Innovation patents – a second tier product with top tier benefits

Posted by Baxter IP on

Australia is one of the few countries in the world that have a two-tiered patent system which, in Australia consists of the:

  • Australian Standard patent; and
  • Australian Innovation patent

The Australian Standard patent application is the normal type of application similar to patent applications worldwide. Inventions that are filed as a standard application must be examined and must pass the novelty and inventive step test in order to proceed to grant.

In contrast, the Australian Innovation patent does not undergo a substantive examination prior to grant. In fact, innovation patents are granted very quickly, often within weeks, after successfully passing a mere formalities examination. Substantive examination of the claims of an innovation patent is an entirely optional exercise and only needs to be undertaken if there is a desire to enforce the granted innovation patent against an alleged infringer.

The examination process of an innovation patent is also known as a second-tier process. To pass the Examination phase and be Certified, an innovation patent must pass the novelty test, which is equivalent to that of the standard patent application, but this is where the similarities end. Instead of an inventive step test, innovation patents are merely required to pass an innovative step test. The innovative step test involves:

  1. comparing the invention on a claim-by-claim basis, with each prior art disclosure separately, to determine any differences between the claimed invention and the prior art disclosure; and
  2. looking at the differences through the eyes of a person skilled in the relevant art and assessing whether the invention as claimed in the relevant claim only varies from the prior art disclosure in ways that make no substantial contribution to the working of the invention.

Most importantly, it does not matter whether features that distinguish the invention from the prior art are well-known or obvious to the person skilled in the art. The only requirement is that there is at least one distinguishing feature between the invention claimed in the innovation patent and the prior art which makes a substantial contribution to the way in which the claimed invention works.

The Innovation Patent System

Innovation patents were introduced in Australia in 2001 to stimulate innovation in Australian small to medium business enterprise and intention to provide patent applicants with protection for “lower level inventions”. Accordingly, the cost for lodgement of an innovation patent is less than that of a standard patent application, as are the official fees to progress the innovation patent application through to a granted or certified patent. As a trade off for the lower level protection, innovation patents only have a life of 8 years compared with the 20 year term of a standard patent. However, this also make the innovation patent ideal for those products whose useful lifespan is on the order of 5 to 8 years since annual renewal fees of an innovation patent are less than that of a standard patent and there is no need to pay annuities for up to 20 years or to conduct annual audits of a patent portfolio and to cull such patents which may be beyond their useful lifespan but which are still attracting annual fees. Also, innovation patents are restricted to a maximum of five (5) claims.

Most importantly however, a certified innovation patent that has successfully passed the optional substantive examination of the claims and found to be both novel and innovative, is afforded exactly the same exclusive enforcement rights as a standard patent.

Accordingly, there have been many cases in the Australian court system where an innovation patent has been successfully enforced against an infringer.

Furthermore, as a by-product of the lower standard innovative test, innovation patents have proved to be notoriously difficult to overturn in court. Therefore, there is more chance that in an infringement action in court, the innovation patent is more likely to be found to be both valid and infringed. This low threshold of innovative step was first set out in Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81.

A fairly recent case in Australia outlining the benefits of enforcing an innovation patent is the case of Vehicle Monitoring Systems Pty Limited (VMS) v Sarb Management Group Pty Ltd (Sarb)FCA 395 2013. In this case, VMS was the owner of Australian Innovation Patent No. 2010101354 entitled “Method, apparatus and system for parking overstay detection”. This case highlighted the difference between an inventive step and an innovative step: for an inventive step, if the difference between the claimed invention and the prior art can be found in the common general knowledge then there it is likely that the claim lacks an inventive step. However, in the case of an innovation patent, the judge in VMS v. Sarb opined that it is of no significance that the claimed feature or features that distinguish the invention over the prior art represents an obvious deployment of common general knowledge. All that is required for innovative step is that the feature or features make a substantial contribution to the working of the invention.

Indeed, the innovation patent has turned out to be much stronger than was ever anticipated by the legislators when the innovation patent system and the innovative test standard was set loose on the innovative masses. The patentability threshold for an innovation patent was always intended to be set lower than that of a standard patent. However, the DelNorth case decisions clarified that the innovative step threshold is much lower than was anticipated by the designers of the system. In particular, the Delnorth decision has made it clear that an ‘innovative step’ allows even obvious enhancements to be patented, even while the certified innovation patent enjoys the same legal enforceability as that of a standard patent.

Strategic Use of Innovation Patents

There are a variety of strategic uses that can be made using the innovation patent system. For example:

  • An innovation patent may be filed as a standard patent is about to expire so that the innovation differs only marginally from that of the invention of the standard patent, but where the difference possesses an innovative step. In this manner, it is possible to extend the patent protection for an invention beyond the initial 20 year term in a process known as “evergreening”.
  • By filing a series of innovation patents surrounding a particular invention, it is relatively easy and cost effective to form a “patent thicket” around a valuable invention which subsequently makes it increasingly difficult and costly for a competitor or an opponent of a standard patent application to oppose a standard patent. This can be achieved by filing multiple divisional innovation patents claiming priority from the standard patent application, each for a minor variant of the invention. The opponent must then challenge each of the innovation patents, as well as the standard patent. Such a patent thicket is also very useful for an application as it creates a great deal of uncertainty for potential competitors to determine whether they are likely to infringe one or more of the patents if they decide to enter the sector of the market to which the patents relate.
  • An innovation patent can be used to specifically target an alleged infringer of a granted standard patent. This is achieved by filing a divisional innovation patent of a standard patent application in the relevant technology. The divisional innovation patent will have the same priority date as the standard patent application and thus will enable the infringer’s activities to be captured. The claims of the innovation patent are specifically drafted to ensure the maximum overlap with the infringer’s activities.

As can be seen, there are a variety of beneficial strategies that can be employed y the savvy patent applicant using the innovation patent system, and indeed, such creative uses of the innovation patent system have been seen in Australian courts. For example, the case of Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [2012] FCA 467 involved nine innovation patents and one standard patent owned by Britax concerning child safety seats— including the tethering and connection means for such seats. Each of the innovation patents was a divisional of Britax’s earlier standard application. Britax submitted that Infa had made various modifications to its products in an endeavour to escape from the monopoly permitted to Britax based on the standard application. Some of the innovation patents and claims within those innovation patents were specifically drafted to catch alleged infringing Infa products and to bring those products before the Court.

Other recent cases relating to the innovation patent system are the highly publicized ongoing legal disputes in Australia between Samsung Electronics Co. Limited (Samsung) and Apple Inc. Indeed, Apple Inc. has been one of the most prolific users of the innovation system in Australia, who in late 2013 held a portfolio of 98 certified innovation patents – over twice the size of the next largest portfolio (Aristocrat Technologies with 43 certified innovation patents) at the time (at the time of writing, Apple Inc. hold 107 certified innovation patents, and 415 granted standard patents indicating the clear importance that Apple Inc. place on the innovation patent as part of their overall patent strategy in Australia).

As we have discussed, innovation patents can be used in Australia to form a strong patent portfolio for intellectual property rights for their lower level inventions, with a lower compliance burden on patent Applicants by providing easier, cheaper and quicker rights for inventions.

Accordingly, if you do not already make use of the innovation patent system, or are not considering the inclusion of innovation patents in your intellectual property strategy, then perhaps you should be…

Please contact any of Baxter IP’s attorneys for more information on how to incorporate innovation patents in to your portfolio to protect your valuable ideas and commercial operations.