Raising the Bar and Sharing the Onus

As regular readers will be aware, for the past few months I have been working with CCH Australia to assist in updating the patents commentary in its Australian Industrial and Intellectual Property ‘loose-leaf’ service (which is also available as an online service).  Among other content, this service provides full text legislation and detailed commentary on copyright, designs, patents and trade marks.

This project is progressing well, with many of the reforms introduced by the Raising the Bar Act now incorporated into the commentary, along with a range of further revisions bringing other aspects of the commentary up-to-date, such as the recent approach of the courts to the tests for ‘manner of manufacture’ and novelty.  The commentary now also includes a comprehensive guide to the different criteria for assessing inventive step which apply to patents now in force, which depend upon when the application was originally filed and/or examined.

One of the topics covered in the most recent update to the patents commentary is the across-the-board application of the ‘balance of probabilities’ test in decision-making by the Commissioner of Patents, which was introduced by the Raising the Bar reforms.  Before 15 April 2013, patent applicants had long enjoyed the ‘benefit of the doubt’ in relation to many aspects of the review of applications conducted by the Patent Office of IP Australia.

For example, the questions of whether a patent application related to eligible subject matter, under the ‘manner of manufacture’ test, whether the invention was useful, and whether the claims were clear, concise and ‘fairly based’ on the description in the patent specification, were all to be decided in favour of the applicant in the event of any doubt. Prior to 2002, the same benefit also applied to the crucial decision as to whether a claimed invention was new, and involved an inventive step.

The applicant enjoyed a similar position during contested opposition proceedings, with the Patent Office being obliged to allow an opposed application to proceed to grant unless it were practically certain that the resulting patent would be invalid. This significant onus of proof upon the opponent also applied in the case of an appeal of an opposition decision to the Federal Court.

Why did applicants receive favourable treatment?

The reasoning behind this generous treatment of patent applicants was apparently that the grant of a patent is not, and nor is it intended to be, a final determination of validity. Section 20 of the Patents Act 1990 (Cth) makes this abundantly clear: ‘Nothing done under this Act … guarantees the granting of a patent, or that a patent is valid, in Australia or anywhere else.’ If a patent is wrongly granted, it remains subject to a subsequent challenge to validity via a revocation action in the Federal Court, in which the usual civil standard of the ‘balance of probabilities’ applies both before and after 15 April 2013 (ie whether it is more likely than not, in light of all available evidence, that the patent is invalid).

Why change the onus of proof?

As the responsible authorities, patent offices the world over are among the first to receive criticism when questionable patents are found to have been granted. It is therefore perhaps unsurprising that one of the key proposals made during IP Australia’s consultation process which ultimately led to the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) was the elimination of bias in favour of the applicant, or patentee, in proceedings before the Patent Office.

So what has changed, exactly?

With the commencement of the Raising the Bar reforms on 15 April 2013, the standard to be applied across-the-board in Patent Office decision-making has become the ‘balance of probabilities’ test.

Determinations of validity made by the Patent Office to which the “balance of probabilities” now applies include:

1. acceptance of a standard patent application under s 49
2. refusal of a standard patent application, following opposition, under s 60
3. refusal of a standard patent application, or revocation of a patent, under s 100A or s 101
4. issuing a Certificate of Examination of an innovation patent under s 101E, or revocation of the patent under s 101F
5. revocation of an innovation patent, following re-examination, under s 101J
6. revocation of an innovation patent, following opposition, under s 101N
7. revocation of acceptance of a patent request for a standard patent under s 50A, and
8. revocation of certificate of examination under s 101EA.

The new standard applies to all applications and patents filed on or after 15 April 2013, as well as those filed earlier, if a request for examination had not yet been filed before 15 April 2013.

The issue of ‘issue estoppel’

One question which is raised by the equalisation of the onus of proof in opposition proceedings is whether an unsuccessful opponent might be prevented, under the equitable doctrine of issue estoppel, from asserting the same grounds of invalidity in a subsequent post-grant revocation action in the Federal Court. This may be a particular concern if the Patent Office opposition decision is appealed to the court.

Under the former provisions, it had been established that issue estoppel should not arise in these circumstances because, while the question in the pre-grant opposition was ‘whether it was practically certain that the patent to be granted on the specification would have been invalid’, the issue for determination in revocation proceedings would be whether, on the usual civil standard of the balance of probabilities, the patent should be revoked: Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742 at [17].

The continued applicability of this reasoning is unclear under the new standards. A prospective opponent who fears infringement proceedings should a patent be granted may therefore be wary of opposing grant, even with a reasonably strong case, in favour of ‘keeping the powder dry’ for a possible future counter-claim for revocation of the patent. If so, then this would be an unfortunate side-effect of a generally beneficial set of reforms, since the public interest is clearly better served if those who have evidence of the invalidity of patent claims come forward before a patent is granted, rather than retaining that knowledge for use as a personal defence.

Updates to the CCH Patents Commentary

In view of the above changes, ¶49-500 of the patents commentary in CCH’s Australian Industrial & Intellectual Property service has been reviewed and updated to reflect the current onus of proof applied in determinations made by the Patent Office.

Other significant updates include:

1. changes to the procedures for filing evidence, and to the Commissioner’s powers to summon witnesses and issue notices to produce: ¶49-450
2. expanded and updated commentary on the “manner of new manufacture” test for subject matter eligibility, particularly as applied to computer-related inventions: ¶47-400.

More to come…

These updates are part of a major project to bring the patents commentary up to date with the Raising the Bar reforms, and other recent developments in Australian patent law. The project has already updated a substantial proportion of the commentary, and will continue with further updates in the coming months. Click here to sign up for a 10 day free trial of CCH’s Australian Industrial & Intellectual Property.

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Tags: Australia, CCH, Patent law, Patent Office, Standard of proof