Three weeks ago, after threatening to do so for years, the Australian Parliament quietly passed a bill to phase out the Australian "second-tier" innovation patent. As a result, this tech-friendly tool used to protect incremental innovations, will no longer be available to inventors who file for patents dated after 26 August 2021.

The innovation patent system is a cost-effective alternative to the standard patent system for novel, incremental developments that may not necessarily pass the “inventive step” threshold required for the grant of a standard patent. They are granted for 8 years, limited to 5 claims and do not have a substantive examination period (or opposition period) prior to being “certified” and enforceable.

Given the rapid yet incremental development of technology, innovation patents provide an attractive alternative for tech inventions that need quick, enforceable protection and/or may not require such protection for the 20-year period of a standard patent. The cheaper and efficient process also makes patent protection more accessible to SMEs and, in particular, tech start-ups looking to commercialise new products or services.

With their quick and simplified examination process, innovation patents serve as a useful strategic tool for pursuing infringement of inventions claimed in standard patent applications stuck in lengthy examinations or oppositions. Patentees in this situation can file divisional innovation patent applications based on the pending standard patent. These applications are likely to proceed quickly through the examination process, generating a right to sue and/or restrain infringers while the standard patent remains pending and unenforceable.

Despite these benefits, the Government has heeded to the advice of its Productivity Commission which found that innovation patents have not served to promote innovation among SMEs. Instead, the Productivity Commission found that the process has been abused to generate a number of “low value” patents that:

  • promote patent thickets;
  • reduce the credibility of patents when seeking finance and commercialisation opportunities; and
  • generate uncertainty for innovators needing to assess infringement risk.

Further, the enforcement strategy mentioned above was seen as an abuse of process that does more harm to innovation than good.

While the issues caused by low value patents are not ideal, it is a shame that the benefits of a simplified, cost-effective process will no longer be available for valuable incremental inventions . While IP Australia will offer tailored SME support services to make standard patent more accessible following the transition, patentees seeking to protect small innovations or those who wish to take advantage of the simplified innovation patent process should file base applications prior to 26 August 2021.