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Focus: Full Court united on grace period for divisional patents

14 July 2009

In brief: Patentees can breathe a sigh of relief now that the Full Court of the Federal Court of Australia has unanimously overturned a controversial decision of a single judge of the Federal Court. Partner Chris Bird and Senior Associate Linda Govenlock report on the appeal decision, in which the Full Court affirmed that a divisional application may be saved by the grace provisions afforded by section 24(1) of the Patents Act 1990, provided that the parent application from which it was divided was a complete application filed within the 12-month grace period.

How does it affect you?

  • In order to be able to rely on the grace period, a complete application must be filed within 12 months of an authorised disclosure of the invention.
  • Where more than one invention has been publicly disclosed during the 12 months before filing a complete patent application, a single complete application may be filed as the basis for patent protection of each invention.
  • A divisional application may be used as a mechanism for protecting – and enforcing – a specific embodiment of an invention, even when the grace period is being relied upon.

Background

Section 24(1) of the Patents Act 1990 (Cth) (the Act) provides a 'grace period', where prior publication or prior use of an invention by or with the consent of the patentee will not deprive the invention of novelty, provided a complete patent application for the invention is filed within 12 months after the information was first made publicly available.

This appeal – Mont Adventure Equipment Pty Limited v Phoenix Leisure Group Pty Limited [2009] FCAFC 84 (7 July 2009) – concerns the effect of the grace period on a divisional patent, in this case a divisional innovation patent. At first instance, the primary judge held that in the context of regulation 2.2(1A), the filing date of the complete application was the actual filing date of the divisional application, not that of the complete 'parent' application from which it was divided. As the divisional application was filed more than 12 months after the October 2004 disclosure of the invention by Mont Adventure Equipment Pty Limited (Mont), the primary judge held the divisional patent was not saved by the grace provisions of s24 and was therefore invalid.

Not surprisingly, this decision caused a fair degree of concern to users of the Australian patent system, as it removed the ability for valid patents to be divided off from a parent application in circumstances where the applicant was placing reliance on the grace period.

(To view our report on the first instance decision go to Focus: Patents and Designs – November 2008.)

The decision was appealed by Mont. In an unusual move, the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) successfully sought leave to intervene in the appeal through the making of written and oral submissions.

The appeal decision

The issue in dispute concerned the meaning of the phrase 'the filing date of the complete application' in regulation 2.2(1A). The question to be decided was whether this was a reference to the filing date of the complete parent application, or the filing date of the complete divisional application for the purposes of s24(1) of the Act.

Phoenix Leisure Group Pty Limited (Phoenix) put forward the contention, consistent with the conclusion of the primary judge and based on a literal reading of the relevant regulations, that the 'complete application' was the divisional application, as it was the validity of the divisional patent that was in question. In rejecting this, the Full Court affirmed that the statutory provisions governing the operation and effect of the grace period are to be construed not in isolation, but in the context of all of the provisions of the Act and the implementing regulations. Their Honours each concluded that the construction of regulation 2.2(1A) adopted by the primary Judge would lead to anomalous and unreasonable results that are inconsistent with the underlying purpose of s24.

Instead, the Full Court accepted the contention advanced by Mont and IPTA that the reference to 'the filing date of the complete application' in regulation 2.2(1A) is a reference to the application that first disclosed the invention. Each judge considered that this construction was in keeping with the Act and implementing regulations, whereby a divisional patent is afforded the same protection in the same circumstances as the parent patent. As observed by Justice Bennett, there is no reason why a divisional patent that is fairly based on a parent patent and entitled to the priority date and term of the parent patent should be deprived of the benefit of the grace period.

Summary

The Full Court unanimously concluded that the phrase 'the filing date of the complete application' in regulation 2.2(1A) was a reference to the filing date of the complete parent application, being the application which first disclosed the invention.

The decision has affirmed that a divisional patent may take advantage of the grace period, provided that the complete parent application first disclosing the invention and from which it is divided was filed within 12 months of the disclosure of the invention.

This will come as a relief to patent holders, particularly as it allows the continued strategic use of divisional innovation patents (which are granted very speedily) against alleged infringers during pendency of a standard patent application, even in circumstances where the patentee is relying on the grace period.

Notwithstanding this decision, Allens recommends that the grace period provisions should only be relied upon as a last resort. A patent application should always be filed before making any public disclosure of an invention.

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