15 June 2015

ACIP stance on Innovation Patents

The Advisory Council on Intellectual Property (ACIP) has responded to the IP Australia research paper (discussed in the following post) by coming out against innovation patents, a different stance to that in its Review of the Innovation Patent System report last year.

(ACIP's 2013 innovation patents discussion paper was noted here. The ACIP report - in an updated version is here.)

ACIP states -
One of ACIP’s chief considerations in its Review of the Innovation Patent System was how effective the system is in achieving its stated objective of stimulating innovation in Australian small to medium enterprises (SMEs). During the course of the review, ACIP was unable to discover any empirical evidence to enable an assessment of how effectively the system was meeting this objective. Consequently, ACIP did not make a recommendation supporting the retention or abolition of the innovation patent system, but made a number of recommendations aimed at improving its effectiveness.
ACIP presented its final report to the Government in May 2014. Since that time, substantially more information has become available. The Intellectual Property Government Open Data (IPGOD) was published in September 2014 and IP Australia’s Office of the Chief Economist has used this dataset to undertake a comprehensive analysis of the economic impact of the innovation patent system (IP Australia Economic Research Paper 05).
A key finding in this research paper is that Australian SMEs are less likely to use the patent system after filing an innovation patent than a company that has not previously filed an innovation patent. This suggests that innovative activity is not being stimulated among these groups by the innovation patent system.
According to the research paper:
The great majority of Australian SMEs and private inventors appear to gain little benefit from the system… Only 23 SMEs have become moderate users of the innovation patent system … The average SME or private inventor files once and never again (74%), does not receive any enforceable right (83%) and lets their patent expire early because they see its value at less than the $110-$220 cost of renewal (78%). (page 2)
Other evidence in the research paper indicates that the costs and benefits of the innovation patent system do not accrue evenly across the users of the system. While 94% of innovation patent applications are made by private inventors or SMEs and they incur 95% of the regulatory costs of the system, larger firms who are already well served by the standard patent system tend to reap a disproportionate share of the benefits. 
ACIP goes on to comment that
the private gains from innovation patents are likely to be offset by the uncertainty costs to consumers and producers. In view of the newly available evidence, ACIP considers that, taking into account the overall costs and benefits of the system, it is likely to result in a net cost to society.
ACIP has given these findings careful consideration. In light of the information made available by the IPGOD dataset and the analysis presented in this research paper, ACIP is now able to make an assessment of the innovation patent system’s effectiveness in stimulating innovation among SMEs. ACIP considers it likely that the innovation patent is not achieving this objective and the Government should therefore consider abolishing the system.