What the Australian Government's response to the Productivity Commission inquiry into the IP system could mean for patents.

The Australian Government’s response to the Productivity Commission Inquiry into Intellectual Property Arrangements has been released.

While much of the more extreme recommendations of the Productivity Commission have essentially been ignored, including those in relation to patent term extensions for pharmaceuticals, the Government has indicated that it will seek amendments to the Patents Act 1990.

The end of innovation patents and the (potential) rise of pre-grant oppositions in Australia

The Government supports the Productivity Commission’s recommendation to abolish the innovation patent system and will seek amendments to the Patents Act 1990 accordingly, with appropriate arrangements to maintain existing rights.

IP Australia will be conducting further consultation before any changes come into effect, but the tenor of the Government’s response suggests that it is now a question of when, and not if, the innovation patent system will be discontinued.

Divisional innovation patents are sometimes used as a litigation tool in order to, among other things, short circuit the enforcement delay associated with the pre‑grant opposition procedure for standard Australian patents. Once innovation patents are abolished and the innovation patent litigation option is no longer available, pre‑grant opposition proceedings will likely play a more significant role in the strategies of patentees and challengers.

As we have previously reported here, Australia’s patent opposition procedure provides a useful and typically lower-cost alternative to revocation proceedings for challenging validity that will be heard and determined by a technically qualified Hearing Officer trained in patent law.

It is important to note that it is still possible to file innovation patent applications. However, if you're considering filing an innovation patent application, you should act now.

Object Clause

The Government response supports the recommendation to insert an objects clause into the Patents Act 1990.

The purpose of an objects clause is to provide a clear statement of legislative intent for the guidance of the courts in the interpretation of the Act. The government will introduce amendments to this effect, but will give further consideration to the exact wording of the objects clause. The implementing legislation will be the subject of further consultation.

Inventive Step

The response supports further amendment to subsections 7(2) and (3) to "raise the bar" higher in relation to inventive step. At this stage we are not aware of the proposed language, but the relatively recent change to these sections of the Patents Act 1990 saw the bar raised for inventive step.

Previously, subsection 7(2) stated that an invention involved an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claims, whether that knowledge is considered separately or together with the information mentioned in subsection 7(3).

Subsection 7(3) stated that the information for the purposes of subsection (2) was (a) any single piece of prior art information; or (b) a combination of any two or more pieces of prior art information; being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.

In 2013 the Patents Act 1990 was amended to “raise the bar” and section 7 was amended to remove any geographical limitation on the common general knowledge and by doing away with the requirement for a prior art document to be one that the skilled person could be reasonably expected to have “ascertained”. Specifically, these sections were amended as follows:

(2) an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed (whether in or out of the patent area) before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).

(3) The information for the purposes of subsection (2) is:

(a) any single piece of prior art information; or

(b) a combination of any 2 or more pieces of prior art information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have combined.

The view of many patent professionals is that the geographical amendment has so far had little impact in practice as many documents are “globally” available anyway, for example, available online. The removal of the "ascertained" requirement has also had little impact in most cases, although it depends upon the particular circumstances of the case at hand.

The Government has stated that bringing section 7 more in line with European practice is envisaged. The effect of this change might be more substantial, but we need to await the actual proposed amendment before commenting further.

Technical Features

The Government intends to amend the Patents Act 1990 to introduce a requirement that only the technical features of a claim are considered for the purposes of inventive step and novelty.

This amendment is again seen to be in line with the approach in Europe and is designed to avoid a claim directed to a collection of technical and non-technical integers being seen as inventive when only the non-technical features are new. This amendment is more directed towards business method type patents and/or methods of analysis that simply use known technical means to implement an idea that in substance is non-technical.