The Australian innovation patent system is currently the subject of two federal government directed reviews. In February 2011, the government commissioned the Advisory Council on Intellectual Property (ACIP) to improve the effectiveness of the innovation patent system. This review is nearing completion.

Additionally, IP Australia (the Australian Patent Office) has also proposed a major overhaul of the system which is likely to render much of the ACIP review obsolete. More significantly, there are substantial concerns within the IP user community that the IP Australia proposal will render the innovation patent system ineffective.

The innovation patent system was introduced in 2001 to replace the prior petty patent system. Key objectives of the new “second tier” patent were to provide protection for minor or incremental innovation which would fill the gap between design registrations and standard patents. The primary beneficiaries of this new patent were to be Small and Medium Enterprises (SMEs) in Australia.

IP Australia’s proposal is set out in consultative paper – Innovation Patents – Raising the Step. The proposal is intended to reverse the current government’s policy of offering two types of patents – standard and innovation – with different inventive levels. As a result, all patentability requirements for innovation patents would be the same as for a standard patent. Justification for this about-face is that the current test for innovation is too low, allowing “obvious” enhancements to be patented.

Phillips Ormonde Fitzpatrick (POF) are of the view this approach will render the innovation patent system obsolete. Importantly, the system would no longer be able to satisfy its primary objective of stimulating innovation in Australian SMEs by enabling them to obtain intellectual property rights for their lower level inventions. Moreover, as Australian industry is suffering in difficult economic times, the support of the innovation patent system is more important than ever.

POF has been actively involved in the limited consultation process available with regards to the IP Australia proposal. Our view is that a clear distinction between the inventive threshold required for standard and innovation patents should be maintained. The current innovation step test could be adjusted to address the concerns it is too low whilst maintaining a separation from the inventive step test for standard patents. That would allow the innovation patent system to continue to meet its key objectives. It will also ensure that Australian’s patent regime remains comparable with many of our major trading partners which offer second tier patent protection.