Public Consultation Open On Recommendation To Discontinue Innovation Patents
Tuesday 18 August 2015 @ 11.18 a.m. | IP & Media
IP Australia has begun a public consultation on the innovation patent system after the Advisory Council on Intellectual Property (ACIP) recommended the system be abolished.
The innovation patent system was introduced in 2001 to provide a bridging mechanism for "incremental innovations" that would not meet the inventive step threshold requirements of the standard patent system. Its aim was to assist small to medium enterprises (SMEs) in stimulating innovation by offering a faster and less expensive form of patent protection. While the ACIP’s initial report in 2014 did not suggest abolishing the system, a new report produced by IP Australia in May this year found that the innovation patent was not meeting its policy goals, and was instead a net cost on SMEs.
The ACIP then issued a statement saying after considering these findings, their recommendation was that the Government should consider abolishing the system. IP Australia is now seeking public comment on the innovation patent system and its possible alternatives. Submissions are due by 28 September 2015.
Review History
The ACIP began an initial review of the innovation patent system in 2011, after it had been operating for ten years. Their final report was issued in May 2014 and concluded:
“ACIP is unable to make a recommendation on whether to abolish or retain the innovation patent system in its current form because it has been unable to obtain adequate empirical evidence as to whether the system does or does not stimulate innovation in Australian SMEs.”
However, the review did set out some recommendations for reforming the system, including by raising the level of invention test and requiring substantive examination of the patent before the third anniversary of its lodging.
In May this year, IP Australia released a report on the economic impact of innovation patents. The report was made possible after the publication of the “IP Government Open Data” system, which links the IP registry with Australian Business Numbers.
Economic Impact of Innovation Patents
The IP Australia report found that “firms who file innovation patents are less likely to participate in the standard patent system afterwards” and that “three quarters of these applicants file one innovation patent and then never file another innovation or standard patent again”. They also found that 78% of patents were let lapse early because firms see their value at less than the cost of renewal ($110-$220).
The report found:
“The low levels of repeated use by SMEs suggest that the innovation patent is not fulfilling its policy goal of providing an incentive for Australian SMEs to innovate, and the evidence shows a reduced likelihood of patenting after participating in the innovation patent system. Given the low private value of the system, it is likely that the system is a net cost to most of the SMEs that use it, and the system has imposed a regulatory burden of more than $100m since its introduction.”
IP Australia also calculated that while the system had some benefits, the “majority of both the regulatory burden ($5.8m to $17.3m) and the fees ($0.7m) fall on Australian SMEs and private inventors”, rather than on large firms.
In light of this analysis, the ACIP released a “Corrigendum” to their 2014 report that stated:
“The report estimates that the private value of innovation patents is of a similar magnitude to the regulatory costs incurred (in the low tens of millions of dollars per annum). ACIP agrees with the finding in the report that the private gains from innovation patents are likely to be offset by the uncertainty costs to consumers and producers. In view of the newly available evidence, ACIP considers that, taking into account the overall costs and benefits of the system, it is likely to result in a net cost to society…
In light of the information made available by the IPGOD dataset and the analysis presented in this research paper, ACIP is now able to make an assessment of the innovation patent system’s effectiveness in stimulating innovation among SMEs. ACIP considers it likely that the innovation patent is not achieving this objective and the Government should therefore consider abolishing the system.”
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