In part one of a three-part series, we look at the changes proposed by the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 (Bill) and how they may affect the education sector.

What is in the Bill?

The Bill is the Federal Government’s response to both the Intellectual Property Arrangements Inquiry Report (December 2016) and the Compulsory Licensing of Patents Inquiry Report (April 2013). The Bill proposes to change various patent and IP arrangements by amending the Patents Act 1990 (Patents Act), Designs Act 2003 (Design Act) and the Trade Marks Act 1995 (Trade Marks Act) to:

• begin the process of phasing out the innovation patent system and incorporate a new Objects Clause in the Patents Act;
• provide further legislative guidance on the operation Crown Use; and
• provide a new legislative test for when an order can be made by the Federal Court for a patentee to grant a licence to another party to exploit an invention.

Part one of our series of blog posts focuses on explaining the changes to patents proposed by the Bill. Part two will deal with the proposed changes to Crown Use and Part three will explain the changes to the compulsory licencing system.

Patent Act changes

The Bill proposes to change patents and their assessment in two ways:

1. it plans to introduce a new ‘Objects clause’ into the Patents Act; and
2. it seeks to abolish the innovation patent system.

Objects clause – do we need it?

The new Objects clause 'provides a patent system in Australia that promotes economic well-being through technological innovation and the transfer and dissemination of technology. In so doing, the patent system balances over time the interests of producers, owners and users of technology and the public'.

Importantly, the Explanatory Memorandum makes clear that the Objects clause does not alter the ordinary meaning of the legislation nor overturn existing case law and established precedent. Further, the objects are not intended to have any effect on the existing requirements for the grant of a patent.

Notwithstanding the above, concerns were raised in submissions regarding the value of the introduction of an Objects clause. Submissions commented on the confusion that terms such as ‘technological innovation’ and ‘economic well-being’ introduced into the Patents Act. Primarily concern revolved around whether the term limited the subject matter eligibility threshold for a grant of a patent as the term ‘technological innovation’ could affect what can be patented, whereas a requirement to provide ‘economic well-being’ could be hard to quantify.

IP Australia and the Senate Committee disagreed with these views.

Removal of the innovation patent – a blow for innovators?

The innovation patent provided SMEs with a way to secure patent rights for a shorter term with a less rigorous certification test requiring only an ‘innovative’ step for registration, and giving a prima facie ‘granted’ status on the making of the application. However, the innovation patent was misused, underutilised and considered too easy to obtain.

The Productivity Commission has recommended that the innovation patent be phased out. This Bill begins the phase out process by setting a requirement that an innovation patent (or the specification of an innovation patent) cannot be accepted unless the priority date is earlier than this amendment. Submissions regarding the removal of the innovation patent varied from concern to support. A few key figures were noted in the Senate Report:

• Innovation patent holders did not see any significant increase in business value or returns and were not more likely to succeed compared to those who did not hold innovation patents.
• Take up of innovation patents was fairly limited with the most significant amount of innovation patent registration coming from abroad.
• Standard patent holders saw a substantial increase in business value and returns and were more likely to succeed compared to those held innovation patents or no patent at all.

What does this mean for the education sector?

The Objects clause is intended to provide clarity around the purpose of patents. However, IP Australia does concede that there may be some ‘short-term uncertainty’ before long-term clarity emerges. Despite assurances that the Objects clause will not affect patent grants, researchers and academics should be prepared to have patents examined in a manner that attempts to determine the ‘technological innovation’ your patent presents and how that provides ‘economic well-being’, such assessment could delay or frustrate patent applications.

The removal of the innovation patent is a potential blow to SMEs. How large a blow is uncertain, due to the limited take-up of this option in the first instance. Nonetheless:

• Those who were working on a product that had an ‘innovative step’ as opposed to an ‘inventive step’ may find it difficult to obtain a patent. Researchers may need to revise their inventions.
• The removal of the innovation patent system means that there is no ‘quick’ method for a patent, limiting the intellectual property protections available to universities and other researchers on the international stage.