delnorth.jpgSince May 2001, a secondary type of patent, known as an “innovation patent,” has been available under Australian patent law.

This underutilised type of patent is extraordinarily useful in several circumstances which will be discussed below.

Key Features

The key features of the innovation patent are:

  1. the patent term is 8 years rather than 20 years;
  2. plants and animals, and biological processes for the generation of plants and animals, are excluded from the innovation patent system (an exception to this exclusion exists for microbiological processes, and products thereof);
  3. there can be no more than 5 claims in an innovation patent;
  4. the innovation patent issues without any substantive examination.  However, the innovation patent cannot be enforced until after it has been examined & certified by the APO.  Hence, examination & certification is an optional procedure which occurs subsequent to issuance;
  5. the standard for patentability is “innovative step” as opposed to “inventive step”.

Innovative Step

According to subsection 7(4) of the Patents Act 1990:

“an invention is to be taken to involve an innovative step when compared to the prior art base unless the invention would…only vary from…[the prior art reference]…in ways that make no substantial contribution to the working of the invention.”

The above phrase recently received its first detailed judicial consideration in Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225.

The Claims

In the above-referenced decision, the invention related to a flexible roadside post.  The broadest claim reads as follows (reference numerals added to aid the reader):

“A roadside post (10) comprising an elongate body formed of sheet spring steel and having a longitudinal axis (L), a transverse axis (T) transverse to said longitudinal axis, a front face (31) and a rear face (33), said front and rear faces transversely extending generally parallel to said transverse axis, wherein said body is elastically bendable through 90 degrees from an unbent state about said transverse axis.”

A narrower claim required that the post further comprise:

a surface coating, applied to said body front and rear faces, providing an exposed front face and exposed rear face of said roadside post, respectively.”

[Download the Delnorth drawings here.]

The Prior Art

One piece of prior art (known as the “Supaflex Guide Post”) embodied all of the features of claim 1, except that the Supaflex Guide Post was constructed of a plastics material, whereas the claim was directed to roadside posts “formed of sheet spring steel”.

A second piece of prior art (a US Patent to “Pellowski”) embodied all of the features of claim 1, except that Pellowski taught that the post should be placed in the road rather than beside the road.  Pellowski did not disclose the “surface coating” introduced in the narrower claim.

The Decision

The trial court outlined three steps that should be followed in determining whether the claimed invention meets the innovative step standard.

  1. Firstly, the claimed invention should be compared with the prior art reference to identify the difference(s).
  2. Secondly, the difference(s) should be looked at through the eyes of the person skilled in the relevant art in the light of common general knowledge as it existed in Australia before the priority date of the claim.
  3. Thirdly, it must be decided whether the difference(s) make a “substantial contribution to the working of the invention” as required by subsection 7(4).  It is important to note here that the question is not whether the difference is better than, or superior to, the prior art.  Rather, the question is whether the difference (i.e. the distinguishing feature, per se), makes a substantial contribution to the working of the invention.

The court held that the broad claim defined an innovative step over the Supaflex Guide Post.  Importantly, the question was not whether the substitution of steel for plastic resulted in a better roadside post.  Rather, the question was whether the presence of steel contributed to the working of the roadside post.  Given that the roadside sign only existed by virtue of the presence of steel, the court quickly answered this question in the affirmative.

The court held that the broad claim lacked an innovative step over Pellowski.  The reasoning of the court is not well expressed in the decision.  However, it seems implicit that the relocation of the Pellowski post from within the road to beside the road did not make a substantial contribution to the working of the invention.

The court then went on to find that the narrower claim also failed to define an innovative step over Pellowski.  Particularly, the court stated that:

“I would not regard a surface coating, applied to the body, front and rear faces, as making a substantial contribution to the working of the invention…I do not suggest that it has no functional purpose, rather that the contribution is not significant enough.”

In summary, innovative step exists if (a) there is a difference, and (b) that difference substantially contributes to the function or working of the invention.  Importantly, the innovative step test does not involve any consideration of the merit of the difference.

In this case, steel was held to make a substantial contribution to the working of the invention, whereas the surface coating was held not to make a substantial contribution to the working of the invention.

Practical Implications

The authors are of the opinion that the Innovation Patent System should be considered by clients in at least the three situations outlined below.

Firstly, an Innovation Patent should be considered in circumstances where the invention is unable to meet the significantly higher inventive step threshold associated with standard patents.  For example, a novel, but non-inventive, pharmaceutical formulation would be perfect subject matter for an innovation patent.  Similarly, where a known product is first made from a known material, as in Delnorth, then patent protection may be possible.

Secondly, an Innovation Patent should be considered for inventions, of any standard or technology, which are of particular commercial importance or are likely to be litigated.

Thirdly, a divisional Innovation Patent should be filed immediately, if possible, whenever the applicant becomes aware of the existence of an infringer.

Lower Level Inventions

When dealing with a lower standard invention, the prudent strategy will be to file a standard application and wait to receive the examiner’s views.  If it proves impossible to convince the examiner that inventive step is present, then it is possible to convert the standard application to be an application for an innovation patent.

Of course, this means that patent term is reduced from 20 years to 8 years.  However, issuance of the innovation patent is virtually assured, and enforceability is also greatly enhanced.

In summary, this strategy provides a mechanism for achieving shorter term protection of non-inventive variations over the prior art.

This will be of particular interest to pharmaceutical clients which are looking for mechanisms to optimise Life Cycle Management (LCM).  For example, the innovation patent system provides a mechanism for protecting novel, but non-inventive, formulations which have been developed late in the term of an earlier key patent.  This can result in a de facto extension of term, albeit only for the novel formulation.  However, this protection can be of great value where it covers the client’s commercial embodiment and extends protection beyond the original key patent’s term.

Commercially Important Inventions

When dealing with a commercially important invention, the prudent filing strategy is to file both a standard application and an application for an innovation patent.  The innovation patent will issue very quickly and can optionally be certified in preparation for enforcement.  This entire process can be completed with a couple of months of filing.  Upon completion, the client is armed with an enforceable patent which is extremely difficult for a competitor to invalidate.

In the meantime, the standard application is left pending for as long as possible.  Indeed, it is conceivable that the standard application might remain pending until close to the end of the 8 year term of the innovation patent.

If it becomes necessary to prosecute the standard application to issuance, then this is possible provided that the issued claims in the standard patent are not identical to the issued claims in the innovation patent.  Alternatively, if it is desired to have identical claims issued in the standard patent, then it will be necessary to withdraw the innovation patent in order to avoid the double-patenting prohibition.

Emergence of an Infringer

Where an infringer emerges, and where a standard application remains pending, it is possible to file one or more divisional applications for an Innovation Patent.  Each Innovation Patent can incorporate a claim which is novel over the closest known prior art.  Litigation can then be commenced based on all of the Innovation Patents.  The infringer is then faced with the difficult task of convincing a court that none of the novel features makes a substantial contribution to the working of the invention. In this scenario, the prospects of favourable settlement are high.

Summary

The innovation patent provides 8-year protection for inventions which are novel over the prior art, and where the novelty-conferring feature substantially contributes to the function of the invention.

There is no consideration whatsoever of the merit or contribution of the invention over the prior art.

The low standard for patentability makes it extremely difficult for a defendant to invalidate an innovation patent.

It is also noteworthy that the remedies available to the patentee for infringement of an innovation patent are identical to the remedies available to the patentee for infringement of a standard application.

In conclusion, an innovation patent is arguably the most pro-patentee patent available anywhere in the world.  On this basis, it is perhaps surprising that only 4,481 innovation patent applications have been filed in the last 7 years.  The authors believe that the low rate of filing of Innovation Patents is a result of most clients being unaware of this secondary type of patent in Australia, and the enormous value that the innovation patent system can offer.

Editor’s Note: Anticipate This!™ makes the case for U.S. Utility Models.

Today’s post is by Guest Baristas Bill Bennett (bbennett@pizzeys.com.au) & Alison McMillan (amcmillan@pizzeys.com.au), patent attorneys with Pizzeys© Pizzeys 2008.

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