The Australian Innovation Patent: The threshold for patentability may be higher than you think

Date: 2017-06-22
Author: Carl Harrap

A June 2017 decision of the Australian Patent Office highlights when claims in an innovation patent may be found novel, but lacking in innovative step.

The decision highlights that the inquiry into innovative step is substantially different from the inquiry into novelty – a novel integer in a claim, which is material to the invention, does not necessarily confer innovative step.

Valuable lessons for patentees, patent examiners and parties to revocation proceedings can be obtained by considering the approach of the Patent Office.

The Patent Office decision highlights that the threshold of innovative step may be higher than that identified in a recent review of the innovation patent system. It is one example of a development in the law alleviating concerns with the innovation patent system. A recent Federal Court decision addresses a problem regarding divisional innovation patents. However, there remain problems to be addressed. The long-term future of the innovation patent in Australia consequently remains uncertain.

Brief introduction to the innovation patent

The Australian innovation patent is a “second-tier” patent, with a full term of 8 years, as opposed to the 20 year term of a standard patent.

An advantage of an innovation patent for the patent’s owner is that no inventive step is required for the innovation patent to be valid. Instead the claimed invention only requires a lower threshold of innovation: a variation from the prior art that makes a substantial contribution to the working of the invention.

This threshold is called an “innovative step”. What this step involves was first considered by the Federal Court in a 2008 decision, which we previously reported on. The requirement of innovative step was designed to present a lesser threshold than that of inventive step.

Due in part to the relatively low number of innovation patents in comparison to standard patents and their more limited term, the body of case law and Patent Office decisions on the innovation patent system, including decisions considering the innovative step threshold, remains under developed.

New Patent Office decision

A June 2017 Patent Office decision progresses this development.1 Significantly, the decision indicates the difference between novelty and innovative step can be considerable.

The innovation patent claimed a method of facilitating digital content download via a server. There were a number of steps to the method, all but one of which were described in a piece of prior art raised by an opponent to the innovation patent. While the claim required the recipient device to connect to the server to download a digital object at "predetermined" intervals, the prior art described the server initiating the connection at "irregular" intervals.

The Hearing Officer found the claim was novel over the prior art. However, the Hearing Officer found that the claimed invention lacked an innovative step. In his decision, he commented that 'regardless of whether the connection request is initiated by the user device or the server, the transmission step is the same'.

Approach by the Hearing Officer to the inquiry into innovative step

Although the Hearing Officer’s reasons were brief, reflecting that the parties before him apparently did not make substantive arguments on point, a staged approach to the question of innovative step appears to have been adopted. This included:

  • Identify the "variation" (if any) between the prior art and the claimed invention.
  • Consider whether that variation makes a substantial contribution to the working of the "invention as claimed".

The first step above indicates that it is an incorrect approach to identify for consideration the novel integer of the claim. In this case, the novel integer of the claim was discontinuous connections to the server at predetermined intervals. However, the correct inquiry involves identifying the variation over the prior art. In this case both the claim and the prior art required discontinuous connections; it was the different time interval between the discontinuous connections that represented the variation.

The second step of the inquiry asks what contribution the variation makes to the invention as claimed. As indicated above, the Hearing Officer considered the variation from the perspective of the transmission or download of the digital content. Viewed from this perspective it is readily apparent why the Hearing Officer reached the view the variation did not make a substantial contribution to the working of the invention.

Lessons from the decision

Significant lessons can be taken from the Patent Office decision, for patentees that have their innovation patents examined, for patent examiners, and for a party requesting revocation of an innovation patent on the basis of lack of innovative step. These include:

  • Claims that are novel over an item of prior art are not necessarily innovative merely because the novel integers are an important or a material part of the claimed invention. For example, in the Patent Office decision, evidence that a discontinuous connection at predetermined intervals is advantageous over a continuous connection did not save the claim.
  • Instead, it is necessary to consider the variation between the claimed invention and the prior art. This is a different exercise from considering novelty. In this regard Justice Dowsett has commented:

- It should not be assumed that a “variation” for the purposes of [innovative step] will necessarily be the same as an “integer” found to be missing in an item of prior art for the purposes of [novelty].

- In my view the skilled person might not approach the question by dividing the invention into integers. Such a person would read the two documents and identify any variation for him- or herself.2

  • Once the variation has been identified, it is necessary to consider the contribution the variation makes to the working of the invention as claimed, and evaluate whether it is substantial. While the inquiry is not into whether there is an advance in the art (as may be considered for the higher threshold of inventive step), the variation must be evaluated from the perspective of the invention as claimed, rather than, for example, from the perspective of a component part of the invention.

The future of the innovation patent

In 2008 we said 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. In a recent inquiry into Australia’s intellectual property arrangements the Productivity Commission recommended to the Australian Government that the innovation patent be abolished, due to a number of flaws in the current design of the system.

One flaw identified by the Productivity Commission was the low threshold for innovative step, as “little more than a test for novelty”. The Commission said that if the system were to be retained, then reform would be required, including raising the threshold for meeting innovative step. The Patent Office decision reported on above illustrates that the threshold may be higher than originally thought.

Another flaw identified by the Productivity Commission was an incentive for “strategic behaviour”, presented by divisional innovation patents enabling patent holders to claim damages for infringement based on the original patent. In other words, damages for infringement could be claimed from a date before the divisional innovation patent was filed and published. This can now be put aside as an anomaly that has now been corrected by the Federal Court in a decision in April 2017, which found that damages can only be claimed from the date of grant of the innovation patent.3

These two flaws were not the only problems of the innovation patent system identified by the Productivity Commission. Overall the Productivity Commission raised substantial doubt as to whether there was a net public benefit in maintaining the system, even in a modified form. It remains to be seen whether the innovation patent has a long term future in Australia, and if so in what form. In the meantime, the decisions in 2017 to date indicate that some of the perceived flaws are being addressed, through appropriate interpretation of the Patents Act.

 


Foxtel Management Pty Ltd v The Advanced Technology Group Pty Ltd [2017] APO 26.

SNF (Australia) Pty Ltd v Ciba Speciality Chemicals Water Treatments Limited [2012] FCAFC 95, at paragraphs 218 and 225.

Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54.