Phasing out the innovation patent system

Article updated 14/02/2020

The Innovation Patent system was originally introduced in 2001 to provide a cheaper, more efficient way for small to medium-sized businesses to protect their intellectual property through the ‘innovative step’ test.  Innovation Patents protect those 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 (the Bill) will see the eventual phasing out of the Innovation Patent system in Australia.

The Bill was introduced into the Senate in July 2019, for the primary purpose of reviewing the Innovation Patent system.  An inquiry into the Bill found that only 17% of submissions supported removal of 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.  Notwithstanding this however, a Senate Committee has recommended that the Bill be passed into law.

Why change the innovation patent system?

The Senate 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 phasing out the system.

The introduction of an object clause

The Bill will see the introduction of an object clause into the Patents Act 1990 (Cth) (the Act), stating that its main object “is to provide a patent system in Australia that promotes economic wellbeing through technological innovation”.^[3]

The Senate Committee recommended an 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 wellbeing” would limit what could be patented and create uncertainty and complexity.

What this means for patent applications

After the Bill receives royal assent, no new innovation patents may be filed.  In the interim however, there are transitional provisions to maintain the rights of those existing Innovative Patents.  There are concerns the legislation 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, may introduce uncertainty and restrict patent eligible subject matter and make it harder for small to medium-sized businesses and other individuals to protect their intellectual property.

However, it is important to note that innovation patents may still be filed up until the date the legislation is passed.  The exact date is yet to be determined but is likely to be around mid-2021.  Even after the legislation takes effect, existing innovation patents will remain valid until their expiry 8 years after filing.  In addition, any pre-existing standard patents may still be converted into innovation patents or have a divisional innovation patent filed from it.

Takeaways

The phasing out of the Innovation Patent system will eventually restrict patent eligible subject matter and thus make it harder for small and medium-sized businesses to protect their intellectual property.  However, nothing will change until the legislation takes effect, so for the time being new innovation patents may still be filed.

Links and further references

Legislation

Patents Act 1990 (Cth)

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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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