The Australian Innovation Patent – Not Quite Dead Yet!

Take-home Messages

• An innovation patent provides the same rights and remedies as a standard Australian patent but is subject to a lower inventiveness threshold – making it a potentially effective litigation tool. The innovation patent has a maximum term of eight years and is limited to 5 claims.
• Although new innovation patent filings ended in 2021, an innovation patent can still be obtained as a divisional of a pending standard patent application having an effective filing date of 25 August 2021 or earlier.
• If patent enforcement litigation is on the horizon, consider keeping a standard patent application alive for families with an effective filing date of 25 August 2021 or earlier. This preserves the option to file a divisional innovation patent – noting its maximum term is eight years from the effective filing date.

Why This Still Matters

I recently attended the 2025 annual conference of the Intellectual Property Society of Australia and New Zealand (IPSANZ) and on the first day several table topics were convened to discuss various aspects of IP law.

One of the table topics was "What, if anything, could or should replace innovation patents?". It was a great discussion, but it got me thinking, yes – the innovation patent is being killed off – but on the other hand the phase out provisions are surprisingly generous. These provisions essentially preserve the ability to file an innovation patent application as a divisional application, as long as that divisional innovation patent application would have an effective filing date of 25 August 2021 or earlier.

Given the strategic "power" of an innovation patent, here is a practical overview of what options remain available to employ this highly effective intellectual property right before its eventual full demise.

The Innovation Patent in a Nutshell

The Australian innovation patent was introduced in 2001 and was intended to provide a lower cost second tier patent tailored for SMEs to encourage them to protect incremental inventions.

Key features:

• Limited to five claims.
• Maximum term of eight years.
• Automatically "granted" upon application following a formalities check, but enforcement requires certification following substantive examination. Crucially, the rights and remedies are the same as for a standard patent and in practice they became a formidable tool in patent litigation.

Innovative Step – The Low Bar

Unlike standard patents where a claimed invention must involve an "inventive step", an innovation patent need only involve an "innovative step". The framers of the innovation patent had originally intended that the "innovative step" should require less inventiveness than an inventive step but be at a level greater than novelty.

It was not until the 2008 landmark decision of Gyles J in Delnorth¹, that there was judicial consideration of the "innovative step" requirement.

In Delnorth, a three step approach to this assessment was adopted involving:

1. comparing the invention as claimed with the prior art to determine any difference;
2. assessing the differences through the eyes of a person skilled in the art at the priority date of the claim; and
3. asking whether the difference makes a substantial contribution to the working of the invention.

Critically, this test involved no consideration of whether the difference identified at step 1 is obvious or forms part of the common general knowledge. In fact, the patents in Delnorth concerned flexible spring steel posts, and well known features such as a marker hole were held to confer an innovative step. Delnorth was affirmed on appeal², and it became clear that the test for an innovative step was much closer to a novelty assessment then had been originally intended.

It didn't take long before the innovation patent was being wielded as an extremely effective tool in litigation, effectively functioning as a novelty patent. This made validity challenges very difficult unless knock out novelty destroying prior art could be identified.

The "Mothership" Strategy Explained

Litigators soon realised they could divide out multiple innovation patents from a pending standard patent application – and deploy them tactically.

This occurred in Delnorth, where infringement proceedings commenced based on a first divisional innovation patent and then a further two divisional innovation patents were added to the proceedings to deal with issues that arose prior to trial. This was possible because there was still a pending standard patent application being examined.

Plainly, this flexibility clearly favours the patent owner. This "mothership" strategy has subsequently been adopted and utilised in multiple different patent litigations to the benefit of the patent owner. Further, challenges to this strategy on the basis that it amounted to an abuse of process were rejected by the Courts³ cementing this as a powerful strategy for patentees.

The Final Countdown

The innovation patent was a victim of its own success in the sense that it tilted the scales so very heavily towards the innovation patent owner. Various learned reports and reviews of the innovation patent system were written in the 2010s resulting in a decision to phase out the innovation patent as it was concluded that it skewed the balance too far towards the patentee and was being used by SMEs.

Phase out process:

• No new innovation patent applications filings after 25 August 2021. Consequently, as innovation patents have a maximum term of 8 years, the last innovation patents will expire by 26 August 2029.
• Pending standard patent applications having an effective filing date of 25 August 2021 or earlier, can be converted to an innovation patent application or serve as the basis of a divisional innovation patent application. This includes standard patent applications originating from a PCT filing with an international filing date of 25 August 2021 designating Australia.

Importantly, any validly filed divisional standard patent applications based on a parent application having an effective filing date of 25 August 2021 or earlier, such as further child applications or grandchild applications (and so on), retain the same effective filing date and can potentially serve as the basis of a divisional innovation patent application.

Practical Moves Before the Curtain Falls

For those important patent families where infringement proceedings might be considered in the near future, a certified innovation patent could be an important part of the litigation toolkit available to the patent owner.

A strategy for preserving the option to file a divisional innovation patent is to maintain a pending Australian patent application by filing successive divisional standard patent applications to keep the application alive, noting that each divisional application will have the effective filing date of the ultimate parent application (eg, an original PCT filing).

However, it must be remembered that the maximum term of any divisional innovation patent is 8 years from the effective filing date. As an example, for a PCT filing having an international filing date of 15 July 2020, any potential divisional innovation patent would expire after 15 July 2028.

Another consideration is that damages for an innovation patent are assessed from the date of grant⁴. Remember, grant typically occurs soon after filing, following a formalities check, so the period for any potential damages assessment may be limited.

As time marches on, both the window for filing and any remaining term shrink. Act now if you believe that the innovation patent could form a useful part of your IP strategy.

Final Word

The innovation patent system may be in its twilight years, but for those who understand its nuances, it remains a potent litigation asset.

If you have questions about navigating these final years, please reach out to us at Madderns.

Footnoes

¹Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225
² Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81
³Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 2) [2018] FCA 1109
⁴Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.