The End Is Near For Innovation Patents

Reviewing the Exposure Draft of the Intellectual Property Laws Amendment Bill 2017

The End Is Near For Innovation Patents
Andrew Clarke

IP Australia has just released the highly anticipated Exposure Draft of the Intellectual Property Laws Amendment (Productivity Response Part 1 and Other Measures) Bill 2017 (“the IP Laws Amendment Bill). The IP Laws Amendment Bill proposes a number of important amendments, including the awaited abolishing of innovation patents, that span the entire suite of intellectual property Acts currently in force in Australia.

To help you understand exactly what each of the amendments mean for you and your business, Innofy are running a short series of articles highlighting the each of the major changes proposed by the IP Laws Amendment Bill. Make sure that you are up to speed with what you need to consider before and after the amendments take effect.

PART 1. The End Is Near For Innovation Patents

The most significant amendment proposed by the IP Laws Amendment Bill is the abolition of innovation patents (Australia’s “second tier” patent system). We knew this day was imminent since the Australian Government published its response to the Productivity Commission’s inquiry into Australia’s Intellectual Property arrangements. A copy of the Productivity Commission’s report on intellectual property can be read, in full, here.

What You Need To Know.

True to their word, IP Australia are implementing legislation to abolish innovation patents. Importantly, the innovation patent route will still be open to any applications with a priority date earlier than the date the IP Laws Amendment Bill takes effect. Any patent applications filed with a priority date after the implementation date of the IP Laws Amendment Bill, however, will not be eligible for conversion or filling as a divisional application.

Accordingly, should the IP Laws Amendment Bill come into effect, there does not appear to be any immediate rush to file innovation patents from your already pending applications. Pleasingly to patent Applicants, it is proposed that innovation patents will still be available for all applications that were first filed before to the IP Laws Amendment Bill.

However, should you have an invention that may not meet the inventive step requirements of a standard patent, we would encourage the filing of a provisional application as soon as possible to ensure that you achieve the required priority date. This should allow you to convert your standard patent application to an innovation patent, should you need to do so.

Why does Australia have an innovation patent system?

The innovation patent system was originally established to provide Australian small and medium sized enterprises (SMEs) with a quicker and more affordable way to protect their innovations.

What went wrong? The demise of innovation patents.

As a reminder, the Productivity Commission and the former Advisory Council on Intellectual Property (ACIP; disbanded in April 2015) recommended that the innovation patent system be abolished. A copy of the ACIP Report on the innovation patent system can be found, here. Both groups found that the innovation patent system is unlikely to provide net benefits to the Australian community or to the SMEs, who were the intended beneficiaries of the system. The Productivity Commission found that the majority of SMEs who use the innovation patent system do not obtain value from it, and that the system allegedly imposes significant costs on third parties and the broader Australian community.

Given the overall lack of net benefits the Government made the decision to abolish the innovation patent system.

How exactly will innovation patents be abolished?

Importantly, the abolishment of the innovation patent system is not intended to affect any existing rights. The innovation patent system will therefore continue to operate for all patent applications that were filed before these proposed amendments commence. In addition, existing rights to file divisional applications and convert a standard patent application to an innovation patent application will be maintained for any patent or application that was filed prior to the commencement date of the proposed amendments.

Part 4 of the IP Laws Amendment Bill sets out the proposed amendments to the Patents Act 1990 (Cth) which will orchestrate the demise of the innovation patent system. Essentially, the changes are achieved under the legislation by requiring that any innovation patent filed after the commencement date of the IP Laws Amendment Bill must have a priority date for each claim that is before the commencement date.

The first amendment is the introduction of a formal definition to the term “priority date”. Specifically, a priority date is determined in two ways, according to subsection 43(2) of the Patents Act, which provides:

43 (2)  The priority date of a claim is:

(a)  if subsection (2A) applies to the claim–the date determined under the regulations; or
(b)  otherwise–the date of the filing of the specification. 

43 (2A)  This subsection applies to a claim if:

(a)  prescribed circumstances apply in relation to the invention defined in the claim; and
(b)  a prescribed document discloses, or a prescribed set of prescribed documents considered together disclose, the invention in the claim in a manner that is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art.

If subsection 43(2A) applies to a claim, the priority date is the date determined under Division 2 of the Patents Regulations 1991 (Cth). If subsection 43(2A) does not apply to the claim, the priority date is the date the specification was filed.

As a mechanism to abolish the filing of new innovation patents, a new requirement is introduced into the formalities check for innovation patent applications, as follows:

(3)  It is a requirement of the formalities check that the date of the patent (if granted) would be a date before the day this subsection commences.

Specifically, for an innovation patent to be allowable under the proposed IP Act Amendment Bill the date of the patent application must be earlier than the commencement date of the IP Act Amendment Bill. If the date of the patent would be on or after the commencement of the Bill – the innovation patent cannot be granted.

An additional requirement is proposed to be inserted into section 101B of the Patents Act, which sets out the examination criteria for innovation patents. The new requirement (to be placed after s101B(2)(h)) is proposed to read as follows:

(ha)  each claim in the complete specification has a priority date that is before the day this paragraph commences; and

This will require the Commissioner of Patents to examine and report on whether each claim in the complete specification for an innovation patent has a priority date that is before the commencement date of this the introduction of the Act Amendment.

Finally, another new requirement is to be introduced into section 101E, which sets out the criteria for the certification of an innovation patent. Currently, section 101E requires the Commissioner of Patents to be satisfied of a number of matters before issuing a Certificate of Examination to the patent Applicant. The requirement proposed in the IP Laws Amendment Bill is that the priority date of each claim in the specification of the innovation patent must be earlier than the commencement date of the Bill.

So, when will innovation patents be abolished?

The good news for those hoping to use the innovation patent system with respect to their current provisional applications (or even applications currently proceeding as standard applications) is that the amendments relating to innovation patents will not commence until the day after the end of the period of 12 months from Parliamentary acceptance of the Bill. This lead time is necessary, to ensure that the exiting rights of patent Applicants are maintained. Currently, the timeframe for filing an innovation patent application that claims priority from a provisional application is 12 months, so the 12-month commencement timeframe will ensure that Applicants who filed a provisional application before the Bill takes effect will continue to have the full 12 months in which they may file an innovation patent.

Any Applicant whose provisional application is filed between the introduction of the proposed IP Laws Amendment Bill and the commencement of Schedule 1, Part 4, will have whatever time remains until the commencement to file an innovation patent, but will still be able to make full use of the full 12 months to file a standard patent.

Be aware of the available patent strategies.

If you are interested in filing a patent application for your technology, and believe that the innovation patent route may best suit your purpose, we would strongly recommend that you contact us as soon as possible to ensure that a priority date can be obtained prior the in introduction of the IP Laws Amendment Bill.

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