exhausted at the time of first sale. The decision reduces the scope of patent owners to impose restrictions on consumers once the product is sold, and repairing a patented product for further use or reuse is not an infringing act.

Policy considerations came into play in the decision, which brings Australian law into line with the US and the EU. The Court furthermore considered that “the implied licence doctrine is not consistent with the certainty demanded by trade and commerce or with consumer expectations. The need for certainty requires the maintenance of the fundamental principle of the law which recognises that an owner has full rights as to the use and disposal of a chattel”. The clear indication was that certainty for consumers and businesses in this area of law is to be preferred where possible over uncertainty over the possibility of restrictions as to product use which have been notified by the patentee.⁴

The Calidad v Seiko Epson decision also went some way to recognising the importance of waste reduction and product design that permits product reuse. Thus encouraging innovation that designs out waste at the outset for the benefit of society and the environment.

As we noted in High Court Of Australia Confirms Dead Parrot’s View, by recognising the need to adapt legal principles to modern trade and commerce, the High Court has laid open a path that will encourage innovation that seeks to maximise the use of resources. Being able to reuse and recycle goods without the threat of patent infringement is just such an incentive. However, it is not the end of the story from an intellectual property perspective.

Copyright and technological protection measures

The Productivity Commission is examining the use by copyright owners of technological protection measures (TPMs), otherwise known as digital rights management, to prevent access to embedded software for repair of everyday products such as consumer electronics and cars. Often, repairing these products requires access to, or copying of, the software which is protected by copyright and risks copyright infringement. Manufacturers often require passwords, encryption or other form of authorisation to access the embedded software. This limits the ability to conduct routine maintenance and repair of products to authorised repairers. End user license agreements (EULAs) then set out the terms and conditions by which users can access products, in particular software. Typical clauses may include no copyright infringement by reproduction and no reverse engineering of products.

Also under investigation is the use, by some manufacturers, of copyright to prevent consumers or third parties accessing and reproducing repair information. Obtaining information necessary to undertake repairs (such as product manuals and diagnostic software) can be difficult if manufacturers refuse to provide such information to non-authorised repairers.

Potential for reform of intellectual property laws

Should the above issues be determined to constitute a significant barrier to repair in Australia, the Productivity Commission considers potentially addressing this barrier by introducing new defences or exceptions to intellectual property laws for repairs. Such defences could be in the form of introducing a new fair dealing exception to the Copyright Act 1968 (Cth) to allow for non-infringing uses of copyright material for the purpose of repair.⁵

Also under consideration are the clarification or expansion of existing exceptions in intellectual property laws that partially cover product repair to provide certainty for consumers and third party repairers. For example, the ‘spare parts’ defence in the Designs Act 2003 (Cth), and the ‘experimental use’ defence in the Patents Act 1990 (Cth), as well as certain of the Productivity Commission’s recommendations relating to improving Australia’s broader IP arrangements in the 2016 inquiry into Intellectual Property Arrangements.⁶

Australian Consumer Law

As discussed above, patent or copyright owners may seek to impose restrictions on product use via contract with the purchaser in EULAs or other agreements. The Productivity Commission is looking into whether the Australian Consumer Law sufficiently safeguards consumers and whether stronger consumer protection under the Australian Consumer Law is required.

Balancing act

As identified in the issues paper⁷, any proposals for reform in relation to identified intellectual property related repair barriers must be considered in light of the potential impact on the broader community. All proposals must be balanced with the rationale of the intellectual property framework to afford manufacturers protection for their proprietary information so as to provide ‘”opportunities to creators of new and valuable knowledge to secure sufficient returns to motivate their initial endeavours or investment”⁸ and to encourage the continued development of innovations that benefit wider society.

Australia’s international treaty obligations must also be borne in mind. Nevertheless, within these parameters, the Productivity Commission has the opportunity to consider recommendations for reform that continue the path laid open by the High Court of Australia in Calidad, and which make it easier to repair and reuse products to reduce wasteful outcomes for consumers and society in general.

The next stage - watch this space

The draft report of the Productivity Commission is due for release in June 2021, following which submissions on the draft report may be filed before the final report is published in October 2021. We note that whilst the period for initial submissions closed on 1 February 2021, at the time of writing, the submissions continue to be uploaded to the Productivity Commission website from stakeholders representing all viewpoints, indicating the importance of the issues around ‘right to repair’. Given both the intellectual property and wider societal considerations at stake, we await the draft report with keen interest.