In July 2019, IP Australia announced a Bill[1] which phases out the innovation patent system. This Bill is currently being considered by Parliament, marking the start of the legislative process that will likely remove this useful form of patent filing from Australian practice. However, there is still a window in which Innovation patents can be filed, and we encourage you to take action while it’s still available.

Once enacted, the Bill will prevent the filing of new innovation applications 12 months after it receives royal assent. Any rights from existing innovation patent filings will be maintained until their natural expiry date ensuring that existing rights-holders are not disadvantaged.

Types of Australian patents

The Australian patent system provides for the filing of “standard” and “innovation” patent applications. Innovation patents are a second tier patent filing system which has a lower innovative step threshold in place of the inventive step applied to standard patents.

Innovation patents can be granted quickly, typically within one month of filing. Quick grant is because innovation patent applications are not subject to substantive prior art searches or examination before patent grant. However, there are a number of limitations compared to standard patents. An innovation patent has a maximum term of eight years, is only permitted to contain five claims defining the invention, and can only be enforced after passing an optional post grant certification examination process. These features have allowed many applicants to use innovation patents as an economic option for quickly obtaining effective protection to either supplement any main patent grant or, if that main patent should be found to be invalid, to recover at least some form patent protection for the invention. Innovation patents are also a valuable litigation tool offering the same remedies for infringement as a standard patent but with a lower validity threshold.

Committee recommendations

Despite these advantages, at least two legislative review committees recommended that the innovation patent system be abolished. It was found that most small and medium enterprises gain no value from the innovation patent, or have not used the system effectively (i.e. have never obtained any enforceable rights, have allowed their right to lapse at the earliest opportunity, have never used the system again, and are less likely than others to utilise the IP system afterwards). It was also argued that the system is heavily used by foreign and multinational firms and is being used for undesirable strategic purposes by large companies, causing uncertainty in the marketplace.

The latest report prepared by the Productivity Commission (2016) concluded that the costs of the innovation patent to the economy outweigh the benefits and that the system imposes a net cost on Australia. As a result it’s recommended that the system be abolished. This conclusion was accepted by the Australian Government.