Australia should remove the ability to patent software and allow consumers to circumvent geoblocking of services like Netflix, the Productivity Commission recommended today.

The commission today published a set of far-reaching draft recommendations to the government to redress the balance of intellectual rights away from rights holders and in favour of users.

Among its recommendations, the commission said Australians should be able to access online content in a timely and affordable manner.

Echoing the findings of both the Harper competition review and the parliamentary inquiry into IT pricing, the Productivity Commission said restrictions by rights holders were having the opposite effect and actually encouraging internet piracy.

Australians should have a legal right to circumvent geoblocking of services like Netflix under the Copyright Act, the commission said, arguing that improved access to content would be "the best antidote to copyright infringement".

Additionally, Australia should introduce a fair use exception to copyright law to replace the existing "fair dealing" provisions in order to fix the imbalance between Australian users and content creators, the Productivity Commission said.

The recommendation mirrors that made by the Australian Law Reform Commission in 2013, but argues further that the fair use exception would ensure copyright law only applies to works where infringement would undermine a rights holder's ability to commercially exploit their work.

"All other uses of the material should, by definition of the exception, be considered fair," the commission wrote.

The recommendation is unlikely to be taken up by the government; Attorney-General George Brandis has previously said he is "not persuaded" about such a clause.

The commission also said existing 70-year copyright terms were too long and should be reduced to 15-25 years after the creation of the original work.

Perpetual copyright of unpublished works should also be removed, the commission said.

Limit software patents

Australia's patent system similarly needs an overhaul, according to the commission.

It believes the system is poorly targeted, with some "inventions" bordering on trivial and being protected for too long.

This creates low quality patents, stymies competition, and frustrates efforts of follow-on innovators while raising costs for the entire nation, the commission argued.

Business methods and software should not be able to be patented, the commission said, as it discourages software innovation and provides strong incentives to block competitors and hinder software development.

Australia currently affords "excessive" patent protection to business methods and software, with terms longer than development cycles, it said.

The commission pointed to the open source movement as providing incentives to innovate and disseminate new software without the need for patent protections.

As copyright also covers software, the commission said this raises the question about whether multiple forms of intellectual property protection is needed for computer code.

It said excluding business methods and software from the patent system would bring Australia in line with other nations.

Improved enforcement access for smaller organisations

Australia's intellectual property rights enforcement system works well for large entities, but small to medium-sized enterprises need lower cost and informal alternatives to resolving disputes in court, the commission recommended.

Business deals that involve IP rights should also be subject to competition law. The current exemption of such deals is an outdated view, according to the commission.

The commission also criticised the government for entering into multi- and bilateral trade agreements that "substantially constrain Australia's domestic IP policy flexibility" and which are overly generous towards rights holders.

Better evidence and analysis is needed to avoid entering into agreements with IP provisions that run counter to Australia's best interests, the commission recommended.

As Australia "overwhelmingly" imports more IP than it exports, profits from excessive rights are flowing offshore, with the country's consumers and taxpayers picking up the tab, commissioner Karen Chester said in a statement.

The commission is now seeking submissions on its draft report, with a closing date of Friday, June 3 this year.