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Warning as patent scheme faces the chop

Adam Zuchetti
Adam Zuchetti
10 September 2019 2 minute readShare
IP Australia

Australia’s innovation patent scheme could soon be scrapped under proposed changes to IP laws, with the ombudsman warning that their removal could hit investment into SMEs and leave them vulnerable to copycats.

In a public statement issued today, Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), criticised government plans to scrap the low-cost innovation patent regime which she said would be “a mistake” that would hit small businesses in particular.

“Although we acknowledge the current system is not perfect, it’s the only viable way for SMEs to access temporary or short-term IP protections, which is essential, particularly when disputes arise,” she said.

“Abolishing the innovation patent system would effectively leave small businesses vulnerable to large businesses stealing their ideas and inventions.

“Small businesses face significant hurdles when trying to protect their IP rights. They don’t have in-house lawyers or patent expertise and often experience difficulties in accessing risk capital.”

Ms Carnell also said that for many SMEs, using the innovation patent system is vital to securing external investment to scale and market their developments.

“Many small businesses rely on the innovation patent system to attract funding. Investors won’t even look at a company that doesn’t have those protections in place,” she said.

“Standard patents are more expensive and can take over two years to get. It’s just not a viable option for small businesses that want to protect their products.”

If the patents are abolished with no replacement scheme introduced, Ms Carnell warned that many SMEs will turn to importing goods rather than developing their own.

“This week, the Senate will debate the innovation patent as part of a suite of proposed intellectual property law changes, and I urge them to support amendments stopping the abolition of the innovation patent regime,” she said.

It follows a similar warning made last year by the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) when the plans to remove the patent system were first announced.

IP Australia, however, refuted the claims, with its director general claiming that “most Australian SMEs and private inventors gain little from the innovation patent”.

Patents a controversial subject

Not everyone is so supportive of the patents framework, however.

As previously reported, chartered tax advice lawyer and Harvard PhD recipient Terry Dwyer has blasted patents as creating monopolies rather than being a tool for enhancing innovation and progress.

“It is well known that the patent system is used to discourage competition,” he wrote in a 2012 submission to the Productivity Inquiry into Compulsory Licensing of Patents.

Responding to Mr Dwyer’s comments, one My Business reader suggested that Australia has fallen victim to overly vague US software patents accepted under the Free Trade Agreement, stating “ideas that are not actual inventions of something real should never have been allowed”.

Others, however, are supportive of patents as a means of protecting SMEs from larger competitors.

Earlier this year, a South Australian physiotherapist launched legal action against retailer Lorna Jane, claiming that her patented compression garments had been copied by the fashion chain. Lorna Jane denied the claims and said it would defend the legal action.

Warning as patent scheme faces the chop
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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