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PATENTS AMENDMENT (INNOVATION PATENTS) BILL 2000 Explanatory Memorandum

PATENTS AMENDMENT (INNOVATION PATENTS) BILL 2000



2000





THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA



HOUSE OF REPRESENTATIVES





PATENTS AMENDMENT

(INNOVATION PATENTS) BILL 2000



EXPLANATORY MEMORANDUM

















(Circulated by authority of the Parliamentary Secretary to the Minister for Industry, Science and Resources, the Hon Warren Entsch MP)













































ISBN: 0642 439699

PATENTS AMENDMENT (INNOVATION PATENTS) BILL 2000

OUTLINE

This Bill amends the Patents Act 1990 (‘the Patents Act’) to repeal the petty patent system, implement the innovation patent system and make other minor amendments.

The Patents Act currently provides two forms of patent protection: the standard patent and the petty patent. The petty patent was introduced in 1979 with the intention that it would provide protection for innovations typically developed by Australian small and medium business enterprises. It was intended to provide relatively inexpensive patent protection for inventions with a short commercial life. Although the petty patent system was directed at lower level inventions it required the same inventive threshold as that required for a standard patent.

In 1995 the Advisory Council on Industrial Property (‘ACIP’) published their report ‘Review of the Petty Patent System’. ACIP concluded that the petty patent was not achieving its objectives. They recommended the replacement of the petty patent system with the innovation patent system. The innovation patent system would require a lower inventive threshold than the standard or petty patent so would provide protection for lower level inventions. It would have a shorter life of 8 years, compared with the 20 years of a standard patent. Based on overseas experience with similar systems ACIP concluded that the innovation patent system would be better suited to the needs of small to medium business enterprises than the petty patent system.

The Government accepted most of ACIP's recommendations in agreeing to establish an innovation patent system to protect incremental inventions that may not be inventive enough to warrant standard patent protection and are not covered by design legislation. Innovation patents will not be available for plants or animals or biological processes for the generation of plants and animals. An innovation patent will be granted after a formalities check and will provide the patent owner with a right that is quick and cheap to obtain, is relatively simple, and lasts for a sufficient time to encourage investment in developing and marketing the invention. Substantive examination, that is the time consuming and costly process in which the invention is assessed against statutory criteria, will only occur if directed by the Commissioner of Patents or requested by the patent owner or a third party. If the patent meets the requirements of examination it will be certified and if not it will be revoked. To reduce the scope for unsubstantiated threats, an innovation patent owner can only enforce their rights if their patent has been certified.

This Bill will also move many of the fee payment requirements from the Patents Act to the Patents Regulations 1991 (‘the Regulations’) to enable this administrative function to be handled more flexibly by the Patent Office, including streamlining fee payment methods and introducing modern methods of fee payment. However, the Patents Act will describe a range of consequences which may result if a person does not pay fees in accordance with the Regulations. This Bill will also correct a number of ambiguities and minor errors in the Patents Act. There is also a consequential amendment to the Income Tax Assessment Act 1997 (‘the Tax Act’) as a result of the introduction of the innovation patent system.

FINANCIAL IMPACT STATEMENT

IP Australia operates on a full cost recovery basis so the implementation and administration of the innovation patent system will be paid for by its users. However, there is a potential cost to Commonwealth revenue as a result of the consequential amendment to the Tax Act which allows for a write-off of expenditure on a patent over its effective life. The estimated total cost to the revenue is: $0.5 million in 2001/02; $1 million in 2002/03; $1.5 million in 2003/04; $2 million in 2004/05; and $2 million in 2005/06



REGULATION IMPACT STATEMENT

INNOVATION PATENT



1. Executive Summary



The innovation patent system will replace the existing petty patent system with a new second-tier system that will be easier and cheaper to use.



The innovation patent system does not set up a compulsory regulatory regime but provides a service that inventors can use to register patent rights in low level inventions, should they choose to do so.



The innovation patent system will encourage and stimulate innovation by providing a means through which Small to Medium Enterprises (‘SMEs’) in particular can seek rights to exclude their competitors from copying inventions in which the owners of the rights have invested money and effort to develop.



IP Australia operates on a full cost recovery basis so the innovation patent system will be funded by users of the system. However, replacing the petty patent system with the innovation patent system may have a small impact on Commonwealth revenue.



By providing defined rights, the system will help create certainty about what can or cannot be copied and the system also provides an avenue for appeal. The certainty and transparency of the system will reduce the compliance burden business would face without such rights.



The system will reduce the potential for free riding, but is balanced by both the increased incentive to innovate and the stimulation provided by the publication of information on inventions that would otherwise be kept secret.



2. Objectives



The purpose of the proposed innovation patent system is to stimulate innovation in Australian SMEs. It would do this by providing Australian businesses with industrial property rights for their lower level inventions. Industrial property rights are not available for these inventions at present, which means competitors may be able to copy them. For this reason, a firm making lower level inventions cannot be certain of capturing the benefits that come from their commercial exploitation. This lowers the incentive to innovate.



The existing petty patent system, administered by IP Australia, has an inventive threshold the same as that for standard patents. This means that it does not meet the need Australian businesses have identified for lower level protection and which most overseas governments are already providing for their SMEs.



The proposed Government action would modify the existing petty patent system so that it provides protection for lower level inventions. It would also reduce the compliance burden on users of the patent system by providing easier, cheaper and quicker rights for inventions than the rights currently provided by the petty patent system.





3. Options and assessments



1The Government announced on 20 February 1997 that it would implement the innovation patent system. It accepted most of the recommendations made in the Review of the Petty Patent System conducted by the Advisory Council on Industrial Property (‘ACIP’).



In making its decision the Government considered the following options:



a) Abolish the petty patent system, so that businesses will be able to protect only those inventions that are sufficiently inventive to meet the standard patent threshold;



b) Retain the existing petty patent system unchanged;



c) Adopt ACIP’s recommendations for modifications to the petty patent system;



d) Adopt a system that goes beyond the ACIP recommendations by granting an innovation patent without substantive examination.





4. Impact Analysis and Assessments



Firms must innovate to maintain and improve their competitiveness. Higher levels of successful innovation will lead to improved economic growth and increased employment and trade opportunities.



Government support for innovation is justified by the market failure resulting from the positive externalities that flow from innovative activity. Because individual firms cannot themselves capture all the benefits that flow from their innovative activities, they will spend less than they might otherwise do. For this reason the total level of innovative activity will be less than is socially optimal. Industrial property rights are a particularly effective way of dealing with this problem because they directly address the positive externalities flowing from the non-excludability of information. They do this by enabling the owners of industrial property rights to prevent others from using their inventions.



The patent system provides governments a means through which they can promote innovation by enabling inventors to capture some of the beneficial externalities of their work. At the same time, the system maximises some of these externalities by requiring the full and detailed publication of information that inventors would otherwise keep secret.



Option a) would abolish part of the existing industrial property system. As such it does not address the problems identified by the 1993 report to the Prime Minister’s Science and Engineering Council (‘PMSEC’). Neither does it respond to the concerns and needs of small and medium sized businesses that ACIP identified in the extensive consultation process it carried out when reviewing the petty patent system. This option would clearly disadvantage the around 400 Australian firms and individuals that apply for petty patents each year.



Implementing option a) would increase the risk that small firms would not be able to recoup the costs they incur in developing incremental inventions because it would make it easier for competitors to copy inventions without having to cover the costs of developing them. This would reduce the incentive to invest in work that could lead to new products and improved processes. Moreover, if the petty patent or a second tier patent system was not available, it is likely that firms would try to keep their inventions secret. The advantages that flow to related firms from the publication of information about the inventions would be lost. To adopt option a) would be to move in the opposite direction to most other countries. Right around the world, countries that do not have them already are establishing second tier patent systems.



Options b), c) and d) all involve the maintenance of a second tier patent system. This would not impose a compulsory regulatory system on business but provide a service that firms could choose to use if they believed that the benefits of doing so outweighed the costs involved. Use of the industrial property system is not compulsory although there is an impact on third parties, who are excluded from using the inventions covered by a patent. However, third parties are also excluded from the use of trade secrets protected through the use of confidentiality agreements and the use of trade secrets has the potential to provide a much longer period of protection than the innovation patent. Because trade secrets provide less certain protection than patents, the enforcement of trade secrets is potentially much more expensive, complex and time consuming for all involved than the enforcement of registered rights. By providing defined rights the patent system creates certainty and this can itself reduce the compliance burden on business.



Option b), the retention of the petty patent system as it stands, suffers from the same problems as those identified in relation to option a). Industry consultations identified a significant demand for a second tier system. However, the petty patent system as it stands is not attractive to Australian SMEs and does not provide a means through which SMEs can seek rights for their incremental inventions. Australia is losing out on the benefits that would flow from the increased levels of innovation that a second tier system has the potential to stimulate. By retaining the petty patent system unchanged we would be ignoring local industry needs and the world trend toward the introduction of second tier systems. This option would particularly disadvantage the smaller firms and individual inventors working to produce incremental improvements to their products and processes.



Option c) would go some way to removing the problems identified in ACIP’s review. However, it would require applicants to seek the expensive and potentially unnecessary substantive examination of their applications before IP Australia could grant an innovation patent. The cost of examination can vary but for a complex matter where there has been no prior search work it can reach around $3000. As innovation patent applications will generally be from small businesses that have not carried out prior searches, the costs will usually be at the higher end of the cost scale. This means that the potential effectiveness of the system in stimulating innovation would be lessened as businesses would be discouraged from using the innovation patent system because of its perceived high cost and complexity.



Requiring substantive examination would not only increase the cost significantly, it would also extend the time that would elapse between making an application and receiving a granted patent. The benefit of requiring substantive examination is that it would provide greater certainty that the innovation patent was valid and allow the owner of the patent to take speedier legal action. However, this is an issue for only a very small proportion of granted patents as in the vast majority of cases the validity of the patent will not be disputed.



Option d) would have the benefits provided by option c) but would provide a cheaper, simpler and quicker system for processing applications. It would eliminate for most applicants the costs associated with the compulsory substantive examination stages, while allowing applicants or third parties to seek (and pay for) substantive examination at any time it became necessary. This would be much more attractive to potential applicants and would appeal to potential users who are currently intimidated by what they see at present as an unnecessarily complex and expensive process.



Under option d) only those innovation patents likely to become the subject of legal proceedings would need to be substantively examined. This means that most applicants would save significant amounts of money and the process would be much simpler. They would also be able to obtain a patent much faster. An innovation patent would be granted at between 6 weeks to 3 months after lodging the application. The existing system takes from 2 to 9 months to grant a petty patent.



The cost of adopting option d) would be that the validity of the patent without substantive examination would be less certain. However, given the very small proportion of granted industrial property rights for which this becomes an issue, the lesser certainty is more than outweighed by the simpler and cheaper processes provided for most applicants. IP Australia would make clear to applicants the nature of the right they were being granted and the right of third parties to seek examination.



Option d) would have the greatest impact in encouraging innovation because it provides rights for incremental inventions that are not covered by the present systems while at the same time providing a simple, cheap and easy to understand means for obtaining the rights. It would serve the needs of those small businesses that have no means of protecting their inventions at present or that are intimidated by the cost and perceived complexity of existing processes.



It is clear that only options c) and d) have the potential to provide a system that will enable individual inventors and SMEs to invest in developing incremental improvements to their existing products and process, knowing that they will be able to seek rights that allow them to stop others copying and using their developments. Only option d) is likely to be sufficiently attractive to SMEs to encourage them to seek this protection and to increase their innovative activity because it is available.



The proposal is not for a new system, but to modify the existing petty patent system so that it better serves the purpose for which it was always intended. Moreover, the use of the system is not compulsory. If firms choose not to use the innovation patent system for their lower level inventions, they are in no way hindered from carrying out their business. The firms that choose to make use of the system will be those that decide it is to their benefit to do so. They will not use the system unless the costs involved are less than the benefits they will gain.



IP Australia operates on a full cost recovery basis so there are no budgetary implications in the actual implementation and maintenance of the innovation patent system. Those using the system will meet all the direct costs of providing it.



However, there is a consequential amendment to the Income Tax Assessment Act 1997 as a result of the introduction of the innovation patent system. Consultations with the Australian Taxation Office (‘ATO’) have revealed that there may be a cost to Commonwealth revenue as a result of replacing the petty patent system with the innovation patent system.



Division 373 of the Income Tax Assessment Act provides a write-off for a patent over its effective life, which is equal to the term of the patent. Taxpayers currently receive a 6 year write-off for capital expenditure incurred in relation to the grant of a petty patent. The innovation patent will have an 8 year term, therefore the amendment to the Income Tax Assessment Act will provide for an 8 year write-off for capital expenditure incurred in obtaining an innovation patent.



The ATO has estimated the total cost to the revenue of this consequential amendment to be: $0.5 million in 2001/02; $1 million in 2002/03; $1.5 million in 2003/04; $2 million in 2004/05; and $2 million in 2005/06.



The cost to the revenue includes the effect of the proposal on both the immediate deductibility of fees incurred in obtaining and renewing an innovation patent, and the write-off of capital expenditure for developing or purchasing the patent over the effective life of the patent.



To the extent that the innovation patent promotes innovation, especially among SMEs, it has the potential to benefit not only this sector, but the nation as a whole. Experience from overseas suggests that the main users of the system will be small and medium sized domestic firms. Overseas firms do not usually use the second tier systems. They seek industrial property rights in foreign countries only for the major inventions that can be covered by rights that have the longer term provided by the standard patent system. Because the owners of innovation patents will be largely Australian SMEs and individual inventors, there should not be any negative effect on the balance of payments.



Businesses using the innovation patent system will benefit from cheaper, simpler processes that provide a granted patent more quickly. They will not have to bear the cost of substantive examination unless this becomes a commercial necessity. They can also have a speedy grant of between 6 weeks to 3 months after lodgement which is an improvement on the current 2 to 9 months for the grant of a petty patent.



One cost of the innovation patent system would be that businesses that are currently able to free ride on the inventive efforts of competitor businesses would no longer be able to do so if the inventions are covered by innovation patents. However, while the innovation patent will prevent free riding, it will lead to increased social benefits through higher levels of innovation. Moreover, one consequence of applying for an innovation patent would be that IP Australia would publish a full and detailed description of the invention shortly after the inventor applied for the patent. Other firms could draw upon the information contained in this description to use in their own inventive activities. This would have the potential to increase the effectiveness of the technical development activities of SMEs.



The proposed extension of the allowable term from the 6 years allowed by a petty patent to the 8 years for the innovation patent might be seen as increasing any social costs that will result from the system. These social costs are those that result from non-inventive producers being prevented from using the invention while the patent is in force. Allowing competing producers to enter the market earlier might increase the supply and reduce the cost to consumers of the invention, or of products containing the invention or made using it. However, the nature of the inventions covered by the innovation patent system will be such that they will normally have a limited market life. This is a consequence of the lower inventive threshold.



Given the lower inventive threshold that will apply to innovation patents, it is likely that competitors will be able to develop technologies to replace them more quickly than with standard patents. As a result, it is likely that most innovation patents will not run to the full allowable term, just as only a small proportion of standard patents run to their full potential term. However, based on overseas experience most users of the innovation patent will be new and unsophisticated users of the industrial property system. The ACIP and PMSEC consultation processes both identified the potential longer term as being necessary to make the system attractive to these potential users.





5. Consultations



Wide consultation was undertaken both during, and prior to, the actual review.



The impetus for the review came from a report to the PMSEC, The Role of Intellectual Property in Innovation. The report was prepared by representatives from higher education/research, small, medium and large business and the legal profession and followed wide industry consultation.



The review was undertaken by the independent ACIP, whose members are drawn from the business and manufacturing sectors, the patent attorney and legal professions and technology development groups.



The formal consultation process for the review included face to face consultations with representatives from industry, research organisations, inventor associations, technology and business advisory groups, patent attorneys and the legal profession. These consultation sessions were held in Sydney, Melbourne, Brisbane, Adelaide and Perth.



ACIP also carried out telephone interviews of 50 petty patentees to develop case studies. ACIP also arranged a major seminar involving representatives from state business offices and other interest groups to canvass the issues they were considering. Before preparing its final report ACIP released a Petty Patents Issues Paper for public comment. The Council then released a draft report for public comment before finalising its report to Government.



Following the public release of ACIP’s final report, IP Australia wrote to all interested parties seeking written submissions on the report and its recommendations. IP Australia took these submissions into consideration in developing the draft response to the report



6. Implementation and review



The innovation patent system will be introduced through changes to the Patents Act 1990 and the Patents Regulations 1991.



The Patents Amendment (Innovation Patents) Bill 2000 will commence on a day to be fixed by Proclamation or immediately after six months from the day of Royal Assent, whichever comes first. Any applications for petty patents filed before the commencement date will be treated as applications for petty patents, with the option to convert to either a standard patent or an innovation patent after the commencement date. All applications filed after the commencement date must be for either innovation patents or standard patents.



There will be no retrospective changes to the petty patents system. All petty patent applications and the petty patents already granted will be handled using existing procedures and according to the conditions that already apply to petty patents.



A proxy measure of the success of the new system would be the number of applications received and the extent to which these exceed the number of applications that were being made for petty patents. This information would be collected under normal operating procedures. IP Australia would report these figures along with the number of applications being made for all the other industrial property rights it administers.



The Government has agreed to undertake an evaluation of the innovation patent system within five years of its introduction. The evaluation will encompass consultations with users of the system, particularly Australian small and medium businesses, and the ATO. The review process is an important aspect of any system and it will provide valuable feedback on the effectiveness, or otherwise, of the new innovation patent system particularly in relation to whether it meets its key objectives.

NOTES ON INDIVIDUAL CLAUSES

Clauses 1 and 2— Short title and commencement



1. These clauses provide for the Act to be cited as the Patents Amendment (Innovation Patents) Act 2000. Commencement is on a day to be fixed by Proclamation or immediately after six months from the day of Royal Assent, whichever comes first.



Clause 3 — Schedule(s)



2. This clause provides that each Act specified in a Schedule is to be amended or repealed according to the relevant provisions of that Schedule. Any item in a Schedule has effect according to its terms.



Schedule 1 — Amendment of the Patents Act 1990



Item 1 — Section 3 (index of expressions)



3. This item inserts the expressions certified, formalities check and innovation patent into the list of expressions defined in the dictionary in Schedule 1 to the Patents Act 1990. These are all terms relating to innovation patents and their inclusion is consequential to the introduction of the innovation patent system. The definitions of these expressions are discussed in items 94, 98 and 99.



Item 2 — Section 3 (index of expressions)



4. This item deletes the expressions divisional application and petty patent from the list of expressions defined in the dictionary in Schedule 1 to the Patents Act. Deleting the term petty patent is consequential to repeal of the petty patent system and the removal of all references to petty patents in the Patents Act. The term divisional application has also been removed from the dictionary in Schedule 1 to the Patents Act. The rationale for this is set out in item 96.



Items 3 and 4 — Section 4 and section 4 (Table 2)



5. These items repeal the diagram showing the typical steps involved in getting and maintaining a petty patent and remove any references to the diagram in the text of section 4. These amendments are consequential to the repeal of the petty patent system. There are no amendments to the diagram showing the steps involved in getting and maintaining a standard patent. Item 3 makes it clear that the written provisions of the Patents Act take precedence over the diagram. Therefore, if there are any inconsistencies between the diagram and the written provisions the provisions prevail.



Item 5 — At the end of section 7



6. This item adds new provisions which set out the test for innovative step. This is not a mere novelty test. It requires a level of inventiveness that is greater than the invention simply being "new". The test requires that the invention is not only new but that it also differs from what was already known in a way that is not merely superficial or peripheral to the invention. The variation must be of practical significance to the way the invention works. However, in contrast to a standard patent there is no requirement that an invention claimed in an innovation patent must be non-obvious. Therefore the test for innovative step will require an inventive contribution lower than that required to meet the inventive step threshold set for standard patents.



7. Innovative step is determined taking into account the prior art base. The prior art base is the same as that used to determine inventive step in relation to standard patents. The person assessing the innovative step is a person skilled in the art who assesses the invention in the light of common general knowledge in the field of the invention as it existed before the priority date.



Item 6 ¾ Subsection 18(1)



8. This item amends subsection 18(1) of the Patents Act, consequential to the introduction of the innovation patent system. The item makes it clear that subsection 18(1) only applies to standard patents.



Item 7 ¾ After subsection 18(1)



9. This item inserts subsection 18(1A), which sets out the requirements for a patentable invention for the purposes of an innovation patent. It varies from subsection 18(1) of the Patents Act in only two respects - it refers to an innovative step, rather than an inventive step and is subject to both subsections 18(2) and (3) (see item 8). It is intended that all other requirements for a patentable invention are the same as for a standard patent.



Item 8 — At the end of section 18



10. This item inserts subsections 18(3) and (4) consequential to the introduction of the innovation patent system. Subsection 18(3) establishes that innovation patents will not be available for plants and animals and processes for the generation of plants and animals. This means innovation patents will not be available for any plant propagative material, including seeds, plant tissues and plant tissue cultures. Innovation patents will also not be available for biological processes that involve the generation of new plants or plant parts. Similarly innovation patents will not be available for animals or biological processes for the generation of animals.



11. Subsection (4) clarifies the limit of the subsection 18(3) exclusion. It confirms that innovation patents will be available for microbiological processes. These include cheese and wine making, brewing and industrial processes such as bioremediation and microbial bleaching.



12. Subsection 18(3) matters will be assessed during the formalities check (see items 22 and 92). An innovation patent will not be granted if it claims an invention that is a plant or animal, or a biological process for the generation of a plant or animal. An applicant for an innovation patent will have the opportunity to amend their application during the formalities check if it includes an animal or a plant, or biological process for the generation of an animal or a plant.



13. Subsection 18(3) will also be considered during examination and is a ground for revocation or opposition of an innovation patent.



Item 9 ¾ Subsections 24(1) and (2)



14. This item amends subsections 24(1) and (2) of the Patents Act consequential to the introduction of the innovation patent system. The item inserts a reference to innovative step, making it clear that section 24 of the Patents Act applies to both innovation patents and standard patents.



Item 10 ¾ Section 28



15. This item substitutes a new section 28 of the Patents Act consequential to the repeal of the petty patent system and introduction of the innovation patent system. The new section allows a person to notify the Commissioner of Patents (‘the Commissioner’) of any information which they believe shows that an invention that is the subject of an innovation patent is either not novel or does not involve an innovative step. The item also establishes that the Commissioner must inform the patent owner and send them a copy of any document accompanying the notice. The amended section has a similar scope to section 27 of the Patents Act, however it applies to innovation patents, not standard patents.



16. The amended section does not include provisions similar to the old subsection 28(1) of the Patents Act, that allow notification on the grounds that the patent owner was not entitled to the grant of a patent, or that the specification did not comply with subsections 40(2) or (3) of the Patents Act. These matters will not be considered in relation to an innovation patent at the stage of grant. They will only be considered if substantive examination is requested after grant. This is in contrast to the situation with petty patents where these issues have been considered prior to grant.



17. If, following examination of an innovation patent, a person wishes the Commissioner to consider issues relating to the patent's compliance with subsections 40(2) or (3), or the patent owner's entitlement to their patent, they can instigate opposition proceedings as discussed in item 51.



18. Notification under the provisions of the amended section 28 will not trigger examination of an innovation patent. If the notifier wishes to have the patent examined they must lodge a request for examination (see item 51, section 101A).



Item 11 ¾ Sections 33 and 34



19. Section 33 of the Patents Act establishes the Commissioner's authority to grant a patent to persons who may be entitled to the grant of that patent but who were not recognised in the original patent application. This section only applies where the grant of that patent has been opposed. Currently this section only provides for circumstances where the original applicant has no entitlement to a patent and the person opposing the grant of the patent is the only person entitled to the patent. However, a more common situation is one in which both the original applicant and the person opposing the grant of the patent are both entitled to the patent. This item substitutes a new section 33 to allow for this situation in respect of standard patent applications and introduces equivalent provisions relating to innovation patents.



20. The new section 33 provides that if the grant of a standard patent or the certification of an innovation patent is opposed the Commissioner may grant a patent for the same invention to any persons who the Commissioner has decided are eligible persons. The provision makes it clear that the eligible persons to whom the patent may be granted can be the opponent(s) either with or without the original patent owner or applicant. The item also provides that if the Commissioner grants the eligible persons a patent, the priority date(s) will be the same as that of the original patent or application.



21. Item 11 also substitutes a new section 34 of the Patents Act relating to patent applications from eligible persons arising out of court proceedings. Section 34 allows the court to make an order declaring that certain persons are eligible persons in relation to an invention that is the subject of a patent. The current wording of section 34 does not encompass the situation where both the patent owner and one or more other persons are eligible persons.



22. The new section 34 allows the court to declare that the patent owner and any other persons are eligible persons, or that the patent owner is not an eligible person but one or more other persons are. The provision also allows those eligible persons to file a patent application in respect of the same invention as the original patent and, if the Commissioner grants the patent, the priority date(s) will be the same as that of the original patent. For the purposes of the later application, it does not matter if the original patent was an innovation patent or a standard patent - the eligible persons can file an application for either type of patent.



Item 12 — Subsection 35(1)



23. Section 35 allows the Commissioner to declare that certain persons are eligible persons in relation to an invention which is the subject of a patent that has been revoked under section 137 (revocation on surrender of a patent). However, the current wording of section 35 does not encompass the situation where both the patent owner and one or more other persons are eligible persons. This item substitutes a new subsection 35(1) of the Patents Act to provide for this situation.



24. The new subsection 35(1) allows the Commissioner to declare, on application by one or more persons, that the patent owner and any of those persons are eligible persons, or that the patent owner is not an eligible person but those other persons are. The provision also allows the eligible persons to file a patent application in respect of the same invention as the revoked patent and, if the Commissioner grants the patent, the priority date will be the same as that of the revoked patent. For the purposes of the later application, it does not matter if the original patent was an innovation patent or a standard patent - the eligible persons can file an application for either type of patent.



Item 13 — Section 36



25. Section 36 allows the Commissioner to declare that certain persons are eligible persons in relation to an invention which is the subject of a patent application that has not been accepted. However, the current wording of section 36 does not encompass the situation where both the patent applicant and one or more other persons are eligible persons. This item substitutes a new section 36 to provide for this situation.



26. The new section 36 allows the Commissioner to declare, on application by one or more persons, that the patent owner and those other persons are eligible persons, or that the patent owner is not an eligible person but those other persons are. The provision will also allow the eligible persons to file a patent application in respect of the same invention as the original patent application and, if the Commissioner grants the patent, the priority date will be the same as that of the original patent application. For the purposes of the later application, it does not matter if the original application was for an innovation patent or a standard patent - the eligible persons can file an application for either type of patent.



Item 14 ¾ Section 39



27. This item repeals section 39 of the Patents Act. Divisional applications are provided for in a new chapter, Chapter 6A. This chapter is discussed in item 42.



Item 15 ¾ Paragraph 40(2)(c)



28. This item substitutes a new paragraph 40(2)(c) of the Patents Act, consequential to the repeal of the petty patent system and the introduction of the innovation patent system. The new paragraph 40(2)(c) provides for the number of claims in an innovation patent. An innovation patent must have at least one, and no more than five claims. In contrast to a petty patent an innovation patent is not restricted to only one independent or "stand alone" claim and no more than two dependent claims that fall within the scope of the "stand alone" claim. All of the claims of an innovation patent can be independent.



Item 16 ¾ At the end of section 43



29. This item adds two provisions to section 43 of the Patents Act, consequential to the introduction of the innovation patent system. These provisions deal with the mechanisms for determining the priority dates of claims in an innovation patent that is a divisional application of an earlier innovation patent. (A description of divisional applications is provided in item 42.)



30. The new subsection 43(5) establishes that if the patent owner has requested examination of the divisional application within the period prescribed by the Patents Regulations 1991 (‘the Regulations’) then the Regulations will also determine the priority date of the claims. The new subsection 43(6) requires that the priority date for a divisional application of an innovation patent cannot be earlier than the filing date of that innovation patent if substantive examination of the divisional application has not been requested in the prescribed period.



31. Chapter 6A (see item 42) deals with divisional applications. It provides the conditions under which a divisional application for an innovation patent can be lodged. Subsection 79C(2) establishes that an innovation patent that is a divisional application of an earlier innovation patent can only be filed after examination of the earlier innovation patent has been requested. This provision, in association with the provisions of subsection 43(5), ensures that if a patent owner is to rely on the priority date advantages of a divisional application they must have requested substantive examination of both the earlier innovation patent and the divisional application.



Item 17 ¾ Part 2 of Chapter 3 (heading)



32. This item amends the heading of Part 2 of Chapter 3 of the Patents Act to restrict the application of Part 2 to standard patents.



Item 18 ¾ Subsection 45(1)



33. This item repeals subsection 45(1) of the Patents Act and replaces it with a new subsection limited to standard patents. This item also inserts subsection 45(1A) to make it clear that, during examination, regard is not given to information only made available through prior use. This is because the Commissioner only has access to documented information during examination. Prior use is only taken into account during opposition and court proceedings when the Commissioner and the court have access to the testimony of expert witnesses.



Item 19 ¾ Subsection 48(1)



34. This item amends the provisions for modified examination in a similar fashion to that discussed in item 18.



Item 20 ¾ After Part 3 of Chapter 3 (heading)



35. Part 3 of Chapter 3 of the Patents Act is separated into two divisions. This item inserts a heading for the first of those divisions, the division dealing with acceptance of standard patents.



Item 21 ¾ Subsection 49(1)



36. This item replaces the reference to section 50 with a reference to section 51. This amendment is consequential to the restructure of Part 3 of Chapter 3 of the Patents Act.



Item 22 ¾ Sections 50, 51 and 52



37. This item replaces sections 50, 51 and 52 of the Patents Act with new sections 50 and 51. The repeal of section 50 is consequential to the repeal of the petty patent system. The only differences between new sections 50 and 51 and the old sections 51 and 52 are that the new sections will only apply to standard patents.



38. This item also inserts Division 2 of Part 3 and replaces section 52, consequential to the introduction of the innovation patent system. Division 2 deals with innovation patents. The new section 52 sets out the provisions for formalities checks and acceptance of innovation patents. The procedure and requirements for the formalities check will be set out in the Regulations. Substantive examination of innovation patents will only be carried out if directed by the Commissioner, or requested by the patent owner or a third party. Substantive examination of innovation patents is dealt with in the new Chapter 9A of the Patents Act.



39. The formalities requirements include an assessment of whether the innovation patent includes a plant, animal or human being, or a biological process for the generation of a plant, animal or human being (see items 8 and 92). Innovation patents will not be granted for these inventions.



Item 23 ¾ Subsection 54(1)



40. This item amends subsection 54(1) of the Patents Act consequential to the introduction of the innovation patent system. The item makes it clear that the subsection only deals with standard patents. Publication of innovation patents is dealt with in item 34 (section 62).



Item 24 ¾ Paragraph 54(4)(a)



41. This item amends paragraph 54(4)(a) of the Patents Act to limit its operation to standard patent applications. The amendment does not alter the provisions for publication of divisional applications for standard patents. There will be no publication of any innovation patents prior to grant. This is because a fast progression to grant is one of the intended advantages of the innovation patent and a requirement for publication of a divisional application at filing would delay its grant. Furthermore, because innovation patents will be published immediately after grant and grant will occur soon after filing, publication of divisional applications of innovation patents will occur soon after filing.

Item 25 ¾ Subsection 54(5)



42. This item amends subsection 54(5) of the Patents Act in the same way that the previous item amends paragraph 54(4)(a). The amendment also provides for the publication of divisional applications for standard patents.



Item 26 ¾ Paragraph 54(6)(a)



43. This item amends paragraph 54(6)(a) of the Patents Act in the same way that the previous two items amend paragraph 54(4)(a) and subsection 54(5). The amendment also provides for the publication of divisional applications for standard patents.



Item 27 ¾ Subsection 55(2)



44. This item amends subsection 55(2) of the Patents Act to replace a reference to a petty patent with a reference to an innovation patent.



Item 28 ¾ Subsection 57(2)



45. This item repeals subsection 57(2) of the Patents Act consequential to the repeal of the petty patent system. The subsection deals with the publication of petty patents prior to grant. This provision will not apply to innovation patents because innovation patents will only be published after grant.



Item 29 ¾ Subsection 57(3)



46. This item amends subsection 57(3) of the Patents Act consequential to the repeal of subsection 57(2) of the Patents Act and the petty patent system.



Item 30 ¾ Subsection 57(4)



47. This item substitutes a new subsection 57(4) to remove any references to subsection 57(2) and petty patents. The amendment is consequential to the repeal of subsection 57(2) and the petty patent system.



Item 31 ¾ Chapter 5 (heading)



48. This item substitutes the heading of Chapter 5 of the Patents Act to limit the provisions of the chapter to standard patents. At present a standard patent can be opposed prior to grant and this provision will not change. There will be no pre-grant opposition of innovation patents as examination of innovation patents will only occur after grant. However there will be a provision for post-grant opposition of certified innovation patents (see item 51 - Part 3 of Chapter 9A).



Item 32 ¾ Paragraph 59(a)



49. This item substitutes a new paragraph 59(a) to make it clear that the grant of a standard patent can be opposed on the ground that the applicant has no entitlement to the grant of the patent or is only entitled to the grant of the patent as a joint applicant. At present the paragraph only indicates that the grant of a standard patent can be opposed on the ground that the applicant has no entitlement to the patent.



Item 33 ¾ At the end of section 59



50. This item adds a further ground for opposition to the grant of a standard patent. Section 59 of the Patents Act provides an exhaustive list of the grounds for opposition. This new provision allows opposition on the ground that an invention encompasses human beings or a biological process for the generation of human beings. Subsection 18(2) of the Patents Act expressly states that human beings and biological processes for the generation of human beings are not patentable inventions.



51. The Regulations provide that the Commissioner has regard to subsection 18(2) issues during examination (regulation 3.18). Section 18 issues are also grounds for revocation of a granted patent under section 138 of the Patents Act. However, the Patents Act currently does not provide for pre-grant opposition of a patent on these grounds. Therefore if an error has occurred during examination and an application has been accepted for a patent that includes a human being there is no mechanism for opposing the patent prior to grant. The only avenue for challenging the patent is to instigate potentially costly court proceedings and apply for revocation of the patent once granted. It has always been intended that this provision be included as a ground for opposition of both standard and innovation patents (see also item 51, section 101M).



Item 34 ¾ Section 62



52. This item substitutes a new section 62 of the Patents Act, consequential to the repeal of the petty patent system and introduction of the innovation patent system. The item sets out the conditions governing grant and publication of innovation patents. Innovation patents will be published immediately after grant.



53. The provision establishes that the Commissioner must grant an innovation patent if the relevant documentation meets the requirements of the formalities check (see section 52). The Commissioner must then publish a notice in the Official Journal stating that the innovation patent has been granted and is open to public inspection. The provision precludes publication of an innovation patent if a prohibition order is in force in relation to the application.



Items 35 and 36 ¾ Paragraph 64(2)(a) and subsection 64(2)



54. These items amend subsection 64(2) and paragraph 64(2)(a) of the Patents Act to limit the provisions of subsection 64(2) to standard patents. Subsection 64(2) deals with the grant of multiple applications for the same invention. Provisions relating to the grant of multiple applications for innovation patents are dealt with in subsection 101B(6) of the Patents Act.



Item 37 — At the end of section 66



55. This item inserts subsection 66(2), to give the Commissioner the authority to issue a duplicate patent deed if the Commissioner has made an error or omission in recording the particulars of a patent on the original deed. A duplicate deed will only be issued on surrender of the original deed.



Item 38 — Section 68



56. This item replaces the provision for the term of a petty patent with provisions setting out an eight-year term for innovation patents.



Items 39 to 41 — Part 3 of Chapter 6 (heading), Division 1 of Part 3 of Chapter 6 and Division 2 of Part 3 of Chapter 6 (heading)



57. These items repeal Division 1 of Part 3 of Chapter 6 and replace the heading of Part 3 of Chapter 6 of the Patents Act with the heading "Part 3 - Extension of term of standard patents relating to pharmaceutical substances". This reflects the repeal of the petty patent system and the fact that extensions of patent term will only be available for standard patents relating to pharmaceutical substances. There will be no extension of term for innovation patents.



Item 42 — After Chapter 6



58. This item inserts the heading for Chapter 6A and sections 79B and 79C. These provisions relate to divisional applications.



59. Section 79B is similar to the old subsection 39(1) of the Patents Act, which allows the applicant for a first patent to make a further application for a second patent claiming an invention disclosed in the first application. This further application is called a divisional application. Section 79B only applies to divisional applications where the first application has not been granted. The divisional application may be for an innovation patent or a standard patent, irrespective of which type of patent the first application was for.



60. Section 79C allows divisional applications of granted innovation patents to be filed, however the divisional application can only be for an innovation patent. Subsection 79C(1) allows the owner of a first innovation patent to make an application for the grant of a second innovation patent if the invention claimed in the second application was disclosed in the first patent.



61. Subsection 79C(2) only allows a patent owner to make a divisional application for an innovation patent in the period after the owner requests examination of the first patent and before the end of a period prescribed by the Regulations. This provision allows an innovation patent owner who has disclosed more than one invention in a first patent to apply for further patents claiming the additional inventions and to potentially maintain the same priority date for all inventions (see item 16). However, the patent owner can only file a divisional application if they file the application within a period that commences on the date on which they request examination of the first patent and ends on a date prescribed by the Regulations. This will prevent a patent owner lodging a series of divisional applications based on a first patent that may never be examined.



62. Subsection 79C(3) indicates that, for the purpose of the section, examination begins on the date the patent owner or third party requests examination or the date the Commissioner decides to examine the patent.



Item 43 — Section 80



63. This item replaces the reference to petty patents with a reference to innovation patents. Chapter 7 (Patents of Addition) will not apply in relation to innovation patents.



Item 44 — Subsection 88(2)



64. This item repeals subsection 88(2) of the Patents Act. Subsection 88(2) relates to applications made under the Patent Cooperation Treaty ('PCT') for petty patents. A PCT application cannot be made for an innovation patent.



Item 45 — Subsection 89(1)



65. This item amends subsection 89(1) of the Patents Act to indicate that a PCT application can only be made for a standard patent.



Items 46 and 47— Chapter 9 (heading) and before section 97 in Chapter 9



66. These items amend the heading of Chapter 9 of the Patents Act and insert section 96A to indicate that the chapter only applies to standard patents and does not apply to innovation patents.



Item 48 — Subsection 98(1)



67. This item amends section 98(1) of the Patents Act to make it clear that the prior art base is not restricted to information that is only available immediately before the priority date of the claim, it includes any information available at any time before the priority date of the claim. This makes it clear that the prior art base includes information that may have been available well before the priority date of the invention.



Item 49 — Subsection 98(2)



68. This item amends section 98(2) of the Patents Act to make it clear that the prior art base considered during re-examination does not include information that is only made publicly available through the doing of an act.



Item 50 — At the end of subsection 99(2)



69. This item amends subsection 99(2) of the Patents Act to insert a reference to section 107. This makes it clear that an applicant or patent owner may file a statement, regardless of whether they have also filed amendments made in response to the Commissioner's directions in relation to their application or their granted patent.



Item 51 — After Chapter 9



70. This item inserts Chapter 9A, Parts 1 to 3 and sections 101A to 101P. These amendments are consequential to the introduction of the innovation patent system and they introduce provisions for the examination, re-examination and opposition of innovation patents. Part 1 provides for examination, Part 2 for re-examination and Part 3 for opposition.



71. The sections dealing with examination of innovation patents are sections 101A to 101F. Section 101A establishes that the Commissioner may examine an innovation patent at any time after grant and must examine the patent if requested to do so by the patent owner or any other party.



72. Section 101B sets out the things that the Commissioner must consider and report on during the examination of an innovation patent. The Commissioner must consider whether:

§ the patent complies with section 40;

§ the patent complies with paragraphs 18(1A)(a) and (b);

§ the patent complies with subsections 18(2) and 18(3);

§ use of the invention is contrary to law;

§ the invention is a food or medicine containing a mere admixture of known ingredients;

§ the invention is a process producing a food or medicine through mere admixture of known ingredients;

§ the patent contains a claim that includes the name of a person as the name or part of the name of an invention;

§ the patent claims an invention that is the same as an invention that is the subject of a patent and is made by the same inventor where the relevant claim(s) of each patent have the same priority date(s);

§ the patent complies with other matters prescribed in the Regulations.



73. Section 101C establishes that examination must be carried out within a prescribed time and in accordance with the Regulations.



74. Section 101D establishes that the Commissioner may request information from the patent owner concerning the results of foreign searches that may have been carried out by international patent offices in respect to foreign equivalents of the patent.



75. The provisions of sections 101A to 101D, with the exception of provisions relating to innovative step, are similar to those associated with the pre-grant examination of a standard patent application. As with examination and re-examination of standard patents the prior art base does not include information only made available through the doing of an act (see item 18). However with innovation patents it is a patent, rather than a patent application that is examined and failure to comply with any of the requirements results in revocation of a patent, rather than lapsing of a patent application as is the case with examination of standard patent applications.



76. Section 101E provides for the issue of a certificate of examination if an innovation patent has met all of the requirements of section 101B and has not ceased under section 143A. The section establishes that when a certificate is issued the Commissioner must notify the patent owner and any other person who has requested examination, publish a notice in the Official Journal and register the issue of the certificate.



77. Section 101F deals with revocation of an innovation patent if the patent does not meet all of the requirements of section 101B and has not ceased under section 143A. The section establishes that the Commissioner must give the patent owner the opportunity to respond to the Commissioner's examination report or amend the specification before revoking the patent. It makes it clear that if the Commissioner does revoke the patent the Commissioner must notify the patent owner and any other person who has requested examination and register the revocation. It also provides for a patent owner to appeal to the Federal Court against the Commissioner's decision to revoke their patent.



78. The sections dealing with re-examination of innovation patents are sections 101G to 101L. Re-examination of an innovation patent is similar to re-examination of a standard patent and only occurs after substantive examination and certification of an innovation patent.



79. Section 101G establishes that the Commissioner may re-examine an innovation patent after certification, if the Commissioner so decides, and must re-examine the patent if requested to do so by the owner or any third party. During re-examination the Commissioner only examines the novelty and innovative step of the claimed invention and revocation only occurs if the claimed invention is not novel or does not have an innovative step. The prior art base for the purpose of re-examination is the same as the prior art base for the purpose of examination and does not include prior art only made available through the doing of an act.



80. Section 101H provides that an innovation patent owner may file a statement disputing the Commissioner’s report in relation to the patent or may amend the specification as a consequence of re-examination.



81. Section 101J provides that the Commissioner may revoke a patent, either wholly or in part, if the Commissioner makes an adverse report under section 101G. Section 101J establishes that the Commissioner must give an innovation patent owner a reasonable opportunity to respond to the Commissioner's report or to amend the specification before revoking the patent. The section ensures that revocation cannot occur while relevant proceedings in relation to the patent are pending and establishes that a patent owner may appeal to the Federal Court against the Commissioner's decision.



82. Section 101K provides that the court may direct the Commissioner to re-examine an innovation patent if the validity of the patent is disputed in proceedings before a prescribed court. It also establishes that the Commissioner must not commence, continue or complete re-examination of a patent while proceedings are pending in relation to that patent.



83. Section 101L establishes that if re-examination of an innovation patent is directed by the court a copy of any report made by the Commissioner in relation to re-examination of the patent and any response provided by a patent owner in response to the Commissioner's report must be given to the court.



84. The sections dealing with opposition to innovation patents are sections 101M to 101P. Section 101M sets out the grounds on which any person may oppose an innovation patent that has been certified and seek its revocation. These grounds are:

§ that the patent owner is not entitled to the invention at all, or is not the sole person entitled to the invention;

§ that the invention is not a patentable invention because it is not a manner of manufacture, is not novel or does not involve an innovative step;

§ that the invention is not a patentable invention because it encompasses plants, animals or human beings or biological processes for the generation of plants, animals or human beings; or

§ that the invention is not fully described, is not claimed in a clear or succinct fashion or is not fairly based on the matter disclosed in the specification.



85. Section 101N establishes that, where an innovation patent has been opposed, the Commissioner must conduct a hearing in accordance with the Regulations. During the hearing the Commissioner must give both the opponent and the patent owner the opportunity to be heard. The Commissioner may take into account any of the grounds listed in the preceding paragraph, whether or not the opponent has raised these grounds. The Commissioner must also give the owner the opportunity to amend the specification to remove any grounds for revocation. Both the patent owner and the opponent may appeal against the Commissioner's decision to the Federal Court. These conditions are similar to those relating to pre-grant opposition of a standard patent (see Chapter 5).



86. Section 101P establishes that if there are proceedings pending in court in relation to an innovation patent the Commissioner must not make any decision in relation to opposition proceedings concerning that patent.



87. The provisions for opposition of an innovation patent are similar to those for opposition of a standard patent. In both cases opposition only occurs after examination of the patent.



Item 52 — Subsection 102(2)



88. This item inserts provisions consequential to the introduction of the innovation patent. The amendments do not change the provisions in relation to standard patents. The provisions establish that an amendment to an innovation patent must fall within the scope of the claims of the patent and comply with subsections 40(2) and (3) of the Patents Act if the amendment is filed after the Commissioner has decided to certify the patent under paragraph 101E(a). This is similar to the situation with standard patents when an amendment is filed after the patent has been accepted.



89. Subsection 102(2B) will also ensure that a granted innovation patent cannot be converted to an application for a standard patent.



Item 53 — Paragraph 106(1)(b)



90. This item amends section 106 of the Patents Act to insert provisions relating to situations where the Commissioner directs amendment of an innovation patent. The item provides that if the Commissioner has, as a result of examination, re-examination or opposition of an innovation patent, decided that there are grounds for declaring the patent invalid, the Commissioner may direct amendment of the patent to remove these grounds. The item does not alter the provisions for standard patents.



Item 54 — Paragraph 107(1)(a)



91. This item substitutes a new paragraph 107(1)(a) to make it clear that this section only applies to applications for standard patents. This paragraph will not apply to innovation patents because they will not be examined before grant.



Item 55 — Section 108



92. This item repeals section 108 of the Patents Act consequential to the repeal of the petty patent system. Section 108 deals with extension of term for petty patents. There is no extension of term for innovation patents.



Item 56 — Section 109



93. This item amends section 109 of the Patents Act to remove the reference to section 108, consequential to the repeal of the petty patent system and section 108 (see item 55).



Item 57 — Section 111



94. This item repeals section 111 of the Patents Act consequential to the repeal of paragraph 228(2)(d) (see item 91). Section 111 currently excludes amendments relating to microorganisms, in particular amendments relating to microorganism deposits made under the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (‘Budapest Treaty’), from the miscellaneous provisions of Part 3 of Chapter 10 of the Patents Act. When the Patents Act was first drafted it was thought that the Act would require a separate regime for amendments relating to deposits made under the Budapest Treaty. However, subsequent experience has demonstrated that a separate regime is not required. The repeal of section 111 and paragraph 228(2)(d) consolidates all amendment provisions into a single regime.



Item 58 — After section 114



95. This item deals with the prior art base considered when assessing the inventive step of an invention claimed in an amended application for a standard patent, or the innovative step of an invention claimed in an amended innovation patent. For the purposes of this item the complete specification prior to amendment is referred to as the original specification and the specification after amendment is referred to as the amended specification.



96. This item applies to situations where the amended specification claims matter that was only disclosed as a result of the amendments. This item provides that objection cannot be taken to the amended specification, and a patent is not invalid, on the ground that the invention does not involve an inventive step (for standard patents) or an innovative step (for innovation patents) because of any publication or use of the invention disclosed in the original specification after the filing date of that specification.



Items 59 and 60 — Subsection 120(1) and after subsection 120(1)



97. These items amend section 120 of the Patents Act to establish that a patentee or an exclusive licensee cannot commence infringement proceedings in respect of an innovation patent unless the patent has been certified.



98. These are the first of a number of items that specify that processes such as infringement proceedings, applications for non-infringement declarations, applications for revocation in response to counter-claims against infringement and applications for compulsory licenses in relation to innovation patents all require that the patent has been examined and certified. This ensures that these proceedings are only carried out in relation to patents that have met the criteria laid out in section 101B and are certified according to section 101E.



Item 61 — At the end of subsection 126(1)



99. This item amends paragraph 126(1)(b) of the Patents Act to provide for the innovation patent system. It inserts a similar provision to that discussed in items 59 and 60 and ensures that a non-infringement declaration in relation to an innovation patent may only be issued after the patent has been examined and certified.



Item 62 — Section 129



100. This item substitutes a new section 129 of the Patents Act to provide for the innovation patent system. The item limits the provisions of section 129 to standard patents or standard patent applications but is otherwise the same as the original section 129.



101. This item also inserts section 129A. Subsection 129A(3) is similar to section 129 but only applies to innovation patents, not standard patents. The provisions apply to situations where a person who has been threatened with infringement proceedings in relation to a certified innovation patent (see section 128) has made an application for relief to the court for a hearing. The court may grant the applicant the relief applied for unless the respondent satisfies the court that the acts about which the threats were made infringe, or would infringe, a claim that is not shown by the applicant to be invalid.



102. Subsections 129A(1) and (2) are also restricted to innovation patents. Subsection 129A(1) establishes that threats made by a patent owner in relation to the infringement of their uncertified innovation patent or by a patent applicant in relation to the infringement of their innovation patent application are regarded as unjustified threats. Subsection 129A(2) allows the court to grant relief to a person who has been threatened with infringement proceedings in relation to an uncertified innovation patent regardless of whether the person was, or was not infringing the claims of the patent. The court will only consider whether the person was infringing the patent if the patent has been examined and certified. This is to deter a patent owner from threatening persons with infringement proceedings if their patent has not been certified.



Item 63 — At the end of subsection 130(3)



103. This item inserts a note indicating that infringement proceedings in relation to a counter-claim for infringement can only commence after the patent has been examined and certified.



Item 64 — Subsection 130(4)



104. This item amends subsection 130(4) of the Patents Act to indicate that where an application for revocation of a patent has been made in association with a counter-claim for infringement (see subsection 130(2)), the provisions for revocation will be the same as those provided by section 138. This makes it clear that this section is not dealing with the revocation proceedings for standard patents and innovation patents set out in Chapter 9 and Chapter 9A, respectively.



Item 65 — At the end of subsection 130(4)



105. This item inserts a note to indicate that proceedings for revocation of an innovation patent under section 138 of the Patents Act can only be commenced if the patent has been examined and certified.



Items 66 and 67 — Subsection 133(1) and after subsection 133(1)



106. These items amend section 133 of the Patents Act to establish that a person may only apply for a license to work an invention disclosed in an innovation patent if the patent has been examined and certified.



Item 68 — Subsection 134(1)



107. This item amends subsection 134(1) of the Patents Act to indicate that section 134 will apply to both standard and innovation patents and a licensee may make an application for revocation of either an innovation or a standard patent.



Item 69 and 70 — Subsection 138(1) and after subsection 138(1)



108. These items amend subsection 138 of the Patents Act to indicate that a person can only apply to the court for an order to revoke an innovation patent if the patent has been examined and certified.



Item 71 — Section 141



109. This item substitutes a new section 141 to specify that a patent application can be withdrawn at any time except during a prescribed period. The Regulations will prescribe a period immediately prior to publication. This provision ensures that an application cannot be withdrawn after the stage at which it is locked into the technical procedures for publication. This will prevent the unintentional publication of applications that have been withdrawn prior to the date at which they become open to public inspection.



Item 72 — Subsection 142(3)



110. This item amends subsection 142(3) of the Patents Act to indicate that the subsection only applies to standard patents. The provision deals with the Commissioner's direction under section 107 to amend a patent application. Section 107 will not apply to innovation patents (see item 54).



Item 73 — Subsection 142(4)



111. This item repeals section 142(4) of the Patents Act consequential to the repeal of the petty patent system.



Item 74 — After section 143



112. This item inserts section 143(A) as a consequence of the introduction of the innovation patent system. The provision sets out the grounds on which an innovation patent will cease.



Item 75 — After subsection 144(1)



113. This item introduces a further provision to section 144 of the Patents Act consequential to the introduction of the innovation patent system. The provision ensures that a contract relating to the sale or lease of, or license to exploit an invention disclosed in an innovation patent cannot act to prevent or restrict the buyer, lessee or licensee from applying for examination of the patent. This is to prevent situations where a buyer, lessee or licensee is prevented or restricted from requesting examination to establish that the patent meets the requirements of the Patents Act.



Item 76 — Paragraph 151(4)(c)



114. This item removes the reference to petty patents from paragraph 151(4)(c) of the Patents Act, consequential to the repeal of the petty patent system. The amended paragraph will be limited to standard patents because an application for an innovation patent cannot be made under the PCT.



Item 77 — Subsection 153(2)



115. This item replaces the current subsection 153(2) of the Patents Act, which deals with petty patents, with a new subsection dealing with innovation patents. The new subsection is similar to the current subsection in that it prevents grant of an innovation patent while an order is in force in relation to the patent. However, the new subsection does not refer to publication of the innovation patent. This is because, unlike a petty patent where the patent application may be published before grant, innovation patents will only be published after grant. Therefore, a provision that prevents grant will also prevent publication.



Item 78 and 79 — Subsection 169(1) and at the end of section 169



116. This item amends subsection 169(1) of the Patents Act to ensure that a patent owner cannot make an application to a prescribed court for a declaration that an invention claimed in their innovation patent has been exploited by the Commonwealth or State unless the patent has been examined and certified as having met the requirements of the Patents Act.



Item 80 — Subsection 174(3)



117. This item replaces subsection 174(3) of the Patents Act, which applies to petty patents, with a new provision, which applies to innovation patents. The amended subsection is similar to the old subsection in that it prevents the grant of an innovation patent while a prohibition order is in force. However, the amended subsection does not refer to publication of the innovation patent.

This is because, unlike a petty patent where the patent application may be published before grant, innovation patents will only be published after grant. Therefore, a provision that prevents grant will also prevent publication.



Item 81 — Paragraph 176(c)



118. This item removes a reference to a petty patent consequential to the repeal of the petty patent system. The amended paragraph will be limited to standard patents because an application for an innovation patent cannot be made under the PCT.



Item 82 — After subsection 178(1)



119. This item amends section 178 of the Patents Act to indicate that it is an offence for a person to falsely represent that they, or another person, are the patentee of an innovation patent that has been examined and certified. This is to prevent a person falsely suggesting that an innovation patent meets the criteria laid out in section 101B and is certified under section 101E.



Item 83 — At the end of subsection 186(1)



120. This item amends subsection 186(1) of the Patents Act to provide for a 2-part Register - a part dealing with innovation patents and a part dealing with standard patents.



Item 84 — Section 187



121. This item substitutes a new section 187, consequential to the introduction of the 2-part Register discussed in the previous item.



Item 85 — Section 204



122. This item amends section 204 of the Patents Act to reflect the renumbering of the sections of the Crimes Act 1914.



Items 86 and 87 — Subsection 223(4) and subsection 223(9)



123. Section 223 of the Patents Act provides a general mechanism for extending the time for doing relevant acts. Subsection 223(4) currently establishes that the Commissioner must publish any request for an extension of time greater than three months. Subsection 223(9) currently provides for compensation and protection of a person who has taken steps to exploit an invention described in a patent if the patent has lapsed or ceased and an extension of time of more than three months is subsequently granted. The exploitation must have occurred before the extension of time was advertised under subsection 223(4). Item 87 amends subsection 223(9) to expand the circumstances under which the compensation or protection provisions have effect. Consequential amendments to subsection 223(4) ensure that these additional circumstances are advertised and establish the timing for action under subsection 223(9).



Item 88 — Paragraph 224(1)(a)



124. This item inserts a reference to section 52 into paragraph 224(1)(c) of the Patents Act, consequential to the introduction of the innovation patent system. This paragraph sets out the Commissioner's decisions that can be reviewed by the Administrative Appeals Tribunal. The amendment deals with an appeal against the Commissioner's decision to refuse to accept an application for an innovation patent. Although an applicant can amend an innovation patent prior to grant if it does not meet the formality requirements of the Patents Act, there is no further mechanism for the applicant to appeal the Commissioner's refusal to grant the patent. The provision in paragraph 224(1)(a) provides a mechanism for appeal of the Commissioner's decision.



Items 89 and 90 — At the end of subsection 227(1) and subsections 227(3), (4), (5) and (6)



125. These items amend section 227 of the Patents Act to move many of the fee payment requirements from the Patents Act to the Regulations to enable this administrative function to be handled more flexibly by the Patent Office, including streamlining fee payment methods and introducing modern methods of fee payment. The item repeals subsections 227(3), (4), (5) and (6) and replaces them with provisions that enable the Regulations to provide for consequences which may result if a person does not pay fees in accordance with the Regulations.



Item 91 — Paragraph 228(2)(d)



126. This item repeals paragraph 228(2)(d) of the Patents Act. It is linked to the repeal of section 111.



Item 92 — After paragraph 228(2)(h)



127. This item provides amendments consequential to the introduction of the innovation patent system. It deals with the power to make regulations concerning the formalities checking process for innovation patents. The amendment establishes that the Regulations will specify the formality requirements (including compliance with subsections 18(2) and (3)), provide for the lapsing and restoration of a patent that does not meet the formality requirements and give the Commissioner the authority to direct the applicant to make changes to put their application in order for filing and acceptance.



Item 93 — Paragraph 228(2)(j)



128. This item amends paragraph 228(2)(j) of the Patents Act consequential to the introduction of the innovation patent system. The amendment indicates that the provisions of paragraph 228(2)(j) will only apply to standard patents.



Item 94 — Schedule 1 (Dictionary)



129. This item inserts a definition of certified in respect of an innovation patent. The definition indicates that an innovation patent has been examined and the Commissioner has issued a certificate of examination under paragraph 101E(e).



Item 95 — Schedule 1 (Dictionary) (definition of complete specification)



130. This item substitutes a new definition of complete specification to indicate that this term may be used to describe a specification as originally filed or as amended. When this term is used in the Patents Act it is either explicitly or implicitly obvious from the surrounding language of the Patents Act which form of the specification is the relevant form.



Item 96 — Schedule 1 (Dictionary) (definition of divisional application)



131. This item repeals the definition of divisional application, consequential to repeal of the term from the index of expressions in section 3 and amendments made to sections 43, 54, 101B and Chapter 6A. These changes are consequential to the introduction of the innovation patent system and the introduction of a second form of divisional application - a divisional application provided for under section 79C - corresponding to a divisional application of an innovation patent (see item 42). As a result of these amendments, whenever the Patents Act refers to a divisional application it will also clearly indicate that the relevant divisional application is either an application provided for under either section 79B or 79C. Therefore the Act does not require a further dictionary definition of the term.



Item 97 — Schedule 1 (Dictionary) (definition of examination)



132. This item establishes that examination may mean examination of an application for a standard patent under section 45 (or section 48 for modified examination) or examination of an innovation patent under section 101B. There has been no change to the definition of examination of a standard patent. Examination of an innovation patent only occurs after grant and is in response to a request from the patent owner or another party or a direction from the Commissioner.



Item 98 — Schedule 1 (Dictionary)



133. This item inserts a definition of the term formalities check consequential to the introduction of the innovation patent system. This term will only apply to innovation patents. The process and requirements of this check will be set out in the Regulations. Once an innovation patent passes the formalities check it will be granted.



Item 99 — Schedule 1 (Dictionary)



134. This item inserts a definition of the term innovation patent consequential to the introduction of the innovation patent system.



Item 100 — Schedule 1 (Dictionary) (definition of patent)



135. This item removes the reference to a petty patent and replaces it with a reference to an innovation patent to indicate that both standard and innovation patents are regarded as patents.



Item 101 — Schedule 1 (Dictionary) (definition of patent application)



136. This item provides an amendment similar to that discussed in the previous item.



Item 102 — Schedule 1 (Dictionary) (definition of petty patent)



137. This item repeals the definition of a petty patent consequential to the repeal of the petty patent system.



Item 103 — Schedule 1 (Dictionary) (paragraph (a) of the definition of prior art base)



138. This item substitutes a new definition of prior art base which provides for both inventive step and innovative step, consequential to the introduction of the innovation patent system.



Item 104 — Schedule 1 (Dictionary) (at the end of the definition of prior art information)



139. This item inserts an additional definition of prior art information, consequential to the introduction of the innovation patent system.



Item 105 — Schedule 1 (Dictionary) (definition of re-examination)



140. This item substitutes a new definition of re-examination which provides that it may mean re-examination of a standard patent under Chapter 9 or an innovation patent under Part 2 of Chapter 9A.



Item 106 — Schedule 1 (Dictionary) (definition of standard patent)



141. This item removes a reference to a petty patent consequential to the repeal of the petty patent system.



Item 107 — Schedule 1 (Dictionary) (definition of supply)



142. This item makes it clear that supply includes both supply and offer to supply.



Schedule 2 — Application, saving and transitional provisions



Part 1 — Application, saving and transitional provisions relating to petty patents



Item 1 — Definitions



143. This item defines the terms commencement day, new law, old law and petty patent as they are used in this Schedule.



Item 2 — Saving and application provisions relating to old law



144. This item establishes that, with limited exceptions, the old law applies to petty patents that are in force, have expired or have been granted before the commencement day and applications for petty patent that have not been decided upon by the Commissioner before the commencement day. A petty patent applicant may convert their application to an application for a standard or an innovation patent if they wish (see item 3 of this Schedule).



145. The first exception to this provision is that relating to fee payments for petty patents. The new law in relation to payment of fees for petty patents and applications (see items 89 and 90 in Schedule 1) will apply to fee payments made in relation to petty patents on or after the commencement day.



146. A further exception concerns the situation dealt with in items 11 - 13 of Schedule 1. Where the Commissioner decides, on or after the commencement day, to grant a patent to an eligible person, or persons, who have opposed the grant of a petty patent (see subsection 33(2)) the Commissioner may only grant an innovation patent. Consistent with this practice, in any matters relating to sections 34 to 36, on or after the commencement day the Commissioner may only grant a standard or an innovation patent.



147. The final exception relates to divisional applications, being further applications made in relation to an invention disclosed in a first patent or patent application (see section 39 of the old law). There will be no provisions to allow for applications for petty patents after the commencement day. A divisional application made after the commencement day may only be made for a standard or an innovation patent. Where the first application is for a petty or a standard patent and the patent has not been granted then the divisional application may be an application for a standard or an innovation patent. However, if the first application is for a petty patent and the patent has been granted the divisional application may only be for an innovation patent.



Item 3 — Transitional — applications for petty patents made before the commencement day may be converted to innovation patents or standard patents



148. This item allows an applicant for a petty patent to convert their application to an application for a standard or an innovation patent if the application has not been accepted before the commencement day. This means that, after the commencement day an applicant for a petty patent can either keep their application as a petty patent application or convert it to a standard or an innovation patent application.



Item 4 — Transitional — Register of Patents



149. This item establishes that after the commencement day, the part of the Register of Patents dealing with standard patents will contain all entries relating to petty patents and all subsequent entries relating to petty patents.



Item 5 — Continuity of Register of Patents not affected



150. This provision ensures that the continuity of the Register is not affected by the amendments made by this Act.



Item 6 — Other transitional matters relating to innovation patents and petty patents may be provided for in the regulations



151. This item ensures that if it is deemed necessary the Governor-General may make further regulations prescribing further transitional matters associated with the introduction of the innovation patent system and the limited continuation of the petty patent system. If such regulations are made they must abide by the standard provisions of the Patents Act and may not be inconsistent with this Bill.



Part 2 — Other application and saving provisions



Item 7 — Application



152. This item makes it clear that the fee payment provisions put in place by the amendments described in items 86, 87, 89 and 90 of Schedule 1 do not apply to fees that were paid or were due and payable before the commencement day.



Item 8 — Saving of regulations for subsection 223(9)



153. This item makes it clear that the regulations in force for the purposes of subsection 223(9) of the Patents Act immediately before the day on which this Bill commences continue to have effect on or after that day. However, this does not prevent the future repeal or amendment of these regulations.



Schedule 3 — Consequential amendments of other Acts



Income Tax Assessment Act 1997



Item 1 — Section 373-35 (after table item 2)



154. This item provides for an amendment of section 373-35 of the Income Tax Assessment Act 1997, consequential to the introduction of the innovation patent system. The amendment inserts a reference to the innovation patent and defines its effective life.