Innovation Patents in ACIP’s Firing Line

IP Australia recently released an economic research paper which analyses the economic impact of innovation patents. This research follows upon a review by the Australian Council on Intellectual Property (ACIP) conducted between 2011 and 2014 which assessed the effectiveness of the innovation patent system in stimulating innovation in Australia. ACIP’s final report found a lack of evidence in support of either the abolition or retention of the innovation patent system. The new IP Australia research paper has formed the basis for ACIP to reassess this report. ACIP has issued a statement which says:

ACIP considers it likely that the innovation patent is not achieving this objective [of stimulating innovation among SMEs] and the Government should therefore consider abolishing the system.

In 2001 the innovation patent system replaced the previous petty patent system with the aim of stimulating innovation among Australia’s SMEs.

IP Australia’s economic research paper is comprehensive and makes use of IP information for applicants from 1990 to 2013 as well as business information and data from the Australian Bureau of Statistics, ASIC and other sources. Key points are:

  • The use of the innovation patent system, shown by number of applications filed, has increased year-on-year since 2001, although there has been a slight drop off in the last two years.
  • Research and development expenditure among manufacturing companies that make use of the innovation patent system is much higher than those not using the system. Similar data for other industries could not be obtained.
  • Companies that file innovation patents are shown to survive for longer compared to companies that do not. There was however no additional survival benefit shown for companies holding enforceable certified innovation patents.
  • The most prolific users of the innovation patent system are SMEs (31%) and private inventors (63%). Large companies only account for 6% of the innovation patents filed.
  • The data also appears to show that the number of SMEs using the innovation patent system is increasing year-on-year. The use of the system by International applicants is also increasing.
  • The vast majority of SME and private inventors using the system only file one innovation patent application. Less than 1% of SME and private inventors have filed 5 or more innovation patent applications.
  • Large companies are more likely to continue to renew their innovation patents and also to have their innovation patents certified, compared with SME and private inventors. This leads the researchers to suggest that large companies hold innovation patents of more value and that SME and private inventors are not obtaining the same value from their innovation patents.

Based on the research data it would be easy to agree with ACIP and suggest that the innovation patent system has not met its intended goals. But large companies using the system are likely to have more experience and be able to extract maximum value from innovation patents through certification and renewal. By contrast SME and private inventors are generally less experienced in this area and may therefore not be achieving the same financial benefits. This data possibly highlights a need for increased education in the use of the innovation patent system among SMEs and private inventors, rather than simply abolition of the system.

The ACIP recommendation does not necessarily mean the abolition of the innovation system. For that to occur, the Government would need to accept the recommendation and make appropriate changes to the Patents Act.

Please contact us if you would like to know more about filing innovation patents and the potential benefits.