‘Free Software’ Advocates Aside, Submissions to IP Australia Overwhelmingly Support Innovation Patent System

As I have previously reported, IP Australia has been conducting a consultation process on the posthumous recommendation by the Advisory Council on Intellectual Property (ACIP) that the Australian government consider abolishing the innovation patent system. 

The due date for public feedback on this proposal was 28 September 2015.  The submissions have now been published and, with the exception of a fairly obviously coordinated campaign by a handful of ‘free software’ advocates, a clear majority of stakeholders – including IP lawyers, patent attorneys, inventors, small-to-medium enterprises, and industry groups – have come out in favour of retaining the innovation patent system. 

Most, however, would also support a range of proposed reforms to the system, including raising the ‘innovative step’ standard, introducing a mandatory deadline for requesting substantive examination, and restricting the use of the name ‘patent’ to those rights that have actually been examined and certified.

Background to Consultation

For those readers who may not be up-to-speed on this subject, the innovation patent is Australia’s second-tier patent right, characterised by a shorter term (eight years), a lower threshold of innovation (‘innovative step’ rather than ‘inventive step’), and lower cost (largely because substantive examination of an innovation patent is optional, unless enforcement is required) than a regular ‘standard’ patent. 

In June 2014 ACIP released a report based on its own three year review of the innovation patent system.  Despite the long duration of the review, and receipt of a range of inputs – including its own commissioned research by Verve Economics on the ‘Economic Value of the Innovation Patent’ – ACIP’s report was largely inconclusive.  In particular, ACIP made no recommendation supporting either the retention or abolition of the innovation patent system.

Subsequently, on 25 May 2015, IP Australia published a report entitled The Economic Impact of Innovation Patents, based on analysis conducted by its Office of the Chief Economist, as part of its ongoing studies of the Economics of IP, which suggested that ‘the innovation patent is not fulfilling its policy goal of providing an incentive for Australian SMEs to innovate’.  This report led ACIP to revise its previous opinion, and issue a statement recommending that abolition of the innovation patent system be considered.  This, in turn, prompted IP Australia to open a consultation process seeking feedback on ACIP’s recommendation.

All Those in Favour of the Innovation Patent…

Numerous parties made submissions supporting the innovation patent system, including the following industry organisations, corporations, and other interested stakeholders:

1. ASMI (Australian Self-Medication Industry Ltd), which represents companies involved in the manufacture and distribution of consumer health care therapeutic goods (non-prescription over-the-counter and complementary medicines including vitamins, minerals and supplements) in Australia, favours retaining the innovation patent system without change, as well as introducing new ‘data exclusivity’ and ‘market exclusivity’ mechanisms for non-prescription therapeutic goods;
2. the Australian branch of international IP professional body AIPPI, within which a majority of members favour retaining the innovation patent system, but with modifications at least including raising the ‘innovative step’ standard;
3. AusBiotech, representing a network of over 3,000 members in the life sciences industry, which includes bio-therapeutics, medical technology (devices and diagnostics), food technology, industrial and agricultural biotechnology sectors, which favours retaining the innovation patent system, but introducing a raised ‘innovative step’ standard, a restriction such the term ‘patent’ would only be applied after examination and certification, and a deadline (of three years) for compulsory examination of innovation patents;
4. BSA | The Software Alliance, which represents the global commercial software industry (counting among its members Adobe, Altium, ANSYS, Apple, ARM, Autodesk, AVEVA, Bentley Systems, CA Technologies, Cisco, CNC/Mastercam, DataStax, Dell, Intel, Intuit, Minitab, Oracle, PTC, salesforce.com, Siemens PLM Software, Symantec, Tekla, The MathWorks, and Trend Micro), and which argues that the innovation patent system should be retained, and improved in line with a number of the recommendations in ACIP’s original report;
5. CropLife Australia, an industry organisation representing the agricultural chemical and biotechnology (plant science) sector, which also favours retaining the innovation patent system with modifications similar to those proposed by AusBiotech;
6. patent attorney, IT consutant, and IP academic John Gibbs, who has provided a very detailed evidence-based analysis which highlights a number of deficiencies in IP Australia’s Economic Impact report, and makes a strong case that the innovation patent system has, contrary to the report’s conclusions (accepted by ACIP), in fact achieved its policy goal of supporting innovation by SMEs;
7. Medicines Australia, an industry group representing the research-based innovative medicines industry in Australia, which supports retaining the innovation patent system, while considering some modifications along the lines outlined in ACIP’s original report into the system;
8. Nufarm Ltd (a crop protection and specialist seeds company, producing products to help farmers protect their crops against damage caused by weeds, pests and disease) would like to see ‘the IPGOD dataset interpreted alongside other readily available data (for example, Australian SME’s make up the majority of the innovation patent infringement cases decided at first instance by the Federal Court over the last five years)’, and which opposes abolition of the innovation patent system while arguing that ‘the patentee should request examination on the third anniversary of lodgment. Unexamined innovation patent applications should also be described as something less than a patent’;
9. the Plastics and Chemicals Industries Association (PACIA), representing the business of chemistry in Australia, which notes that ‘PACIA members are users of the innovation patent system’ and that the ‘system provides an effective second tier patent regime that supports particular forms of innovation with a reduced period of protection’;
10. Pfizer Australia, which wrote in support of the submission by Medicines Australia (of which it is a member); and
11. ResMed Ltd, which ‘sees a role for a rapid, low-cost patent system that enables an IP owner to take action against free-riders’, but would like to see modifications to various aspects of the innovation patent system, including raising the ‘innovative step’ standard, changing the remedy for infringement, changing nomenclature to clearly distinguish uncertified rights from certified patents, compulsory examination, and fee relief (i.e. a ‘small entity’ discount) for SMEs.

A number of SMEs have also filed submissions in support of the innovation patent system.  These include:

1. CTA Australia Pty Ltd, a developer and supplier of ‘tactile guidance products’, noting ‘several instances in which competitors of ours have sought to benefit unfairly’ from its innovations by copying, whereby ‘innovation patent protection has been crucial in enabling us to curb such copying’;
2. textiles manufacturer Haskin Holdings, which has found innovation patents valuable in protecting its business against cheap imports;
3. cycling accessories company Knog, which recently ‘used the Innovation Patent system to stop the spread of copy products throughout the Australian market’;
4. Locker Group (which services the architectural and construction industries), which has found the innovation patent system useful in protecting against cheaper copies of its innovative products being imported from China; and
5. Simplicity Axles, a Victorian manufacturing business that argues ‘that innovation patents fill an important role in small business giving us the ability to conceptualize design, manufacture and market product quickly whilst also giving us the confidence in knowing we will be able to profit from our investment’.

A number of individual patent attorneys, and firms, also filed submissions in support of the innovation patent system.  This is unsurprising – as I have argued previously, we tend to see a cross section of those applicants that obtain the greatest benefits from the innovation patent system.  My own submission was along these lines, as well as advocating for a number of modifications that I believe would improve the system.

…And All Those Against…

One member of the IP professions who has come out in favour of abolishing the innovation patent system is Dr Aaron Mitchell, a registered patent and trade marks attorney from South Australia.  Dr Mitchell argues that he considers ‘the fundamental attributes of innovation patents such as the low-innovative threshold, low application cost, ambiguous scope/enforceability which is combined with exploitation confined to the small marketplace of Australia, to be harmful to SME’s.’  I note that Dr Mitchell (LinkedIn profile) has spent much of his career as a patent attorney working in the government sector (research, education and training, policy, legislation and regulation), and therefore has a very different perspective from that of many other members of the profession working in private practice.

Most of the other submissions favouring abolition provide little, if anything, by way of evidence or reasoned argument in support of their position.  In particular, a number of submissions were received from individual members of the public containing almost identical comments along the following lines:

As a member of the software industry, I support the ACIP’s recommendation to abolish the innovation patent system.  In my experience, the scheme is not only ineffective in promoting innovation, it actively discourages invention and creativity in our industry.

Needless to say, such comments lack anything resembling either evidence or detailed reasoning.  They also fail to address the fact that abolition of innovation patents would affect all industries, and not just the ‘software industry’ (whatever that may be), including those represented by other submissions in support of innovation patents.  In any event, these near-identical submissions are so clearly the result of an orchestrated campaign that they can hardly be regarded as constituting independent contributions to the consultation process.  Furthermore, they are at odds with the submission made by BSA | The Software Alliance as noted above.

Other parties making submissions in favour of abolition of the innovation system include Melbourne-based free-software advocate Ben Sturmfels, on behalf of a group of nine like-minded individuals, and Open Source Industry Australia Ltd, which argues that ‘abolition of the innovation patent system will be an important first step towards delivering a more efficient, effective and equitable patent regime for Australia’.

Other than these niche interests, support for the proposition that the innovation patent system should be abolished appears scant.

Conclusion

Overall, submissions in response to IP Australia’s consultation overwhelmingly support the value of maintaining a second-tier patent right.  The innovation patent is generally regarded as a qualified success – including by a number of SMEs, who are ostensibly the ‘target market’ for the system.  Most supporters would be comfortable with a number of changes to the system, including raising the ‘innovative step’ standard, and making examination of innovation patents compulsory (with many suggesting three years from filing as a suitable deadline).

The principal advocates of abolishing the innovation patent system are ‘free’, or open-source, software advocates.  However, it is already well-known that the goal of this interest group is a broader abolition of enforceable patent rights in relation to software-implemented inventions.  Accordingly, the clearly coordinated submissions by this special-interest group are unlikely to have much influence over any decision on the future of the innovation patent system, which would, after all, have an impact across all fields of technology.

IP Australia’s response to the feedback received in this consultation process will be interesting.  It is clear that the innovation patent system has many supporters, including among those companies and individuals that it was intended to benefit.  Nonetheless, the analysis reported by IP Australia’s own economists draws a different conclusion.

So how much sway do the economists hold within IP Australia?  It was not so long ago that economic analysis was viewed as the servant of policy-making.  However, in these rationalist times it often becomes the master, with ‘cost-benefit’ as its ultimate expression.  With the future of the innovation patent hanging in the balance, will the economists reign supreme, or will the voices of the stakeholders in the system tip the decision towards retaining the innovation patent in some form?

Tags: Australia, Innovation patent, Innovation policy, Law reform