ACIP releases Review of the Innovation Patent System

Posted by Christina Ilinkovski

On 17 August 2011, the Advisory Council on Intellectual Property (ACIP) released a 'Review of the Innovation Patent System' (the Review) to assess the effectiveness of the innovation patent system in stimulating innovation by small to medium business enterprises in Australia. The Review also sets out a number of perceived problems with the innovation patent system and invites comments from interested stakeholders.

The innovation patent system was designed to provide patent protection for lower-level inventions that did not meet the 'inventive step' threshold required for a standard patent and could not be protected as a registered design. An innovation patent must satisfy a lower 'innovative step' threshold (as opposed to an 'inventive step'), namely that the difference between the claimed invention and what was previously known makes a substantial contribution to the working of the invention. Innovation patents are granted following a formalities check (with no substantive examination prior to grant required) and provide protection for a maximum of eight years (as opposed to 20 years for a standard patent). However, an innovation patent must undergo substantive examination and obtain certification before being enforced - this can be requested by the patentee or a third party or commenced at the Commissioner of Patent's decision.

It was hoped that this process would provide patent owners with a right that is quick and cheap to obtain, is relatively simple and lasts for a sufficient time to encourage investment. The Review notes that this is the first comprehensive review to assess whether the objectives of the system remain appropriate for Australia today and in the future.

The Review identifies a number of concerns with the innovation patent system, including:
(a) whether the innovation patent system remains relevant to Australia and continues to meet its original objectives;

(b) whether innovation patents are too easy to obtain and overly difficult to invalidate;

(c) that the innovation patent system is overly generous: this is based on its lower inventive threshold (particularly in light of the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (the IP Bill), which proposes to raise the degree of inventiveness required for standard patents to match the standards set by Australia's major trading partners) and the availability of identical remedies for infringement as a standard patent. Further, an innovation patent may be in existence for several years before it is examined and certified (and patentees may deliberately seek to delay this). This causes uncertainty in the market as other parties wishing to enter the market may find it difficult to determine whether they would infringe a valid claim of an innovation patent. The Review therefore questions whether the remedies for infringement of an innovation patent are appropriate;

(d) the issue of a significant proportion of applicants (particularly large corporate companies) using an innovation patent as a form of quick interim protection while they also pursue a standard patent. This arguably undermines the objective of providing for SMEs protection for lower level inventions;

(e) the abuse of the divisional application process, whereby applicants file a divisional innovation patent based on a standard patent application. This enables patentees to 'fast track' the grant of a certified innovation patent and subsequently, to commence infringement proceedings. This mechanism avoids the pre-grant opposition period (available in respect of standard patents) and may result in a competitor being driven out of the market before the merits of the standard patent have been properly assessed; and

(f) the issue of 'evergreening', whereby patentees seek to extend the period of patent protection beyond the initial patent term by applying for secondary patents (often covering only minor incremental developments). The Review considers that this practice has been most prevalent in the pharmaceutical industry. As a result, it proposes to exclude innovation patents from covering chemical or pharmaceutical compositions.

Currently, the pending IP Bill proposes to amend the Patents Act 1990, including certain provisions relating to the innovation patent system. These proposals include:

• expanding the possible grounds for revoking an innovation patent during re-examination;


• expanding the common general knowledge (CGK) against which innovative step is assessed, by removing the requirement that CGK is in Australia only;


• permitting the Commissioner of Patents to consider information made publicly available through the doing of an act when assessing both novelty and innovative step; and


• introducing a 'balance of probabilities' type test when the Commissioner of Patents decides whether to certify or revoke a granted innovation patent.

The aim of the proposals is to raise patent standards generally and increase certainty in the enforceability of patents. However, they do not seek to change the shorter term and lower patentability threshold for innovation patents. We await to see how these proposals may address the concerns with the innovation patent system.

ACIP is seeking written submissions on the Review by 14 October 2011. ACIP will then undertake further consultation with key stakeholders to develop reform proposals to address the findings of the Review.Click here to access the Review by ACIP.

Partner: Charles Alexander