Ten years after its introduction, Australia's unique innovation patent system is under review. On 17 August, the Advisory Council on Intellectual Property (ACIP) published an issues paper, "Review of the Innovation Patent System". The closing date for submissions is 14 October 2011.
What is an innovation patent?
Innovation patents provide a means of patent protection for a maximum term of eight years (compared to a maximum term of 20 years for standard patents other than standard pharmaceutical patents) for inventions that do not meet the inventive threshold necessary for a standard patent.
As the Issues Paper states:
"The objective of the innovation patent system is to stimulate innovation in Australian small to medium business enterprises (SMEs) by providing IP rights for lower level inventions. The innovation patent system requires a lower degree of inventiveness (innovative step) than a standard patent so as to provide protection for lower level inventions."
How has the innovation patents system worked so far?
In the 10 years since their introduction, 11,287 innovation patents have been granted. Of these, only 1,790 have been certified. In each case, the vast majority have been to Australian applicants, in contrast to standard patents, the vast majority of which are granted to foreign applicants.
During this period, the Federal Court of Australia has issued 27 decisions, and the Full Court of the Federal Court of Australia has issued 11 decision, relating to innovation patents, of which, only two decisions from each court have related to the innovative step requirement unique to the innovation patent. Those courts have held that the innovative step requirement is satisfied if the difference between the patented invention and the prior art makes a substantial contribution to the working of the invention, irrespective of whether that difference is minor or obvious.
This lower degree of inventiveness required to satisfy the innovative step requirement for an innovation patent is to be contrasted with the higher degree of inventiveness already required for standard patents, which is currently being raised by the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 to a standard more consistent with that required in the patent systems of Australia's major trading partners.
What is ACIP looking at in its review of innovation patents?
It is against this backdrop that the ACIP review is being undertaken, with the Issues Paper referring to a number of concerns that have been raised about the relevance and operation of the innovation patent system in recent years, including:
"One of the key concerns is that the innovation patent is overly generous given that it has a lower inventive threshold and the same remedies against infringement as a standard patent. Another concern is that some applicants are using the innovation patent system for tactical purposes regarding higher-level inventions rather than as attempts to protect lower-level inventions. An applicant for a pending standard patent retains the opportunity to file as many divisional innovation patents as they see fit (up until the point where the limited term of innovation patents prevents further filing). This means that a person accused of infringement may find themselves initially defending proceedings for infringement of a first patent, and subsequently see the proceedings amended to include another innovation patent drafted to address the weaknesses of the first patent that have been identified in the proceedings and so on."
ACIP seeks submissions in response to the Issues Paper in general, but posits a number of specific questions (which we paraphrase below) to which it seeks responses:
- Is the innovation patent system a useful and appropriate means to stimulate innovation by Australian SMEs?
- Is the objective of seeking IP rights for low-level inventions still the main reason that inventors file innovation patents?
- Is the cost of obtaining the grant or the certification of an innovation patent a consideration in seeking either?
- How do people in other jurisdictions perceive innovations patents?
- How do people's experiences dealing with other countries' second-tier protection for inventions compare to their experiences with innovation patents?
- Are there concerns about the uncertainty arising from the delays in getting certification?
- Are the current remedies for infringement of an innovation patent, which are the same as those for a standard patent, appropriate?
- If the available remedies for infringement of an innovation patent were reduced (eg. they no longer included injunctive relief) would the costs of obtaining an innovation patent be justified?
- What are people's experiences in dealing with divisional innovation patents?
- Are people aware that applications for standard patents can be converted into innovation patents?
- Should innovation patents be unavailable for computer software?
- Should innovation patents be unavailable for chemical or pharmaceutical compositions?
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 Unlike standard patents, innovation patents are granted without substantive examination. If examination is directed by the Commissioner of Patents or requested by the applicant or a third party and the application meets the requirements of examination it will be certified. If it does not meet those requirements, it will be revoked.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.