Federal Court takes an innovative step on innovation patents

Date: 2008-09-16
Author: Carl Harrap

Justice Gyles of the Federal Court of Australia has handed down his decision in Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225 (Delnorth), which addresses the meaning of an ‘innovative step’ in relation to an Australian innovation patent.

Justice Gyles of the Federal Court of Australia has handed down his decision in Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225 (Delnorth), which addresses the meaning of an ‘innovative step’ in relation to an Australian innovation patent.

Innovation patents explained

Innovation patents were introduced in May 2001 as a second-tier patent to the standard patent, with the aim of stimulating innovation in Australian small to medium sized entities. Innovation patents have a shorter term of eight years and are limited to five claims, but were introduced to enable ‘lower level’ inventions to be protected by requiring only an ‘innovative step’ rather than an ‘inventive step’.

While the statutory test for innovative step was sourced from a 1930s decision of the Australian High Court regarding novelty, there has still been considerable doubt as to how much lower the threshold of innovative step is in comparison to inventive step. Justice Gyles has now provided the first interpretation by the Federal Court of innovative step.

The decision

In issue were three innovation patents for roadside marker posts. Delnorth Pty Ltd alleged that Dura-Post (Aust) Pty Ltd had infringed these innovation patents. In response Dura-Post (Aust) Pty Ltd made a cross-claim of invalidity of the innovation patents.

The cross-claim put the issue of what constitutes an innovative step squarely before the Federal Court for the first time. One consideration for the court was whether a marker post constructed from sheet spring steel was innovative over prior art plastic marker posts.

Justice Gyles postulated a test for innovative step that does not require an advance over the prior art. Instead, what is required is a difference over the prior art that makes a substantial or real contribution to the working of the invention. According to the test, a difference of this nature may be innovative irrespective of the extent that it varies from the prior art, or the extent to which it represents an improvement over the prior art.

This test for innovative step represents an entirely different approach on the question of validity to the approach when evaluating inventive step. According to the test, the threshold level of difference over relevant prior art will be very much lower for an innovation patent than for a standard patent.

The questions to ask

Justice Gyles provided his interpretation of the requirement for an invention to have an ‘innovative step’ as defined in section 7(4) of the Australian Patents Act 1990 (Act). Section 7(4) requires that the claimed invention vary from the prior art information in a way that makes a substantial contribution to the working of the invention. Also as required by the Act, Justice Gyles considered each item of prior art separately, not combining two or more items to reach a view on the validity of the claims.

Justice Gyles held that a two-step inquiry was involved:

  • Determine the difference(s) between the claimed invention and the prior art.
  • Ask whether the ordinarily skilled person in the field would, in the light of common general knowledge view the claimed invention as only varying from the prior art in ways that make no substantial contribution to the working of the invention.

Importantly, Justice Gyles held that the evaluation of substantial contribution to the working of the invention was entirely different to the process for determining whether there is an inventive step, saying:

There is no need to search for some particular advance in the art to be described as an innovative step which governs the consideration of each claim.
and
The focus is upon the working of the invention (as claimed) not to the degree or kind of variation from the [prior art]. In other words, the variation from the kinds of information might be slight but, if a substantial contribution is made to the working of the invention, then there is an innovative step.

What is a substantial contribution?

Justice Gyles held that a substantial contribution ‘means “real” or “of substance” as contrasted with distinctions without a real difference’.

In this context he held that it ‘cannot seriously be argued that the material sheet spring steel does not make a substantial contribution to the working of the roadside post’. Therefore, the claimed roadside post was found to involve an innovative step over prior art plastic roadside markers.

Another of the independent claims considered by Justice Gyles referred to a maker hole, which His Honour, in agreeing with one of the witnesses, found that it ‘makes a real contribution which is of substance to the working of the invention, as the embedding of the post in the ground is a significant aspect of the operation of a roadside post and the marker hole undoubtedly assists in that regard’.

Another of the independent claims, which was not limited to spring sheet steel, included a feature of a surface coating applied to the front and rear faces of the post. The closest prior art considered described a surface coating only on the front face. This difference was found by Justice Gyles to serve a functional purpose, but not to involve a sufficiently significant contribution to the working of the invention. Justice Gyles did not give reasons for this finding.

The end result

The claims that differed from the prior art only by the use of sheet spring steel were ultimately found invalid over another item of prior art that specifically referred to the use of spring steel for a similar marker. The difference from that prior art was that it was described as positioned along the roadway as opposed to adjacent to the road. Justice Gyles put this difference ‘aside’ when evaluating innovative step, presumably indicating his view that this difference in location of the marker post clearly could not establish innovative step.  

Many of the other claims were found valid. These claims added the features of: a marker hole, a tapered end to assist in embedding the marker post in the ground, the use of a barb to retain the post in the ground, the addition of longitudinal ribs and the use of particular dimensions. The finding the invention defined by these claims included an innovative step confirms that the threshold to obtain a valid innovation patent is low.

The role of common general knowledge

Justice Gyles’ test severely limits the role of the common general knowledge in determining validity of an innovation patent. Its role is confined to determining whether a novel feature substantially contributes to the working of the invention. This is in contrast to a standard patent where the common general knowledge is an essential element in the question of whether a claimed invention involves a sufficient advance to be patentable, namely an inventive step.

The application of this test may be viewed as fitting uneasily with His Honour’s explicit finding that the common general knowledge did not include spring sheet steel for roadside posts or analogous uses. The question arises as to why he thought it necessary to specifically find that the difference in the claimed invention was not common general knowledge, without making separate findings as to the role of the common general knowledge.

Justice Gyles made no mention of the common general knowledge as it related to the use of a marker hole, tapered end, barb, ribs or particular dimensions, or for that matter the use of a surface coating. It therefore appears that the common general knowledge has a very minor part to play in the evaluation of innovative step.

Implications of the decision

The interpretation of innovative step by Justice Gyles in Delnorth may be viewed favourably by the holders of innovation patents and may encourage the increased filing of innovation patents. If the test adopted by Justice Gyles remains, then successfully revoking an innovation patent on the ground of lack of innovative step will be difficult.

This of course is a double-edged sword and innovation patents could readily be used to exclude competing products or processes. It will now be increasingly difficult to obtain a freedom to operate opinion in Australia over a pending application filed less than eight years ago, as any opinion will need to take into account the option to file an innovation patent and its comparatively low threshold for validity.

Developers of new products (or processes) would be well advised to consider maintaining a patent application pending for the first few years of the life of the product, even if the changes to the product are not viewed as inventive. The availability to file innovation patents may greatly assist in discouraging ‘copy-cat’ products and potentially provide an effective remedy against such products, in the form of an injunction and possibly also damages for infringement of an innovation patent. It is also noteworthy in this respect that there is no-pre-certification opposition for innovation patents.

It will be interesting to see where, in the wake of the introduction of innovation patents, the new balance between encouraging innovation and avoiding overly restricting competition rests.

This article was written by Carl Harrap, Senior Associate, Sydney.