I previously reported on the Australian government’s budget announcement that it will be introducing a so-called ‘patent box’ tax incentive for medical and biotech (and, possibly, clean energy) innovations. Implementation details of the scheme are yet to be worked out, and the government is promising to consult closely with industry on the design of the patent box. However, while the final form of the scheme – which will not come into effect until 1 July 2022 – may not be known for many months, there is already at least one critical issue that prospective users of the system may need to consider.
The government’s fact sheet on ‘tax incentives to support the recovery’ states that ‘…granted patents, which were applied for after the Budget announcement, will be eligible’. There is, as yet, no clear indication of what the government means by ‘applied for’, however in its ‘What’s New’ email (to which you can subscribe here), sent on 14 May 2021, IP Australia states that ‘[t]o be eligible, the patent must have a priority date after 11 May 2021…’. Being unable to find this detail in the budget papers, I sent out a tweet asking whether anybody else had seen it, and tagging @IPAustralia, which responded:
Hi Mark, thanks for your comment. This is our understanding of the announcement. Further details on the patent box will be released in the coming weeks by Treasury as part of the public consultation.
— IP Australia (@IPAustralia) May 14, 2021
There is a big difference between ‘priority date’ and ‘filing date’, which hopefully will be open for discussion during the public consultation. If the critical date is the priority date, then this means that Australian medical and biotech innovators who have already filed a priority application (e.g. a provisional application) prior to the budget announcement would not be eligible for the patent box tax incentive if they subsequently file a complete application claiming the benefit of the provisional filing date. On the other hand, if they were now to file the same complete application in Australia without a priority claim, then they would be eligible for the scheme upon grant of any resulting patent.
The risk of dropping a valid claim to priority, of course, is there there may be intervening prior art that could invalidate or limit the scope of the claims, which has been made public after the priority date, but before the subsequent complete filing date. To minimise this risk, the complete application should be filed as soon as possible.
Fortunately, the Australian grace period protects an applicant against their own disclosures during the 12 months prior to the complete filing date. Furthermore, the discovery of intervening prior art would not be fatal, at least up until grant of the patent (see regulation 10.2B(7) of the Patents Regulations 1991), since the patent request could be amended to include the priority claim, with the consequence that the patent box incentive would then be unavailable.
The choice to file in Australia without claiming priority would not affect the applicant’s right to claim priority in other jurisdiction, either through direct applications or via the Patent Cooperation Treaty (PCT).
But, frankly, this seems perverse. To my mind, the logical choice for the critical date is the filing date of the complete patent application, which commences the patent term of up to 20 years during which the patent box tax incentive could be claimed. Basing eligibility on the priority date will simply encourage strategies, such as I have outlined above, to engineer eligibility. This does not serve anybody’s interests. The government will not make significant savings on the operation of the patent box scheme, while applicants will feel compelled to adapt their patent filing strategies simply to comply with an arbitrary choice of eligibility criteria.
Hopefully, through the consultation process, common sense will prevail. In the meantime, however, medical and biotech innovators with pending priority applications should probably seek advice from their patent attorneys.
Before You Go…
Thank you for reading this article to the end – I hope you enjoyed it, and found it useful. Almost every article I post here takes a few hours of my time to research and write, and I have never felt the need to ask for anything in return.
But now – for the first, and perhaps only, time – I am asking for a favour. If you are a patent attorney, examiner, or other professional who is experienced in reading and interpreting patent claims, I could really use your help with my PhD research. My project involves applying artificial intelligence to analyse patent claim scope systematically, with the goal of better understanding how different legal and regulatory choices influence the boundaries of patent protection. But I need data to train my models, and that is where you can potentially assist me. If every qualified person who reads this request could spare just a couple of hours over the next few weeks, I could gather all the data I need.
The task itself is straightforward and web-based – I am asking participants to compare pairs of patent claims and evaluate their relative scope, using an online application that I have designed and implemented over the past few months. No special knowledge is required beyond the ability to read and understand patent claims in technical fields with which you are familiar. You might even find it to be fun!
There is more information on the project website, at claimscopeproject.net. In particular, you can read:
- a detailed description of the study, its goals and benefits; and
- instructions for the use of the online claim comparison application.
Thank you for considering this request!
Mark Summerfield
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