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Overview
Until now there has been no substantive judicial guidance as to the threshold for patentability of innovation patents, although there has been a general assumption that a lower threshold should apply, as compared with standard patents. Enter a recent judgement in Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225.
In broad terms, the Court held that attention should turn to the contribution that a novelty-conferring feature makes to the claimed invention. The net result is that, without strong novelty-destroying prior art, significant difficulties are likely to be encountered when challenging the validity of an innovation patent.
The present judgment has important implications for the commercial value of innovation patents as strategic business tools, as outlined more fully below.
Overview of the Innovation Patent Regime
Innovation patents were introduced into Australian law in 2001, with a regime focussed on streamlining procedures and reducing costs for applicants. A key difference between the two types of patents relates to the threshold test for patentability, with standard patents requiring an "inventive step", and innovation patents requiring an "innovative step", in order to confer patentability over the prior art.
It is important to note that there are other important differences between standard patents and innovation patents. Consideration of these is important in determining whether an innovation patent may be the most suitable option in any given situation.
The Federal Court’s Position on "Innovative Step"
In overview, the Federal Court has confirmed that a lower patentability threshold should be applied to innovation patents. Under the lower threshold test for "innovative step", when comparing the invention as defined in the claims to the closest prior art, the consideration is whether any variation would make a "substantial contribution to the working of the invention". If so, the invention should be considered to posses the requisite innovative step. Importantly, no consideration is given to whether the claimed invention might be considered "obvious" in a more traditional patent sense.
As for the meaning of "substantial contribution", the Court held that "substantial" means "real" or "of substance", as compared with distinctions of no real or substantial significance. This suggests a wide gamut of possibilities. For example, there are arguments to suggest that increases in marketability, efficiency, or perhaps even aesthetics may be sufficient to constitute a "substantial contribution". However, there will be limits, and no doubt further light will be shed on this distinction by subsequent decisions of the Courts.
The Strategic and Commercial Value of Innovation Patents
Innovation patents have found popularity as strategic business tools, particularly for the purposes of enforcement and commercial negotiations. This popularity is set to increase further following the present judgement.
One common strategy is to file an application for an innovation patent as a “divisional” of an existing standard patent application, and by that means obtain enforceable rights within 2-3 months. The innovation patent can thereby be used as a short-term tool, whilst retaining a standard patent application pending in the longer term.
There are some inherent disadvantages associated with innovation patents (such as early publication, post-grant opposition, and a shortened term of 8 years as compared with 20 years for a standard patent). However, those considerations are often of less immediate concern when entering a phase of commercial negotiation or enforcement, and can often be offset in the longer term by means of the standard "parent" patent.
The lower threshold test for patentability and the correspondingly higher presumption of validity can only enhance the commercial and strategic value of innovation patents in this context. This is good news for the owners and licensees of innovation patents, but will be a concern to those at risk of infringement or otherwise wishing to challenge the validity of these patents.
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