End of the Line for Australian Innovation Patents

 Australia has phased out its innovation patent system, following legislative changes to the Patents Act 1990 (Cth). 

The final day for filing a new Australian innovation patent is 25 August 2021.

The relevant amending provisions of the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 (Cth) commence from 26 August 2021 - 18 months after the Act received royal assent.

What is (or was) an Innovation Patent?

The innovation patent was conceived as a simpler, faster, and more economical, form of protection for inventions compared to a standard patent or provisional patent.

Unlike a standard patent, an innovation patent does not require the applicant to demonstrate an "inventive step". 

However, the prospective patentee must still demonstrate the subject matter has:

• novelty - namely, the absence of public disclosure of the invention before the priority date; and 
• an innovative step - namely, that the invention is different from known prior art, and makes a 'substantial contribution to the working of the invention'.

The duration of an innovation patent (once granted) is up to 8 years after its filing date, subject to payment of annual renewal fees. The specification is limited to 5 patent claims and formal examination of the application is optional.

Once filed, the application may be granted in as little as 1 month, and examination (if requested) can be completed within 6 months.

The overall cost of the application (excluding professional attorney fees) is estimated at approximately A$1,500 - substantially less than the cost of a full standard patent.

The Phase-Out

In 2015, the Australian Productivity Commission was tasked with a review of Australia's intellectual property laws, including to "ensure that the intellectual property system provides appropriate incentives for innovation, investment and the production of creative works while ensuring it does not unreasonably impede further innovation, competition, investment and access to goods and services".

The Productivity Commission's Final Report was released in 2016, and included a recommendation to abolish the innovation patent system.

That recommendation was formally supported by the Australian Government in 2017, stating in its response: "The [Australian] Government considers that more targeted assistance would better achieve this objective [to stimulate innovation in Australian SMEs], while avoiding the broader costs imposed by the innovation patent system."

Legislation was then implemented in two parts:

• The 'Part 1' Act (passed in 2018) included amendments to copyright, designs and trade mark legislation, among other measures; and
• The 'Part 2' Act (passed in 2020) addressed the recommendation to abolish the innovation patent system.

According to IP Australia's official announcement, the phase-out stems from several reasons, which are reflected in the 2016 Productivity Commission Final Report:

1. The innovation patent's low barriers to entry made it easy to file a patent application, but resulted in a clogging of the system. Further, it was argued that strategic filers could exploit the system as a means of stifling competition.
2. The low innovation threshold and lack of compulsory examination created difficulties and uncertainty for other innovators in gaining a clear understanding of freedom to operate.
3. Innovation patents were not recognised internationally. This is said to have jeopardised international expansion prospects and exposed patent holders to potential copycat activity in international markets.

IP Australia's conclusion was that the innovation patent system had failed to achieve to its objectives, whilst imposing an A$11m annual administrative burden on the agency.

Where to from here?

Existing innovation patents filed before 25 August 2021 will continue to remain in force until their expiry, and divisional applications based on an existing innovation patent application will still be permitted provided the effective priority date is on or prior to 25 August 2021.

To support SME innovators, IP Australia has deployed a range of other measures including:

• an online portal;
• a dedicated "SME Fast-Track" patent process to shorten the examination timeframes for SMEs; and 
• piloting access to subject matter experts and case managers targeted at assisting self-filers.

It will remain to be seen what impact the removal of innovation patents has on the broader Australian patent landscape.

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Ben Thorn is an Australian intellectual property lawyer based in Brisbane, Queensland. He is the founder and director of Xuveo Legal, and is the current chair of the Queensland Law Society Technology and Intellectual Property Committee. Ben has been listed as a recommended intellectual property lawyer in Doyle's Guide 2020 and 2021.

Section 52 on the way out?

I refer, of course, to that section in the Copyright, Designs and Patents Act 1988. Under the Enterprise and Regulatory Reform Bill, introduced the other day (23 May to be precise), section 52, beloved of students of copyright law and those who set exams on the subject (it seems to crop up every year in the external London LLB papers, but, students, please don't rely on that as a guaranteed bit of question-spotting) will be repealed.

Whast does section 52 do? According to the Information Notice on the website of the soi-disant Intellectual Property Office:

This exception currently limits the term of protection for artistic works which have been produced through an industrial process.

Which not only reveals a lack of familiarity with the section itself, it reveals a lack of comprehension of the way copyright works. How, pray tell, can an artistic work be produced "through" an industrial process? And what  makes you think that "through", rather than "by", is the appropriate preposition to use, anyway? And why is taxpayer money being wasted on such ineptitude? I would prefer to see my taxes spent on educating people so they attain a reasonable standard of literacy.

Section 52 actually says (in subsection (1)):

This section applies where an artistic work has been exploited, by or with the licence of the copyright owner, by—
(a) making by an industrial process articles falling to be treated for the purposes of this Part as copies of the work, and
(b) marketing such articles, in the United Kingdom or elsewhere.

It is concerned with exploitation, not with production. Had the Information Notice said "production of copies" I would not have been moved to play the grumpy old man - but for the sake of a couple of words, and a few moments thought before putting pen to paper (or fingertip to key) accuracy has been cast aside. Anyway ...

What will it mean in practice? Section 52 does not feature frequently in litigation. In fact, all I got from a search of the cases on BAILII is Blayney (t/a Aardvark Jewelry) v Clogau St. David's Gold Mines Ltd & Ors [2002] EWCA Civ 1007 (16 July 2002), and that case only comes up because my Boolean search was, as my old maths teacher could have predicted (had he not passed away a couple of years ago), rubbish: it so happened that there were 252 lost sales involved in a case, Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, cited by the Court of Appeal, and also an odd 52 pence in the calculation of the profit that the claimant would have made. So make that no cases on section 52, a number confirmed by the first IP textbook that comes to hand when I reach towards my bookcase.

But section 52 does an important job, or at least it did and I am not convinced that it doesn't still. The fact that it doesn't feature in litigation matters not, just as the argument that a speed camera that catches no speeding motorists is redundant: in fact, it could simply be doing what it's there for. It goes back, dear reader, to the good old days when copyright was the preferred means of protection for industrial designs, because it gave protection for 50 years (yes, it was that long ago) post mortem auctoris, whereas if you troubled to register a design under the Registered Designs Act 1949, v1 (you will appreciate that we are now on v3), you would get 15 years' protection. Where was the incentive to pay money to the Designs Registry (part of the Patent Office, but don't get me started on silly names, read my Dictionary under "Gowers", or go straight to the judgment of Jacob LJ in EI Du Pont Nemours & Co v United Kingdom Intellectual Property Office [2009] EWCA Civ 966 (17 September 2009) where the learned judge talks of 'the trendy but pointless "operating name"' behind which the agency now hides) when you got longer protection by not doing so? Of course, registration would have given stronger protection, but was it sufficiently stronger to make the difference?

Nowadays, registration will give 25 years' protection and a registered design won't be of quite such doubtful validity as it was in those days. But the principle of section 52 seems to me to hold: if the law offers two forms of protection (and there is no reason why it shouldn't), it is entirely right that the rights concerned should be made coterminous. If the right period of protection for an industrial design is 25 years, copyright should not give longer. If the UK is different from other EU countries by not allowing full copyright protection for such artistic works, but EU law does not mandate harmonisation (and it doesn't), what reason is there to change? Professor Hargreaves recommended evidence-based policy-making, so where is the evidence on this matter?

The Press Notice from BIS (have I mentioned my aversion to trendy names? But this isn't just an "operating name" for the Department of Trade) hints at what the evidence might show. One of the aims of the current Bill is:

Deterring the importation and sale of unauthorised replicas of classic designs which qualify for copyright protection and extending copyright protection for mass-produced artistic works to life of the creator plus 70 years. These measures will promote innovation in the design industry and encourage investment in new products, while discouraging unauthorised copies.

Which seems to me to be saying that the period of protection afforded by the registered design system clearly isn't enough, given the longevity of some designs (and the fact that until recently no-one bothered very much with registering designs anyway). Far from promoting innovation, though, removing the restrictions on copyright term will encourage the use of classic designs. That might be a good thing in itself, but the professed policy goals appear to be the complete opposite ...

At least section 51 has removed the biggest problem caused by copyright interfering in the field of industrial designs - there might be copyright in the design of an exhaust pipe (if embodied in an artistic work) but making the article won't infringe copyright in the artistic work. So perhaps abolishing section 52 won't be an unmitigated disaster. It just seems totally misguided and contrary to the evidence.

The Information Notice then goes on, without drawing breath (and therefore suggesting that this is part of the same thought process):

Currently, when section 2(2) of the European Communities Act 1972 is used to amend the exceptions to copyright and performance rights, this can cause difficulties as its use may require a downwards adjustment of criminal penalties in copyright legislation. 

An order making power to allow amendment of any exceptions to copyright and performance rights (via secondary legislation) will enable the Government to preserve the level of penalties which are set out in the substantive copyright legislation. In some cases this includes penalties of up to ten years for copyright infringement on a commercial scale. It would not allow any reduction or increase in penalties.

Excuse me, but that first paragraph requires some explanation. I just don't see how that happens, though I am quite prepared to accept that it does. As for the second paragraph, the ineptitude of the author again becomes glaringly apparent: what is the "order making power" referred to? It clearly means an order that makes power: had the author intended to mean a power to make orders he or she should have written "an order-making power", and that seems to be what was intended. OK, so after a little thought I worked out the meaning, but no reader should be obliged to think through what the author intended to write. The whole point is to make the meaning clear by means of the words (and punctuation) used. Especially where the author purports to be a professional writer.

Scammers and the IPO

Trade mark owners continue to fall prey to scams masquerading as official agencies, writing to tell them their trade marks need renewing (not difficult information to come by) and obtaining a signature on a piece of paper that constitutes an instruction to renew at a fee practitioners would not charge in their widest dreams. Not illegal in itself, this technique relies on the fact that trade mark owners won't recognise an official letter: a practitioner would spot this at a glance.

When the source of the letter is a company called Intellectual Property Agency Ltd (although not a company incorporated in England and Wales) it's easy to see how someone might confuse it with the Intellectual Property Office. That institution directs complainants to Consumer Direct, though it seems to me that anything set up to help consumers (I include the Unfair Terms in Consumer Contracts Regulations, the Unsolicited Goods and Services Act, and the distance selling regulations) will be of no avail for the simple reason that anyone registering or renewing a trade mark is by definition not a consumer: only traders need trade marks - OK, let's say "undertakings" ... the connection between trade marks and trade was jettisoned in 1994.

Had the Office not been renamed, scammers might have found it difficult to pull the wool over anyone's eyes without using the words Patent Office and therefore committing an offence under section 112 of the Patents Act. But hang on - that section talks about using not only those words but "other words suggesting that his place of business is, or is officially connected with, the Patent Office". "Intellectual Property Office" is a "trading name" or something of the Patent Office, so surely using the name "Intellectual Property Office" is an offence - it suggests an official connection with the Patent Office. Changing "Office" to another word is unlikely to be enough to avoid the offence. So maybe some of these scams are more illegal than they look - but is anyone going to do anything about it?