New products, processes and inventions (patents)

  • You can protect the product, process or invention that you have developed by applying for a patent.

    What is a patent?

    A patent is granted by IP Australia (Australian Government agency). A patent holder has the right to stop others using the patented product, process or invention in Australia.

    You can also apply for a patent in other countries.

    How does a patent help my business?

    The patent holder is the only person entitled to make the product, use the process, or exploit the invention, and to realise the economic benefits from the product, process or invention.

    A patent protects your innovation from competitors who may want to copy or reverse-engineer your product, process or invention.

    This means that only you can market and sell the products or services that are protected by the patent, and only you are entitled to profit from that.

    If a person 'copycats', 'free rides' or reverse-engineers your patented invention, there are certain steps that you can take to stop the person doing so, and to be compensated as well.

    Can I license my patent?

    As well as making and selling products or services that are protected by your patent, you can also profit from your patents by authorising other people to use them. This is called 'licensing'.

    When you license your patent, you give another person the right to use your patent.

    You might, for example, grant a licence to another person whose business is located elsewhere in Australia (i.e. they are not a local business competitor) or even grant a licence to another person in another country.

    In that way your patent is working even harder for you. You can profit from making and selling products or services yourself, but you will also receive royalties from licensee(s) making and selling your products or services.

  • Some innovations are best protected by a patent. Other innovations are best protected by keeping them as a trade secret, know-how, or confidential information.

    Each option has its advantages and disadvantages. Some of the factors that might influence the choice one way or the other are:

    Factors in deciding to patent an innovationFactors in deciding to maintain an innovation as a trade secret

    The innovation can be easily copied or reverse-engineered.

    A patent will deter 'copycats' from reverse-engineering a new product or service and then profiting from your innovation.

    The innovation is a process that is not apparent or visible to anyone other than the innovator. It will be difficult to identify or even know if there are 'copycats' or infringers.

    Patenting such a process will make it public knowledge, and it will be difficult to identify 'copycats' and 'free riders'.

    My business is in the high technology sector where innovation moves ahead at a fast pace.

    Whoever files a patent application first will gain the economic benefits of the patent. Whoever does not patent, or whoever files the patent application second, will not realise any economic benefits. In a sector where innovation moves ahead quickly, there is sometimes a race to be the first to patent.

    The innovation is a process that is not apparent or visible to anyone other than the innovator and staff, and there are no apparent licensing possibilities.

    If it is practical to protect the innovation by keeping it a secret among your staff, robust confidentiality agreements might offer adequate protection. This way you will not incur patenting costs.

    The innovation can be used in industry sectors other than my own, and I want to be able to license my innovation to licensees in those other sectors.

    Normally, a patent will facilitate the licensing process, and will present a more robust proposition than would a know-how licence.

    The innovation has a short product life cycle.

    There might be many reasons for a short product life cycle, including the rate of change of technology. This suggests that competitive advantage gained by being the first to market, and marketing strategies used to stay there, might be more effective strategies than patenting - particularly if the product life cycle is shorter than the time to apply for, and be granted, a patent.

    I plan to export the products or services of my innovation.

    A patent in the countries where you plan to export will help you deter or stop 'copycats' who reverse-engineer your product or service and try to profit from your innovation.

    The cost of patenting.

    After you have realistically estimated the profits from your innovation, and taken into account the usual business risks associated with your estimates, you will need to compare these results with the cost of patenting.

    You can then make a considered decision about whether the cost of patenting is commercially justified.

    I need to partner with a manufacturer to get my product or service into the market place.

    Normally, a patent protects your innovation better against abuse by your manufacturer than a confidentiality agreement protecting know-how.

    The innovation is still under development.

    When you file a patent application you start a process with strictly enforced steps and time frames. If you apply for a patent too early, you might sacrifice a patent with the most robust scope and claims. Weighing up these risks is a difficult task.

  • Many factors will influence your decision to apply for a patent. Some of the factors that might be relevant in your specific circumstances include:

    FactorHow this could influence your decision to patent
    Are you about to exhibit your innovation at a trade show, or otherwise make it publicly known?

    As soon as you make your new product, process or invention publicly known, generally you become disqualified from being entitled to be granted a patent.

    Consider deferring the exhibition of your product, process or invention, or consider accelerating your patent protection strategy.

    Are you seeking an investor to inject capital into your innovation? Among prospective investors' criteria for investing in a new product, process or invention is patent protection, and confidence that the patent protection will be robust.
    Have you invested a lot of capital in developing your innovation? The greater the size of your investment in developing your product, process or invention, the greater your risk of financial loss if there isn't strong patent protection.
    Has someone else already developed the product, process or invention?

    Have you undertaken patent searches to see if your product, process or invention is already the subject of another person's earlier patent application?

    Undertake a patent search or, for a more robust search, consider engaging a patent attorney.

    Is there an opportunity to license your innovation:

    • to other companies in Australia
    • to other industry sectors
    • overseas?

    You can profit from your product, process or invention not just by making and selling it, but by licensing it as well.

    There are at least 3 ways in which you can license without your competitors benefitting. The stronger the patent protection, the greater the value of the licensing proposition and, therefore, the greater the returns that can be realised from licensing.

    Are you aware of the cost of patenting?

    A fully informed decision to patent can only be made if you are aware of how much it will cost to patent. Visit IP Australia's website to get the latest information on the fees applicable in filing a patent application.

    If you engage a patent attorney, be sure to ask your patent attorney what professional fees will also be payable.

  • Requirement What it means
    1. The innovation is patentable subject matter Patentable
    • New products such as toys, appliances, tools, medical devices, pharmaceutical drugs
    • New process, such as a manufacturing process or an industrial method or process
    • Software
    • Business methods
    • Some types of biological materials

    Not patentable

    • Artistic creations
    • Mathematical algorithms or models
    • Abstract intellectual or mental concepts or processes
    • Plans or schemes
    • Principles or theories
    2. The innovation is new (called 'novelty')

    You cannot patent something that is already publicly known, as it would be unfair to confer the economic benefits of a patent in relation to something that is already publicly known. The test of 'novelty' is assessed as at the date you file your application for the patent.

    For this reason, if you intend to disclose your product, process or invention to someone, it is critical that you have a confidentiality agreement signed beforehand.

    3. The innovation is inventive This requirement of an inventive step relates to the 'obviousness' of the new product, process or invention. If it is 'obvious' to a skilled person, it is not patentable.
    4. The innovation is useful (called 'utility') This requirement does not relate to whether the new product, process or invention is 'useful' in terms of whether or not someone would buy it. Instead, it relates to whether the invention is capable of being made in accordance with the claims and information in the patent.

    From April 2013, there has been a requirement to disclose a specific, substantial and credible use for the invention in the patent specification.

    5. The innovation must not have prior use If you have been selling the product, using the process in your business, or if you have licensed it, this prior use disqualifies it from being patentable.

  • There is no such thing as a 'worldwide' patent.

    A patent is granted by a government of a country. The Australian Government, for example, does not have power to grant a patent that would apply in the United States. Nor does the United States Government have the power to grant a patent that would apply in Australia.

    Patent Cooperation Treaty (PCT)

    Sometimes the Patent Cooperation Treaty (PCT) is thought of as conferring a 'worldwide' patent. The PCT, however, deals only with the application process.

    Before the PCT, it was necessary to file separately in each country where the patent was sought. This was expensive to do, and forced applicants to decide—sometimes prematurely—in which countries they should seek patents.

    The objectives of the PCT were to address these 2 problems by:

    1. Deeming a PCT application in 1 treaty member country to be filed in all treaty member countries at the same time.
    2. Allowing an applicant a period of up to 21 or 31 months from the earliest priority date to decide in which countries to proceed to apply for a patent (called 'national phase').

    Applying for a patent in other countries

    There are 2 ways of applying for a patent in other countries:

    1. You may file a separate complete application in each country in which you decide to pursue the grant of a patent.
    2. You may file a PCT application, and in due course nominate those countries in which you want to proceed to national phase.

    It is not mandatory to file a PCT application.

    Read more about how to apply for a PCT. You can also engage a patent attorney to file the application for you.

    You might consider filing a complete application in each relevant country, and forgo the PCT application step, for example, where:

    1. You decide to pursue patents in a small number of countries only.
    2. Some of the countries where you want to pursue a patent are not members of the PCT (some South American, Central American, African, and Middle Eastern countries).

    Patent application process in other countries

    In practice, you would consider applying for a patent in those countries where you anticipate:

    1. Selling the products or services protected by the patent.
    2. Exporting the products or services protected by the patent.
    3. Licensing the products or services protected by the patent.

    The patent application process in other countries is much the same as in Australia: the application is examined to ensure that the requirements for a patent are met, third parties may oppose or object to the grant of a patent, and when the application is successful, the patent is granted.

    Costs

    Additional costs may be incurred for:

    1. Fees charged by the individual national patent offices.
    2. The fee for retaining a patent attorney/lawyer in the individual jurisdictions.
    3. A certified translation of the patent specification required in some non-English speaking countries.

  • The maximum duration of your patent will be 20 years (for a standard patent) or 8 years (for an innovation patent), from the application filing date.

    After your patent is first granted, it will be subject to payment of annual renewal fees.

    Your rights as a patent holder include the right:

    1. To obtain a court order to stop a competitor unlawfully using (infringing) your patent (this kind of order is called an injunction).
    2. To grant a licence to another person (e.g. in other parts of Australia, in other industries, or in other countries) to exploit your patent commercially, in return for licence fees, royalties, or other payments.
    3. To sell your patent.
    4. To gift your patent in your will.
    5. To mark your product and its packaging as being patented (someone who does so without having a patent commits an offence).

    If you have applied for a patent, and the application is pending, you are also entitled to mark your product, and its packaging, to indicate that a patent is pending (e.g. 'patent pending'). Again, someone who does so without having a patent commits an offence.