27 February 2020

Countdown to the End of the Innovation Patent: Abolition Legislation Signed into Law

Like sands through the hourglassOn 26 February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 received Royal Assent (i.e. was signed into law by the Governor General of Australia), becoming Act No. 9 of 2020.  I reported passing of this Bill in the Senate, with amendments, in November last year, noting that its passage through the House of Representatives (which eventually occurred on 5 February 2020) was a mere formality.  The full text of the Bill, as passed, can be found on the Parliament of Australia website, and should soon be available as the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 on the Federal Register of Legislation.

The main feature of the Act, about which I have written a number of times over the past few years, with varying degrees of ambivalence, is the abolition of Australia’s second-tier innovation patent system.  I briefly reviewed the history of the innovation patent’s downfall when reporting passage of the Bill through the Senate, and will not rehash this here.  The key point to note, however, is that the legislation provides for an 18 month window, commencing on the date of Royal Assent, before the phase-out of the innovation patent begins.  The following timeline has therefore now been established:
  1. 26 February 2020 – Act receives Royal Assent;
  2. 26 August 2021 – no longer possible to file new innovation patent applications, other than divisional applications based on applications filed on or before 25 August 2021; and
  3. 25 August 2029 – final expiry date of all innovation patents (i.e. eight years after the last possible filing date of 25 August 2021).
The Bill originally provided a 12-month sunset period, however this was extended to 18 months by amendments in the Senate proposed by the Labor opposition, along with provisions requiring that a statutory review be undertaken to assess the impact on Australian small to medium enterprises of abolishing the innovation patent system, and make recommendations to facilitate access to standard patent protection for small business in Australia.  The review must commence within three months (i.e. by 26 May 2020), and provide a written report to the Minister for Industry, Science and Technology (currently the Hon Karen Andrews MP) within 12 months of commencement (i.e. no later than 26 May 2021).

To assist people with keeping track of the time remaining to file new innovation patents, I have added a countdown timer to the sidebar of this blog.  (You’re welcome!)  Notably, because 2020 is a leap year, and the Act received Royal Assent prior to 29 February and during daylight savings time, everyone has 25 hours more than would otherwise have been the case to file their final innovation patent applications!

While abolition of the innovation patent is, for most people, the big ticket item in the Act, it introduces a few other changes to Australia’s IP laws.  Read on for a brief summary of these.

Addition of an ‘Objects Clause’ to the Patents Act

As of 27 February 2020, the Patents Act 1990 has an express purpose: new section 2A provides that:

The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.

As I understand it, such ‘objects clauses’ – which outline the underlying purposes of legislation and can be used to resolve uncertainty and/or ambiguity – are quite fashionable these days, so the Patents Act was somewhat démodé to be lacking in this respect.  Section 15AA of the Acts Interpretation Act 1901 provides that:

In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.

An objects clause can therefore save a court from having to dredge through extrinsic materials – such as legislative history, explanatory memoranda, and parliamentary speeches – in order to determine the purpose of an Act.  Another way of looking at this is that adding an objects clause enables the government of the day to impose its own objectives on an Act that might originally have been enacted three decades prior, by a government of differing political stripe.  In this particular instance, the objects clause has its origins with the economists at the Australian Productivity Commission, which included this recommendation in its 2016 report on its Inquiry into Australia’s Intellectual Property Arrangements.

During IP Australia’s consultations on a draft of the legislation, some submissions expressed concern that references to ‘technology’ and ‘technological innovation’ in the objects clause might introduce a ‘technological arts’ test to the criteria for patentable subject matter in Australia, despite the courts having previously rejected such an approach (‘What is or is not to be described as science or technology may present difficult questions now, let alone in a future which is as excitingly unpredictable now as it was in 1623 or 1959, if not more so. We think that to erect a requirement that an alleged invention be within the area of science and technology would be to risk the very kind of rigidity which the High Court warned against’: Grant v Commissioner of Patents [2006] FCAFC 120).  IP Australia, for its part, responded that there was no intention that the existing law be affected by the addition of the objects clause.  Time will tell.

Crown Use

Patent rights are created by statute, and it is therefore not particularly surprising that the government reserves for itself some special privileges to ensure that it can access patented technologies should the need arise.  ‘Crown use’ refers to provisions that allow governments at federal, state, and local levels, and associated authorities, to exploit IP rights, while also providing for appropriate compensation to the rights-holder.

Changes to Crown use provisions under the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 are actually quite extensive.  At the same time, however, they are of relatively minor significance simply because Crown use is so infrequently invoked.  Historically, on the rare occasions that Crown use has been asserted by a government entity, or by a party acting under the authority of a government entity, it has been largely as a form of ‘defence’ to prevent a patent owner from blocking an allegedly infringing activity.  The amendments will serve to limit this kind of ‘retrospective’ reliance on the Crown use provisions, and include:
  1. clarification of the purposes for which Crown use may be asserted;
  2. requiring government authorities to attempt to negotiate an agreement with rights owners before invoking Crown use; and
  3. requiring ministerial authorisation to invoke Crown use if an agreement cannot be negotiated, or in the event of an emergency.
The amending Act applies these revised provisions to both patents and registered designs.

Compulsory Licences

Compulsory licensing provides a mechanism to prevent a patent owner from restricting use of an invention in the market, in circumstances where it has failed to do so itself, i.e. effectively ‘withholding’ the patented technology from the public.  Prior to the current amendments, the Patents Act empowered the courts to order a patent owner to grant a compulsory licence if ‘the reasonable requirements of the public [were] not being met with respect to a patented invention.’

Like Crown use, compulsory licensing provisions have rarely been invoked in Australia.  Even so, the Productivity Commission found, in its 2016 report, that there was potential to conflate the ‘reasonable requirements of the public’ with the interests of Australian industry, and that this would be inconsistent with promoting community-wide welfare.  As a result, it recommended that the ‘reasonable requirements of the public’ test be replaced with a ‘public interest’ test.  Therefore, as section 132B of the Patents Act now explains, the new compulsory licensing conditions include ‘that demand in Australia for the invention is not being met on reasonable terms, authorisation to exploit the invention is essential to meet that demand and it is in the public interest to grant the licence.’ 

The amendments also clarify the circumstances in which a compulsory licence may be granted to enable the owner of another patent to exploit a corresponding invention which depends upon use of the invention protected by the patent for which the licence is sought.  A typical circumstance in which this could be relevant is where someone develops, and patents, an improvement on an original patented product, but the owner of the original patent refuses to grant a licence, thus depriving the public of the benefit of the improvement.  I would argue that this is a ‘problem’ crying out for a commercial solution – if the improvement is so great, then both patentees stand to benefit from an appropriate (cross-)licensing arrangement.  Appropriately, then, the legislation sets a high threshold for a court to intervene by granting a compulsory licence – it must be ‘satisfied that the other invention involves an important technical advance of considerable economic significance on the original invention.’

Electronic Seals

No, this has nothing to do with digitisation of aquatic mammals!  Amendments to section 206 of the Patents Act 1990, and to section 200 of the Trade Marks Act 1995, provide that the seals of the Patents and Trade Marks Offices may be ‘kept and used in electronic form’.  These provisions ensure that IP Australia can use modern technology to provide digitally-certified documents in electronic form.  Personally, I would like to see use of the archaic term ‘seal’ discontinued altogether – it has been an awfully long time since anybody at IP Australia actually pressed a stamp into a blob of softened wax!

Closing the Back Door on Omnibus Claims

The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 purportedly outlawed the routine inclusion of ‘omnibus claims’, i.e. claims defining an invention purely by reference to the description and drawings, with the introduction of section 40(3A): ‘[t]he claim or claims must not rely on references to descriptions, drawings, graphics or photographs unless absolutely necessary to define the invention.’  Unfortunately, it left a few loopholes that allow such claims to be introduced at points in the lifecycle of a patent other than examination such as amendment after acceptance of an application or after grant of a patent, re-examination, opposition, or in revocation proceedings.  These loopholes are now closed.

Protection of Information

As a general rule, patent applications and associated documents are made publicly available, typically at 18 months following the earliest priority date, to ensure that the public benefits from knowledge of the invention.  Previously, the Commissioner of Patents has had the power, under the Patents Regulations 1991, to prevent publication of documents that contain sensitive information, such as commercial or personal information that is not essential to understanding of the invention.  However, publication of such documents has been an ‘all or nothing’ proposition.

Section 56 of the Patents Act has now been amended to enable the Commissioner to publish redacted copies of documents that contain, but do not consist entirely of, sensitive information.

Simplifying Translation Requirements

Many patent applications filed in Australia originate from countries in which English is not the primary language.  In particular, International Applications filed under the Patent Cooperation Treaty (PCT) may have original specifications that are not in English, in which case the applicant is required to file an English translation.  Until now, it has been compulsory also to provide a ‘certificate of verification’ of the translation.  In most cases – unless there is good reason to doubt the accuracy of the translation – this is a formality that serves only to impose an additional administrative overhead on the applicant.

Subsection 10(2) of the Patents Act has now been amended such that the requirement in any given case for a certificate of verification can be determined under the Regulations.  This will enable filing of a certificate to be made non-compulsory by amendment of the Regulations (which is far less onerous than amending legislation).  I understand that the intention is to regulate for provision of a certificate of verification to be non-compulsory unless expressly required by the Commissioner (which will be, in practice, hardly ever).


So, there you have it.  Innovation patents are on the way out, an objects clause is in, Crown use and compulsory licensing have been reformed, and a number of other minor and outstanding issues addressed.

Just to be clear, other than the 18 month delay in abolition of the innovation patent, all of the other changes discussed above are effective immediately, as of 27 February 2020.


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