Last call for innovation patents in Australia

As a result of legislation enacted in February 2020, Australia’s second tier patent regime, the innovation patent system, is being phased out. 

Innovation patents are very effective enforcement tools across a variety of technical fields, even where the technical contribution is significant and capable of protection by a standard patent. Applications for new innovation patents must be filed on or before 25 August 2021.

The abolition of the innovation patent system does not apply retrospectively. Existing innovation patents and those granted based on applications filed before the deadline will continue to be in force. Given the term for innovation patents, some will continue until 25 August 2029. IP rights holders should take advantage of the innovation patent regime before it’s too late.

Beginning of the end

In 2019, we wrote about the proposed changes to patent legislation that would signal the beginning of the end for Australia’s second-tier patent system. As expected, those changes have been enacted and the deadline for applying for the last innovation patents is closing in. The phase-out of the innovation patent regime commenced on 26 February 2020 when the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 (Cth) (the Amending Act) came into force. 

The innovation patent system was originally introduced to facilitate and protect the inventiveness of small-to-medium sized enterprises (SMEs), but the view taken by the Productivity Commission and accepted by the Government is that uptake and engagement with the system proved insufficient. The Federal Government is currently undertaking a Patent Accessibility Review with the goal of understanding how the standard patent system can be better adapted to provide for SMEs. 

Last call

Innovation patents are (and will remain until August 2029) a very effective enforcement tool. IP rights holders who have applied for innovation patents before the deadline (or who obtain divisional innovation patents based on standard patent applications made before the deadline – discussed below) will continue to enjoy the benefits of those rights including:

• ease and speed of grant (can be granted within as little as one month, without substantive examination and no pre-grant opposition);
  
  
• a lower level of required inventiveness making them notoriously difficult to revoke (the Productivity Commission described the requirement as ‘little more than a test for novelty’);
  
  
• the same infringement remedies as for standard patents.  

A further important advantage has emerged as a result of one measure in last week’s 2021-2022 Federal Budget announcement. Innovation patents may well be an expeditious way to obtain the tax incentives under the proposed new ‘patent box’ for patents in the medical and biotech industries. Under the proposal, income derived from Australian medical and biotech patents for inventions developed in Australia will be taxed at 17% (instead of the usual 30% corporate tax rate or 25% for certain SMEs).

Key takeaways

In order to take advantage of the innovation patent regime before it is too late, IP rights holders should:

1. Undertake the exercise of reviewing their portfolios and consider the possibility of applying for innovation patents. This is particularly the case for IP owners who have identified potentially infringing conduct and may be developing an enforcement strategy.
   
   
2. File any applications on or before the 25 August 2021 deadline (whether as a standard patent application or innovation patent application).
   
   
3. Be aware that it will still be possible to apply for a divisional innovation patent after the deadline as long as the parent application (from which the divisional takes its filing date) was filed on or before 25 August 2021. Rights holders should, therefore, consider whether to maintain live divisional applications where a standard application has been filed before the deadline.