May 4, 2021

Innovation Patent Abusers Ramp-Up Activity

A recent update from IP Australia indicated that there are delays in the grant of innovation patents due to the volume of applications being filed. For those that don’t know, the innovation patent is currently the second tier of Australia’s two-tier patent system but is being phased out from 26 August 2021.

A quirk of the innovation patent is that it is “granted” following a fairly rudimentary formalities examination.  This contrasts with most patents around the world which undergo substantive examination before they are granted. (Despite having already been granted, an innovation patent must survive a substantive examination before it can be enforced.)

This makes the innovation patent attractive to parties who want a guaranteed “granted patent”. However, one of the reasons the innovation patent is being phased out that a review of filing activity identified that a number of patent applications appeared to being filed in order to allow patent applicants from other countries to say that they’d been granted a patent in Australia without any genuine desire to obtain patent protection. Indeed, in recent years, the practice of foreign applicants obtaining an innovation patent in Australia in order to obtain a subsidy in their home country (most notably China) has become common place.

A ramp-up in this type of activity prior to 26 August was probably expected but it appears that it is more significant than IP Australia anticipated. Recent filing statistics show a marked increase with 1682 innovation patent applications being filed between January and March 2021 compared to 502 filings during the same period in 2020 and 1819 filings for the whole of 2019.  This is off the back of a significant increase in filings in the later part of last year with over 3000 filings in the last 6 months of the year;  clear evidence to show that those just wanting a granted patent are making hay while the sun shines.

At a more qualitative level, examining some of the information captured in the database it is clear that this boom also includes a fair number of inexperienced users of the system which is probably making formalities examination more complicated and impacting IP Australia. It will be fascinating to see how the system holds up as we approach the cut-off date.

For other users of the patent system, it is important to note that the innovation patent can provide valuable protection because the relatively lax requirement of an “innovative step” not only allows for protection of incremental inventions but also makes innovation patents difficult to invalidate; making them ideally suited for litigating.

The good news is that applicants who have a pending Australian standard patent application or a pending PCT application as of 25 August 2021 will still be able to file for an innovation patent using the divisional application process.  However, applications filed outside Australia (other than PCT applications) and Australian provisional patent applications filed prior to the 26 August 2021 will not provide eligibility to file for an innovation patent.  Accordingly, patent applicants who filed such an application after 25 August 2020 or intend to file a new application in the near future should consider filing an eligible application by 25 August 2021.

Applicants who would benefit most are those who have incremental inventions, contemplate having to litigate their patent or who want to improve their negotiating position in Australia.

Please contact us if you would like advice specific to your situation.

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