The innovation patent is unique to Australia and is a powerful tool for patentees. Over the last three years, the Federal Government has initiated two significant reviews of the innovation patent system which threaten to water down the value and muscle of an innovation patent.
Both reviews are a response to concerns that the current system is detrimental to innovation and is being abused by patentees.
However, existing research and feedback suggests the innovation patent system encourages innovation and provides Australian SMEs with a platform to develop and market incremental inventions.
There is no convincing evidence that the system is being abused or is stifling innovation. Therefore, any reform should be targeted at meaningfully addressing genuine pitfalls of the system, rather than unnecessarily overhauling it or limiting its application.
Although many other jurisdictions (e.g., Japan, Singapore, Germany) also have second tier patent systems, most do not offer the remedies and breadth of protection provided by the innovation patent.
The two reviews (by the Advisory Council on Intellectual Property and IP Australia) each question the effectiveness of the innovation patent system and put forward options that would diminish (in varying degrees) the scope of the system.
The ACIP’s review is the more comprehensive of the two and it has proposed the following main reforms:
The IP Australia review considered raising the inventiveness threshold for innovation patents to the same as that for a standard patent.
Currently the innovation threshold is too low. Innovation patents may be granted for any substantial contribution to the working of the invention, regardless of whether the contribution was obvious. Accordingly, the threshold can result in the Patent Office granting innovation patents for unworthy contributions that are then very difficult to invalidate. Therefore, carefully raising the innovation threshold makes sense.
However, raising the innovation threshold to the same as that of the standard patent would render the innovation patent futile. The challenge is therefore to raise the standard high enough to preclude undeserving applications while still ensuring the protection of worthy incremental inventions.
A way of achieving this balance could be to set the innovative step test against the backdrop of the common general knowledge in the field.
Currently, the comparison between the claimed invention and the prior art information is conducted in isolation from the body of common general knowledge. A new test could require that the comparison between the claimed invention and the prior art information must be undertaken in light of the common general knowledge. Such a test would expand the prior art base by which the innovative step is tested, and thereby greatly assist in stopping minor enhancements to an invention from being patented.
The other reform options proposed would either take away from the current value and utility of the system or unfairly disadvantage specific industries.
Whether the recently elected Coalition Government will prioritise a reform to the innovation patent system is yet to be revealed. However, the Coalition may be less inclined than the previous Labour Government to radically change the system given that the innovation patent system was brought in under the Howard Government for the benefit of SMEs.
If the Government does persist with reform, it would be prudent to wait until it can assess how the new Raising the Bar reforms play out, then tackle the challenge of carefully raising the innovation threshold.
 Andrew Christie and Sarah Moritz, IPRIA Review of Innovation Patent System (2004, 2005), IP Australia review of the Innovation Patent System (2006) and Verve Economics, Economic Value of the Innovation Patent commissioned by IP Australia (2013).
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