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Will the loss of innovation patents make IP protection more difficult?

Innovation patents are on the way out; what does this mean for SMEs?

In response to recommendations from the Productivity Commission, the Australian Government has decided to abolish the innovation patents system. But what is an innovation patent, and will this move make it more difficult and expensive for SMEs to protect their IP?

What is an innovation patent?

An innovation patent is similar to a regular patent, but has some key differentiators. First, it only lasts for eight years, whereas a regular patent lasts for up to 25. It also has a lower threshold of inventiveness than a regular patent, which requires:

  • something new,
  • that involves an inventive step and
  • is able to be made or used in an industry.

By contrast, an innovation patent only requires an innovative step – that is to say, not something brand new but an improvement on an old technology that makes it significantly better.

A folder labelled 'patents'.
An innovation patent is similar to a regular one, but there are key differences.

The advantage of an innovation patent for SMEs is twofold – it's granted far quicker than a regular patent (usually a month after filing) and is less expensive to acquire. This makes it an attractive option for SMEs with fewer resources to protect their IP than larger companies.

What is the Government doing to the innovation patents system?

The Government will be amending the Patents Act 1990 to remove the innovation patents system. Draft legislation released by IP Australia in December gives an insight to what we might expect the official legislation to resemble. Were it to be enacted, currently held innovation patents will be unaffected and allowed to ride out their 8 year term.

Also, the system would not be fully phased out until 12 months after the legislation has received royal assent. This means that those who are looking to make an application may have time to get in before the law changes.

The loss of innovation patents may make it harder for SMEs to protect their innovations in a court of law.

What does this mean for SMEs and their IP?

Innovation patents cut red tape and lower costs for small scale inventors and businesses. As such, their loss in the future may make it more challenging for these entities to protect their IP. The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) explained that "the proposed abolition of the IPS comes at a time when its use is flourishing, with over 2,000 applications for innovation patents filed in Australia in 2016, the majority by Australian SMEs and inventors, for which the system is principally intended". 

So while the loss of innovation patents may make it harder for SMEs to protect their innovations in a court of law, there will still be options. For example, keeping any innovative steps your company has developed as trade secrets may become necessary, but this does come with its attendant risks.

Another option is to apply for a regular patent. This may prove difficult, as the standards of inventiveness are higher for a patent. Getting professional advice on whether you could be granted a regular patent is a wise idea.

At Alder IP, we're experts in protecting your IP from exploitation. For more information on how we can help protect your innovations, get in touch today.