Vehicle Monitoring Systems Pty Limited v Sarb Management Group Pty Ltd (trading as Database Consultants Australia) (No 2)  FCA 395 (3 May 2013)
A recent decision of the Federal Court of Australia concerning an innovation patent does not make any surprising new law, finding infringement and contributory infringement of the claims and upholding the claims as valid. The case however, does contain a few gems, reminding us of the nuances of fair basis and innovative step set down in earlier important judgements. And for those more academically minded, a tricky issue is raised concerning the overlap of the contributory infringement provisions and the defence of prior user.
The claimed invention
The invention relates to parking violations, particularly the detection of vehicles that overstay a defined time interval in parking spaces. The claims include a number of apparatus claims, at least some of which were held infringed by the respondent (SMG) by supplying a product falling within the scope of the claims. The claims also include method claims for identifying overstay of a vehicle in a parking space. SMG was held not to directly infringe these claims as it did not carry out the method. However, Yates J held there was contributory infringement by operation of Section 117 of the Patents Act (the Act) because other persons used the product in an infringing way in accordance with instructions and inducements given to them by SMG or contained in advertisements published by or with SMG’s authority.
The Defence under Section 119
Interestingly, SMG claimed the defence provided by Section 119 of the Act. This section exempts from infringement persons who were exploiting the patent or had taken definite steps to do so immediately before the priority date. (This section could only be successfully invoked by SMG if SMG was successful in challenging the priority date of the patent, which it was not.)
Overlap of prior user defence and contributory infringement
One of the most interesting issues of the case, the overlap between the prior user defence of section 119 and the contributory infringement provisions of S117, Yates J temptingly revealed and then declined to answer. Yates J said that the defence under Section 119 is limited to the alleged infringer’s own actions of exploitation and does not cover the act of authorising another person to exploit the invention. In this scenario, he left open the question of whether SMG would still be liable for contributory infringement under Section 117 for supplying a product to another person who carries out the infringement, even where the defence of Section 119 applies to the other person carrying out the method.
I must say that the legislation leaves us rather confused on this point. The contributory infringement provisions of Section 117 require the user of the product to infringe the patent thereby making the supplier liable for infringement. So, in the case of the user being a prior user under Section 119, is the user infringing or not? On the one hand, Section 119 expressly indicates that a person exempted under Section 119 does so “without infringing a patent”. So far so good for the supplier. If the user is not infringing by virtue of Section 119, then arguably the supplier is not caught under Section 117. I would like to say that that is the end of the story.
However, Section 119 continues to state that the person (i.e. the user) may do an act “that would infringe the patent apart from this subsection”. Section 119 acknowledges the concept of infringement but also states that this is not infringement where certain prior user criteria are fulfilled. We are therefore left in doubt as to which version of infringement is to be ascribed to Section 117. No wonder Yates J declined to address the issue.
The innovation patent was filed by way of a divisional application from a parent application which itself was a divisional application of an earlier application (the grandparent). The claims of the innovation patent no longer included features which had been included in the claims of the parent or the grandparent application. Therefore, SMG alleged that the claims lacked fair basis, thereby depriving the innovation patent of its earliest priority date. SMG failed in its attack.
Yates J reminds us of the principles set out in Leonardis v Sartas No 1 Pty Ltd (1996) 67 FCR 126. In that case, the Full Court explained the difference between fair basis required for a priority document and a divisional application as compared with the requirement for internal fair basis i.e. the requirement for claims to be fairly based on its own specification. Based on statutory interpretation, the Full Court in Sartas said that fair basis on a priority document or on a parent application in the case of a divisional application need not relate to all the matters disclosed in the earlier documents.
Thus, in the present case, the omission of features claimed in the parent and the grandparent from the claims in the divisional application for the innovation patent did not deprive the claims of the innovation patent of fair basis.
The decision also reminds us of the very low threshold of innovative step set out in Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd  FCAFC 81.
We are reminded about the difference between inventive step and innovative step, particularly with regard to the role of common general knowledge. When considering inventive step, if the difference between the claimed invention and the prior art can be found in the common general knowledge then there is a strong argument that the claim lacks inventive step. Not so with innovative step. In the case of an innovation patent, Yates J said that it is of no significance that the claimed feature or features that distinguish the invention over the prior art represents an obvious deployment of common general knowledge. All that is required for innovative step is that the feature or features make a substantial contribution to the working of the invention.
Using a real example from the case, the Tetsuya document was considered close prior art. Tetsuya was concerned with vehicles that are stationary in areas where parking is prohibited, not time-limited. In that context, a count is commenced once the stationary vehicle is detected. When the count reaches a predetermined limit, this fact is registered and sent from the count management means to the wireless communication means, which then relays this fact to a base station. Yates J accepted that the invention as claimed to determining vehicle overstay in a parking space of defined time duration, rather than to identifying illegal parking in a prohibited parking area, makes no substantial contribution to the working of the invention. However, the claimed inventions operate by a processor that processes data from the sensor, which it stores and then analyses to determine whether overstay has occurred in a parking space of defined time duration. Yates J said that the claimed processor functions provided flexibility, such as taking into account different parking restrictions for different days of the week and different times of the day. In contrast, the device of Tetsuya provided only simple count management and not the claimed processor functions. These claimed processor functions were considered to make a significant contribution to the working of the invention.
One might consider that a processor instead of a counter might be an easy substitution for a person skilled in the art equipped with the common general knowledge of counters and processors. The case serves as another reminder that you must forget what you know about obviousness and inventive step when considering innovative step. The only thing that matters is whether the difference makes a substantial contribution to the working of the invention. The threshold of innovative step is indeed very low.