What is an innovation patent?

An innovation patent is Australia’s second-tier patent where an inventive step test of a standard patent is replaced with an “innovative step” test. Innovation patents still require the invention to be novel, but the innovative step represents a lower threshold than a traditional patent. This means that innovation patents are useful for protecting ‘less sophisticated’, ‘lower’ or incremental inventions.

An innovation patent has a term of eight years from filing, which is shorter than 20 years for a standard patent. Innovation patents are also limited to five claims, whereas a standard patent has no limit to the number of claims, although excess claim fees are applicable for each claim in excess of 20. The shorter-term and limited claim number reflects the expectation that the level of inventiveness will be low. An innovation patent provides a relatively quick and inexpensive way to obtain protection for an invention.

A significant difference between innovation and standard patents is that an innovation patent grants shortly after filing. This allows the applicant to market that they have a “granted patent”. However, even though an innovation patent is granted, it cannot be enforced against a third party unless it has passed examination. Examination of innovation patents is called certification. This terminology, which is somewhat unusual for patents, has led to some confusion among applicants about what rights an innovation patent provides.

A brief history of innovation patents

Innovation patents aren’t Australia’s first ‘second-tier’ patent. Petty patents were Australia’s first ‘second-tier’ patent and were introduced in 1979. Petty patents differed from standard patents with a term of six years, limited number of claims, and different procedures for grant, but importantly the same inventive step threshold as a standard patent still applied.

The petty patent wasn’t without issue, and in 1997 the Government released a response to a number of recommendations on how the petty patent should be abolished and replaced with a true second-tier patent. In addition, suggestions were accepted that a new second-tier patent with a lower ‘inventiveness’ requirement be created to fill a perceived gap between registered design rights and standard patent protection. The aim of the innovation patent system was to provide a low cost, efficient way to help small to medium enterprises (SMEs) protect their intellectual property (IP).

And so, in June 2000 the Patents Amendment (Innovation Patents) Bill 2000 was introduced to the Australian Parliament, and by May 2001 the innovation patent commenced. The fact that an innovation patent could be granted shortly after filing brought much scepticism, but this quickly subsided, and the innovation patent became an immediate hit.

Despite this success, it would take until 2008 for an innovation patent to be enforced (Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd) and for guidance to be received on the threshold required for an “innovative step”. In short, the Delnorth decision found that the innovative step threshold is met if a feature exists that provides a technical effect to the invention, even if this effect would otherwise be considered obvious. The intention to provide a lower threshold to patentability had become a reality.

The low patentability threshold of an innovation patent ended up being a double-edged sword. Not only did it allow “lesser inventions’ to be patented, but it also provided much stronger protection for more ‘standard’ inventions. This benefit was used extensively during enforcement, particularly by large organisations, where applicants would typically file several innovation patents and use them in addition to standard patents against alleged infringers. After all, if an invention is easier to patent using an innovation patent, it should be harder to revoke. For these reasons, innovation patents were more favoured by large corporations than SMEs.

The fast granting of innovation patents also meant that innovation patents of low quality with no prospect of ever being enforced were filed. Some saw this as an abuse of the system.

In February 2011, the Government initiated a review of the innovation patent system to assess whether it was meeting the desired objective. This review was finally delivered in 2014 with a recommendation to abolish the innovation patent, even though submissions considered in the review were overwhelmingly against abolishment. Behind the scenes, a review of the economic impact of innovation patents was performed by IP Australia and delivered in May 2015. In August 2015, the Productivity Commission also began a review of Australia’s IP system and published its finding in December 2016. They also recommended the innovation patent be abolished.

Then, in August 2017, the Government released its response to the Productivity Commission report where it accepted the recommendation to abolish the innovation patent. After a number of additional reports and submissions over the subsequent 12-24 months, a bill was passed to abolish the innovation patent, and on Thursday 27 February 2020, IP Australia announced that it will no longer accept new innovation patent applications from 26 August 2021.

Where to now?

Currently, there is no discussion of whether the innovation patent should be replaced by a new second-tier patent. From the Productivity Commission’s report, it is probably safe to assume that Australia won’t have a second-tier patent for some time.

For the time being, innovation patent applications filed before 25 August 2021 remain in force until their expiry. New innovation patent applications must also be filed before 25 August 2021, although there are two exceptions to this date:

  1. A divisional innovation patent application can be filed after 25 August 2021 provided that the parent application for the divisional was filed on or before 25 August 2021.
  2. A standard patent application can be converted to an innovation patent application provided the standard patent application was filed on or before 25 August 2021.

For those who expect to enforce and litigate patents, the loss of the innovation patent changes litigation strategy. It also means that more time and effort will be placed on ensuring that standard patents are valid prior to enforcement as it won’t be possible to rely on innovation patents should standard patents be found invalid e.g. for lack of inventive step.

For SMEs that hope to obtain protection for ‘lesser’ inventions, the loss of the innovation patent is significant as they now can only protect inventions that are novel and inventive by filing a (more expensive) standard patent application. After 21 August 2021, and with the standard patent ‘inventive step’ threshold in mind, SMEs that view a strong patent application as a key part of their commercial strategy may need to carry out further product development . It’s more important than ever for organisations to work with IP and commercial teams in tandem. Collaboration at this level will help ensure inventors realise maximum benefit from their work.