Inventive in 1952. Not so Inventive in 2014

The Evolution of the Inventive Step 

No component of Australian patent law has invoked as much drama or evolved as much as “inventive step/obviousness”. Obviousness has long been considered an abstract idea. Nevertheless, legislators have progressively attempted to quantify this concept. Given the changes introduced by Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), it is appropriate to review the evolution of this law, and briefly explain the reasoning behind and consequences of each (r)evolutionary step.

Life before formal obviousness

The first notable statutory expression of English patent law was the Statutes of Monopolies¹, according to which, patents were accorded for 14 years onto a “manner of new manufacture”. That one clause included the requirement of novelty, manner of manufacture, and inventive merit in a patent application. The requirement was replicated in the Patents Act 1903 (Cth) as the definition of “invention” and a patent could be granted if the “invention” was “novel”. However, there were no express grounds for rejecting, opposing, or revoking an application or patent based on lack of inventive step. In spite of this deficiency, patents were often judged on some minimum amount of “inventive merit,” and if no inventive merit or ingenuity was found, patents were revoked. However, due to lack of an available ground, the revocation was typically based upon the omnibus rejection of not being a “manner of manufacture” or lacking “novelty.” For example, in Williams v Nye², it was found that mere combination of known items to produce a known result did not include inventive ingenuity and the patent was revoked for not being a manner of manufacture. In the Australian case of Griffin v Isaacs³, the patent was invalidated for want of novelty, notwithstanding differences from the prior art, because those differences did not make a “substantial contribution to the working of the thing”.

Even though courts decided the lack or presence of “inventive merit” on a case-by-case basis, there was no set standard and courts often had to rely on their own instincts and the available common law to determine inventive ingenuity in a patent application. Accordingly, to have a more definitive law, practitioners began to feel the need for an express definition of inventiveness in patent law.

Introduction of the obviousness/Inventive Step clause

By mid-twentieth century, multiple amendments had been made to the UK patent law, which were not reproduced in the Patents Act 1903 (Cth). To determine these insufficiencies and to recommend amendments to the Patents Act, the Attorney-General appointed committees in 1935 and 1952. Among their suggestions, a need for laying down specific guidelines for revoking or opposing a patent was strongly voiced. As a result, the Patents Act 1952 (Cth) was introduced,which included the previous definition of “invention” which incorporated the concept of novelty in the word “new”. Patent examination considered novelty under s42(2)(e), but the 1952 Act also included an obviousness clause to determine whether an invention could be revoked or opposed. According to the clause –

“The invention, so far as claimed in any claim, was obvious and did not involve an inventive step, having regard to what was known or used in Australia on or before the priority date of that claim.”

Even though the addition of this clause provided a definition, it raised a lot of uncertainties. For instance, the 1952 Act did not include an express definition of the phrase “known or used” in Australia. Consequently, it was uncertain how many people had to know or use an invention for it to be “known” or “used”. Moreover, it was unclear whether printed publications and prior patents could be included in “known”.

Courts therefore developed their own meanings for this phrase.

Sunbeam v Morphy-Richards⁵ was the first notable case, which attempted to define the phrase “known or used in Australia”. Sunbeam had a patent directed to an electric frying pan and Morphy-Richards had argued that the patent was not inventive based on a prior published US patent. While deciding inventiveness, the Judge stated “that the intention of the Australian Act (of 1952) was to preserve the distinction between novelty and subject matter; and that therefore the words “known or used in Australia” were intended to refer to common knowledge,… as distinct from available knowledge… I propose, however, in considering the issue under s100 par. (e), to assume that the hypothetical person skilled in the art was possessed of the stock of common knowledge in the art and also acquainted with the particular prior specifications and articles mentioned.” And therefore, the Judge considered the US patent while deciding inventiveness.

Some years later, in another High Court case⁶, the Judge further defined known and used. In this case, S W Hart had contended that a patent for an improved steriliser owned by Hart Pty Ltd was not inventive in light of two prior published US patents. Moreover, SW Hart was unable to provide evidence regarding the common general knowledge (CGK) in Australia. The Judge acknowledged the definition used in Sunbeam v. Morphy Richards and further defined “known in Australia” as “enabling mere paper anticipations to be probative of obviousness but only if they would have been known to a diligent searcher skilled in the particular art.” Accordingly, the Judge decided that the two US patents could be easily found by a diligent searcher skilled in the art and considered those patents while deciding whether the Hart patent was inventive.

However, in the decision of 3M v Beiersdorf (1980)⁷, the High Court completely changed their opinion, by deciding that prior publications could not be used to determine the inventive step of that invention because “there was no evidence in the present case that those working in Australia in the field of adhesives or of surgical tapes followed a practice (of searching for publications in all countries) or that any of the specifications relied upon was part of the common general knowledge of those working in these fields in Australia”. The Court held that the teachings of these references were not widely known in Australia before the priority date of the patent. In doing so, the Court decided that the person skilled in the art did not need to be a diligent searcher or be acquainted with the prior specifications unless they formed part of the common general knowledge.

After the 3M decision, it was impossible to compare a claimed invention against prior art publications unless it could be shown (by suitable evidence) that these formed part of the CGK in Australia at that time. In other words, no matter how apparently obvious a claimed invention was when compared with a prior publication, the claim could not be invalidated on that basis unless the publication was proven to be well known in Australia. Based on these conflicting judgements, legislators began to feel that the then current standard of inventive step was low and they sought out a committee again to determine the best possible amendments to the patent Act.

Moreover, some confusion remained regarding the differences between novelty and inventive step. Furthermore, Examiners were still not allowed to reject an invention based on obviousness, so they considered obviousness as part of the existing requirements conveyed by the term “manner of new manufacture” in s6 of the Statute of Monopolies. Specifically, Examiners were still citing novelty objections when differences existed between the claimed invention and the prior art, in light of the ruling in Griffin v Isaacs. In the 1980s, the Courts clarified the differences between novelty and inventive step through a number of cases.

For instance, in Werner v Bailey⁸, the primary contention was that “inventiveness or ingenuity is a necessary element in novelty so that an objection to the grant of a patent on the ground of want of novelty necessarily involves an inquiry as to inventiveness”. In response, Gummow J. held that the objections of novelty and obviousness are fundamentally different in character though they overlap to some extent. He also stated that obviousness might be raised under an objection for want of novelty only where improvement is a mere workshop improvement.

Similarly, in Martin v Nicaro⁹, the cross-claimants had argued that the invention was invalid for want of novelty based on multiple prior art references, which referenced each other. Burchett J. stated that in the case of a combination patent, all of the integers may be old, and the interaction of the integers to produce a new result constitutes the invention. If only some of the integers are disclosed in one specification, a reference to another specification, which contains the remaining integer or integers, no more discloses the combination than does the knowledge possessed by the expert in the area of each of the old integers. Indeed, the reference in the specification of earlier references is simply dismissive. The logic that forbids the assembly of previously known specifications into a mosaic of the invention, in order to deny its novelty, is not less offended when those specifications are linked only as antitheses. At the least, a real link is requisite.

Therefore, by the early 1990s, a clear distinction between novelty and obviousness was established.

The 1990 reform of the Inventive Step clause

The Patent Act 1990 (Cth) introduced a definition of the term “patentable invention,” which made some clear legislative distinctions between novelty, inventive step, and manner of manufacture. According to s18–

“Subject to subsection (2), a patentable invention is an invention that, so far as claimed in any claim:

(a) is a manner of manufacture within the meaning of section 6 of the Statutes of Monopolies; and

(b) when compared with the prior art base as it existed before the priority date of the claim:

(i) is novel; and

(ii) involves and inventive step; and

(c) is useful; and

(d) 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.

Further, the 1990 Act introduced inventive step as a ground for objections during examination and prescribed the art that could be relied upon to challenge inventive step in detail as –

(2) For the purposes of this 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 in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with either of the kinds of information mentioned in subsection (3), each of which must be considered separately.

(3) For the purposes of subsection (2), the kinds of information are: (a) prior art information made publicly available in a single document or through doing a single act; and (b) prior art information made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art in the patent area would treat them as a single source of that information; being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area.¹⁰

The ‘patent area’ meant ‘Australia’, and as originally enacted, the 1990 Act still required that the person skilled in the art and the common general knowledge (CGK) be limited to Australia. Also, while prior art documents could, in principle, be published anywhere in the world, prior acts (e.g. public use or sale) remained limited to Australia.

Consequently, for patents filed on or after 30 April 1991 (when the 1990 Act came in operation), inventive step was assessed not only against the CGK, but also against a single item of prior art information, so long as ‘the skilled person could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area.’ This requirement has routinely proven to be a stumbling block, particularly in areas where it is rare for Australian workers to conduct prior art searches, when developing new ideas.

The most controversial example of this obstacle was the decision in the Emperor Sports¹¹ case. There, the invention involved tear-off strips of material for use in Australian football and rugby games. The full bench of the Federal Court found that the relevant ‘person skilled in the art’ was a football (OZTAG^TM) coach, who would not be expected to find a prior US patent document disclosing essentially the same invention, but intended for use in American football. As a result, the claims were found to be inventive. After this decision, the legislators agreed that some changes were required to the inventive step clause to prevent such inventions from being granted.

Amendment of 2001

There was speculation that the 2001 amendment of the 1990 Act would remove the phrase “be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area”. However, this phrase was not deleted. Instead, the 2001 Amendment Act allowed a combination of documents to be used to assert obviousness.

(2) For the purposes of this Act, an invention is to be taken to involve an inventive step… (3) The information for the purposes of subsection (2) is:

(a) any single piece of prior art information; or

(b) a combination of any 2 or more pieces of prior art information; being information that the skilled person mentioned in subsection (2) could…be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.¹²

The combination of 2 or more pieces of prior art information, however, had to be reasonably ascertained, understood, and regarded as relevant by the Australian worker in Australia. This amendment consequently increased the prior art base that could potentially be used, but because the person skilled in the art was still an Australian worker and the patent area was still limited to Australia, it was difficult to prove that prior art references from other countries would be considered relevant in Australia in fields where conducting prior art searches were not common.

In an interesting development, innovation patents were introduced just before the 2001 Amendment of inventive step. These patents were introduced for protecting new developments where the invention may be for relatively minor improvements or variations on known inventions or where the product concerned may have a relatively short life cycle. Accordingly, innovation patents are awarded for 5 years and have a much lower threshold for patentability, which includes novelty and an “innovative step”. The initial test for innovative step was based on Griffins v Isaacs and stated that an invention is to be taken to involve an innovative step unless the invention would only vary from a single reference or act in ways that make no substantial contribution to the working of the invention.

Therefore, even though inventive step was progressively becoming more stringent for patents, legislators introduced a new instrument that was stated as being a lower threshold of patentability for inventions that were minor improvements of known inventions.

Raising the Bar of 2012

With the widespread availability of the Internet and increasing globalization, legislators began feeling the need to have patentability laws that were comparable with major trading partners. Consequently, in the early 21st century, patent systems started shifting toward a global standard.

2012 saw such a shift in Australia. Along with amendments to utility and fair basis, the appropriately coined Act “raising the bar” also aimed to raise the standard of the inventive step. The amended Act recited–

(2) … 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 (whether in or out of the patent area) before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).

(3) The information for the purposes of subsection (2) is:

(a) any single piece of prior art information; or (b) a combination of any 2 or more pieces of prior art information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have combined.¹³

This amended section introduces two changes– (i) the CGK can now be anywhere in the world and (ii) it is not necessary for the skilled person to ascertain prior art references.

The Explanatory Memorandum of the Patent Amendment Bill 2011 states that the geographical restriction to CGK, which was present in the previous Act, is not present in the patent laws of Australia’s major trading partners or under the Patent Cooperation Treaty (PCT). Further, the geographical restriction imposes constraints in court and opposition proceedings, where the parties often lead expert evidence on what is the common general knowledge. The geographical restriction often means that only Australian-based experts are best placed to give this evidence. In view of these facts, the geographical restriction to the CGK is removed.

In reference to the amendments to the prior art clause, the memorandum explained that in Australia inventive step was assessed against a restricted pool of information because of the wording of the Act. There are several problems with this restriction. First, information that is clearly relevant may be excluded on the basis that the skilled person would not have ‘ascertained’ the information. For example, in the Emperor Sports decision, the exclusion of the relevant US patents undermines the principle that patents should not be granted for routine modifications of what was already publicly available

Second, while the requirements that prior art be ‘understood’ and ‘regarded as relevant’ are implicit in the pre-existing tests for inventive step, they were expressed as a threshold limitation on the prior art base, which unnecessarily complicated the provision without having any substantial effect on the outcome of the inventive step inquiry.

Third, the restrictions on the prior art base were out of alignment with the patent systems of Australia’s major trading partners. This means that there are unnecessary differences in how the inventive step considerations are applied and, more significantly, foreign patentees may receive broader patent protection in Australia than they could in their own country.

In summary, the intention of the 2012 amendments was to raise the threshold of inventive step. Moreover, the new subsection allows the combination of separate documents, different parts of a single document or of separate documents and any other pieces of prior art information (including acts) where such combination would have been obvious to a person skilled in the art

It is too early to comment on the success/failure of this amendment as no cases have come up that contest inventive step under the new law. However, attorneys believe that this amendment may also introduce some pitfalls. For instance, it is not certain whether obscure or esoteric references can be cited as prior art references in fields where prior searching is not common? Or whether evidence of CGK of a remote tribe can be used to undermine CGK of an Australian worker? Only time will tell.

Summary

Since introduction in the 1952 Act, the test for inventive step has been more widely applied and the differences between novelty, inventive step, and manner of manufacture have become clearer. Moreover, the test for inventive step has been made progressively more stringent, as a result of progressively widening of the prior art base. This stringency has inturn raised the threshold for patentability, making it harder and harder for inventors to obtain or defend their patents. The intention of intellectual property rights has always been for the public good and to fuel innovation. But, people are now wondering whether these intentions are being helped or hampered by this high patentability standard.

On one hand, granting patents to seemingly obvious inventions is prima facie contrary to public policy and contrary to the purpose of the patent law, whose object has always been to encourage genuine inventions without imposing undue restraint upon normal industrial development. So, a patent granted through a low patentability standard may act as a formidable deterrent, discouraging a manufacturer from pursuing research, or from adopting improvements in methods of manufacture, which involve nothing more than the application of the normal technique and skill of those experienced in the art.

On the other hand, global patent litigation is on a rise, which has forced large companies to drive research based on patentability. Overly high patentability standards may prevent these companies from investing in research areas that are not easily patentable but for the public good.

Only time will tell whether the new stricter standards help or hinder innovation.

A large number of patents remain current to which earlier laws apply. Accordingly, when assessing ‘inventive step’ of claims in an Australian application or patent, it is necessary to determine which version of the law applies. A summary of the applicable laws is reproduced in the table below.

¹Statute of Monopolies (1623) – Article 6

²Williams v Nye (1890) 7 RPC 62 (CA)

³Griffin v Isaacs (1938) 1B IPR 619

⁴Patents Act 1952 (Cth), s 100(e)

⁵Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd [1961] HCA 39; (1994) 180 CLR 98

⁶Hart Pty Ltd v S W Hart & Co Pty Ltd [1978] HCA 61; (1978) 141 CLR 305

⁷Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd [1980] HCA 9; (1980) 144 CLR 253 (“3M”)

⁸Re RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd [1989] FCA 37

⁹Re Martin Engineering Company; ESS Engineering Services and Supplies Pty Limited v Trison Holdings Pty Limited (Trading As Dyna Engineering Wa; Giangregorio Massarotto; Nicaro Holdings Pty Limited, Matflo Engineering Pty Limited and Richard Couper N [1989] FCA 64

¹⁰Patents Act 1990 (Cth),ss 7(2)-(3)

¹¹Commissioner of Patents v Emperor Sports Pty Ltd [2006] FCAFC 26

¹²Patent Amendments Act 2001, ss 7(2)-(3)

¹⁴Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), s 7