The recent moves by the Australian Government to abandon the innovation patent system has raised concern amongst SMEs and the innovation industry.

The innovation patent system provides many advantages to Australian SME’s and individuals, being a low cost way to obtain intellectual property protection for new innovations. The cost for obtaining what is known as a “standard” patent in Australia is generally significantly higher, given the need for a patent specification to be prepared describing the invention, and examination processes by IP Australia before grant.

Seeking innovation patent protection avoids many of the costs associated with standard patent protection. An innovation patent application is granted without the need for any substantive examination by IP Australia. It is then possible to obtain a granted innovation patent number relatively quickly, and this number can be quoted in sales literature relating to that innovation. It is only necessary to have the innovation patent examined if the innovation patent needs to be enforced.

The examination sets a lower threshold of invention known as an “innovative step”. This makes it easier to obtain a certification of the innovation patent to allow it to be enforced before the Federal Court. This is because it is only necessary to show that the invention provides a substantial contribution over earlier existing and known technologies. The only significant disadvantage is that the patent monopoly during which you can enforce the innovation patent is limited to 8 years, compared with 20 years for a standard patent. That may not be an issue if the patented product only has a limited commercial life (i.e., such as the fidget spinner toy that was popular for a short time).

With all of these advantages, why were there moves to abandon this system?

The Australian Productivity Commission’s (PC) review of Australia’s intellectual property protection regimes recommended that the innovation patent system be abolished due to:

a) Uncertainty for Australian businesses because it was not known if an innovation patent could ever be enforced. As most innovation patents are not examined, businesses in manufacturing or products that may fall within the scope of an unexamined innovation patent would not be sure if they would be liable to infringement action should that patent be certified.

b) The innovation patent system was open to abuse by patent owners seeking to obtain substantial damages retrospectively from competitors. It is possible to file a ‘divisional’ innovation patent application from a pending standard patent application. This provided a means for applicants of a standard patent application to initiate infringement actions earlier against a competitor by filing a divisional innovation patent application. The claims could then be more broadly drafted to better encompass the competitors product which would be more likely to be accepted under the less rigorous requirements for obtaining a certified innovation patent.

c) Another concern was the extensive use of the innovation patent system by Chinese applicants. It is known that many Chinese provincial governments provided monetary incentives to local businesses that obtained granted patents in China and overseas. This led to a flood of innovation patents being filed by Chinese applicants to obtain granted Australian innovation patents. These innovation patents would then clog the Australian Patent Register, while only being of questionable value. However, recent filing data provided by IP Australia showed that there has been a significant reduction in the number of Chinese applicants filing patents in Australia in 2017, so this does not appear to be a serious concern.

The PC recommended that the Australian innovation patent system be abandoned, and draft amendments were prepared to the Patents Act (Cth) to allow this to occur. These provisions were however omitted from the bill recently presented to Parliament as further public consultation was required before making such a change to the Australian intellectual property laws. It is also likely that it was politically expedient to remove these provisions to avoid potential blocking of the bill.

So the innovation patent system survives for the moment, at least. As this issue is most certainly low on the agenda of the current Government, it is unlikely any further action will be taken in the near future to abandon the innovation patent system.