The innovation patent – a missed opportunity in Australia?

Recent figures published by IP Australia show that fewer than 5% of patent filings in Australia are for so-called ‘innovation’ patents, and that a disproportionately high number of these are made by private applicants. Additionally, fewer than 15% of innovation patent applications are made by non-resident applicants. This suggests that few patent holders are using the system strategically, and that many patent holders are missing available opportunities.

Australia’s second-tier innovation patent system was introduced in 2001, with high hopes that it would provide an equivalent to successful second-tier systems available in other countries, such as Germany and Japan. Unfortunately, much of the early publicity for the new system focused on perceived procedural flaws, rather than the opportunities that it presented. As a result, the benefits flowing from a strategic Australian innovation patent-filing strategy have been largely overlooked. This has been exacerbated by the largely hidden nature of the benefits.

The key to the Australian innovation patent system is that the threshold level of inventiveness for which a patent may validly be granted is significantly lower when compared to that required for the grant of a standard patent. The obvious result of this is that an innovation patent may be obtained for an invention that would not qualify for a standard patent. A less obvious result is that an innovation patent may validly include a significantly broader claim than available in a standard patent for the same invention.

The trade-off for this broader scope is the term of the patent, which is eight years rather than the 20-year term of a standard patent. Both the tests for infringement of an innovation patent and the available remedies are identical to those for standard patents. Even more importantly, the main defence to infringement – invalidity of the patent – is significantly harder to establish in the case of an innovation patent.

An infringer seeking to invalidate a standard Australian patent may identify several pieces of prior art, combine (or ‘mosaic’) them together and argue that the sum of their features is sufficiently similar to the claimed invention that its creation would have been obvious. This is similar to the regime in the United States, as addressed recently by the US Supreme Court in KSR v Teleflex.

In contrast, an infringer seeking to invalidate an innovation patent must identify (effectively) a single piece of prior art that is so close to the claimed invention that any differences do not significantly affect the way the invention works. Clearly, this presents an extremely high hurdle over which the infringer must leap. It also provides a much greater degree of certainty, which, one may presume, greatly reduces the chances of the patent being litigated.

Australian patent law prohibits double patenting. It does not, however, prohibit having concurrent applications for the same invention, or indeed two patents directed to the same invention but of differing claim scope.

It is important to consider the ramifications of this when devising a patent strategy around an invention. The existence of an innovation patent as, for example, a divisional application derived from a standard Australian patent application or a Patent Cooperation Treaty application can provide a high degree of certainty to the patent protection during the first eight years of an invention’s life. At the same time, it can provide a strong disincentive to competitors eager to attempt infringement. Finally, it can provide for a scope of claim that will make it much more difficult for any competitors seeking to engineer around the patent.

The bad press that accompanied the introduction of the innovation patent system may well have blinded innovators to the opportunities presented by the system. This situation is gradually changing. Use of innovation patents alongside standard patents can have significant commercial benefits, which should always be considered as an important part of a patenting strategy in Australia.