The innovation patent is unique to Australia and is a powerful tool for patentees. Over the last three years, the Federal Government has initiated two significant reviews of the innovation patent system which threaten to water down the value and muscle of an innovation patent.

Both reviews are a response to concerns that the current system is detrimental to innovation and is being abused by patentees.

However, existing research and feedback suggests the innovation patent system encourages innovation and provides Australian SMEs with a platform to develop and market incremental inventions.[1] 

There is no convincing evidence that the system is being abused or is stifling innovation.  Therefore, any reform should be targeted at meaningfully addressing genuine pitfalls of the system, rather than unnecessarily overhauling it or limiting its application. 

Why is the innovation patent such a valuable tool?

Although many other jurisdictions (e.g., Japan, Singapore, Germany) also have second tier patent systems, most do not offer the remedies and breadth of protection provided by the innovation patent.

  1. Coverage.  You can obtain an innovation patent for almost all subject matter for which standard patents may be granted, including processes and computer-implemented methods.[2] 
  2. Lower standard of inventiveness.  An invention is to be taken to involve an innovative step when compared to the prior art base unless the invention would only vary from the prior art in ways that make no substantial contribution to the working of the invention.  As this standard is considerably lower than the inventive step standard, the innovation patent is easier to obtain and more difficult to invalidate. 
  3. Full gamut of remedies available.  The remedies available for a certified innovation patent are the same as those available for a standard patent. 
  4. Cost-effective and flexible.  An innovation patent can be obtained inexpensively in just 1 – 2 months as no substantive examination is required before grant. 
  5. Strategic use.  You can file a divisional application for an innovation patent from a standard patent application (up until three months after acceptance of the standard application) which allows you to enforce your rights in the invention even whilst a standard patent application remains pending.

Snapshot of the ACIP and IP Australia reviews

The two reviews (by the Advisory Council on Intellectual Property and IP Australia) each question the effectiveness of the innovation patent system and put forward options that would diminish (in varying degrees) the scope of the system. 

The ACIP’s review is the more comprehensive of the two and it has proposed the following main reforms:

  1. Raise the threshold of innovation;
  2. Reduce the remedies available (e.g. remove the ability to seek an injunction);
  3. Limit the monopoly available (e.g. to a single embodiment disclosed in the specification as filed);
  4. Limit the scope (e.g. remove computer software and pharmaceuticals from available subject matter);
  5. Change the grant process (e.g. make certification (examination) compulsory); and
  6. Limit access to the innovation system (e.g. make it available only to Australian individuals or SMEs).

The IP Australia review considered raising the inventiveness threshold for innovation patents to the same as that for a standard patent. 

What is really the key pitfall of the current system?

Currently the innovation threshold is too low.  Innovation patents may be granted for any substantial contribution to the working of the invention, regardless of whether the contribution was obvious.  Accordingly, the threshold can result in the Patent Office granting innovation patents for unworthy contributions that are then very difficult to invalidate.  Therefore, carefully raising the innovation threshold makes sense. 

However, raising the innovation threshold to the same as that of the standard patent would render the innovation patent futile.  The challenge is therefore to raise the standard high enough to preclude undeserving applications while still ensuring the protection of worthy incremental inventions.

A way of achieving this balance could be to set the innovative step test against the backdrop of the common general knowledge in the field. 

Currently, the comparison between the claimed invention and the prior art information is conducted in isolation from the body of common general knowledge.  A new test could require that the comparison between the claimed invention and the prior art information must be undertaken in light of the common general knowledge.  Such a test would expand the prior art base by which the innovative step is tested, and thereby greatly assist in stopping minor enhancements to an invention from being patented.    

The other reform options proposed would either take away from the current value and utility of the system or unfairly disadvantage specific industries. 

Is reform likely?

Whether the recently elected Coalition Government will prioritise a reform to the innovation patent system is yet to be revealed.  However, the Coalition may be less inclined than the previous Labour Government to radically change the system given that the innovation patent system was brought in under the Howard Government for the benefit of SMEs. 

If the Government does persist with reform, it would be prudent to wait until it can assess how the new Raising the Bar reforms play out, then tackle the challenge of carefully raising the innovation threshold.