Phasing out of Australian Innovation patent and other amendments from the Australian IP legislature

Wednesday 4th March 2020

On 26 February 2020, the Intellectual Property Laws Amendment Act 2020 (Amendment Act) received royal assent in the Australian Parliament. The Amendment Act incorporates several key amendments to the Designs Act 2003 (Designs Act), Patents Act 1990 (Patents Act) and Trade Marks Act 1995 (Trade Marks Act) and begins the process of phasing out the innovation patent system, which will no longer permit the filing of new innovation patent applications from 26 August 2021.

Our last update on the Amendment Act was in May 2019, when we reported that in July 2018, the intellectual property office of Australia (IP Australia) released an exposure draft for the proposed Intellectual Property Laws Amendment Bill. This occurred in response to the assertions made by the Productivity Commission’s (PC) report that the Australian Government take actions to strike a better balance in the current patent system, which is thought to slightly benefit the rights holders against the interests of the broader Australian community, whilst also encouraging innovation, investment, and the production of creative works.

This article briefly explores the current changes to the intellectual property (IP) legislature in Australia, whilst also discussing the potential implications of these changes.

Phasing out of innovation patent system

The new legislation will bring quite a number of changes to Australia’s IP laws, starting as early as 27 February 2020. However, the controversial phase out of Australia’s second-tier innovation patent system will not commence until 26 August 2021.

Previously, the innovation patent system came under some intense criticism from the PC for granting protection for inventions that is “too easy” to obtain for patentees, and resulting in a “proliferation of low quality patents”, which hinders innovation, stifles competition, and needlessly shifts the burden to consumers of technology. As such, the Amendment Act has set to abolish the innovation patent system altogether and sets out the timings for this as follows:

  • It is no longer possible to file new innovation patents from 26 August 2021;
  • Existing innovation patents that were filed before 26 August 2021 will continue in force until their full eight year term expires;
  • Divisional innovation patent applications can be filed after 26 August 2021, provided that the parent application for the divisional was filed before 26 August 2021; and
  • Conversion of a standard patent application to an innovation patent application can be done, provided the standard patent application was filed before 26 August 2021.

As a result of the above changes, the innovation patent, which once served as an attractive, quick, and effective form of protection for inventions in fast-moving fields such as electronics or computer software, where the inventions are considered to become obsolete in eight years’ time, will now sorely be missed. Whilst this is somewhat disappointing, the patent community could still find some comfort from the news that the Amendments Act did not include any amendments to the ‘inventive step’ threshold for standard patents, as was proposed in IP Australia’s response to the PC report. We can only assume that the plans to raise the inventive step threshold may have been abandoned by the legislature, at least for now.

It is thought that this phase out of the innovation patent is part of the government’s commitment to ensure that the current Australian IP system meets the needs of small and medium enterprises (SMEs). That said, the government remains committed to help SMEs navigate the IP system through its new dedicated support services.

For more options for SME’s moving forward, see IP Australia’s innovation patent fact sheet, where the following “dedicated support services” for SMEs have been announced:

i.   SME fast track (providing options for regular expedited examination);
ii.   SME case management (providing support for internationally expedited applications);
iii.   SME portal (starting a 24/7 support platform for SMEs); and
iv.   SME dedicated outreach program (an IP education program).

Other amendments to the legislature

The other key changes to the Patents; Trade Marks, and Designs Acts to take effect from 27 February 2020 are summarised as follows:

1. Introduction an objects clause into the Patents Act

New Section 2A has been incorporated into the Patents Act which reads as follows:

“The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.”

The purpose of the objects clause is to provide greater clarity and guidance on the purpose of the provisions in the Patents Act, and thus a continued consistency between policy intent and administrative and judicial interpretation. The objects clause is also intended to clarify and clearly articulate the goals of the Australian patent system and to assist courts in interpreting the Patents Act in cases where the text of the legislation is uncertain or ambiguous.

Whilst this introduction of the objects clause is intended to clarify the goals of the patent system, it is to be understood that this clause does not alter the ordinary meaning of the legislation or overturn existing case law and established precedent.

2. Compulsory licensing of patents

“Compulsory licensing” refers to use of a patented invention under a licence granted by the court. In relation to compulsory licences, Schedule 4 of the Patent Act implements recommendations set out by the PC Report. The Act changes the test applied by the courts when determining whether a compulsory licence should be granted.

The amendments remove the current ‘reasonable requirement of the public’ test and replaces it with a ‘public interest’ test. The relevant factors to be taken into account under the new public interest test are:

  1. determining the benefits of the invention to the public from meeting the demand for the original invention;
  2. remuneration (i.e., commercial costs and benefits) to the applicant and the patentee for providing authorisation for commercial exploitation of the invention
  3. any other matters the court considers relevant, including matters relating to greater competition and any impact on innovation.

The new compulsory licensing amendments are expected to improve the balance between the rights of the patent owner and the interests of the broader public. Furthermore, under the new legislation, the compulsory licensing terms have also been amended to clarify that only the patentee of a dependent patent (i.e., one that can only be exploited by also exploiting an earlier original patent) can seek a compulsory licence over the use of the original patent. Further, the dependent invention must involve “an important technical advance of considerable economic significance on the original invention”.

3. Omnibus claims

Minor amendments to the Patents Act are proposed to make a technical correction around ‘omnibus claims’. This is because, Section 40(3A) of the Patents Act currently states that:

“…claims must not rely on references to descriptions, drawings, graphics or photographs unless absolutely necessary to define the invention”.

As such, omnibus claims are considered unpatentable in Australia.

The new Schedule 6 of the Amendment Act now provides that these omnibus claims can be challenged post-acceptance and post-grant as well. This also means IP Australia can now object to these claims during amendment, re-examination, opposition, and revocation proceedings filed after 27 February 2020.

Although drafted logically with the intention to avoid the situations where a patentee could pursue a post-acceptance or post-grant amendment to include these omnibus claims that would otherwise not be allowable during examination, the current amendment raises some concerns as it does not take into account the circumstances where an Examiner has previously accepted that a reference to a drawing or graphic in a claim was ‘absolutely necessary’.

4. Verified translations

From 26 August 2020, a certificate of verification of documents translated in English will no longer be required at IP Australia, unless required under the Patents Regulations (i.e., the situations where the Commissioner has reason to believe that the translation may not be true and/or accurate).

5. Crown use of patents and designs

“Crown use” refers to use by, or on behalf of, the Australian Government. Crown use is a rarely used safeguard that allows the government to step in when action is necessary to deal with an emergency, or other public interest issue, and access patented inventions and designs.

The current amendments to the Act clarify the circumstances in which Crown use can be invoked, introduce a process of Ministerial oversight, and provide better guidance to the courts on the remuneration standard that should be used in determining the level of compensation to be paid to the rights holder.

6. Protection of sensitive information

The Amendment Act now includes that the Commissioner of Patents is provided with the power to redact sensitive information from patent documents, including the power to partially or wholly redact a document, and publish a redacted version.

7. Electronic Seals

The Amendment Act also introduces minor amendments to the Patents and Trade Marks Act to allow for the official seals of the Patent Office and the Trade Mark Office to be kept and used in electronic form when supplying electronic certified copies of documents to customers.

This includes a certified copy of a patent specification to establish a priority date for overseas filings, certificates for trade marks, or as evidence for legal or other proceedings.

Ministerial review of the accessibility of patents to SMEs

Finally, the Amendments Act also includes provisions for a ministerial review in terms of the accessibility of patents for SMEs. The ministerial lasting no more than 12 months will commence on 26 November 2021 (being three months from the commencement date of the new innovation patent provisions). The review is expected to consider factors such as:

a)   patent application costs;
b)   processing times;
c)   the government’s advice in respect of the current patent application process; and
d)   the awareness of the patent application process.

As we wait for the outcome of the ministerial review, we will keep our readers informed with any further updates.

Need more information?

If you are in the process of considering and/or filing innovation patent protection in Australia or would like any further information in relation to these changes, please feel free to contact us.

For detailed information on the Act and the amendments made to the legislation, please see the Explanatory Memorandum.

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