Focus: Innovative step on an unsure footing
1 October 2013
In brief: The Australian Government's Advisory Council on Intellectual Property is currently accepting submissions to its Review of the Innovation Patent System, in which it is considering making changes to the requirement that a valid innovation patent disclose an innovative step. The outcome of this review could have a significant impact on what constitutes a valid innovation patent, and may cut across a number of cases that have sought to clarify the innovative step requirement for these patents. Partner Sarah Matheson (view CV), Senior Associate Tom Reid and Law Graduate Israel Cowen report.
- The future of innovation patents
- Dura-Post v Delnorth (2009)
- SNF v Ciba (2013)
- VMS v Sarb (2013)
- Multisteps (2013)
How does it affect you?
- To be valid, an innovation patent must disclose an invention that involves an innovative step. The current Advisory Council on Intellectual Property (ACIP) Review of the Innovation Patent System is revisiting the issues covered in IP Australia's September 2012 proposal to raise the 'innovative step' threshold to the 'inventive step' level required for standard patents. Submissions to the review are due by this Friday, 4 October 2013.
- The ACIP review comes as a line of recent cases have considered the innovative step requirement. The cases provide some further guidance on what, since it was first addressed in Dura-Post v Delnorth,1 has been construed to be a relatively low bar to patentability. Indirectly, the spate of recent cases may be evidence of the increasing use of the innovation patent system ACIP has noted in its Options Paper.
- Organisations looking to rely on innovation patents to protect their R&D investments, and organisations accused of infringing an innovation patent, should be aware of these developments and should monitor, and consider contributing to, the ACIP review.
A valid innovation patent must (at least) disclose an invention involving an innovative step; that is, a difference from what came before that makes a substantial contribution to the working of the invention.2
ACIP is currently accepting submissions as part of its Review of the Innovation Patent System. As part of this review, ACIP intends to revisit the issues covered in IP Australia's 2012 proposal to raise the 'innovative step' threshold required for innovation patents to the same level as the 'inventive step' required for standard patents.3 The reasons IP Australia gave for doing so included to address concerns that pharmaceutical companies might use the lower threshold to 'inappropriately extend the life of pharmaceutical patents and delay the introduction of less expensive generic medicines', leading to increased costs to consumers and the Federal Government.4
ACIP's reason for revisiting this proposal now is said to be the need to encourage an improved calibre of innovation patents, and to provide greater certainty for inventors in their ability to enforce such patents.5
Raising the innovative step threshold is only one of the options that ACIP will consider as part of the review. Other options under consideration include changes to limit the inventor's monopoly rights to a single embodiment of the invention, and/or to reduce the available remedies for infringement of non-commercialised innovation patents, or even abolishing the innovation patent system entirely.6
If implemented, the proposal to raise the innovative step threshold could render obsolete a line of cases dealing with the innovative step requirement, starting with Dura-Post7 in 2009 – where the test for innovative step was first judicially considered8 – and followed by SNF v Ciba9 and VMS v Sarb,10 where the courts further articulated relevant principles to be used in understanding the innovative step requirement. The most recent case to address this, Multisteps,11 confirmed that an innovation patent must clearly articulate the feature or features that are said to be innovative, in finding that the patentee had failed to meet this requirement. These cases are summarised below.
Here, the Full Federal Court upheld the trial judge's decision that the applicant had infringed the respondent's innovation patent for a flexible roadside marker post.12
At trial, the applicant had argued that the patent lacked an innovative step, since the additional features described in the patent did not make a substantial contribution to the working of the invention, and made no advance over the prior art. The court rejected the argument that the test for innovative step required an 'advance in the art',13 and upheld the trial judge's characterisation of 'substantial contribution' as requiring a contribution that was 'real' or 'of substance'.14 It also upheld the approach taken at trial to assessing innovative step, which essentially involved the following two-step process:
- compare the invention described in each claim with the relevant prior art and identify any difference or differences; and
- assess those differences to determine whether they only differ from the prior art in a way that makes a substantial contribution to the working of the invention as claimed.15
This decision provided a relatively broad approach to what might constitute an innovative step. In September 2012, the then Parliamentary Secretary for Industry and Innovation, the Hon Mark Dreyfus QC MP, in directing IP Australia to consult on raising the innovative step threshold (which led to the current ACIP review), said that the Dura-Post decision has been seen as allowing 'relatively obvious minor improvements to inventions'16 to be patentable, and implied that it may have contributed to 'unusual growth of innovation patent applications for certain technologies, such as IT and pharmaceuticals'.17
The test for innovative step as outlined in Dura-Post was expressly applied in the judgments of the trial judge and on appeal in SNF v Ciba.
At trial, the judge found that a variation in the effect of the invention on mineral waste processing had 'an important effect', which her Honour considered satisfied the 'substantial contribution' requirement under s7(4) of the Patents Act 1990 (Cth).
In refusing special leave to appeal further, the High Court did not address the issue directly, but concluded that the primary judge's finding, including her Honour's focus on the 'important effect', was not inconsistent with the statutory test for innovative step.18
In assessing the existence of an innovative step in VMS v Sarb, which concerned a ground-embedded car-parking overstay detector system, the court applied Dura-Post in arriving at the following principles:
- the test is not whether the invention could work effectively (albeit with some inconvenience) without the feature said to make the requisite contribution but, rather, whether that feature's contribution to the working of the invention is real or of substance;
- the contribution must be of a necessary 'attractive feature', which alleviates an inconvenience and/or overcomes an ineffectiveness;19
- the substantial contribution must be to the working of the invention – eg contributions that enhance the invention's flexibility and scope of operation;20 and
- it is not relevant that a prior art product could be adapted to perform the function which the patent in question performs, especially if the patent in question is characterised in the claims by its function. The prior art must be designed to perform that function, and in the particular way claimed.21
In Multisteps, the applicant (Multisteps) alleged that the respondent had infringed two of its innovation patents by supplying certain plastic 'clamshell' fruit containers.
The main disagreement between the parties' experts concerned claim 1 of one of the Multisteps' patents, which claimed a clamshell container with 'protruding legs'. Multisteps' expert considered there was a 'substantial contribution' in the enhanced stackability of containers facilitated by the engagement of the protruding legs of one container with a raised protrusion on another container's lid.
The court rejected the patentee's contribution that the 'enhanced stackability' feature contributed the requisite substantial contribution. Claim 1 did not refer to a lid with raised protrusions, nor did the body of the specification describe the function of the 'protruding legs' as being to enhance stackability (rather, the function described was to provide 'extra friction' with various surfaces, without any mention of stackability).22
Further, the claims did not contain any words confining the invention to the 'particular working interrelationship'23 between the protruding legs and the raised protrusions of the lid described by Multisteps' expert, which meant that the invention improperly 'include[d] embodiments that d[id] not possess the asserted innovative step'.24
The lessons from Multisteps are that:
- the relevant feature can involve, or rely on, a relationship among multiple elements, but if so, that relationship must be articulated; and
- all of the claims of the innovation patent must be limited to embodiments of the invention containing the relevant feature.
Given that the ACIP review proposes to make changes to the innovative patent system and possibly to the innovative step required, organisations looking to rely on (or challenge the validity of) innovation patents should be aware of how the changes might affect current case law, and should monitor, and consider making a submission to, the ACIP review by the 4 October deadline.
- Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239.
- See Patents Act 1990 (Cth), section 7(4).
- See IP Australia, Innovation Patents – Raising the Step Consultation Paper (24 September 2012).
- See, eg, Australian Government Advisory Council of Intellectual Property, Review of the Innovation Patents System – Options Paper (August 2013), 13-14.
- Ibid 35-43.
- Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239.
- See earlier article 'Invention and innovation: defining the difference' in our Focus: Patents and Designs.
- SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd  FCA 452, affirmed in SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd (2012) 204 FCR 325, and special leave refused by the High Court in SNF v CIBA Specialty Chemicals Water Treatment Limited  HCATrans 54 (15 March 2013).
- Vehicle Monitoring Systems v Sarb Management Group (No 2)  FCA 395.
- Multisteps Pty Limited v Source and Sell Pty Limited  FCA 743.
- See our Focus: Patents and Designs for an article on this case at trial.
- Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239, .
- Ibid .
- Ibid .
- See the Hon Mark Dreyfus QC MP, 'Media Release: Public Consultation on Innovative Patents' (24 September 2012).
- SNF v CIBA Specialty Chemicals Water Treatment Limited  HCATrans 54 (15 March 2013).
- Vehicle Monitoring Systems v Sarb Management Group (No 2)  FCA 395, .
- Ibid [231-2].
- Ibid .
- Multisteps Pty Limited v Source and Sell Pty Limited  FCA 743, .
- Ibid .
- Ibid .
- Sarah MathesonPartner,
Ph: +61 3 9613 8579
- Philip KerrSenior Patent/Trade Mark Counsel,
Ph: +61 2 9230 4937
- Andrew WisemanPartner,
Ph: +61 2 9230 4701
- Michael MorrisPartner,
Ph: +61 7 3334 3279
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