Innovation Patent Perishes as Phase-Out Process Pushes Ahead

Earlier this year on 26 February 2020, legislative amendments were passed to begin phasing out the innovation patent in Australia. The process will be slow, as innovation patents can continue to be filed until 25 August 2021, and it will be 26 August 2029 before all expire. While the system’s abolishment has been in the pipeline for several years, businesses should ensure they are up to date with the changes.

The Rise of the Innovation Patent

The Australian Government introduced the innovation patent in 2001 to encourage innovation, by creating a mechanism for small to medium-sized businesses to protect their intellectual property in a quick and cost-effective way.  Generally, the requirements for securing an innovation patent are less strict.  The threshold for inventiveness is lower, with applicants only required to show that their invention involves an ‘innovative step’, rather than the standard patent ‘inventive step’.  With a shorter protection period of eight years and five claims limitation, the innovation patent was marketed toward inventions with a short market life that were likely to be replaced by up and coming inventions.

The Fall

In 2016 the Productivity Commission determined that the innovation patent system had not met its intended objectives of encouraging research and development, and in fact had disadvantaged the small to medium enterprises it was designed to assist.  The Commission recommended that the system be abolished, and the Federal Government adopted this recommendation in 2017. Its reasons for doing so include:

• The lower inventiveness threshold applicable to innovation patents has not incentivised genuine innovation and competition.  The grant of more innovation patents has resulted in investors being discouraged from funding commercialisation, and the generation of uncertainty around potential infringements and businesses’ freedoms to operate.
• The system does not align with international patent systems and innovation patents are not recognised overseas.  Also, the granting of an Australian innovation patent publicises the invention, which can disadvantage enterprises that later wish to export their inventions globally.
• Bigger businesses have strategically taken advantage of the system by obtaining several innovation patents for the one overarching invention, and making only small variations to each application.  In doing so they create ‘patent thickets’, which restrict small to medium enterprises’ operating freedoms and abilities to take products to market which can compete with those of larger companies.

The Farewell

On 26 February 2020, the Intellectual Property Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 was passed, which began the eight year phasing-out process for the innovation patent.

The key things you need to know are:

• 25 August 2021 is the last day that innovation patent applications can be filed, and applications filed by this date can be approved after it.  Any patents filed by this date will be enforceable until their expiry date, so those who currently hold innovation patents will not be disadvantaged by their phasing out. 
• After 25 August 2021 divisional innovation patent applications can still be filed, as long as the relevant parent application is filed on or before 25 August 2021.
• Standard patent applications can continue to be converted to innovation patent applications provided that the standard application is filed on or before 25 August 2021.
• By 26 August 2029 all innovation patents will have expired.

Over the next 12 months, businesses should consider any upcoming inventions they might look to secure innovation patent protection for and accelerate these applications where required.  Alternatively, consider whether your invention may be eligible for standard patent protection, which is not subject to the phase-out process and carries a longer protection period of twenty years.

Special thanks to Abbey Geran, Research Clerk for her assistance with preparing this article.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.