There are many experts who argue that Indian SMEs would be more innovative, if Utility patents are awarded in India. As per news reports the draft under consideration advocates Utility patents saying that “This will help identify the actual, potential and untapped areas of creativity and innovation and facilitate preparation of focused strategy to channelize efforts and financial resources where they are needed,” “Utility patents or protection of grassroots innovation have been an established system in many other countries, including developed economies as they form a key part of the scientific and economic development.”
In this background reasons for Australia abolishing Utility Patents called `Innovation Patent' need to be examined in depth. When introducing utility patents/ petty patents in Australia, similar assumptions were made.
1.4 Objectives of the innovation patent system
The need for a utility model to promote, protect and disclose lower level inventions in
Australia has been extensively investigated several times over the last 40 years. In the
early 1970s, the Designs Law Review Committee (the Franki Committee) found that
there was a ‘gap’ for functional inventions that were not sufficiently inventive to gain
patent protection and were not protectable under the designs system.33 Their
recommended solution to this ‘gap’ was the establishment of a ‘petty patent’ system
and an amendment to the designs system to allow for the protection of ‘functional
designs’. Subsequently, the Government amended the Patents Act 1990 (Patents Act) in 2000 to
establish the innovation patent system. Subsection 7(4) of the amended Patents Act
defined an ‘innovative step’ as follows:
For the purposes of this Act, an invention is to be taken to involve an innovative step when
compared with the prior art base unless the invention would, to a person skilled in the relevant
art, in the light of the common general knowledge as it existed in the patent area before the
priority date of the relevant claim, only vary from the kinds of information set out in
subsection (5) in ways that make no substantial contribution to the working of the
invention.
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.
The report estimates that the private value of
innovation patents is of a similar magnitude to the regulatory costs incurred
(in the low tens of millions of dollars per annum). ACIP agrees with the
finding in the report 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.
