Jacob Schindler

Over the weekend, Australia’s government responded to a lengthy list of IP system reforms proposed last year by the country’s Productivity Commission, a top policy advisory body. Among other changes, the country’s second-tier “innovation patent” system looks almost certain to be abolished. The reply also endorses aligning the inventive step threshold for standard patents with that used by the EPO, a change that could generate industry pushback as it’s introduced in Parliament. 

The Productivity Commission in December declared “the ‘second-tier’ patent experiment has failed”, and the Turnbull government appears to agree. Akin to utility models elsewhere, the ‘innovation patent’ has a lower inventive step threshold and a maximum life of eight years, but offers the same remedies as a standard patent if it has been substantively examined by IP Australia. Intended to help SMEs protect incremental inventions, critics have pointed out that the biggest users of the system appear to be tech giants like Apple and obscure Chinese companies hunting for tax incentives. Others, like Rachel Hook, partner at FB Rice, say it was a useful tool for their clients: “It may have run away a bit from the intent, but it seems a bit drastic to abolish the innovation patent rather than fix it up.” But the government has said it will push for abolition, and it looks like it will get its way.

The government will also ask Parliament to raise the inventive step threshold for standard patents and insert language in the patent statute that emphasises the technical/technological features of an invention, through the following three amendments to the Patents Act 1990:

  • Insert an ‘objects clause’ describing the legislation’s purpose as “enhancing the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology” (7.1)
  • Amend the inventive step threshold to bring it into line with the test used by the European Patent Office (7.2)
  • Require patent filers to “identify the technical features of the invention in the set of claims” during the application process (7.3)

Grant Shoebridge, a principal at Shelston IP and Council Member of the Institute of Patent and Trade Mark Attorneys of Australia, says there is a common thread running through all three proposals – an emphasis on technical features that may exclude other types of innovation. “My view is that what they’re trying to do here is narrow the subject matter that’s patent eligible,” he says.

On the objects clause, Hook notes that it looks designed to “shield against expansion in strength and scope of rights” and that litigants may pull it out of their back pockets in opposition and invalidation cases. As for the technical features requirement, there is no indication of how it will be implemented yet, but Hook notes that it is rare to see a set of claims that have no technical features in them.

As for the inventive step change, Shoebridge questioned whether the change in process will produce a change in patent quality. Policymakers, he argues, are proceeding from a concern that Australia allows low quality patents, and that narrowing the scope will produce higher quality patents. But from an innovator’s point of view, an overly narrow patent has very little commercial value.

For patent owners, the bottom line is that the reforms will create uncertainty while adding “another layer of complexity and expense around the procedure”, says Hook. And where there is uncertainty, Shoebridge adds, there is risk.

The life sciences sector welcomed the government’s rejection of several proposals specific to pharmaceutical patents. A statement by industry group AusBiotech praised the government’s decision not to push for the elimination of the 5-year patent term extension, calling it “a major victory for the research-based sector and, frankly, fairness”. Some practitioners suspect that the government wanted to implement that proposal, but would have found it difficult because of various treaty obligations.

From today, patent owners can have their say on these and other potential changes to the Australian IP system in a public consultation. After that, any amendments will have to clear Parliament. Hook notes that the proposal for EPO-style inventive step test generated pushback during the most recent IP reform effort – the Raising the Bar Act – and did not make it into the final legislation. With around 20 months left before another general election, it is far from certain that everything on the Turnbull government’s IP agenda will make it into law.

IP professionals from many of Australia’s top corporates and research organisations will have a chance to discuss the strategic impact of these proposed reforms at the upcoming IPBC Australasia, which will be held at the Sofitel Melbourne on Collins on November 30.