Innovation patents – useful but unloved by some

Innovation patents – useful but unloved by some

Innovation patents – useful but unloved by some

Innovation patents have been available in Australia since 2001 and are able to provide patent protection as an alternative or addition to that obtainable under the standard patent system.  The innovation patent has popularity among users as it is subject to a lower patentability threshold than standard patents and is quicker and cheaper.  Although it has a reduced patent term and more restrictions on patentable subject matter, otherwise provides the same remedies for infringement as does a standard patent.  On the other hand critics of the system suggest the patentability threshold is too low having regard to the remedies it can provide on infringement and also that its use has extended beyond an original objective of stimulating innovation particularly from SME’s by offering protection for relatively low-level inventions.  The Advisory Council on Intellectual Property (ACIP) was asked in 2011 to review the innovation patent system principally in the light of concerns including those just discussed.  In the Report1 of that review published in May 2014 ACIP was unable to make recommendations as to whether to abolish or retain the system in its current form although recommendations were made as to how the patentability threshold might be raised while still being below that specified for a standard patent.

Key points

  • An Australian innovation patent can provide within a matter of a few months, weeks even, a strong and enforceable patent right with the same remedies as those available to a standard patent which may take several years from application through to grant.  
  • It is strong in the sense that due to the low threshold for inventiveness it can be difficult to successfully attack on that ground.
  • Although the current system has been criticised as being too generous having regard to the low patentability threshold, the current position is that the innovation patent system is still available for use and, indeed, is used quite extensively.  
  • It can provide significant benefits to rights holders in protecting innovation, not merely lower level innovation, which was one of the objectives when the system was first introduced.

How the system works

An innovation patent can be obtained for the same broad classes of invention for which a standard patent can be obtained but with a few exceptions relating to plants, animals and biological processes for their generation2.  It can be filed either as a first instance application, as an application associated with an earlier filed provisional application, or as a divisional application, usually from a pending complete application for a standard patent.  

The requirements for the specification of an innovation patent application are broadly the same as those applicable for a standard patent3 in terms of disclosure sufficient for others to perform the invention and disclosure of the best method for performing the invention.  The processing regime and patentability threshold are however significantly different and it is those differences which give rise to the advantages and related criticisms of the innovation patent system.  Other differences are a reduced patent term of 8 years in comparison with 20 years for a standard patent.

On filing the application it is subject to a formalities check only and provided it is found in compliance it will proceed to grant of the patent.  Grant can take place within just a few weeks after filing and it is important to note that grant takes place without any assessment of patentability being undertaken by IP Australia.  Although the patent has been granted, the patent cannot be enforced until it has successfully undergone substantive examination for patentability which can be requested by the patent owner or a third party at any stage throughout the term of the innovation patent4.  A patent which has successfully undergone the substantive examination process is referred to as a certified patent.  The patentability threshold as considered in substantive examination will be discussed later in this article.  Importantly, an issued innovation patent cannot be enforced until certification, and any threats made under that patent prior to its certification are deemed to be unjustified threats and as such are actionable5.   

In the writer’s experience an innovation patent which has been certified and accordingly in a condition for enforcement against infringement can issue within as little as six weeks after filing the innovation patent application.  Moreover it is possible for a patentee to have both an innovation patent and standard patent side-by-side for the same invention (although not with identical claims in both) and this has given rise to what have been referred to as “unintended” consequences of the system, although consequences which perhaps could have been foreseen arising from the manner in which the previous petty patent system (which the innovation patent system replaced) was sometimes used.  

The original objectives of the innovation patent system

The ACIP report6 includes a useful discussion of the considerations which led to the innovation patent system which was introduced in 2001, noting the gap which existed at
the time between design protection and the previous petty patent protection as means for protecting what were considered to be lower level inventions.  An objective of the innovation patent system as introduced in 2001 was, as the ACIP report notes, to stimulate innovation in Australian SMEs by providing Australian businesses with intellectual property rights for their lower level inventions.  An intention was also to provide easier, cheaper and quicker rights.

Although it seems quite clear that the objectives of providing easier, cheaper and quicker rights for lower level inventions have been fulfilled by the current system, its success or failure cannot be judged just on the basis of that rather narrow perspective.  The evidence shows that the system is not only used by Australian SME’s but also by substantial corporations both Australian based and overseas based7.  That is hardly surprising and could have been foreseen.  That section of the Report also notes so-called strategic uses of the system to obtain a speedy grant of an enforceable patent right to target specific infringements.  This is frequently achieved by filing the innovation patent as a divisional application from a pending standard patent application for that invention and which itself may take a number of years before it is granted.  A strategy of this type would normally be employed by larger companies rather than individual or small business applicants.

The patentability threshold

Perhaps the major concern which has arisen in the operation of the innovation patent system is the low level of the patentability threshold in the way that it has been interpreted by the courts.  In practice it seems that little more than bare novelty is required to meet that threshold.  

For an invention to be protected by a standard patent it must have novelty in relation to “prior art” in the form of prior documentary publications or something that has been disclosed by the doing of an act8.  It must also have inventive step meaning it is not obvious over the prior art and an important factor in the assessment is the common general knowledge of persons skilled in the particular art9.  This is quite a robust test for patentability and was further strengthened by the “Raising the Bar” amendments introduced in 201310 and the detailed considerations, which do not warrant discussion in this article, are comparable with those under US and European patent law.

For an innovation patent aside from the requirement for novelty, the principal patentability requirement is that of an innovative step11 rather than an inventive step.  Although the prior art which can be brought into the assessment of innovative step is generally similar to that for inventive step (although there are some technical differences), an innovative step is considered to exist when the differences over the prior art make a substantial contribution to the working of the invention, and this has to be considered in the light of the common general knowledge.  Although it was always the intention for an innovative step to require an inventive contribution lower than that required to meet the inventive step test for standard patents and, indeed, there was no requirement for the invention to be non-obvious12 nevertheless it was some years after the 2001 introduction of innovation patents before the innovative step test was clarified by the court.  This occurred in the Delnorth case13 which concerned a roadside post of spring steel, the subject of a number of innovation patents by Delnorth.  Dura-Post argued that reference to contribution to the working of the invention in the innovative step test required a consideration of the advance in the art represented by the invention.  That was rejected both at first instance and by the Full Court on appeal.  The Delnorth decisions clarify that the test requires an assessment as to whether the differences between the invention as claimed and the applicable prior art contribute to the working of the invention.  At first instance and as accepted on appeal it was held that “substantial” contribution in the context of the innovative step test meant “real” or “of substance”.  Although that would represent a factual enquiry on a case-by-case basis, nevertheless it does seem that provided the contribution to the working of the invention is more than trivial it is likely to meet the threshold for innovative step, again noting it does not have to be non-obvious or represent an advance in the art.  The practical effect of this is that for most inventions it is relatively straightforward to formulate a claim, even one of relatively broad scope, that is likely to satisfy that criterion.

The writer frankly admits that when innovation patents were first introduced he and some others had construed the wording of the innovative step test as requiring an advance in the art more or less along the lines argued by Dura-Post in the Delnorth case but with the caveat that the advance did not have to be non-obvious thereby meeting the objective of a lower patentability threshold than that needed for inventive step.  A consequence of the Delnorth decision is that the innovative step threshold is lower than had been originally foreseen and, in fact, is considered by many to be too low.  

The ACIP review

The concerns discussed above among others gave rise to the ACIP review.  In the background to the review14 it is stated “In recent years a variety of concerns have been raised about the relevance and operation of the innovation patent system.  One of the key concerns is that an innovation patent is overly generous given it has a very  
(emphasis added) low inventiveness threshold but the same remedies against infringement as a standard patent”.  

Although as noted in the introduction, ACIP was unable to make any recommendations on whether to abolish or retain the innovation system in its current form, this was because it was unable to obtain adequate empirical evidence as to whether the system does or does not stimulate innovation in Australian SMEs15.  Nevertheless it did recommend that innovative step is amended to raise the required level of innovation to a level above the current threshold but still below the inventive step threshold required for standard patents16.  The recommendation is that the required test should be that for inventiveness as described by the High Court in the landmark 3M case17, subject also that the invention should be non-obvious to a non-inventive skilled worker in the field when compared to the common general knowledge anywhere in the world.  Given, as ACIP noted that the current level as elaborated in Delnorth and subsequent cases is effectively no more than a novelty test, the ACIP recommendation does raise the threshold to a more reasonable level.

While the ACIP review was in progress a consultation paper “Innovation Patents – Raising the Step”18 was issued by IP Australia under its then Director–General, Phillip Noonan.  That paper while also noting concerns expressed at the low level threshold for innovation patents proposed a somewhat more radical solution to require a non-obvious inventive step, in other words basically the same test as applicable to standard patents.  The consultation paper, released in September 2012 seems to have progressed no further but nevertheless the recognition that some change is necessary does seem to be quite clear.  

The attitude of the current Government to innovation patents is not known and whether any change will take place at least within the current term is uncertain.  Nevertheless it seems highly likely that some change will occur in the future and in the writer’s view that change might be to abolish the innovation patent system in its entirety.  Most other developed countries have a successful innovative culture using the regular patent system to secure protection with patent owners ranging from individuals through SME’s to multinational corporations.  Whether Australian protection for lower level innovation is justified, remembering that it is not available exclusively to applicants domiciled in Australia, is a serious issue and in the writer’s view is better answered in the negative.  While a patent right of that type can provide significant commercial benefit to the patent owner, nevertheless its exclusionary effects against competitors, likely also SME’s, cannot be underestimated.

Conclusion

Future change in the innovation patent system does seem inevitable but it is unlikely that any changes will affect existing innovation patents, at least those which have been examined and certified.  For innovators, as opposed to their competitors, the system properly used can provide a strong patent right obtainable much more quickly than a standard patent, and at less cost while providing the same remedies as those available for infringement of a standard patent.  The reduced term of 8 years maximum while substantially less than that of a standard patent is still commercially useful for many inventions particularly the type of inventions for which the innovation patent system was designed.

 

End notes

  1. http://www.acip.gov.au/pdfs/ACIP_Final_Report_-_Review_of_the_Innovation_Patent_System.pdf
  2. Patents Act 1990 (Cth), s18(3)
  3. Above, n 2, s40(2)
  4. Above, n 2, Ss101A, 101B
  5. Above, n 2, s129A(1), (2)     
  6. Above, n 1, at pp 20, 21
  7. Above, n 1, at pp 25 to 31
  8. Above, n 2, s7(1)
  9. Above n 2, s7(2)
  10. Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth)
  11. Above, n 2, s7(4)
  12. Patents Amendment – Innovation Patents Bill 2000 (Cth) – Explanatory Memorandum
  13. Dura-Post Aust. Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81
  14. Above, n 1, at p5
  15. Above, n 1, Recommendation 1 at p6
  16. Above, n 1, Recommendation 2 at p7
  17. Minnesota Mining and Manufacturing Co. v Beiersdorf (Australia) Ltd [1980] HCA9
  18. http://www.ipaustralia.gov.au/pdfs/Innovation_Patent_System_Consultation.doc
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