Changes afoot for the innovation patent system in Australia

Monday 16th September 2019
Article written by: Dr Fiona Pringle

The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 was introduced to the Australian Senate in late July 2019. This Bill follows on from Part 1, which addressed the trade mark and plant breeder’s rights systems. The focus of the current Bill is mainly on the patent system.

A change introduced by this Bill that has received significant attention is abolishing the innovation patent system in Australia. The innovation patent system has a lower inventive threshold and a shorter term (eight years). It is granted without substantive examination, but to be enforced it needs to be examined and certified. The intent behind introducing the innovation patent system was to encourage innovation by small and medium sized enterprises. However, as discussed in the Explanatory Memorandum to the Bill, the Productivity Commission enquiry into the intellectual property system in Australia found that innovation patents are “unlikely to provide net benefits to the Australian community or to the small and medium sized enterprises” and that they impose “significant costs on third parties and the broader Australian community”. The innovation patent system will therefore be abolished.


The Bill provides a delayed commencement date for the provisions abolishing the innovation patent system. They will not take effect until 12 months after the Bill receives Royal Assent. Therefore, applicants will have a significant lead time and plenty of warning of when the changes will take effect. In addition, innovation patents filed before the commencement of the amendments will not be affected by the changes, nor will the ability to file divisional innovation applications or convert standard patents to innovation patents for any patent or application filed prior to commencement. These transitional provisions help to maintain existing rights of applicants.


The Bill will also amend the compulsory licensing provisions of the Patents Act 1990. A compulsory license can be granted by the Court to a third party (i.e. not the patent owner) to exploit an invention. This provides for the market in Australia to be supplied by another party if the patentee is not doing so. The current test used in determining whether a compulsory license should be granted asks if the “reasonable requirements of the public” are being met. The Bill will replace this with a “public interest” test. The public interest will also be considered when developing terms of the license, such as remuneration for the patent owner. The Explanatory Memorandum of the Bill explains that the term “public interest” is a well understood legal term which has been interpreted by the Courts many times in a variety of situations. The intention of the amendment is to provide clarity and certainty.


Other changes will clarify the Crown use provisions for both patents and designs. The Crown use provisions are intended to provide for Australian Federal, State and Territory governments to use patented technology without authorisation of the rights holder if required, for example, because of an emergency such as a natural disaster or pandemic. The Explanatory Memorandum of the Bill states that the Crown use provisions in the Patents Act 1990 will be amended to “clarify the circumstances in which Commonwealth, State or Territory government agencies can utilise the Crown use provisions” and to “increase accountability, certainty, and transparency in the Crown use provisions to the benefit of patent owners”. For example, the amendments will introduce a requirement that the Crown must first approach a rights hold to negotiate terms of use unless there is an emergency situation. If negotiation is not successful, or there is an emergency, Ministerial approval will be required to invoke Crown use. The corresponding Crown use provisions in the Designs Act will be amended for consistency with the updated Patents Act provisions.


The Bill was referred to the Senate Economics Legislation Committee and its report is due 4 September 2019. We will keep you informed of further progress with this legislation.

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