Key IP enforcement tool likely to be abolished: time to act now

Legislation currently before the Senate – the IP Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (Cth) (Bill) – will (if passed) have the effect of abolishing Australia’s innovation patent system. Users of the patent system should try to obtain these key enforcement tools while they are still available.

The innovation patent system was introduced in 2001 to protect incremental technological developments by Australian small and medium sized enterprises and as a replacement for the petty patent system which had been in operation since 1979. 

For nearly 40 years, these systems have guaranteed protection for innovations in Australia by way of a second tier patent system – a legacy of protection which seems likely to come to an end, as there is little doubt that the legislation will pass. 

Under the Bill, those who have already obtained or applied for innovation patents will (if the Bill is passed) continue to be able to enforce them. In addition, for a period of 12 months from the Bill receiving royal assent, it will still be possible to apply for innovation patents. 

After this ‘grace period’, no more applications will be accepted – it will be too late. 

The Bill follows the 2015-16 inquiry by the Productivity Commission into Australia’s IP arrangements, and gives effect to the recommendation in the Commission’s final report that the system be abolished. While submissions are continuing to be made in an effort to save the system, given the extent of consultation prior to and following the Commission’s final report, it is likely that the Bill will be passed. 

Opponents and proponents of the innovation patent system agree that innovation patents are a powerful enforcement tool. This is because they: 

• only require a low level of inventiveness to be valid (an ‘innovative step’) making them notoriously difficult to revoke (the Productivity Commission described the requirement as ‘little more than a test for novelty’);
  
  
• can be granted very quickly (within as little as one month);
  
  
• are granted without substantive examination (but are examined before they can be ‘certified’ and then enforced);
  
  
• do not have a pre-grant opposition procedure;
  
  
• have a maximum term of eight years (compared to 20 years for a standard patent); and
  
  
• provide the same infringement remedies as a standard patent. 

The ease with which innovation patents can be obtained, coupled with the difficulty of challenging their validity, has made them an effective litigation tool. As the Productivity Commission recognised, if a standard patent application is pending, parties can apply for a divisional innovation patent and tailor the claims of this divisional application to capture potentially infringing products. A further key benefit of the innovation patent system is that it avoids the risk that a competitor will delay a competitor from being able to obtain and enforce a patent by opposing the patent application before IP Australia.

Australian and foreign IP owners have utilised the innovation patent system across a range of technological fields. Users of the patent system should start undertaking the exercise of reviewing their portfolios and consider the possibility of applying for innovation patents, particularly IP owners who have identified potentially infringing conduct and may be developing an enforcement strategy. 

While the days of this powerful enforcement tool may be numbered, they are not yet done, and users of the patent system should act now to make sure they are in the best possible position to protect their IP in the years to come.