IP Australia has issued a consultation paper on innovation patents. Once submissions have been considered, IP Australia will make recommendations to the government regarding changes to the Patents Act.
The main proposal of the consultation paper is to raise the threshold for inventiveness to the same level as for standard patents.
The proposed change would bring about a fundamental limitation to the role of the innovation patent system. The proposed changes would not, however, affect innovation patents already filed before the change.
The Australian innovation patent system was introduced in 2001, replacing the earlier petty patent system. An identified purpose of the innovation patent system was to enable protection of functional or incremental innovations that were not sufficiently inventive to be granted a standard patent, but which could not be protected under the design system, which protects only the appearance of a product.
The main differences between standard and innovation patents are:
• Standard patents must involve an ‘inventive step’. Innovation patents have a lower patentability threshold involving an ‘innovative step’, which is discussed below.
• Innovation patents have a term of 8 years in contrast to the maximum term of 20 years for a standard patent.
• Unlike standard patents, innovation patents are granted almost immediately without substantive examination. An innovation patent is not enforceable until it has been substantively examined and certified. This is an optional step and there is no obligation to request substantive examination.
• Innovation patents are limited to 5 claims.
Statistics published by IP Australia indicate that 11,902 innovation patents were filed between 2001 and 2011, representing about 4.5% of the total patent filings during the same period.
A standard patent must involve an inventive step. This involves testing whether the invention would have been obvious when compared with the prior art base. In contrast, an invention is taken to involve an innovative step when compared with the prior art base if the invention varies from the prior art in ways that make a ‘substantial contribution to the working of the invention’.
This test has been considered in several court cases, including Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd  FCA 1225. The case law indicates that the requirement for an innovative step is not onerous. The consultation paper voices two concerns, firstly that innovation patents are being granted for enhancements which are obvious. Another stated concern is that applicants are using innovation patents to obtain quick protection for high level patents that would ordinarily be the subject of a standard patent application.
IP Australia has proposed that the Patents Act be amended to replace the ‘innovative step’ requirement with an ‘inventive step’ requirement. If this proposal were to be implemented, the familiar obviousness enquiries would be applicable to innovation patents.
The closing date for submissions regarding the consultation paper is Thursday, 25 October 2012. Once the submissions have been considered, IP Australia will make recommendations to the government on the way forward. IP Australia sees the proposed changes as a short term goal.
In February 2011, the Advisory Council on Intellectual Property (ACIP) commenced a review of the innovation patent system as a whole. It is clear from the consultation paper that IP Australia sees a pressing need for policy reform. Consequently their proposed amendments are being pursued in advance of the ACIP review. This is surprising, as ACIP expects to soon release an interim report and to complete a final report in mid-2013.
We will continue to monitor developments. However, if the proposed amendments are presented to parliament and enacted as law, it is not clear what practical function or benefit the innovation patent system would provide in comparison with the standard patent system. One possible function would be for an applicant to file a patent application where there was no intention of having the application substantively examined. However, if the applicant then ever wished to enforce the property rights, it would be necessary to have the patent examined, and this would involve the same patentability thresholds as a standard patent.