11 October 2012

IP Australia Proposal Renders Innovation Patents ‘Obsolete’ - IPTA

IPTAAs reported here last month (see IP Australia Gazumps ACIP, and Revives the Petty Patent!), IP Australia recently released a consultation paper proposing to replace the present ‘innovative step’ test for innovation patents with the ‘inventive step’ test as will apply to standard patents following implementation of the Raising the Bar Act.

If the proposals become law, innovation patents will have exactly the same patentability requirements as standard patents, but with a shorter term, limited number of claims and restricted subject matter.  As we argued in our earlier article, this would effectively represent a return to the ‘petty patent’ system, which was widely regarded as a failure – rarely used, except for tactical purposes.  This was precisely the reason the Australian Council on Intellectual Property (ACIP) recommended the introduction of the innovation patent as a new ‘second tier’ system of protection for lower-level advances.

The stated purpose of the innovation patent system was to stimulate innovation in Australian small-to-medium enterprises (SMEs) and to provide for protection of their lower level inventions.  Without a distinct ‘innovative step’ test, this purpose will not longer be satisfied.

Patentology is not alone in holding these views.  The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) has circulated a notice to members regarding IP Australia’s proposal, to which was attached a letter setting out IPTA’s position on the proposed reforms.

As many readers will be aware, Patentology is steadfastly independent.  We are not a member, or otherwise formally affiliated, with IPTA, although we are always happy to publish the sincerely-held views of people or organisations with a genuine interest in the Australian patent system, even if they do not accord with our own.

On this issue, however, we are absolutely as one mind with IPTA.  What follows is a copy of the letter setting out IPTA’s position on IP Australia’s proposal for the innovation patent system, and we encourage readers – particularly those connected with Australian SMEs – to consider making formal submissions to IP Australia, and to bring this article to the attention of like-minded associates and colleagues.


IP Australia Consultation Paper – Innovation Patents – Raising the step
IP Australia has recently issued a consultation paper, a copy of which [can be obtained here], outlining a proposal that will generally render Australia’s innovation patent system obsolete.

The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) is concerned with IP Australia’s proposal, which may have a significant detrimental effect on the ability of Australian small to medium enterprises (SMEs) to protect their innovations.

In February 2011 the Government recently asked the Advisory Council on Intellectual Property (ACIP) to investigate the effectiveness of the innovation patent system with a view to suggesting reforms which may improve its operation. ACIP released an Issues Paper in August last year seeking submissions from stakeholders, and also conducted extensive consultation. ACIP is expected to release an options paper shortly and to have its final report for the Government completed by mid 2013. It is therefore premature for IP Australia to propose such substantial changes to the innovation patent system.

IPTA urges all Australian SMEs that currently utilise the Australian innovation patent system to promptly voice their concerns.
Purpose of the Innovation Patent System
The purpose of the current innovation patent system, which was introduced in 2001, was stated by the Government to be to “stimulate innovation in Australia SMEs”. In particular, the Revised Explanatory Memorandum presented to the Parliament to explain the Bill that introduced the innovation patent system, stated:

The purpose of the proposed innovation patent system is to stimulate innovation in Australian SMEs. It would do this by providing Australian businesses with industrial property rights for their lower level inventions. Industrial property rights are not available for these inventions at present, which means competitors may be able to copy them. For this reason, a firm making lower level inventions cannot be certain of capturing the benefits that come from their commercial exploitation. This lowers the incentive to innovate.

The existing petty patent system, administered by IP Australia, has an inventive threshold the same as that for standard patents. This means that it does not meet the need Australian businesses have identified for lower level protection and which most overseas governments are already providing for their SMEs.

The innovation patent system addressed this purpose by replacing the requirement for an “inventive step” for a standard patent (or the previous petty patent), which generally requires any invention to not be obvious, with an alternate “innovative step” test, which generally has a lower required threshold of inventiveness.

Evidence has shown that innovation patents are being used primarily by Australian SMEs for the purpose of protecting lower level innovations as the system intended.
IP Australia’s Proposed Reform
In the consultation paper, IP Australia sets out their proposal to replace the requirement for a lower level “innovative step” for innovation patents with the “inventive step” test that is required for standard patents.

The effect of this change will be that the patentability requirements for an innovation patent will be exactly the same as for a standard patent. Innovation patents will still, however, have the important restrictions of a maximum 8 year term, a maximum of 5 claims defining the invention and certain limitations on patentable subject matter.

As such, if IP Australia’s proposals become law, the innovation patent system will effectively be rendered obsolete and will no longer be available to meet the specific needs of Australian SMEs that were originally identified to prompt introduction of the innovation patent system.

IPTA believes that the innovation patent system can be improved in ways that do not involve the introduction of an inventive step standard as high as that applicable to standard patents, and has made submissions to ACIP to this effect. IPTA believes that no action should be taken to change the innovation patent system until the Government has had an opportunity to consider ACIP’s report.
IP Australia’s Justification
IP Australia’s main justification for the proposed change, as explained in the consultation paper and press releases, is based on a perceived concern that innovation patents will “inappropriately extend the life of pharmaceutical patents and delay the introduction of less expensive generic medicines”. However, this statement is factually incorrect, and the basis for the concern has not been adequately explained by IP Australia.

Innovation patents cannot be used to extend the term of any patent. In view of the length of time it takes to obtain approval to market a pharmaceutical invention, the short 8 year term from the filing date makes innovation patents generally unsuitable for protecting pharmaceutical inventions. In the rare case that they are filed for pharmaceutical inventions they are usually filed as “divisionals” of standard 20 year patents, and expire at least 12 years earlier than the standard patent. In IPTA’s view, the benefits that the innovation patent system provide to Australian SME’s far outweigh this perceived, and as yet unrealised, concern.
Your Submissions
Submissions detailing your concerns and opposition to IP Australia’s proposals may be made to:
Mr Brendan Bourke
Director, Domestic Policy
IP Australia
PO Box 200
Email: MDB-Reform@ipaustralia.gov.au

We also suggest that you at least copy your submissions to each of the following:

The Hon Greg Combet AM MP
Minister for Industry and Innovation
PO Box 6022
House of Representatives
Parliament House, Canberra ACT 2600
Email: greg.combet@innovation.gov.au

The Hon Mark Dreyfus QC MP
Parliamentary Secretary for Industry and Innovation
PO Box 6022
House of Representatives
Parliament House, Canberra ACT 2600
Email: mark.dreyfus.mp@aph.gov.au

Mr Philip Noonan
Director General
IP Australia
PO Box 200
Woden ACT 2606
Email: philip.noonan@ipaustralia.gov.au


Andy said...

If i may also add that the figures suggested by IP Australia in their consultation paper in relation to "electrical devices and engineering (a 350
per cent rise), information technology (a 390 per cent rise), and
pharmaceuticals (a 560 per cent rise)...".are incorrect and misleading. A quick query on AusPat confirms an error on the part of IP Australia as far as numbers and growth of Innovation Patents is concerned.

Patentology (Mark Summerfield) said...

Thanks for your comment, Andy.

I mentioned in my own commentary on the consultation paper that the number of innovation patents granted (which, aside from a few weeks delay is essentially the same as the number of applications filed) has approximately doubled.

IP Australia claims a 150% rise 'averaged across all technologies'. Now, a 150% rise might mean either one-and-a-half times as many, or two-and-a-half times as many. But, either way, their figures do not match mine, so at least one of us is wrong!

Of course, estmating numbers of patents or applications in specific areas of technology is notoriously difficult. Generally, you can use the International Patent Classification (IPC) codes to get an idea, but even the simplest estimate on this basis involves a choice of which classes to include, and whether to count only those documents for which the primary classification falls within those classes, or to include all documents with one of more classifications within the selected classes.

IP Australia has been characteristically opaque in failing to provide any indication of their methodology. Could I ask what criteria you used for your 'quick query' on AusPat?



Andy said...

For example in "information technology" Use IPC Subclass ="G06*" AND Application type= "innovation Patent" AND Sealing date="200X"

X= relevant year A comparison between 2002 (71 results) and 2011 (221 results). 2001 should be either rationalised or disregarded because the earliest innovation patent sealed in 2001 was in October 2001. Further these figures include expired and lapsed innovation patents and only cover filed and sealed (but not necessarily certified) innovation patents.

This suggests an overall growth of 211% over 10 years for IT.

For pharmaceuticals Use IPC subclass= "A61*" 2002=46; 2011=101

Growth rate of 119% over 10 years in pharmaceuticals

With electrical devices and engineering I am not sure what subclasses to look at. It seems IP Aust mean all of subclass F and possibly G07* OR G08*.

Ted said...

Maybe the three people above need to go.

Jonas said...

Yep they do.

Patentology (Mark Summerfield) said...

Well, ultimately the fate of two of them is, at least in principle, in the hands of the people. So, two cheers for democracy there*. The third is one of our very own Sir Humphrey Applebys!

* ‘So Two Cheers for Democracy: one because it admits variety and two because it permits criticism. Two cheers are quite enough: there is no occasion to give it three.‘ - E.M. Forster

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