10 March 2012

Raising the Bar on ‘Dodgy’ Divisional Patent Applications

divided-roadIP Australia has been expressing concerns for some time about what it considers to be the unreasonable practices of some applicants in relation to divisional applications.  These practices are largely based on the current ability to file a divisional application at any time up until the date of grant of the parent case.  Amongst other uses, this allows an applicant whose application has been opposed to undermine the opposition process by refiling as a divisional application.

The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 includes provisions which will enable IP Australia to do away with this ‘loophole’ in the existing law, although without reading the Explanatory Memorandum it is not entirely apparent that this is the intention.  The amendments to sections 79B and 79C of the Patents Act 1990 (which provide for divisional standard and innovation patents, respectively) move many of the requirements for a valid divisional filing – including the final deadline – into the Regulations.

Correction:-

An earlier version of this post stated that the restrictions on divisional applications would come into effect immediately.  This was incorrect.  A 12 month commencement period applies.

Many thanks to Terry Moore at IP Australia for bringing this error to our attention.
And while proposed Regulations implementing the changes in the Raising the Bar Bill have yet to be published, IP Australia has made it very clear that it intends to set the divisional filing deadline to correspond with the end of the opposition period (i.e. the day three months following publication of acceptance in the Official Journal).  The Regulations will similarly restrict the ability to ‘convert’ a standard patent application into a divisional application after filing.

As with the Bill’s provisions raising the standards for patentability (see Australia’s ‘Raising the Bar’–What This Means for Patent Applicants), the new restrictions on divisional applications will come into effect 12 months after the Act is signed into law.  Anybody with an Australian patent application which is currently under opposition, or which comes under opposition in the coming months, will therefore have this limited period within which to take advantage of the existing right to file a divisional application.

‘LEGITIMATE’ AND ‘QUESTIONABLE’ DIVISIONAL PRACTICES

While we certainly do not condone practices which serve only to frustrate the proper operation of Australia’s patent laws, there are circumstances in which the filing of a divisional application in the course of an opposition can have a legitimate purpose, enabling the applicant to secure rights to which they are fully entitled under the Australian law.

Divisional Application

A divisional application is a separate patent application ‘carved out’ of a prior pending application, often called the ‘parent’. The divisional application usually includes the same description as its parent, and is most commonly used when the original application discloses more than one invention. In this case, the claims in the divisional application are entitled to the same priority and filing date as the parent.

In Australia, it is not necessary that a divisional application claim a completely distinct invention. It is also possible to add new content (similar to a US ‘continuation in part’), however the divisional must contain at least one claim which is wholly supported by the description in the parent application.
Furthermore – and regardless of what IP Australia may think – for as long as the law permits the filing of divisional applications at any time up until grant of the parent case, this remains a right which is conferred by the legislation upon patent applicants.  The exercise of a legal right, no matter how ill-advised the legislative provision may be, should not subsequently be prejudicial to the applicant.  There have been recent cases in which IP Australia has strongly intimated, however, its intentions to terminate divisional applications with extreme prejudice (see, for an example, Australian Patent Office Rejects Cannabis Lunacy).

Nonetheless, there is little point in filing a divisional application in the course of an opposition merely because it seems likely that the opponent will succeed.  A divisional application filed at this stage is limited to claims that are of the same scope as, or narrower than, those of the parent case.  If there is patentable subject matter within the scope of the opposed patent claims, then this can be captured by amendment.  If not, then the divisional application is certain to suffer the same fate as the parent.

There are, however, circumstances in which the filing of a divisional application from an opposed parent should be considered legitimate.
Lack of Inventive Step
The purpose of pre-grant opposition proceedings is to enable third parties – typically competitors involved in the same industry as the applicant – to bring forward material pertinent to the patentability of the invention that might not have been readily accessible to the examiner.  Opposition is thus part of the overall system which is designed to prevent invalid patents being granted.

In examination, if the examiner finds prior art showing that the claimed invention is novel, but does not make an inventive contribution to the field, in Australia the applicant has the option of converting to an innovation patent, or filing a divisional innovation patent.  This would be an available strategy if the claims would satisfy the lower ‘innovative step’ requirement.

After acceptance, the conversion option is not available.  However, it is currently possible to file a divisional innovation patent application based on a standard parent application.  However, the amendments under Raising the Bar, in combination with the proposed Regulations, are going to eliminate this option in a case in which prior art brought forward by an opponent establishes that claims lack an inventive step, but would satisfy the requirements for innovative step.

This seems problematic, considering that in such a case the applicant is prima facie entitled to innovation patent rights in Australia.  The purpose of opposition is to augment examination, not to deny the grant of rights to which the applicant is entitled under the law.
Obstructive Opponent
Another case in which filing a divisional application during an opposition could be seen as a legitimate strategy is when the opponent is the one ‘gaming’ the system.  Oppositions sometimes become protracted for many additional months, or even years, if a decision issues finding some or all of the claims to be invalid, but that there is validly patentable subject matter in the application.

At this point, the applicant may seek to amend the claims to preserve their validity, and allow a patent to be granted, however the amendment request itself is subject to a full contested opposition.  A belligerent opponent can use this procedure to delay the grant of a patent, even if the applicant has put forward valid amended claims.

Under the current provisions, there is an alternative option in these circumstances of filing a divisional application with the amended claims instead.  This option will be removed under the proposed Regulations.

CONVERTING TO DIVISIONAL

Currently, it is possible to convert a standard patent application to a divisional application so long as the application in question could have been filed as a divisional of the nominated parent on its original filing date.

The need to do this sometimes arises because an applicant has failed to realise that one of their own earlier published applications discloses the invention as claimed in at least the broadest claims of a subsequent application.  In this case, it is necessarily the case that the anticipated claims could have been claims of the earlier application, and thus the later application is entitled to claim divisional status so long as the applications were at some stage co-pending, i.e. the first was not already a granted patent before the second was filed.

By converting the later application, the anticipated claims are entitled to the priority date of the original application, and are therefore no longer anticipated!

The proposed Regulations will require that the earlier application still be pending, and that the opposition period not have expired, at the time of requesting the conversion, and not only at the time of filing the later application.

Again, this seems problematic in that it deprives the applicant of right to which they are prima facie entitled, but for an error or omission in failing to request divisional status at filing.

This could prove to be a particular trap for overseas applicants, particularly those accustomed to the US system.  In our experience it is not unknown for US-originating applications to be filed in Australia – often via the PCT system – as independent cases, but which later turn out to be related as continuations or continuations-in-part in the US.  In the past we have been able to fix this, in most instances, by converting the later application to a divisional of the earlier one.  However, since the issue is often not identified until the second application is examined, by which time the first is usually granted, this correction may become unavailable.

CONCLUSION

Most divisional applications will be unaffected by these proposed changes.  The most common reason for filing a divisional application is for the purpose of claiming an additional invention which was disclosed in the original filing.  Such divisionals are usually filed after the original application is examined, and either before, or roughly simultaneously with, acceptance of the parent.

And there is no question that the changes will prevent some ‘abuses’ of the system, and in that sense will result in some efficiency gains.

However, the changes also have the potential to adversely effect applicants who are acting in perfectly good faith.  Such applicants, and their attorneys, will need to be extra-vigilant to ensure that divisional applications are filed within the time limits available, if there is any possibility that they might be needed to preserve legitimate rights.

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