The Innovation Patent System was introduced in Australia in 2000, with the aim of stimulating innovation by providing Australian small and medium sized businesses with a mechanism for protecting low level inventions. Additional aims of the Innovation Patent System were to make obtaining protection cheaper and quicker than a Standard Patent.
In February 2011, the Australian Government instructed the Australian Government Advisory Council of Intellectual Property (ACIP) to investigate whether the Innovation Patent System, as it stands, is meeting its original objectives or whether reform of the System is required. The review of the Innovation Patent System was initiated, in part, in response to perceptions that the Innovation Patent provides a monopoly to the owner that is too generous at the expense of competition.
ACIP first released an Issues Paper in August 2011 to garner public feedback. An Options Paper was released in August 2013 setting out a range of options for reform and seeking further public input.
Three options being considered by ACIP
The Options Paper released by ACIP in August 2013 suggested three options as possible courses of action for dealing with the Innovation Patent System.
Option 1: no change
The recently enacted 'Raising the Bar' legislation has already made some significant changes to the Innovation Patent System. This included broadening the prior art base against which the innovativeness of the invention is considered, and raising the burden of proof for patentee's to establish the validity of their invention during examination before the Patent Office.
A first option suggested by ACIP is to make no changes to the Innovation Patent System and to wait and see if the changes brought about by the 'Raising the Bar' legislation have an impact. Also, feedback obtained by ACIP from small and medium sized businesses in relation to the current Innovation Patent System has been generally positive.
Option 2: abolish the Innovation Patent System
A second option suggested by ACIP is to abolish the Innovation Patent System altogether. Arguments for abolishing the Innovation Patent System discussed by ACIP include:
- Innovation Patent Applications represent only about 5% of the total number of Patent Applications filed in Australia each year and abolishing the Innovation Patent would not lead to a significant reduction in patent filings in Australia.
- Large companies comprise an increasing proportion of the users of the Innovation Patent System, in some instances for strategic litigation purposes, suggesting that the Innovation Patent System is not achieving its intended purpose which is to encourage innovation by small and medium sized business.
- There is a perception that a significant proportion of uncertified Innovation Patents are of poor quality and this devalues Australia's Patent system.
- Low level patents, such as the Innovation Patent, may be out of favour internationally and the United Kingdom recently determined not to introduce a lower level Patent system on the basis that it would increase business costs and stunt future innovation.
- The Innovation Patent System is unique to Australia and does not encourage Australian innovators to focus on international opportunities.
Option 3: reform the Innovation Patent System
A third option, and perhaps the most likely option that will be adopted by ACIP in its recommendations to the Australian Government, is to reform the Innovation Patent System.
Raising the innovative step threshold
The innovation patent system provides an eight-year monopoly and equal remedies to a Standard Patent for 'innovations' that have a very low level of innovation and would not qualify for protection by a Standard Patent. It is apparent from the Options Paper that ACIP believes that the level of innovation required for an Innovation Patent is too low.
The full Federal Court of Australia in Dura- Post (Australia Pty Ltd) v Delnorth Pty Ltd1 considered the innovative step requirement of the Innovation Patent System. In that decision, the court had to determine whether the use of spring steel in the manufacture of road side posts, as opposed to the use of PVC plastic as in the prior art, involved an innovative step. The Federal Court found that the use of spring steel, rather than plastic, was sufficient as the nature of the materials were quite different and the use of spring steel made a substantial contribution to the working of the invention, namely to make the posts elastically bendable. It is quite possible that had the patent in suit been a Standard Patent, the use of spring steel in the invention may have been considered obvious and the Patent invalid.
There is concern that, following the decision in Dura-Post, the Australian Innovation Patent System is increasingly being used by foreign Applicants and Australian companies for tactical purposes or as a litigation tool in relation to higher level inventions, rather than in relation to attempts to protect lower level inventions. The very low level of innovation required for an invention to qualify for a valid Innovation Patent makes it virtually impossible for an infringer to invalidate an Innovation Patent for lack of an innovative step. There is also concern that the Innovation Patent is being used to build 'patent thickets' around successful inventions. This involves filing multiple Innovation Patents, including Divisional Innovation Patents, for minor variants of the main invention. A third party needs to challenge each of the Innovation Patents as well as, perhaps, an original Standard Patent in order to enter a market.
One area of reform being considered is to raise the level of innovation required for an Innovation Patent. Some options for a new innovative step threshold include:
- 'Not Clearly Obvious' – one option that was suggested was to introduce a threshold test that an invention must not clearly be obvious. However, concerns were raised as to whether this would result in a test that is practically no different to the test that applies to the Standard Patent.
- 'Substantial Contribution to the Working of the Prior Art' – this proposal was put forward by a number of Legal Professional organisations as being the test that the legislation originally intended. ACIP raised concerns about how such a test would differ from the test which currently applies.
- 'Inventive Step under Patents Act 1952' – another proposal put forward is to adopt the inventive step test which applied under the Patents Act 1952 where obviousness of an invention was determined in light of the common knowledge in Australia only. ACIP identified some advantages with this option including the availability of case law which developed while that test prevailed.
Other suggestions for reform include reducing the remedies for infringement of an Innovation Patent, restricting the monopoly of an Innovation Patent to a single embodiment disclosed in the specification of the Patent as filed, or only granting Innovation Patents to individuals and small and medium businesses.
ACIP raised the possibility of excluding methods, processes, chemical compositions, pharmaceuticals and software inventions from being protected by the Innovation Patent System. Such a proposal would no doubt be controversial were it to be proposed.
The deadline for submissions on the Options Paper closed on 5 October 2013. ACIP's final report to the Australian Government is to be provided in late 2013. It appears that a likely outcome will be a recommendation to reform the Innovation Patent System to at least raise the innovation threshold.
ACIP does not appear to favour options for restricting the filing of Innovation Patent Applications as divisionals to reduce the use of the innovation patent to create 'patent thickets'. Nor does ACIP appear to favour adopting compulsory examination of innovation patents. Accordingly, it seems likely there will be no recommendations for reform that would substantially reduce uncertainty arising from 'patent thickets' and non-compulsory examination of innovation patents.
1Dura-Post (Australia) Pty Ltd v Delnorth Pty Ltd  FCAFC 81 (30 June 2009)
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