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Innovation patents – the long goodbye

By Hayden Delaney and Jonathan Lewis / 20 April 2020
5 min.
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Worthwhile read for: Entrepreneurs, Business Owners, Product Developers

In February 2020 IP Australia announced that, after several stays of execution, the Australian innovation patent would be phased out. The announcement may have got lost with the sudden and dramatic onset of the COVID-19 crisis, so it is worth reviewing how we reached this point.

The beginning

Innovation patents were first introduced in 2001 as a “second-tier” form of patent protection to provide a relatively inexpensive mechanism for small to medium businesses to protect their intellectual property. An “innovative step” test was introduced, in which inventions that would have failed the inventive step test applied to standard (20 year) patents, could still potentially be protected using an innovation patent. As a trade-off for being relatively easy to obtain, innovation patents were given a term of eight years only.

How do they work?

Innovation patents are granted without being examined meaning that, in most instances, applicants are guaranteed to obtain a granted patent. However, a granted innovation patent cannot be enforced against infringers until it is examined and certified (a voluntary step).

The granting of innovation patents without examination left the system (and IP Australia) open to some derision when an innovation patent for a “circular transportation facilitation device” was granted in 2001. An image of the invention is shown below:


While this patent was quickly revoked to save further blushes for everyone involved, the process of granting innovation patents without examination was one of the factors that eventually led to the innovation patent’s untimely demise (more on that later).

Usage of the innovation patent

After a slow start of around 900 innovation patents filed in the first year of their existence (2001), use of the system has increased over the years with an average of roughly 2,000 innovation patents filed every year since 2015.

While providing a cheap alternative to standard patent protection, and also filling a gap between registered designs and standard patents, the innovation patent became known as an effective enforcement tool. With no inventive step requirement (making it relatively difficult to invalidate), and the same penalties for infringement as a standard patent, the innovation patent became a useful tool for patentees looking to enforce their rights.

Why phase out the innovation patent?

In 2014, the Advisory Council on Intellectual Property (ACIP) published a report recommending the abolition of the innovation patent. In the following years, momentum for this grew despite resistance from the patent attorney profession and many patent applicants and inventor groups. The rationale for abolishing the innovation patent was based on three perceived issues:

  1. the  low bar of the innovative step test means that enforceable rights for borderline patentable inventions could be obtained through the innovation patent system, thereby stifling competition;
  2. the innovation patent system is open to abuse through the granting of patents for “junk” inventions, with the patent for the wheel being one example. 

More specifically, it is believed that the ability to quickly and easily obtain granted innovation patents is being exploited in order to access Chinese government grants that become available when patents are granted outside China to Chinese applicants; and

  1. there is a low take-up of the innovation patent by the target audience (Australian SMEs). In 2014, it was reported that innovation patents made up only 5% of Australian patent filings and that only 623 out of over two million active Australian companies had filed an innovation patent in 2013.

The end is nigh

Whether or not these perceived issues were based in reality was a subject of much debate for many years. However, such arguments became academic when, in February 2020, parliament passed the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019, finally signing the death warrant for the innovation patent.

All is not lost for patent applicants, though, as applications for innovation patents will be accepted by IP Australia up to and including 25 August 2021. In addition, it will still be possible to convert standard patent applications to innovation patents provided that the standard patent application was filed on or before 25 August 2021.

Will the innovation patent be replaced with a different second-tier patent?

Not likely! After spending the best part of a decade agitating to abolish the innovation patent, the chances of IP Australia proposing a replacement system (at least in the short to medium term) are nil.

Takeaways

The innovation patent was not a perfect system. However, to abolish it based on (possibly overstated) reasons rather than attempting to provide a fix for the perceived issues feels like a heavy-handed overreaction. 

Nonetheless, as the likelihood of a further reprieve for the innovation patent is remote, patent applicants should now adjust to the reality that after 25 August 2021 it will be much more difficult to protect inventions that may struggle to meet the inventive step test applied to standard patent applications.

In the interim, patent applicants should ensure that they make full use of the innovation patent system to protect their intellectual property while the option is still available.

For further information or discussion, please contact a member of our Intellectual Property team. 
 

Authors
Hayden Delaney
Partner
Hayden is a Partner and he leads HopgoodGanim’s Intellectual Property and Technology team. Hayden specialises in the information, communications and technology sector, and intellectual property law.
Jonathan Lewis
Director Patents
Jonathan is a Director of our Patents practice and is a registered Patent Attorney.

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