Abolition of the Innovation Patent System May Prove Detrimental to Australian SMEs

February 2nd, 2018 notebook

The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) has stated that the government’s proposed abolition of the innovation patent system will “seriously disadvantage Australian SMEs attracting finance to commercialise their innovations by removing the simplest and lowest cost means of protecting their intellectual property.”

The Innovation Patent System (IPS) was introduced in 2001 to encourage local SMEs to innovate. In 2016, over 2,000 applications for innovation patents were filed. The IPS allows Australian inventors and SMEs to protect their ideas and provides them with a strong foundation for future business negotiations.

In August 2017, the Australian government proposed to abolish the Innovation Patent System and introduce the Intellectual Property Laws Amendment Bill in order to “explore more direct mechanisms to better assist SMEs to understand and leverage their intellectual property and secure and utilise intellectual property rights.”

IPTA does not agree, declaring that the government does not realise that without the Innovation Patent System, SMEs will not be able to obtain certain IP rights and thus, they will not be able to utilise these rights. They hold the view that the innovation patent system protects “lower level inventions that may not be entitled to standard patent protection.”

Three principal issues existed with the IPS. First and foremost, it was seen that SMEs were not utilising the system or receiving material benefits from it. It was also believed that the threshold test for novelty was too low, which could create a large number of innovation patents that were hard to rescind. Thirdly, some felt that the “granted on filing” system could be taken advantage of, for instance, by allowing foreign applicants to receive subsidies in their own country for obtaining a “granted” patent.

Although flawed, many do not agree that completely eradicating the system is the right option and that the system was not failing to meet its goal of fostering Australian innovation. However, while fixing the IPS may better assist SMEs, this may no longer be an option as the abolition seems concrete. The government will now look to abolish the IPS through amending the Patents Act 1990. The date for this is not known, but it has been estimated that the filing deadline for the last innovation patent application may occur in around 2-3 years.