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NEWS - PLANNING
Tougher new patent laws
11/14/2001
The Government has emphasised its commitment to investment in Australia's research and innovation capabilities. However, the cost of innovation continues to increase and, particularly for small businesses, this expenditure needs to be justified by at least the possibility of capitalising on their successes.
The patent system provides this opportunity. However recently the Government passed a raft of amendments to legislation to raise the threshold for obtaining a patent.
So what do these changes mean for businesses investing in innovation?
Clearly the bar has been raised, but exactly how high will not be apparent until the new regime has been in place and under scrutiny for some time.
The tests for obtaining a patent have become tougher. Despite this, the overall impact of the changes could be to provide important benefits for Australian innovators.
Once innovators have cleared the new hurdles and obtained a patent it may in fact give stronger legal protection than a patent granted under the previous legislation.
This will be important if patent owners need to enforce their patents against an alleged infringer. Patents that are granted after a more comprehensive examination process should be more likely to survive any attack on their validity.
It may also mean that those assessing the value of a company's assets will place more weight on the value of an Australian patent.
Corporate investors well recognise the potential value of patent ownership, as companies holding a portfolio of patents can monopolise the market for their patented product or service.
Investors, particularly those based overseas where a more stringent patent system exists, may recognise that the revised system means that an Australian patent has greater force, is more likely to stand up to scrutiny and is therefore a more valuable asset.
A standard patent grants the developer of new technology a 20-year monopoly. During this time the patent owner can exploit the invention to the exclusion of all potential competitors.
The patent system is designed to enable innovators to generate sufficient revenue to recoup their initial investment as well as provide funds for future development.
To obtain a patent, an invention must meet two key criteria. First it must be new or "novel" compared with technology already known in the field - the "prior art". The comparison with prior art involves a consideration of similar technologies disclosed in publications or prior use of such technologies.
The second criteria is that the new technology must constitute an "inventive step" - it cannot be merely an obvious development over what was previously known.
The legislative changes arise out of a recent review of Australia's patent system which concluded the criteria for obtaining a patent, including the tests for novelty and inventive step, were not stringent enough.
There was a concern that patents were being granted for inventions that were not genuinely innovative, allowing the system to be abused for anti-competitive purposes.
The review also raised concerns about the high costs and procedural delays associated with patent litigation. It was thought the introduction of more stringent standards would provide for more certainty about the validity of patents, reducing the incidence of litigation where the validity of patents is challenged.
The legislative amendments, which apply to both standard patents and the new eight-year innovation patent, received assent on October 1.
While not going quite as far as initially proposed, the changes raise the threshold for obtaining a patent in a number of significant ways.
Under the new regime, the novelty of an invention will be assessed in light of both published material and prior use of the technology anywhere in the world. Previously the relevant use was confined to use in Australia.
The amendments also raise the inventive step threshold. The changes to the test include allowing prior art information disclosed in separate documents and other information to be combined when assessing whether the invention involves an inventive step.
Under the previous regime applicants were given the "benefit of the doubt" by the Australian Patent Office when assessing whether the tests for novelty and inventive step were met. The new law reverses this onus, so the Patent Office has to be satisfied that the criteria are met.
Patent applicants also face a new obligation to tell the Patent Office about any prior art relevant to their invention which they become aware of through searches of publications or other patents. This new "tell all" requirement includes giving notice of search results that suggest the invention may not meet the tests for novelty and inventive step.
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