In June 2014, following a three year plus review process with a broad range of inputs, ACIP (the Advisory Council on Intellectual Property), published a “final” report on the effectiveness of the Australian innovation patent system.  Despite the results of its own economic research commissioned as part of that review, it was unable to come to any clear conclusions regarding retention or abolition of the system, and limited its recommendations to options for addressing concerns regarding the current low patentability threshold.

However, following publication of a more recent economic report prepared on behalf of IP Australia that attempts to assess the potential economic impacts of innovation patents, ACIP has taken the remarkable step of re-issuing their Final Report with a one page Corrigendum indicating that in light of this economic report the government should consider abolishing the innovation patent system.

As most will be aware, the Australian innovation patent system is a fast grant second tier patent system, that has a limited patent term, an option to defer examination and a reduced patentability threshold.  The question at the centre of these reviews is whether innovation patents achieve their original purpose which was to stimulate innovation in Australian SMEs by providing easier, quicker and cheaper rights as well as an avenue to protect their lower level inventions.

Most advisors would readily agree that the current innovation patent system does provide SMEs with more cost effective options for protection than the standard patent system, and at the same time provides an effective means for protecting lower level inventions. So why have ACIP made such a strong turnaround and is their position fully supported?

We don’t purport to be economic analysts, but it does seem that the data in the economic report is open to a number of alternative interpretations, and that inappropriate weight may have been given to various factors.  For example, the fact that there are a high level of self-filed innovation patent applications, clearly clouds the data relating to the ca lculated total regulatory cost of the system and the assessment of commercial success of innovation patent filing entities.  This obviously has an effect on the concluded net economic impact, which appears to have been a major factor influencing the revised stand being taken by ACIP.

Regardless of these concerns, the Australian Government is currently considering these reports to determine what, if anything, needs to be done with the current innovation patent system and when.

In the meantime, we believe these events signal a strong possibility that the innovation patent system in its current form may soon cease to be an option for our clients.

Final report

Economic report