An extract from The Patent Litigation Law Review, 3rd Edition

Types of patent

There are currently two tiers of patents under the Act: standard patents and innovation patents.

Standard patents, as the name suggests, are the traditional form of patent protection available under Australian law. Standard patents have a term of 20 years, and can only be granted and enforced following examination by the Australian Patent Office and the expiry of an opposition period (or the successful resolution of any third-party opposition).

Innovation patents are intended to cover lower level inventions (innovations). Innovation patents are similar to 'utility models' that are available in some jurisdictions internationally, such as China and Japan. Innovation patents provide the same scope of rights and remedies for infringement as standard patents but have a lower threshold for patentability (i.e., 'innovative step' rather than 'inventive step'). Innovation patents have a shorter term of eight years, but can be granted quickly upon compliance with formal filing requirements. To be enforced, an innovation patent must be certified, which requires completion of examination by the Australian Patent Office. In practice, an enforceable innovation patent can be obtained quickly (in four to five months) and there is no pre-grant opposition available to third parties. However, legalisation has recently been tabled by the federal government, which, if passed, will result in the phasing out of innovation patents.

Australia has a patent term extension regime available for certain standard patents relating to pharmaceutical substances. Eligible patents may have their term extended by up to a further five years. The rights of a patentee during the extended term of the patent are limited compared with a patentee's rights during the initial 20-year term.

Substantive law

i Infringement

Section 13(1) of the Act sets out the scope of the patentee's rights as being 'the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention within the patent area' (i.e., Australia). 'Exploit' includes:

  1. where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
  2. where the invention is a method or process – use the method or process or do any act mentioned above in respect of a product resulting from such use.

A person can be sued for direct, or indirect or contributory, infringement.

Direct infringement occurs when a person, without the authorisation of the patentee, performs any of the acts falling within the scope of exclusive rights conferred by a patent, as defined by Section 13(1) of the Act and the definition of 'exploit' (see above).

The applicant must establish that the allegedly infringing product or process contains all the essential integers of a claim of the patent. This necessarily involves a comparison between the patent claims and the alleged infringing product or process.

Section 117 of the Act provides a statutory basis for a finding of contributory infringement for the supply of infringing products where the use of such products by the person to whom they are supplied falls into one of the following categories:

  1. if the product is capable of only one reasonable use, having regard to its nature or design – that use;
  2. if the product is not a staple commercial product – any use of the product, if the supplier had reason to believe that the person would put it to that use; or
  3. in any case – the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, from the supplier.

A person may also be liable for indirect patent infringement at common law by authorising the infringement, jointly participating in the infringement or otherwise contributing to the act of infringement.

ii Invalidity and other defences

Invalidity is dealt with in Section 138(3) of the Act (which sets out the grounds on which a patent may be invalidated) in combination with Section 18 of the Act (which provides the requirements for an invention to be patentable as a standard or innovation patent). In broad terms, the main grounds upon which a standard patent may be invalidated are:

  1. not a 'manner of manufacture' (i.e., patentable subject matter);
  2. lack of novelty;
  3. lack of inventive step;
  4. inutility – that is, the claimed invention does not attain the result promised by the patentee, and also a specific, substantial and credible use is not disclosed in the specification;
  5. the invention was secretly used before the priority date by, or on behalf of, or with the authority of, the patentee;
  6. the patentee is not entitled to the patent;
  7. the patent (or an amendment to the patent) was obtained by fraud, false suggestion or misrepresentation;
  8. the complete specification does not disclose the invention in a manner that is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art;
  9. the complete specification does not disclose the best method known to the applicant of performing the invention;
  10. the claims are not clear and succinct; and
  11. the claims are not supported by matter disclosed in the specification.

The above list applies for innovation patents, except that rather than the patent requiring an 'inventive step' (see (c)), an 'innovative step' (which is a lower threshold) is required.

The key tests for manner of manufacture, novelty and inventive or innovative step are summarised in subsections iii, iv and v. One consequence of the RTB amendments is that, in addition to inventive step (as discussed below), the grounds of inutility, disclosure, best method and support (previously fair basis) have been amended to bring them into line with the requirements in other jurisdictions, in particular Europe, including the United Kingdom.

iii Manner of manufacture (patentable subject matter)

Apart from the exclusions for human beings (for standard and innovation patents) and for plants and animals (for innovation patents only) in Subsections 18(2) and (3) of the Act, there are no categories of inventions that are automatically excluded from patentability under Australian patent law.

Rather, the boundaries of what may constitute patentable subject matter are controlled by the requirement that an invention must be a 'manner of manufacture' within the meaning of Section 6 of the Statute of Monopolies 1623.

The leading High Court case on this ground (NRDC) established that it is neither possible nor desirable to give a specific definition to the expression 'manner of manufacture' and that it is a flexible concept capable of adapting to changing needs and times. The key test, as established by NRDC, is that the invention must give rise to an artificially created state of affairs that is of practical utility and economic significance.

The High Court has since held that the two requirements from NRDC are not a mechanistic test conferring a presumption of patentability. If the two NRDC criteria are met, the subject matter may be patentable, but other relevant factors must be considered, in particular consistency with the purposes of the Act and the international context.

iv Novelty

Section 7(1) provides that an invention is novel unless it is not novel in light of prior art information that is publicly available anywhere in the world prior to the priority date.

The information can be gleaned from a single document, or through doing a single act. It is permissible to combine information from two or more related documents or from two or more related acts but only if the relationship between the documents or acts is such that a person skilled in the relevant art would treat them as a single source of information. A patent can also be invalidated on novelty grounds if the prior art information is contained in a single complete specification that, even though published after the priority date of the claim under consideration, has a priority date that precedes it, provided that the information was contained in the specification both on its filing date and when it was published (commonly referred to as a 'whole of contents' novelty citation).

Other than whole of contents novelty citations, prior art published after the asserted priority date of a claim can only be considered for novelty or inventive step if the priority date of the claim is found to be later than the date asserted by the patentee (and the prior art was published before that later date). In assessing claims to priority, the same test for fair basis (before the RTB amendments) or support (after the RTB amendments) is applied to the priority document relied upon to confer the asserted priority date.

To assess whether an invention is novel over (or not anticipated by) any particular piece of prior art, the courts apply the 'reverse infringement test', that is 'whether the alleged anticipation would, if the patent were valid, constitute an infringement'. In other words, prior art will only anticipate an invention if it discloses all of the essential integers of the claimed invention. The cases emphasise that a clear and precise disclosure of the subject matter of what is claimed is required. In particular, the prior art must contain 'clear and unmistakable directions' to carry out the invention in order to render it not novel.

v Inventive step

Standard patents are subject to the inventive step test, while innovation patents are subject to the innovative step test, which has a lower inventive threshold.

Following the RTB amendments, under Section 7(2) of the Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art, in the light of the common general knowledge as it existed (anywhere in the world) before the priority date of the relevant claim, considered separately or together with the prior art information specified in Section 7(3).

Various observations have been made by the courts as to how to approach obviousness, although none are intended to replace the test laid down in Section 7(2). The most commonly applied test for inventive step (or obviousness) is whether the skilled person would directly be led as a matter of course to try the claimed invention in the expectation that it might well produce a useful result. However, this test may not be appropriate in all cases.

It is also important to recognise the limits imposed on the extent to which different sources of prior art information can be combined for the purposes of inventive step. Under Section 7(3) of the Act, the prior art information assessed for inventive step can be either any single piece of prior art information, or a combination of any two or more pieces of prior art information that the skilled person could, before the priority date of the relevant claim, be reasonably expected to have combined. It is impermissible to make a 'mosaic' of a number of independent items of information and then allege that the mosaic reveals the claimed invention.

The RTB amendments significantly expand the scope of the prior art base and the common general knowledge relevant to the assessment of whether an invention involves an inventive step. As a consequence, 'new law' patents must satisfy a higher threshold of inventive step as compared with 'old law' (i.e., pre-RTB amendments) patents.

vi Defences to infringement

In addition to the ability to rely on a licence from the patentee (express or implied) as a defence to infringement, there are other limited defences available, some of which are discussed below.

Section 119 of the Act provides a prior use defence. This defence is available in limited circumstances where the alleged infringer can establish that, immediately before the priority date of the relevant claim, they were exploiting the claimed invention in the patent area or had taken definite steps to do so.

Section 119A of the Act provides a defence for acts done solely for purposes connected with obtaining regulatory approval for pharmaceutical products. The RTB amendments extend this defence to non-pharmaceutical products under Section 119B.

The RTB amendments also introduced a defence under Section 119C of the Act if an otherwise infringing act is done for experimental purposes relating to the subject matter of the invention.