The days of the innovation patent are numbered, as changes to Australia’s IP laws take effect
As foreshadowed in our previous report, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (the Bill) has now passed through both houses of Parliament and was enacted into legislation on 26 February 2020 by Royal Assent.
The new legislation will bring about a number of changes to Australia’s IP laws, starting as early as 27 February 2020. However, the controversial phase out of Australia’s second-tier innovation patent system will not commence until 26 August 2021. The timing of this and other key changes to the Patents Act 1990 (Cth), Trade Marks Act 1995 (Cth) and Designs Acts 2003 (Cth) are summarised as follows.
27 February 2020
1. Introduction of an object clause into the Patents Act.
2. A ‘public interest’ test will replace the current ‘reasonable requirements of the public’ test for compulsory licences. Further, only the patentee of a dependent patent will be able to obtain a compulsory licence over the original patent.
3. Crown use provisions for patents and designs can be invoked for the provision of a service that any Commonwealth, State or Territory Government has the primary responsibility for providing or funding. Governments will also be required to seek a negotiated outcome with the patentee before invoking Crown use, except in the case of emergencies.
4. Omnibus claims may be may be challenged post-acceptance and post-grant.
5. Introduction of electronic seals by the Patent and Trade Mark Offices.
6. The Commissioner of Patents will have the power to redact sensitive information from OPI documents.
26 August 2020
7. It will no longer be necessary to file a certificate of verification of documents translated into English.
26 August 2021
8. It will no longer be possible to file new innovation patent applications.
Changes commencing 27 February 2020
Key changes to Australia’s IP laws to take effect from 27 February 2020 are summarised as follows:
New Section 2A has been introduced into the Patents Act 1990 (Cth) as follows:
The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.
According to the Productivity Commission, the object clause will help to “ensure that the patent system remains adaptable and fit-for-purpose, particularly as new technologies emerge and as economies and business models evolve,” and “frame policy debates and reform.” However, concerns have been raised that the objects clause may be used to restrict the scope of patentable subject matter.
The Explanatory Memorandum (EM) accompanying the Bill states that the term ‘technological innovation’ “is not intended to narrow or change the subject matter eligibility threshold for grant of a patent” but rather refers more broadly to “applications of scientific knowledge for practical purposes.” Nor is the term ‘economic wellbeing’ intended to include any ethical and social considerations. Despite this, concerns have been raised that such terms could be used in practice to restrict the scope of patentable subject matter or to promote an anti-patent agenda.
In considering an application for a compulsory licence filed on or after 27 February 2020, the Court will be required to consider the ‘public interest’. The ‘public interest’ test, which also applies to determining the terms of a licence and remuneration (if any) payable to the patentee, will replace the current ‘reasonable requirements of the public’ test and is intended to “to improve the balance between the rights of the patent owner and the interests of the broader public.”
The relevant factors to be taken into account under the new public interest test are:
(i) the benefits to the public from meeting the demand for the original invention;
(ii) the commercial costs and benefits to the patentee and the applicant from providing authorisation to exploit the original invention; and
(iii) any other matters the court considers relevant, including matters relating to greater competition and any impact on innovation.
The compulsory licencing provisions have also been amended to clarify that only the patentee of a dependent patent (i.e., one that can only be exploited by also exploiting an earlier original patent) can seek a compulsory licence over the use of the original patent. Further, the dependent invention must involve “an important technical advance of considerable economic significance on the original invention”.
Both the Patents Act 1990 (Cth) and Designs Act 2003 (Cth) have been amended to clarify that the Crown use provisions can be invoked for the provision of a service that any Commonwealth, State or Territory Government has the primary responsibility for providing or funding. Further, Governments will be required to seek a negotiated outcome (e.g., a licence) with the patentee for a reasonable period and on reasonable terms before invoking the provisions, except in the case of emergencies.
Where negotiation is unsuccessful or in the case of emergencies, Ministerial authorisation must be sought before invoking Crown Use and the patentee must be notified of such authorisation at least 14 days before the use begins. In such cases, remuneration to the patentee must be “just and reasonable having regard to the economic value of the exploitation of the invention and any other matter the court considers relevant”.
Section 40(3A) of the Patents Act currently states that “…claims must not rely on references to descriptions, drawings, graphics or photographs unless absolutely necessary to define the invention”, effectively rendering ‘omnibus claims’ unpatentable. However, due to a drafting oversight, Section 40(3A) could previously only be considered during examination.
Under the amended legislation, ‘omnibus claims’ may be challenged post-acceptance and post-grant. This includes during amendment, re-examination, opposition and revocation proceedings filed after 27 February 2020. While this sensibly removes the possibility that patents may be amended post-acceptance or post-grant to include claims that would otherwise not be allowable during examination (and which cannot be challenged), it has raised concerns that it could be used to challenge claims in circumstances where an Examiner has previously accepted that a reference to a drawing or graphic in a claim was ‘absolutely necessary’.
The Patent Office and Trade Mark Office are able to keep and use a seal in electronic form, allowing IP Australia to provide certified electronic copies of documents.
The Commissioner of Patents has been imbued with the power to redact sensitive information from documents laid open to public inspection (OPI) where it is deemed reasonable to do so. This means that sensitive documents that were previously withheld from public inspection in their entirety may now be made OPI in redacted form.
Changes commencing 26 August 2020
Changes to Australia’s IP laws to take effect from 26 August 2020 are summarised as follows:
For applications filed on or after 26 August 2020, it will no longer be necessary to file a certificate of verification of documents translated into English, unless required under the Patents Regulations (e.g., where the Commissioner has reason to believe that the translation may not be true and correct).
Changes commencing 26 August 2021
Changes to Australia’s IP laws to take effect from 26 August 2021 are summarised as follows:
Despite extensive lobbying efforts by the Institute of Patent & Trade Mark Attorney Attorneys (IPTA), SMEs and other interested stakeholders, the innovation patent system’s days are finally numbered. Most significantly, it will no longer be possible to file new innovation patents on or after 26 August 2021. Therefore, we recommend filing any proposed new innovation patents before 26 August 2021.
Importantly, however, existing rights will not be affected by the changes:
- Innovation patents filed before 26 August 2021 will be entitled to see out their full 8-year term.
- It will still be possible to file divisional innovation patent applications having an effective filing date and priority date for each claim that is before 26 August 2021.
- Pending standard patent applications with an effective filing date and priority date for each claim that is before 26 August 2021 may still be converted to innovation patents.
The value of innovation patents
Innovation patents will be sorely missed as a mechanism for obtaining enforceable patent rights relatively quickly and cost-effectively compared to standard patents. While innovation patents have a maximum term of only 8 years, the lower ‘innovative step’ threshold makes them particularly valuable for SMEs that have developed incremental yet commercially significant advances in technological innovation. In this regard, innovation patents can provide the essential leg-up needed for some SMEs to establish themselves in a competitive marketplace.
A disappointing result
In a ‘fact sheet’ released late last year, IP Australia went so far as to say that innovation patents “harm small business innovation” and “inhibit genuine innovation and competition”. Despite submissions by IPTA and SMEs that this is patently untrue (pardon the pun!), IP Australia remains committed to this stance.
The main problems identified with the innovation patent system are the low ‘innovative step’ threshold and the ability to obtain grant without substantive examination (although they are not enforceable until examination and certification has been conducted). However, the Government was unreceptive to any reforms that would address these issues within the current system.
While this is an extremely disappointing result, some comfort may be taken in that the proposed changes to the ‘inventive step’ threshold for standard patents, discussed in our previous update, have been abandoned (at least for now).
Options for SMEs moving forward
In its 2017 response to the proposed law reforms by the Productivity Commission, the Government indicated that it would “continue to explore more direct mechanisms to better assist SMEs to understand and leverage their IP, secure and utilise IP Rights and access affordable enforcement”. This was reiterated by IP Australia in its 2019 ‘fact sheet’, where it announced the following “dedicated support services” for SMEs:
1. SME fast track (regular expedited examination);
2. SME case management (including support for internationally expedited applications);
3. SME portal (a 24/7 support platform for SMEs); and
4. SME dedicated outreach program (an IP education program).
The amendments to the Patents Act also include provision for a Ministerial review (lasting no longer than 12 months) of the accessibility of patents for SMEs, which will commence on 26 November 2021 (being 3 months from the commencement date of the new innovation patent provisions). The review must consider, inter alia:
(a) the cost of applications for patents;
(b) processing times of patents;
(c) advice provided by the Australian Government with respect to the patent application process; and
(d) awareness of the patent application process.
We will eagerly await the outcome of this review and update our readers with any developments.
If you would like any further information in relation to these changes, or any other IP issues, please contact us.