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Focus: Patents and Designs

11 November 2008

In this issue: We look at three court decisions that provide some judicial guidance on three important patent and design issues.

First judicial guidance on the grace period for patents

In brief: The Federal Court has handed down the first judicial decision on the grace provisions and the news is not good for patentees. In Mont Adventure Equipment Pty Limited v Phoenix Leisure Group Pty Limited [2008] FCA 1476 (2 October 2008), Federal Court Justice Stone held that the holder of a divisional innovation patent was not saved by the grace provisions of section 24(1) of the Patents Act 1990 (Cth.), even though the parent application from which it was divided was filed within the statutory 12-month 'grace period'. Patent Attorney Linda Govenlock and Partner Dr Trevor Davies look at the decision and its implications.

How does it affect you?

  • The protection afforded by the grace provisions is limited and should only be relied upon where absolutely necessary.
  • If more than one invention is publicly disclosed before filing a patent application, separate applications for each invention must be filed within 12 months of the disclosure.


In October 2004 Mont Adventure Equipment Pty Limited offered some of its travel packs for sale in Australia. On 13 May 2005, it filed a standard patent application (the parent application) for the travel packs which had been offered for sale. Subsequently, on 22 November 2006, Mont also filed an innovation patent application claiming divisional status from the parent application in order to fast-track protection for its travel packs. Mont alleged Phoenix Leisure Group Pty Limited infringed one or more claims of the innovation patent. As part of its defence, Phoenix alleged the innovation patent lacked novelty and an innovative step in light of Mont's public disclosure of the travel packs in October 2004.

The question before the court

Mont acknowledged that the travel packs offered for sale in October 2004 embodied the features of claims 1-5 of the innovation patent. The key issue before the court was whether, in defending the validity of the innovation patent, Mont could rely on the grace provisions of s24(1), which allows for certain public disclosures of an invention to be disregarded when assessing the novelty and inventive/innovative step.

In order for Mont to be able to rely on the grace provisions, the innovation patent had to be deemed to be a complete application filed within 12 months of Mont's public disclosure of the invention. The question before the court was whether the 'filing date of the complete application' in the context of s24(1) was:

  1. 13 May 2005 – the filing date of the parent patent application; or
  2. 22 November 2006 – the filing date of the divisional innovation patent.

If the answer to this question was (a), as argued by Mont, then Mont would have satisfied the requirements of s24(1) and its October 2004 disclosure of the invention could not be taken into consideration when assessing the validity of the innovation patent. However, if the answer was (b), as was argued by Phoenix, the innovation patent was filed outside the 12-month 'grace period' and the October 2004 disclosure of the travel packs would render the claims of the innovation patent invalid.

The court's decision

Justice Stone concluded that the 'complete application' in the context of s24(1) refers to the complete application for the patent, the grant or revocation of which is in issue, in this case the divisional innovation patent. With regard to what was the 'filing date' of that complete application, a close examination of the relevant regulations revealed some discrepancies as to whether the filing date of a divisional application could be taken to be that of the parent application. Justice Stone agreed with Phoenix that, using a literal reading of the language of the regulations, the filing date of the divisional application was 22 November 2006. As this date was well beyond the 12-month grace period set by the October 2004 disclosure, Mont's innovation patent was not saved by the grace provisions of s24(1).

In light of this decision, the grace provisions do not extend to a divisional application that is actually filed more than 12 months after the first public disclosure of the invention, even if the divisional application is fairly based on a parent application filed within the 12-month grace period and is entitled to the earliest priority date of the parent application. Any such divisional application will be vulnerable to a finding of lack of novelty or inventive/innovative step in light of the first public disclosure of the invention.

As was submitted by Mont, this construction of s24(1) does have the seemingly anomalous effect of a divisional application being entitled to the earliest priority date of a parent application, but to not be entitled to the benefit of the grace period. Whether or not this was the intent of parliament when enacting the grace period provisions is not certain.


Following this decision, the protection afforded by the grace provisions is more limited than may have been initially perceived. This decision serves as a timely reminder for all patent applicants that the strongest patent protection will be achieved by filing a patent application before any public disclosure of an invention. The grace provisions should only be relied upon where absolutely necessary and should not be considered a routine option in any patent filing strategy.

If more than one invention is publicly disclosed before filing a patent application, in order to ensure that each invention may be protected, it will be necessary to file a separate application for each invention within 12 months of the disclosure.

The decision is being appealed by Mont and we wait to see whether the Full Federal Court will uphold this controversial decision.

Invention and innovation: Defining the difference

In brief: Some valuable clarification regarding Australia's second-tier patent – the innovation patent – has been provided by a recent Federal Court decision, in which the validity of a roadside post manufacturer's innovation patents was upheld, and the patents found to be infringed. The scope of the 'innovative step' was considered judicially for the first time. Partner Chris Bird and Patent Attorney Lester Miller look at the decision.

How does it affect you?

  • Although our advice remains that standard patent protection should always be considered in the first instance, this decision will increase confidence for applicants seeking patent protection in Australia for inventions that meet insurmountable obviousness objections, but which have one or more distinguishing features that make a 'real' contribution to the way they work.
  • Small or incremental inventions may be protected with more certainty, providing an increased incentive to innovate and to protect new ideas in Australia.
  • The decision also looked closely at the object statement of the patent specification in construing the claims, delivering an important reminder that such statements should not be overly prescriptive.

The facts and the decision

Delnorth Pty Ltd alleged that three of their certified innovation patents (the patents) relating to an 'Ezy-Drive' roadside marker post were infringed by the manufacture and sale of a 'Flexi-Steel' post made by Dura-Post (Aust.) Pty Ltd. Dura-Post cross-claimed, arguing that the Delnorth patents were invalid.

Innovation patents

Innovation patents can be seen as the Australian equivalent of Utility Models. They have a maximum term of eight years and can include no more than five claims. After a formalities check, innovation patents are usually granted quickly, and, if infringement is to be asserted, must undergo a certification process involving substantive examination by the Patent Office. The patents at issue were divisional applications from a pending standard patent application, with claims directed to the allegedly infringing article.

Claim construction

The patents referred to the post being 'elastically bendable through 90º'. The court considered whether the proper construction of this phrase meant that it was limited to a perfect crease-free return to an upright position or whether it was acceptable for the post to return to a generally vertical position. The court had regard to problems in the art (namely UV deterioration, high cost and poor resilience under what is known as 'wheel over' conditions, in which a vehicle's wheel directly runs over and often creases the post at ground level). Having regard to the stated purpose of the invention (to 'ameliorate' identified disadvantages), it was found that the post need not return to its exact original position, and the Flexi-Steel post was therefore found to infringe the patents.


The closest prior art was considered to be a flexible steel marker post for placing into a formed hole and cementing into position.

The difference between the claimed post and the prior art were sufficient to render the patent claims novel. Relatively commonplace features of a driven post included having a protective coating, a marker hole for depth indication, a barb to resist removal, a taper for drive assistance, and stiffening ribs were found to distinguish the patents. It then remained to be decided whether those differences amounted to an innovative step.

The section of the Patents Act dealing with innovative step (s7(4)) states: 'an invention is to be taken to involve an innovative step when compared with the prior art base unless the invention would, to a person skilled in the relevant art, in light of the common general knowledge...only vary from the [prior art base] in ways that make no substantial contribution to the working of the invention'.

To decide whether an innovative step is present, the court set out a step-by-step test:

  • Each claim must be approached individually.
  • The differences, if any, between the claim and the prior art base should be identified.
  • The differences should be viewed through the eyes of the person skilled in the art, in light of the common general knowledge at the time of the claim.
  • Assess whether the combination of features in the claim only varies from the prior art base in a way that makes no substantial contribution to the working of the invention.
'Substantial contribution'

The court had regard to the Federal Government's Advisory Panel in its recommendations that led to the introduction of the innovation patent in 2001. The court considered whether the word 'substantial' meant 'great' or 'weighty', or alternatively 'more than insubstantial' or 'of substance'. Finally, the court settled on the interpretation 'real' or 'of substance'.

It considered that the assessment of the word 'substantial' involves 'quite a different kind of judgement from that involved in determining whether there is an inventive step. Obviousness does not come into the issue. The idea behind it seems to be that a claim which avoids a finding of no novelty because of an integer which makes no substantial contribution of the working of the claimed invention should not receive protection but that, where the point of differentiation does contribute to the working of the invention, then it is entitled to protection, whether or not (even if) it is obvious. Indeed, the proper consideration of the [test] is liable to be impeded by traditional thinking about obviousness.'

Finally, the court determined that a claim in the patents for a roadside post that was similar in every way to the prior art but for being drivable, with the marker hole to show a worker the recommended installation depth, did involve an innovative step. Other claims found to be valid involved differences as small as the taper at the base of the post to assist driving into the ground, a barb to resist extraction, and stiffening ribs. The feature of the post coating was found not to involve an innovative step.


Although the size of what constitutes an innovative step is always likely to be subjective and to depend on expert evidence, the decision makes clear that the test can be applied by a court in line with the intent behind the innovation patent system, to protect an 'incremental invention', that is, a creation that is more than novel but which may be obvious.

In view of the difference in term of the two types of Australian patent, our recommendation to those seeking patent protection is to pursue standard patent protection in the first instance, and, if an obviousness objection cannot be overcome during examination, an innovation patent application may be filed as a divisional application with no loss of priority, which will then be assessed against a lower threshold. Further, innovation patents can be used for strategic reasons. If a rapid grant is required (for example, in order to begin enforcement proceedings), an innovation patent application may be filed as a divisional application and pursued to certification, while the parent standard application is left to continue its conventional course through the Patent Office.

Disclosure of inventions and designs at international exhibitions

In brief: Disclosure of a design prior to filing an application for protection in Australia is not always fatal to the validity of the application. Partner Chris Bird and Senior Associate Anthony Selleck look at a recent court decision on the issue.

How does it affect you?

  • The patent and designs legislation of most jurisdictions includes provisions enabling an invention or design to be disclosed at certain exhibitions without jeopardising the validity of a later-filed application for protection. The provisions have rarely been relied upon, possibly because of a perception that most exhibitions did not fall within their scope of operation. However, in Chiropedic Bedding Pty Ltd v Radburg, the Full Court of the Federal Court of Australia recently considered the provisions relevant to Australian design registrations and has accorded them a relatively wide scope of operation.

Chiropedic Bedding was the owner of an Australian design registration for a design applicable to a 'posture-top' mattress. Prior to filing its application to register the design, Chiropedic had displayed mattresses made according to it at a fair organised by the Furnishing Industry Association of Australia. When Chiropedic brought infringement proceedings against Radburg Pty Ltd, the respondent sought to invalidate the registration on the ground that the prior publication was fatal to the novelty of the registration. In response, Chiropedic sought to rely on the 'exhibition' provisions in the Designs Act 1906 to overcome the effect of their prior disclosure.

It should be added here that, unlike the 12-month 'grace period' provision in place under the Australian Patents Act 1990, there is no equivalent blanket provision in the Designs Act to protect applicants for registered designs.

The Designs Act's provisions allow a design to be exhibited at 'an official or officially recognized international exhibition' (or a description of the design to be published during the holding of such an exhibition) prior to the filling date of the application for registration. At first instance, the judge confirmed that an official exhibition was distinct from an international exhibition, rather than a type of international exhibition (that is, he declined to read the word 'international' as applying to both categories of exhibition). Further, the trial judge construed 'official' exhibitions as those organised by governmental authorities, and 'officially recognised' exhibitions as those organised by other bodies, but recognised by government, such as through financial support or official endorsement (as was the case with the exhibition in question, which had received funding from the Victorian State Government). The appeal court concurred.

As the Furnishing Industry Association fair was not an 'official' exhibition, the provisions would only apply if the fair could be considered as an appropriate international exhibition. At first instance, the court held that an 'international' exhibition required a 'significant foreign presence' judged in both a quantitative and qualitative sense. The Furnishing Industry Association fair fell short of this requirement on the grounds that the foreign contingent at the exhibition comprised only seven exhibitors from New Zealand (amongst 250 Australian exhibitors). However, on appeal, the court found that the 'significant foreign presence' test was incorrect, as it introduced into the provisions questions of degree which were likely to raise uncertainly and expense.

According to the Full Court, the mere fact that the Furnishing Industry Association fair included exhibitors from Australia and New Zealand was enough to qualify it as an 'international' exhibition for the purposes of the provisions.

This decision is good news for designers and applicants in industries where exhibiting new products is important, but does not, of course, remove all risk. Reliance on any type of grace period can be problematic for rights owners, and we therefore continue to recommend that all applications for registered designs and patents are made prior to any public exposure of the design or invent

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