14 July 2010

Innovation Patents Flop Like Stunned Mullet

Seafood Innovations Pty Ltd v Richard Bass Pty Ltd [2010] FCA 723 (12 July 2010)

Australia's second-tier patent, the Innovation Patent, has been dubbed "the strongest patent in the world".   This has been as a result of court decisions that have demonstrated the very great difficulty of invalidating innovation patent claims (other than on grounds of clear anticipation) due to the very low threshold of "innovative step". 

It is now established that the innovative step enquiry is no more than a modified novelty test requiring nothing more than the presence of at least one meaningfully functional novel feature when a claim is compared to each individual item of prior art separately.  Whether or not the novel feature has any inventive "merit" is completely irrelevant to the test.

Following earlier court decisions, one of our colleagues has speculated that there may be a flip side to the low threshold of validity, namely the possibility that innovation patent claims might be interpreted relatively narrowly in order to avoid giving too much scope to these almost indestructible patent rights.  This decision of the Federal Court of Australia provides the first indication that this may indeed be the case.

Furthermore, the judge in this instance (Spender J) appears to have shown a particular willingness to find an innovation patent invalid on alternative grounds, when an attack based on lack of innovative step fails.

BACKGROUND

Seafood Innovations Pty Ltd ("SI") is the proprietor of two innovation patents, nos. 2006100980 ("first innovation patent") and 2008100126 ("second innovation patent"), both of which are entitled "A Fish Stunning Apparatus".

SI initially filed a provisional application, no. 2002953070,on 3 December 2002.  A standard Australian patent application, no. 2003302671, claiming priority from the provisional was filed on 3 December 2003.

Both the first and second innovation patents were filed as divisionals from the pending standard patent application.  The first was filed in 2006, well prior to the dispute arising with Richard Bass Pty Ltd ("Bass").  The second innovation patent, significantly, was filed in 2008, after the commencement of litigation.

SI contended that Bass infringed the first and second innovation patents by making, using and exporting fish stunning devices falling within the scope of the patent claims.

It was common ground between the parties that the first innovation patent was valid, and that the second innovation patent, if valid, was infringed.  Bass denied infringement of the first patent, and contended that the second patent was invalid.  The court agreed with Bass.

THE INVENTION

The patents relate to an apparatus for stunning fish on a commercial scale (eg over 2000 fish per hour). 

The preferred embodiment of the stunning device (100) is shown on the left.

The fish (210) enters the guide (200) of stunner (100) via entrance (230).

The fish is arrested by the pivotally movable floor (220).

It is then stunned by the piston (443) of a pneumatic ram.



The drawing on the right shows the operation of the device (100) after the fish has been stunned.

Pneumatic rams (260) actuate the pivotally movable floor (220) from the first position shown above, in which it blocks passage of the fish (210), to the second, lowered, position shown on the right, such that it is allowed to pass through the guide (200) to the exit (240).

INFRINGEMENT OF FIRST INNOVATION PATENT

The critical feature of the claims of the first innovation patent was the pivotally movable floor (220).  It was common ground that all other features of the claims were present in the Bass devices.

The claims referred to the fish guide (200),
wherein the fish guide includes a floor being pivotally movable between a first position and second position, the floor moving from the first position to the second position to allow a fish to pass unidirectionally from the entrance to the exit. (Emphasis added.)
The accused Bass devices included a "chin plate", that was functionally equivalent to the floor (220) of the SI patent.  While Bass argued that the chin plate was not a "floor", the court did not agree (at [89-90]).

However, the accused devices also included a trigger plate, equivalent to the trigger (300) in the SI device, and either two or four "cheek plates".  In the Bass devices, in addition to the chin plate pivoting down, the trigger plate moved up and back, and the cheek plates folded back against the sides of the device, in order to permit the fish to pass through after stunning (at [41]).

Bass argued that in its devices, the fish was not allowed to pass through the guide to the exit by movement of the chin plate alone, and that the fish would remain within the device if the trigger and cheek plates did not also move.  SI argued that Bass could not avoid infringement as a result of there being additional features operating to release the fish from the guide, and that Bass was urging the court to impermissibly import a "gloss" on the plain words of the claim by requiring movement of the floor by itself and without other events, to allow the fish to pass through the guide (at [71]).

However, the court found that it was not a question of "adding" anything to the claim, but rather of the correct construction of the word "allow".  Spender J held that the lowering of the chin plate in the accused devices was necessary, but not sufficient to allow the fish to pass through (at [76-7]).  His Honour rejected the patentee's contention that "allow" is permissive, and means to aid, assist or afford (at [79]).  Rather, based on dictionary definitions, he concluded that "allow" means "to permit" (at [80]). 

On this basis, he concluded that since movement of the chin plate by itself was not sufficient to "permit" the fish to pass to the exit of the accused devices, they did not fall within the scope of the claims of the first innovation patent, and that the Bass devices used a "substantially new or different mechanism":
[In the claimed invention t]he movement of the floor acts like a gate, door or flap, operating to allow the fish to move towards the exit. In the respondents’ devices, after the fish is stunned, the passageway constituted by the chin plate, the two or four cheek plates, and the top plate, expands, sphincter like, to allow the fish to move towards the exit. (at [86])
There seems no question that this is a particularly narrow construction of the claim.  The end effect is that Bass avoids infringement.

VALIDITY OF SECOND INNOVATION PATENT

As noted previously, the second innovation patent was filed after the litigation had commenced.  Claim 1 of the patent did not include the "pivotal floor" limitation, but instead recited an arrangement:
wherein a fish moves unidirectionally from the front entrance through the guide to the rear exit and the height of the striker is adjustable with respect to the fish guide.
Spender J appears to have been influenced by what seems to be a deliberate strategy by SI to compensate for perceived weakness of the first innovation patent by filing a new application with claims drafted in view of the alleged Bass infringement.  (See [91]: "It is, in my opinion, a highly relevant circumstance that the Second Innovation Patent was granted on 28 February 2008, after proceedings against the respondents for infringement of the First Innovation Patent had been commenced.")

SI was successful in establishing that its claims involved an innovative step.  However, Spender J found that the claims did not satisfy the requirements of section 40 of the Patents Act 1990.  In fact, it is not entirely clear from the decision which aspect of s40 Spender J has relied upon.  He states, at [116] that "the claims do not define the invention", because they fail to recite essential features necessary to make it work, and in particular some mechanism to hold a fish in place during stunning, and to release it afterwards.

In some respects, this seems more like an inutility argument (although it appears that Bass did not plead inutility).  Alternatively, it may be that by excluding "essential" features, SI was claiming more broadly than it was entitled to, which appears more like an argument of lack of fair basis.  Regardless, the second patent was found to be invalid (at [118]).

IS IT AN INFRINGEMENT TO EXPORT?

As an additional issue, Bass argued that it was not, in any event, an infringement of a patent to export a product falling with the scope of the claims.

Under the Australian law, a patent confers an exclusive right upon the patentee to "exploit" the invention.  The Dictionary in Schedule 1 of the Act states:
Exploit, in relation to an invention, includes: (a) where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or ...
Bass argument was that this definition does not expressly identify exporting as an exploitation of the invention.  Spender J held that the above definition is not exhaustive, and that in any event exporting falls within the meaning of the phrase "otherwise dispose of it" (at [29]).

Furthermore, he held that the making of the invention for export would have been an infringement of the patent in the circumstances.

CONCLUSION

This decision suggests that courts may be disposed to apply narrow claim construction to innovation patents, and to find them invalid on grounds other than lack of innovative step.  However, the relevant law is the same as that applied to standard patents, and there must therefore be some doubt about the viability of treating innovation patents differently (if that is indeed what has happened in this case).  It would certainly be interesting to see what happens if SI appeals this decision to the Full Court.

FISHY BUSINESS

As a final note, we are grateful to our colleague Ken Simpson for pointing out that, in addition to the respondent being called Bass, counsel for the patentee in this case is Mr S Burley SC, and its patent attorneys were Fisher Adams Kelly.  We asked Ken what he thought of this decision, but he said he would have to mullet over.  That put us in our plaice!

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