The end of the innovation patent in Australia

The innovation patent system was originally introduced in 2001 to provide a cheaper, more efficient way for small to medium businesses to protect innovations through the introduction of the ‘innovative step’ test.  Innovation patents provide protection for inventions that do not meet the inventive step threshold required for standard patents.  However, the recent Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (Bill) will see the complete abolition of the innovation patent system in Australia.

Why revoke innovation patents?

The Bill was introduced into the Senate in July 2019, for the primary purpose of abolishing the innovation patent system.  An inquiry into the Bill found that only 17% of submissions supported abolishing the innovation patent.[1]  The majority of the opposition came from many small and medium-sized businesses and relevant industry groups, including the Australian Chamber of Commerce and Industry which represents around 300,000 Australian businesses.  Despite these objections, a Senate Committee has recommended that the Bill be passed into law.

The Committee proposed a number of reasons for removing the innovation patent system.  Firstly, there has been a perception that the current innovative step test, which requires “a substantial contribution to the working of the invention”,[2] was too low and therefore gave rise to an influx of innovation patents that were enforceable at law.  In addition, there was a perception that small and medium-sized businesses were not making use of the innovation patent system, and those who had were not acquiring benefits from it.  This appears to be the primary justification for its abolition.

The introduction of an object clause

The Bill will see the introduction of an object clause into the Patents Act 1990 (Cth) (Act), stating that its main object:

is to provide a patent system in Australia that promotes economic well being through technological innovation”.[3]

The Senate Committee recommended the objects clause with the aim of providing more targeted assistance to stimulate innovation in Australia.  In making its decision about the objects clause, the committee was of the view that an object clause would “provide a valuable statement of the overarching framework for the patent system to guide decision makers and the community”.[4]  Arguments that were raised against the introduction of an objects clause were that terms such as “technological innovation” and “economic well being” would limit what could be patented and create uncertainty and complexity.

What this means for patentability

The Government has now proposed amendments to the Act to abolish the innovation patent system, with appropriate transitional provisions to maintain the rights of those existing innovative patents.  After the Bill receives royal assent, no new innovation patents may be filed.  This is likely to occur from mid-2021.  There are concerns this will result in a narrowed patent eligible subject matter, particularly for innovations in the ICT and biotechnology fields.  This, combined with the introduction of an object clause, will introduce uncertainty and have the effect of restricting raising the bar and make it harder for small to medium-sized businesses and other individuals to protect their intellectual property.

Takeaways

The abolition of the innovation patent will raise the bar for innovators and thus make it harder for small and medium-sized businesses to patent their innovations.  That said, it will come as welcome relief for organisations that have been the subject of infringement proceedings where the threshold of inventiveness is so low.

Further references

Legislation

Patents Act 1990 (Cth)

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Further information

If you need assistance with protecting or enforcing your patent rights, please telephone me for an obligation free and confidential discussion.

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013
Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Senate Economics Legislation Committee report on the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019.

[2]  Dura-Post (Australia) Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81.

[3] Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 sch 1.

[4] Senate Economics Legislation Committee report on the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019.

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