10 June 2015

Innovation patents are the second tier of Australia’s patent system. They provide a lower cost, shorter term patent with a lower inventive threshold. Innovation patents were envisaged to encourage innovation among SMEs in Australia by giving firms the option of more accessible patent rights, but are they achieving their objective?

The report draws evidence from a number of sources to consider the net impact of the innovation patent system. In total, the evidence casts doubt on whether the innovation patent is meeting its policy objectives.

Most innovation patent applicants try the system once and never use the system again. The majority of innovation patents are allowed to lapse before full term, suggesting that applicants do not place much value in maintaining the rights they have been granted. Further, econometric testing shows that those who file an innovation patent are less likely to file standard patents.

The report shows that innovation patents are linked with improved firm survival and are positively correlated with R&D in the manufacturing sector. Standard patents however have a much stronger effect on firm survival, and are positively correlated with R&D across manufacturing and many more industry sectors.

The report also looks at evidence on the distribution of costs and benefits generated by the system, and finds that the benefits are disproportionately realised by larger firms and existing users of standard patents, while the costs are unevenly borne by SMEs and private inventors – the group the system exists to incentivise.

On the basis of the evidence in this report, the Australian Council of Intellectual Property (ACIP) published a corrigendum in its Review of the Innovation Patent System stating it now ‘considers it likely that the innovation patent is not achieving this objective and the Government should therefore consider abolishing the system.’

The report demonstrates what can be achieved with Intellectual Property Government Open Data (IPGOD). You can find the Economic Impact of Innovation Patents research paper, along with our other research papers, on our research program page.