The Turnbull government quietly slipped out its response to the Productivity Commission’s inquiry into intellectual property arrangements last Friday afternoon, supporting a recommendation to wipe out second level IP protection for startups and SMEs.
Recommendation 8.1 of the Productivity Commission report states ‘the Australian Government should abolish the innovation patent system’ and the Turnbull government has supported the move.
The system allows a less rigorous and cheaper to obtain form of patent protection that was designed to be accessible for smaller companies with good ideas that didn’t pass the invention test of a formal patent.
In its response, the government said it would will seek legislative amendments to the Patents Act 1990 to abolish the innovation patent system, although arrangements would be made to preserve existing rights.
In defending the move, the government response said maintaining the innovation patent system was too expensive and that the Productivity Commission had found that most SMEs who had used the innovation patent system did not obtain value from it.
Intellectual property system observers were surprised by the decision to abolish the scheme.
“Really surprised they are going to can the innovation patent system. This makes obtaining IP protection much more difficult and costly for mum and dad inventors,” said patent attorney and managing director of BaxterIP, Chris Baxter.
Grant Shoebridge, a principal with Shelston IP and a council member of the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) said the “innovation patent system was designed to give SMEs a second tier patent protection which didn’t meet the threshold for inventive step, but did meet an innovative step.”
Putting on his IPTA hat, Dr Shoebridge said the institute believed the innovative patent system should be reformed but not abandoned entirely.
The main problem with the current system was that applications were automatically granted, but were unenforceable until they had been examined and certified.
“IPTA believes the decision to abolish the innovation patent system is not right. We think it should be reformed. The innovative threshold should be raised and there should be an examination process after applications are filed,” he said.
There was good news in the government’s response for Dr Shoebridge, who acts in pharmaceutical patent matters, in that the government has decided to not support a recommendation that would have seen restrictions on extensions of patent terms for pharmaceuticals.
“That was surprising and that was good,” he said.
Industry minister Arthur Sinodinos, and Communications minister Mitch Fifield will both be involved in bringing about the reforms supported in the Productivity Commission IP review.
As legislation is drafted over the next 12 months, IP Australia, which is under Senator Sinodinos wing, will consult with stakeholders on changes to patents, trademarks, and plant breeder’s right systems while Senator Fifield’s Communications department will consult on changes to the copyright laws.
IP policy will be monitored by a new IP Policy Group and a main priority will be to ‘align Australian inventive step law with international best practice to ensure that the necessary protections are available to deserving inventions.’
Dr Shoebridge is concerned over the government’s support of other recommendations which tinker with definitions of what constitutes patentable IP. Changes could undo long standing case law and lead to legal uncertainty over interpretations which could take judges and lawyers handling IP matters years to sort through.
In particular, Dr Shoebridge points to recommendation 7.1, 7.2 and 7.3 of the Productivity Commission report, all of which the government supports.
Recommendation 7.1 says an objects clause should be placed into the Patents Act. The clause would ‘describe the purpose of the legislation as enhancing the wellbeing of Australians by promoting technological innovation and the transfer and dissemination of technology. In so doing, the patent system should balance over time the interests of producers, owners and users of technology.’
Recommendation 7.2 seeks to raise the inventive step threshold to bring it more into alignment with European practice.
“If they propose to change the inventive step threshold, they change the wording of the legislation. That will introduce uncertainty into what the actual threshold is until such time it can be considered by a court,” said Dr Shoebridge.
Recommendation 7.3 asks IP Australia to reform its patent filing processes to make applicants ‘identify the technical features of the invention in the set of claims.’
“This appears to be a surreptitious way of attempting to introduce a higher patentable subject matter standard into the Patents Act, i.e. excluding from examination inventions that allegedly do not include technical features. This could be interpreted as excluding isolated products of nature from patent eligibility,” said Dr Shoebridge