The Full Court of the Federal Court’s recent judgment in Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (Delnorth case) makes it difficult for patent infringers to invalidate innovation patents on the basis of “innovative step”. The Court dismissed Dura-Post’s appeal, confirming that “innovative step” requires less ingenuity than does “inventive step” (a requirement for standard patents).

The Court confirmed that innovation patents provide eight years of protection for advances in technology that, although they may be obvious, nevertheless substantially contribute to the working of the particular technology to which they relate.

Judgment of the Trial Court

Delnorth was successful at trial in establishing infringement by Dura-Post of certain claims of its patents. Dura-Post then appealed to the Full Court.

Innovation Patents

Innovation patents were introduced into the Australian patent system following a report of the Advisory Council on Industrial Property (ACIP) in 1995. The legislation that gave life to innovation patents came into effect on 24 May 2001. That legislation was designed "to stimulate innovation in Australian [Small to Medium Enterprises]", “by providing Australian businesses with [IP rights] for their lower level inventions".

Like the owners of standard patents, innovation patent owners have the exclusive rights, during the term of the patent, to exploit the invention and to authorise others to do so. The term of an innovation patent is 8 years as compared with 20 years for a standard patent.

Although innovation patents are not subject to substantive examination when they are filed, an innovation patent owner must have their patent “certified” before they can sue for patent infringement. Substantive examination is part of the certification process.

For an innovation patent to be valid it must, among other things, be new and involve an “innovative step”.

A person who is sued for infringement of an innovation patent can seek cancellation (i.e. revocation) of the patent on various grounds. One such ground is lack of innovative step. If the patent is successfully revoked, there is no liability for patent infringement. In this case, Dura-Post argued that Delnorth’s patents lacked an innovative step.

The primary issue in the Delnorth case was the meaning of “innovative step”. Although the Court also dealt with novelty and “manner of manufacture” arguments, those other arguments are not the subject of this update.

The Patents

The patents in the Delnorth case concerned roadside posts for supporting signage or delineating paths, roadways or boundaries.

Roadside posts are often impacted and damaged by vehicles and then have to be replaced or repaired. As at the date of the patent, these posts had been made from such materials as timber, steel, plastic and plastic/rubber composite. Some of these materials suffered problems such as fracturing and degradation due to UV exposure. Roadside posts made from steel were generally not resilient because they tended to deform upon impact.

A further problem experienced in the manufacture of these posts related to the hinging mechanisms used. Sometimes the nature of the vehicle impact caused the post to be pressed flat against the surface of the road. Existing technology used in roadside posts resulted in fatigue to the hinge due to these direct “wheel-overs”.

Delnorth’s invention claimed to substantially overcome or at least ameliorate one or more of these various problems.

What does “Innovative Step” Mean?

The Patents Act states that an invention is 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 the light of the common general knowledge … only vary from the kinds of information set out in subsection (5) in ways that make no substantial contribution to the working of the invention.”

As did the trial judge, the Full Court held that if any variation contributed substantially to the way in which the roadside post functions as such, then that variation necessarily made a substantial contribution to the "working of the invention". In doing so, the Full Court rejected Dura-Post's argument that the critical question was not whether a marker hole affected the use of a roadside post, but whether it contributed substantially to the use of an elastically bendable spring steel post. The Full Court also confirmed that one must look at each claim of the patent, not the overall advance in the art. It endorsed the following methodology:

  • The first step is to compare the invention as claimed in each claim with the prior art base and determine the difference or differences;
  • The second step is to look at those differences through the eyes of a person skilled in the relevant art in the light of common general knowledge as it existed in Australia before the priority date of the relevant claim and then ask whether the invention as claimed only varies in ways that make no substantial contribution to the working of the invention.

The Full Court also held that the trial judge was correct in holding that "substantial" contribution means "real" or "of substance".

Did the Delnorth Patents involve an Innovative Step?

Having resolved these issues, the Full Court then applied the above tests to the patents in the case before it. In particular, it compared the invention as claimed in each claim as against each of the two relevant pieces of prior art (the “Pellowski” and “Kennedy” patents). It performed the comparison through the eyes of one “skilled in the art” and in light of the common general knowledge.

The Court accepted that Pellowski disclosed an elastically bendable sheet spring steel post that was arcuate in shape and bendable to either side of its longitudinal axis. It accepted evidence of Delnorth’s expert that the “desiderata” elements did make a substantial contribution to the working of the invention.

The Court accepted that Kennedy disclosed "a flexible support with a plurality of thin sheets of material laminated together”. The Full Court accepted the evidence that:

  • A homogenous body of sheet spring steel the subject of Delnorth’s patents made substantial contributions over a plurality of sheets, and
  • In any event, Kennedy did not disclose the use of a marker hole, a barb or a tapered end as claimed by the Delnorth patents.

Therefore, the relevant claims did involve an innovative step and were held valid.

Strong Protection for Advances in Technology

The Full Court remarked that the test for innovative step requires a narrow comparison between the invention as claimed and the relevant prior disclosure, having regard to the fact that the threshold for an innovation patent is intended to be lower than for a standard patent. The Court appeared to endorse the comments of the trial judge that:

“The phrase ‘no substantial contribution to the working of the invention’ involves quite a different kind of judgment from that involved in determining whether there is an inventive step. Obviousness does not come into the issue ... [W]here 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 ... proper consideration [of the issue] … is liable to be impeded by traditional thinking about obviousness.”

By its decision in the Delnorth case, the Full Court has confirmed that patent protection is available for 8 years for advances in technology that, although obvious, nevertheless substantially contribute to the working of the particular technology to which they relate. This is obviously good news for prospective patentees.