Invalidating secret commercial use or permissible secret experimental use? – 22 October 2013
- A new Australian grace period excuses secret commercial use of an invention before the priority date.
- Beyond this new grace period, secret experiments having some commercial content may not be invalidating if commercial return is not guaranteed.
A new grace period for secret commercial use
Prior to 15 April 2013, secret commercial use of an invention in Australia before the priority date was a bar to Australian patentability. The priority date is usually the filing date of the first patent application on which the patent is based. The prohibition against premature secret use was intended to prevent innovators obtaining a de facto extension of their patent term by benefiting from their inventions before filing a patent application.
In contrast to the strict prohibition against secret commercial use, a grace period applied to information made public during the 12 months immediately preceding the first complete (i.e. non-provisional) patent application. Thus, strangely, commercial uses before the priority date but within the 12 month grace period were invalidating only if they were secret.
In Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (No 2)  FCA 1478 (Bradken), Justice McKerracher considered secret use within this period. The case provides guidance as to the distinction between invalidating secret commercial use and permissible secret experimental uses.
Significant changes to Australian patent law introduced 15 April 2013 created a 12 month grace period for secret commercial use in line with the existing 12 month grace period for publicly available information. Nonetheless, earlier case law (including Bradken) remains relevant to secret uses occurring prior to 15 April 2013 and/or outside the 12 month grace period.
The current statutory framework
Section 18 of the Patents Act 1990 provides that an invention is a patentable invention if (amongst other things) it “was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention”.
Thus the quoted wording defines an exclusion to what is patentable. Section 9 of the Act defines secret use and provides a list of exclusions to the exclusion:
“For the purposes of this Act, the following acts are not to be taken to be secret use of an invention in the patent area:
(a) any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for the purpose of reasonable trial or experiment only;
(b) any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, being use occurring solely in the course of a confidential disclosure of the invention by or on behalf of, or with the authority of, the patentee, nominated person, or predecessor in title;
(c) any other use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for any purpose other than the purpose of trade or commerce;
(d) any use of the invention by or on behalf of the Commonwealth, a State, or a Territory where the patentee or nominated person, or his or her predecessor in title to the invention, has disclosed the invention, so far as claimed, to the Commonwealth, State or Territory;
(e) any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for any purpose, if a complete application is made for the invention within the prescribed period.”
Section 9(a) permits secret experimental use before the priority date. Section 9(e) creates the new grace period mentioned above.
Permissible secret experimental use
Bradken clarifies that secret experiments having some commercial content are not necessarily invalidating. This clarification is not binding case law because it was also held that secret use was not open to be raised. Nonetheless the clarification will likely be followed by subsequent decision makers.
In Bradken, three railway wagons were supplied to a customer for testing. The wagons were provided on the basis that, if the trial operations were to the customer’s satisfaction, the customer would pay for the wagons (and if not the wagons would be returned). The tests were conducted in strict secrecy and included aerodynamic, stress and load testing. The wagons were modified during the tests, albeit in ways not directly relatable to the claim wording.
His Honour concluded that this did not amount to an impermissible secret commercial use, but was rather an experimental use permissible under Section 9(a) set out above.
Whilst noting the “key distinction” as to “whether the working is in fact a trial or test of the invention and not merely a demonstration of the invention to secure orders” (at 351), His Honour gave great weight to fact that commercial returns were not guaranteed.
“If the testing did not succeed, Lynx received nothing and would be out of pocket. I do not consider this to be commercial ‘exploitation’ of the invention. Rather, it has all the hallmarks of testing and experimentation, albeit with some assurance of financial contribution only if the tests were successful. But no ongoing sales were guaranteed at any time. No sales or income were secured prior to the actual priority date. No manufacture occurred prior to that date. There was no other use of the invention prior to that date” (at 364).
“‘Only’ cannot be given an absolute meaning and must permit of some commercial content otherwise there would almost never be an exception available under the Patents Act making the defence pointless” (at 366).