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The fixation on innovation

In 2015, the Australian Government asked the Productivity Commission to undertake a 12-month public inquiry into Australia's intellectual property system to determine whether existing arrangements provided "an appropriate balance between access to ideas and products, and encouraging innovation". In August 2017, the Australian Government announced its official support of the Productivity Commission's recommendation that the innovation patent system be abolished, on the basis that the majority of small and medium sized enterprises (SMEs) who use the system obtain limited value from it.

What is the innovation patent system?

The innovation patent system was established in 2001 to stimulate innovation in Australian SMEs and protect incremental or low level inventions that are not considered sufficiently inventive for the purposes of standard patent protection. To obtain an innovation patent, the invention must simply be incrementally different from what is already in existence and the difference must make a substantial contribution to the working of the invention. Under the current system, an innovation patent lasts up to eight years and provides equal remedies to that of a standard patent.

Reasons for abolishment

The Commission's recommendation that the innovation patent system be abolished was founded on three grounds. First, innovation patents are rarely used by the SMEs for which the system was predominantly intended, with innovation patents making up fewer than 5% of all patents currently in force. Second, the low innovative threshold has encouraged a multitude of "low value patents" (such as a pizza box that converts to a bib), which has "created uncertainty for other innovators who are unsure whether they are infringing on another party's patent". Finally, users have been "gaming" the system to improve their bargaining position in patent disputes and to frustrate entry by competitors.

Patently controversial

We think it goes without saying that with any legislative reform comes a high chance of backlash from stakeholders. In this case, the Government's plan to abolish the innovation patent system has been described as a "stab in the back" for SMEs, with the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) urging the Government against such measures, suggesting it will "remove the simplest and lowest cost means of protecting their intellectual property". IP Australia director general Patricia Kelly has since responded, explaining that the majority of the small amount of SMEs and private inventors that own innovation patents do not receive any enforceable right (83%) and let their patents expire early (78%).

The Government is in consultation with IP Australia to determine the appropriate amendments to the Patents Act 1990 (Cth), to abolish the innovation patent system while reserving existing patent rights. While the phase-out of the innovation patent system is expected to be gradual, the Government has noted it "will continue to explore more direct mechanisms to better assist SMEs understand and leverage their IP, secure and utilise intellectual property rights, and access affordable enforcement".




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