What happened? 

On 26 February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 came into force (the Act). Among other things, the Act amends the Patents Act 1990 (Cth) with the effect of phasing out and ultimately "abolishing" the Australian innovation patent system.

What are innovation patents? 

Innovation patents provide relatively quick and inexpensive short-term protection for inventions that do not meet the inventiveness threshold required for standard patents.

To obtain an innovation patent, the invention must involve an "innovative" step, in the sense of making a substantial contribution to the working of the invention. This is a lower threshold than the requirement for an "inventive" step, or lack of obviousness, in respect of standard patents. Further, innovation patents are limited to 5 claims and the maximum duration of protection is 8 years, rather than the usual 20 year term for standard patents.

The innovation patent system was implemented in 2001 to replace the previous petty patent system. At the time, the Advisory Council on Industrial Property (ACIP) considered that the petty patent system, which had an inventiveness threshold the same as that for standard patents, was not meeting the needs of Australian businesses for protection of "lower level" inventions. It was thought that the innovation patent system would encourage and stimulate innovation by providing a means through which Small to Medium Enterprises (SMEs) could protect inventions in which they had made an investment.

Why is the innovation patent system being abolished?

Recommendations in relation to abolishing innovation patents have been made by ACIP (in 2015) and by the Productivity Commission's Inquiry Report on IP Arrangements in 2016. Most recently, the Productivity Commission concluded that:

  • the low threshold of innovative step contributes to a multitude of low value patents which can be used strategically and are more likely to impose costs on the community rather than benefit innovation; and
  • abolishing the system would deliver greater benefits for the community by simplifying the patent system, reducing costs and removing the ability for patent holders to use the system strategically. Innovative and socially valuable ideas protected under the innovation patent system (i.e. those that are a benefit to the community) would receive protection under the standard patent system.

The Government agreed with this conclusion in its response to the report dated August 2017, finding that neither SMEs nor the Australian community at large benefited from the system and that it would explore other ways of better assisting SMEs to secure and leverage their IP rights.

What is the effect of the Act?

The Act imposes a requirement that innovation patent applications filed on or after the commencement date of the amendments must have a date of patent, and a priority date for each claim, that is earlier than the commencement date. IP Australia states that the commencement date in this case is 26 August 2021. As a result:

  • prospective applicants have until 25 August 2021 to file new standalone innovation patent applications;
  • innovation patent applications may continue to be filed from 26 August 2021 if they are divisional applications based on parent applications filed on or before 25 August 2021; and
  • standard patent applications may be converted to innovation patent applications from 26 August 2021 if the standard patent application was filed on or before 25 August 2021.