Canberra-esque madness kills the SME-focused innovation patent system

Comment by Peter Roberts

Parliament has passed legislation killing the low cost innovation patent system, bowing to arguments from the Productivity Commission.

Legislation killing the patent was passed by the Senate last week and followed an essentially economically-focused review that lacked transparency.

This is yet another victory in a long list of destructive wins by the PC whose economic rationalist thinking has dominated politics for generations.

Remember the Productivity Commission is the body that has:

# long argued against special tax treatment for R&D, such than the innovation intensity of the economy has fallen below 2 per cent of GDP.

# that has long argued Australia should focus on what it is good at and import from others – this gave us the export profile of an undeveloped country as I argued last week.

# that railed against the car industry until we didn’t have one.

# that happily saw rural fibre processing, spinning and weaving industries go to China, just so we could buy $10 jeans made by forced labour in third world countries.

# etc, etc etc.

Now to the PC’s assault on IP law.

The Howard government replaced the petty patent with the innovation patent in 2001.

The system saw filings of what was a lesser patent than the more conventionally known one more than quadruple within seven years.

The innovation patent applied for a shorter period of eight years verus 20 for a full patent.

And it required a lower threshold of inventiveness – it required an innovative step forward, rather than inventive step.

Applying the more restrictive inventive step is consistent with the Productivity Commiission’s apparent view of innovation as requiring laboratory experimentation – the type that occurs in universities and research institutions.

Of course SME innovation is far more likely to be in small, practical, incremental steps.

None of this registers with the PC.

The Institute of Patent and Trade Mark Attorneys lead efforts to block the change, labeling the government’s arguments as misrepresenting the operations of the patent.

The IPTA’s Grant Shoebridge said a revision of the innovation patent system would have been preferable to abolition.

“This view is supported by a number of industry groups, including the Australia Chamber of Commerce and Industry, which represents more than 300,000 Australian businesses.”

Shoebridge is principal of Shelston intellectual property.

Canberra based the change on arguments that big companies use the innovation patent to stifle innovation, while the patent fails to incentevise small and medium sized (SME) companies to innovate.

These arguments came from a 2016 report from, you guessed it, the Productivity Commission.

Despite being asked to review the entire patent system, the PC made only one recommendation, and that was to abolish the innovation patent.

Apparently we are led to believe everything is just fine with intellectual property protection in Australia other than the innovation patent.

The loss of the innovation patent further supports a Canberra-esque view of innovation proceeding in a linear fashion from lab scientists to grateful industry.

This does not reflect what really happens on the nation’s factory floors.

However the Labour party – in keeping with its apparent policy of voting against its own beliefs – compromised in the Senate, winning an 18 month phase out period and the promise of an inquiry into the operation of the patent system.

It is hard to see how an inquiry after the event will change the government’s mind, raising questions about Labor’s genuineness in supporting the innovation patent, actually in Labor’s genuineness.

And of course throwing out a scheme used and valued by SMEs to save a few million dollars makes a mockery of the government’s rhetoric of supporting private small business.

The result of all this can only be less innovation, and another win for the economists of the PC.

– Peter Roberts

Picture: Grant Shoebridge

Subscribe to our free @AuManufacturing newsletter here.