The Australian innovation patent: a "perfect storm" for rights enforcement?

"The innovation patent – a missed opportunity in Australia?" discussed the potential strategic applications of the Australian innovation patent. Two recent decisions of the full bench of the Federal Court of Australia - Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd ([2009] FCAFC 81) and Mont Adventure Equipment Pty Ltd v Phoenix Leisure Group Pty Ltd ([2009] FCAFC 84) - have confirmed the significant potential of the innovation patent as a powerful weapon in the arsenal of proprietors of patentable intellectual assets.

The Australian innovation patent
To recap briefly, the Australian innovation patent was introduced in 2001 with the intention of providing second-tier protection for innovative technologies, similar to successful second-tier systems available in some other countries (eg, Germany and Japan). While a standard patent (the first tier) is subject to the usual requirements of novelty and inventive step (ie, non-obviousness), claims in an innovation patent are assessed against a lower threshold of “innovative step”. The test for innovative step is whether any claimed feature that is novel over the prior art makes a “substantial contribution to the working of the invention”.

The notable limitations of the innovation patent are:

• It has a maximum term of eight years (as compared with 20 years for a standard patent).
• A maximum of five claims may be included (whereas the number of claims in a standard patent is potentially unlimited, subject to the payment of excess claims fees at acceptance for all claims over 20). 
• An innovation patent may not be granted in respect of plants, animals and the biological process for their generation (while the equivalent limitation for an Australian standard patent is restricted to human beings).

However, aside from these limitations innovation patents may be granted in respect of the full range of patentable subject matter in Australia, and the tests for infringement of an innovation patent, along with the available remedies, are identical to those for standard patents, including injunctive relief or an award of damages or account of profits.

The innovation patent “perfect storm” 
While one possible use of the innovation patent system is to protect developments that are an insufficient advance over the prior art to qualify for standard patent protection, this option may be of limited interest to multinational patent holders which, in general, would see little value in obtaining a short-term patent in Australia for an innovation that could not be similarly protected in most other markets.

However, there is no prohibition on obtaining an innovation patent for an invention that would equally qualify for standard patent protection. The strategic value of an innovation patent in this case arises from a combination of factors:

• An innovation patent application may be filed as a divisional of a pending Australian standard patent application or an international (Patent Cooperation Treaty) application designating Australia.
• An innovation patent may be granted, examined and certified (ie, made enforceable) within a matter of months and is not subject to a "pre-grant” type of opposition proceeding that could delay the patentee’s ability to enforce its rights. 
• Due to the lower threshold of innovative step, in principle a valid innovation patent could be obtained having broader claims than would be possible in a corresponding standard patent. 
• While Australian law prohibits double patenting (ie, the possession of two patents for the same invention), there is no bar against holding one granted patent while a corresponding standard patent application remains pending or relinquishing the earlier patent to enable the later application to proceed to grant. 
• Furthermore, the approach taken by the Australian Patent Office to the assessment of whether two patents relate to the same invention is very narrow – both must include claims having virtually identical scope and it is therefore quite possible to hold two patents of differing claim scope in respect of the same underlying inventive concept.
• As a result of the lower innovative step threshold, it may be extremely difficult for an accused infringer to attack the validity of an innovation patent successfully.

Particularly in view of the Dura-Post and Mont Adventure decisions, these factors create a potential “perfect storm” for parties wishing to enforce their patent rights in Australia. (The Dura-Post decision was the result of an appeal which upheld the first-instance decision - see "Innovative inventions? Obviously!".)

Turning first to Mont Adventure, the case involved the question of whether a divisional application is entitled to the full benefit of Australia’s 12-month grace period for disclosures made by the applicant before filing of the original (parent) application. In an initial decision of a single judge of the Federal Court, it was ruled that the relevant grace period must be measured from the date of filing of the divisional application and could not be backdated to the filing date of the parent. In most cases this would result in the divisional claims being invalid by virtue of the applicant’s earlier disclosure. However, the full bench reversed the ruling of the lower court, finding that it was clearly the intention in the Patents Act that divisional applications should inherit the full benefits accruing to the parent as if, in effect, both applications had been filed on the same day.

The Dura-Post case is now the leading decision in Australia on the application of the innovative step test - that is, the meaning of a “substantial contribution to the working of the invention”. The decision confirms that the relevant enquiry is to be conducted in relation to each single piece of asserted prior art information (eg, document) considered separately, as is the case for novelty. If a claim is novel in that it recites one or more features that are not present in the prior art, the question is then whether those features make a substantial contribution to the way in which the thing defined by the claims operates, which is to say a contribution that is "“real” or “of substance”, as contrasted with distinctions without a real difference". Whether a feature is obvious, well known or indeed disclosed in other prior art documents of record is immaterial. The question is solely directed to whether some additional function or effect is achieved, as opposed to the addition of a superficial, novelty-conferring feature that serves no real purpose in terms of the way that the product or process operates. In short, the innovative step test is nothing like the test for inventive step, but is rather a modified novelty test.

Therefore, divisional innovation patents:

• Are entitled to the full benefit of the filing date of a parent standard application (even if the Australian grace period provisions have been relied on).
• May be obtained rapidly.
• Can coexist with their pending parent application.
• Are extremely robust against attacks upon their validity.

And therein lies the patentee’s “perfect storm”.

Strategic applications and conclusion
In view of the above-described features of the Australian patent system and the outcomes in Mont Adventure and Dura-Post, potential strategic uses of divisional innovation patents include:

• Obtaining early and potent protection for new inventions while keeping longer-term options open via a pending standard patent application.
• Acquiring a rapid enforceable right in the event that a potential infringement is identified while the corresponding standard patent application remains pending.
• Targeting innovation patent claims to the specific features of an infringing product or process in preparation for prospective enforcement action.

Innovation patents may be of limited value in the case of inventions, such as pharmaceuticals, from which the greatest value is extracted during the final years of the standard patent term. However, for those fields of business and technology for which much of the value of a new product or service is realised during the early years following development and commercialisation, it is well worth considering the incorporation of innovation patents into an effective intellectual asset management strategy.