Abolition of the Australian Innovation Patent?

Date: 2015-08-13
Authors: John Dower & Stuart Irvine

The Australian patent system currently provides for two different patent rights: standard patents and innovation patents. In May this year Australia’s Advisory Council on Intellectual Property (ACIP) released a statement recommending that the Government should consider abolishing innovation patents.

In the wake of this statement IP Australia has released a consultation paper seeking views on ACIP’s recommendation, with submissions closing on 28 September 2015.

The innovation patent system

Innovation patents were introduced in Australia in 2001. The goal of innovation patents was to provide shorter-term protection for lower level inventions and in doing so stimulate innovation in Australian SMEs.

Procedural considerations aside, the main differences between standard and innovation patents relate to validity and term.

In order to be valid a standard patent needs to satisfy an inventive step test – in essence a requirement that the claimed invention would not have been obvious. The corresponding requirement for an innovation patent is the “innovative step” test – a test that replaces considerations of inventive merit with a requirement that differences over the prior art provide a “substantial contribution to the working of the invention”.

The trade-off for the lower validity standard applied to innovation patents is term: innovation patents have a maximum term of 8 years when compared to standard patents which have a maximum term of 20 years.

ACIP’s review

In 2011 ACIP was asked to conduct a review of the innovation patent system. ACIP published its “final” report in June 2014 (here).

In its final report, ACIP’s findings with respect to the innovation patent system were largely inconclusive. ACIP reported that:

  • There was insufficient evidence to assess the value of the innovation patent system to Australian innovators.
  • It was not possible to recommend retention or abolition of the innovation patent system.
  • If it was to be retained, there was sufficient evidence to support changing the innovation patent system. Recommendations in this regard were to raise the innovative step threshold and to require examination on the merits of innovation patents within a limited time period.

Following ACIP’s 2014 report, IP Australia’s Office of the Chief Economist released a report on “The Economic Impact of Innovation Patents” (here). In the Economic Impact Report, IP Australia stated that its analysis of the evidence suggests doubt as to whether the innovation patent system is meeting its policy objectives, and that the majority of SMEs gain little value from the innovation patent system.

The accuracy of the evidence and the methodology used to evaluate it has given rise to a number of concerns.

ACIP was abolished in April 2015, but was subsequently permitted to release a revised recommendation in May 2015 based on the report (see the corrigendum here). In summary, ACIP’s revised recommendation is that “the Government should therefore consider abolishing the system”, the basis being that ACIP now considers it likely that the innovation patent is not achieving the objective of stimulating innovation among SMEs.

Call for submissions

IP Australia has called for submissions regarding the innovation patent system (here). Specifically, IP Australia has requested input on:

  • the recommendation to abolish the innovation patent system; and
  • any potential alternatives for encouraging innovation amongst SMEs.

Submissions close on 28 September 2015. All interested parties, and in particular SMEs affected by the proposal, are encouraged to respond.