Australia Phasing Out Innovation Patents (Utility Models)

A few months ago, I posted about the Australian Government’s announcement of its intention to phase out the innovation patent.  On the 26th February this year, the relevant Act received Royal Assent, and from 26th August 2021 applicants will no longer be able to file Australian innovation patents.


Utility Models as an Intellectual Property Right

The Australian innovation patent is a form of intellectual property (IP) right, often referred to in other jurisdictions as a utility model.

Utility models are similar to standard patents in that they provide the owner with an exclusive right to stop others from using an invention.  However, they have a relatively lower threshold for patentability and offer a corresponding lesser level of protection.

Typically, a utility model will differ from a patent in the following ways:

  • Patentability: whilst novelty of the invention is still required, inventive step / non-obviousness typically has a lower threshold or is not required at all
  • Term of Protection: shorter than a patent, usually 7 to 10 years, depending on the jurisdiction
  • Registration: often simpler & faster, because many patent offices do not perform substantive examination prior to registration
  • Costs: utility models are cheaper to both obtain and maintain than patents
  • Subject Matter Qualification: in certain jurisdictions, utility models can only be obtained for certain technologies, and for products but not for processes

Being easier, quicker and cheaper to obtain, utility models are often sought to protect incremental innovations.  They are well suited for small and medium sized enterprises (SMEs) that make minor improvements or adaptations to existing technologies.


Why is Australia Phasing Out the Innovation Patent?

Recent studies have shown that the innovation patent has failed to achieve its intended purpose.

SMEs and individual inventors have not fully embraced the system, often being one-time users only and not maintaining these IP rights for their full term.  The desired incentivisation of research and development within these groups has not been observed either.

Rather, the system has provided a mechanism that enables big business to stifle the innovation of the smaller players.  The costs of the system have been disproportionally borne by the smaller entities, to a net cost to Australian businesses of AUD 11m annually, whilst the larger entities have realised the benefits.


How is IP Australia Continuing to Support SMEs?

The decision to phase out the innovation patent has been driven, in part, by the commitment to ensure the Australian IP system continues to meet the needs of SMEs.

There a number of other resources and initiatives currently available and also being introduced to ensure that SMEs remain supported.  These include:

  • SME Case Management: the availability of a dedicated case manager to support SMEs through the application process for both national and international filings
  • SME Fast Track: a mechanism to maintain the speedier prosecution process associated with the innovation patent, by requesting accelerated examination of a standard patent (usually 12 months) within eight weeks (typical of the former IP right)
  • SME Dedicated Outreach Program: a program of events, webinars and networks to provide educational services to support IP strategy for the entire business lifecycle
  • SME Online Portal: offering 24/7 support and advice, including an IP portfolio management tool


Innovation and Utility Models in New Zealand

A few years ago, New Zealand began formally exploring the introduction of a similar type of intellectual property right, referred to as an advancement patent.  However, the bill did not proceed past its first reading and is currently not being pursued.

New Zealand’s patent law landscape has changed significantly over recent years with the enactment of the Patents Act 2013.  Under the previous 1953 Act, the requirement for patentability in New Zealand had a relatively lower threshold than that found in many other global jurisdictions.

The 2013 Act brought this requirement into line with other territories, requiring absolute novelty, as well as examination for inventive step.  This allows New Zealand entities to compete and operate on a level playing field internationally, as well as attracting partnerships and investment globally, by providing a legislative framework that is comparable to other global jurisdictions.

Removing the lower threshold for patentability, however, may have negatively impacted upon SMEs, in that they might no longer be encouraged to invest in the incremental development of technology, as the return on investment would likely be realised over a much longer time period when now following the slower, standard patent route.

The New Zealand Advancement patent was designed to address these concerns by learning from the experiences of utility models elsewhere, including the Australian innovation patent.  The experiences overseas, however, have shown that utility models often do not function as intended, and this may be one reason why the New Zealand Advancement patent was not pursued.


Support for SMEs in New Zealand

Aotearoa has its own established innovation agency, Callaghan Innovation, that provides a single point of contact for businesses, supporting them at all stages of their innovation journey, with initiatives including:

  • A comprehensive network to access experts for advice, mentoring, partnering or access to technology
  • Research & Development services to take technologies and products from concept to commercial reality
  • Innovation skills delivered through a series of programmes and workshops designed to increase the pace of innovation and scale businesses
  • R&D Funding – including various grant programmes as well as guidance on R&D tax incentives
  • Scale-Up NZ – an online portal and ecosystem to connect New Zealand companies, investors, commercial hubs and multinationals

The utility model may not have taken hold in Australasia, but by learning from the experiences of others and delivering proactive support to businesses, the prospects for continued and leading innovation here are looking positive.

Alistair Curson



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