Denham Sadler
September 26, 2019

Scrapping patents is a ‘death blow’

Policy

Scrapping patents is a ‘death blow’

Patent problem: Intellectual property warfare breaks out over patent scheme

The scrapping of a fast-tracked patent scheme would be a “death blow for SME innovation” and the federal government’s justifications for the move are “absolute nonsense”, according to Australia’s peak body for intellectual property.

The innovation patent system was introduced in 2001 as a faster and cheaper way for Australian companies to trademark innovations that may not qualify for a standard patent.

The scheme offers eight-year patents for an incremental advance in existing technology, rather than a new invention.

There are about 6500 active innovation patents, with the scheme most popular in civil engineering, furniture and games, information technology methods for management and electrical engineering.

But the Productivity Commission in 2016 recommended the scheme be scrapped, saying it was being abused by larger companies and overseas firms and offered no real benefit to local SMEs.

Legislation abolishing the innovation patents scheme will likely pass the Senate during the next sitting period with bipartisan support after the Senate Economics Committee earlier this month gave the green light for the passing of the legislation, despite a number of concerns surrounding it.

The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) said the government’s arguments for scrapping the scheme are “absolute nonsense” and don’t reflect reality.

“How the Senate Committee could ignore the advice of industry groups like Australian Chamber of Commerce and Industry which represents 300,000 businesses, the Australian Small Business Family Industry Ombudsman, Medicines Australia and AusBiotech is beyond me,” IPTA president Michael Caine said.

“There is almost universal agreement that the real threat to confidence and investment in SME innovation is a lack of protection for inventions and this will certainly be the case if the innovation patent system is abolished.”

The IPTA’s claims are in direct conflict with the government’s intellectual property agency IP Australia, which told the committee that there is “clear evidence and widespread agreement among stakeholders that the innovation patent does not work”.

IP Australia has argued that the scheme has resulted in uncertainty and higher regulatory costs for local SMEs, and is heavily used by foreign companies for “undesirable strategic purposes”.

But the IPTA said this is “absolute nonsense”, with 41 of the 51 submissions to the inquiry calling for innovation patents to be retained in one form or another.

“In submissions to the inquiry, SMEs around the country have clearly demonstrated the critical need to retain the cost efficient, second tier innovation patent system. The reality is that the current innovation system provides a rapid and affordable system for Australian SMEs to protect commercially significant incremental innovations,” Mr Caine said.

“The suggestion that abolishing the innovation patent will favour foreign patent holders at the expense of Aussie innovators is false and misleading as is the suggestion that fast-tracking the standard patent system will assist SMEs.”

Instead, the IPTA said the current scheme should be revised so that examination of an application is mandatory, rather than just when it is challenged, and the innovative step should be raised, but not to a point on par with the standard patents.

The innovation patents system should also be actively promoted by the government, Mr Caine said, so that it can act as an “IP entry point for Australian businesses and subsequently feed those businesses into the standard patent system”.

The legislation is likely to be supported by Labor, which backs the scrapping of the scheme but has said the government needs to do more to fill the gap that this will leave. 

Centre Alliance senator Rex Patrick will be voting against the legislation, saying that the government’s claims are in “direct contradiction to submissions by SMEs and certainly does not reflect the view and experience of a number of South Australian innovation-based companies”.

“It makes no sense to shut down the IPS when it is useful and valued by SMEs and, especially, if retaining the IPS costs nothing,” Senator Patrick said.

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