17 December 2017

Australian Patent Office Finds Grace Period Applies to Applicant’s Own ‘Secret Prior Art’

Clock deadlineOne of the cardinal rules of the patent system is that you should not disclose your invention before you have filed an appropriate patent application.  An invention must be novel and involve an inventive step at the date of first filing.  These requirements are tested against the ‘prior art’, which is generally all information made available to the public, by anyone, at any earlier time.  This includes any disclosures made by inventors and/or applicants themselves.

In some countries, however, there are ‘grace period’ provisions that permit a patent application to be validly-filed during some limited period – typically 12 months – following a disclosure.  Australia is such a country.  Under the relevant Australian law and regulations, any information made publicly available, through any publication or use of the invention by an inventor or subsequent assignee of the invention, must be disregarded as prior art, so long as a patent application is filed within 12 months of the disclosure.  It turns out, however, that this is an overly-simplistic way to describe the way in which the grace period rules work.

A complication arises in the case of what we in Australia usually call a ‘whole of contents’ citation, and which our American counterparts tend to call ‘secret prior art’.  Patent applications are not usually published until 18 months after their earliest claimed filing date (i.e. priority date), which means that it is possible for a prior application (i.e. one for which the inventor claims an earlier priority date) to be published after a later application.  Under Australian law, such unpublished (i.e. ‘secret’) applications can be cited only in relation to novelty, but not for inventive step purposes.  This means that a later applicant is barred from obtaining a patent for something that an earlier applicant had demonstrably already invented, and is entitled to claim as their own.

But what happens when the applicants of the ‘secret’ prior application and the later application are one and the same?  On the face of it, this is not a situation that the grace period was designed to address.  Grace periods are about prior public disclosures, not prior unpublished applications.  Nonetheless, in a recent decision an Australian Patent Office hearing officer has managed to interpret the grace period rules in a manner that encompasses ‘self-whole-of-contents’ applications: Rozenberg & Co Pty Ltd. v Velin-Pharma A/S [2017] APO 61

How this outcome was achieved is quite interesting.  Whether it is correct or not is another matter – in my view there are arguments either way, although I am inclined to think that the grace period does not apply to ‘whole of contents’ citations, and that the law provides more appropriate mechanisms to deal with this situation.

Grace Period – Applicant Perspective

The diagram below illustrates the way in which patent applicants – and the patent attorneys advising them – most often think about the grace period.  In effect, this is a ‘prospective’ view: the common situation is that a potential patent applicant has already made some disclosure, and wants to know whether it is still possible to validly file an application.  If the 12-month grace period has not yet expired, then the answer is ‘yes’.
Prospective applicant view
This is not, however, how the Australian grace period is implemented through the Patents Act 1990 and Patents Regulations 1991Section 24(1)(a) provides for self-disclosures to be disregarded in ‘prescribed circumstances’, so long as a patent application is made within the ‘prescribed period’.  To find out what these terms mean, it is necessary to consult the Regulations.

Grace Period in the Regulations

In the case at hand – an opposition by Rozenberg to a patent application by Velin-Pharma – the relevant regulations are the ones that were in force prior to commencement of the Raising the Bar patent reforms on 15 April 2013, in which:
  1. Regulation 2.2(1A) provided that a prescribed circumstance is that the relevant disclosure occurred ‘within 12 months before the filing date of the complete application’; and
  2. Regulation 2.3(1A) provided that the corresponding prescribed period is ‘the period of 12 months after the information was first made publicly available’.
Notably, this takes a ‘retrospective’ view of the grace period, i.e. given that an application has been filed on a known date, what is the period during which disclosures should be disregarded?  This scheme is illustrated in the diagram below.
Retrospective Regulations view
Normally, we would expect that if the grace period applies, the disclosure date would be within the ‘prescribed circumstances’ period, and the filing date would be within the ‘prescribed period’, as shown above.

The Timeline at Issue

The diagram below illustrates the situation that arose in the Rozenberg case.  Velin-Pharma had filed an earlier application which was then published after the filing date of the later application, which was opposed by Rozenberg.  On the face of it, the grace period, as described above, does not apply, because the publication date of the earlier application does not lie within the ‘prescribed circumstances’ period, and the relevant filing date of the opposed application is not within the ‘prescribed period’.
The publication itself is clearly not an issue, because it did not occur until after the priority date of the opposed Velin application.  However, unless the prior application can be disregarded under the grace period provisions, there is nothing preventing it from being considered as ‘whole of contents’ or ‘secret’ prior art.

To resolve this apparent conflict, the Hearing Officer determined that the effect of Regulation 2.2(1A) (the ‘prescribed circumstance’) was to establish a start date, but no end date, i.e. the ‘prescribed circumstances’ period in the diagram above continues forward in time, as indicated by the dotted extension of the arrow.  On this interpretation, the publication of the earlier application does fall within the ‘prescribed circumstances’ period.  (See paragraph [186] of the decision.)

Similarly, the effect of Regulation 2.3(1A) was to establish an end date, i.e. the latest date on which an application may validly be filed, but no specific start date.  Clearly, then, the filing date of the opposed application is earlier than the end date of the ‘prescribed period’.  (See paragraph [187] of the decision.)

As a result, the grace period was found to apply, and the earlier application disregarded.  It was therefore not necessary to consider whether it was applicable as 'whole of contents’ prior art for novelty purposes.

Is the Decision Correct?

To my mind, the Hearing Officer’s interpretation somewhat stretches the meaning of the phrases ‘within 12 months before the filing date‘, and ‘period of 12 months after the information was first made publicly available’.  The word ‘within’, to me at least, implies a period that is bounded at both ends.  And a ‘period of 12 months after…’ is, on its face, a period of exactly 12 months having a specific start date. 

Furthermore, the Act provides other means for an applicant to address the issue at hand.  For example, if an earlier application by the same applicant in fact discloses an invention that is claimed in the later application, then arguably the proper resolution is that the later application should be made as a divisional of the earlier filing under section 79B of the Act.  In this way, the relevant claims of the later application secure the priority date of the earlier application, which is therefore not prior art, by definition, without recourse to the grace period.  This approach has the additional merit (from a policy perspective) of preventing the applicant from effectively extending the expiry date on a patent for an invention that was actually originally disclosed in the earlier application.

On the other hand, the Hearing Officer’s approach avoids something that I expect most people would regard as an absurd anomaly.  Specifically, if the first Velin application in this case had been filed just a few months earlier it would have been published within the 12 months before the filing date of the later application, and would then have satisfied the grace period requirements, assuming the Hearing Officer’s interpretation of the Regulations was otherwise correct.

It is, however, also arguably anomalous that the Hearing Officer's approach permits disregarding a prior application that was filed more than 12 months prior to the subsequent application's filing date.  Indeed, if publication of the earlier application occurred 12 months previously (within the grace period), then it could have been filed up to 18 months prior to that date, i.e. as long as two and a half years before the later application!

Raising the Bar – Different, But Not Much Clearer!

The Raising the Bar amendments, which came into effect on 15 April 2013, changed the regulations relating to the grace period.  Under the current provisions:
  1. Regulation 2.2C(2) provides that a prescribed circumstance is any self-disclosure that is not covered by a separate regulation (there are specific provisions for disclosures at recognised exhibitions, learned societies, and reasonable trial of inventions); and
  2. Regulation 2.2C(3) provides that the prescribed period ‘for making a complete application for the invention is 12 months from the day the information was made publicly available’.
Under the revised regulations, the ‘prescribed circumstance’ no longer has any associated date or time period, which eliminates one source of strained interpretation.  However, the phrase ‘the period … is 12 months from the day…’ still appears to imply a period of exactly 12 months having a specific start date.

Conclusion – Judicial Review Would Be Helpful

In my opinion, the grace period provisions were never intended to, and should not, apply to ‘whole of contents’ prior art citations.  A objection based on such a reference can, by definition, only relate to a lack of novelty of a claim.  However, under part (b)(2) of the definition of ‘prior art base’ in Schedule 1 of the Patents Act 1990, the objection can only succeed if the later claim (or a broadly equivalent claim) could have been made based on the earlier application as filed.  This implies that the later application is inevitably entitled to claim divisional status from the earlier application.

The proper approach to avoiding a self-whole-of-contents novelty problem is therefore to file the later application as a divisional of the earlier one.  Australian patent attorneys reading this will be aware that there are circumstances in which it would not be possible retrospectively to correct a failure to claim divisional status at filing, which could in some cases result in a harsh outcome for an applicant.  However, it seems to me that, for better or worse, this is the scheme of the Act.  In my view, the grace period only applies to information cited on the basis of prior disclosure.

Furthermore, I do not believe that this raises any anomaly.  If an earlier application is published after the filing date of the later application, then the grace period simply has no role to play – it is prior art for ‘whole of contents’ novelty purposes only, and not for prior publication novelty and inventive step. If it was published before the filing date of the later application, then it may be excluded under the grace period for prior publication novelty and inventive step purposes, but remains a potential citation for ‘whole of contents’ novelty.  The two forms of prior art are evaluated in different ways (see, e.g. my earlier article Valid ‘Notional Claim’ Required for ‘Whole of Contents’ Novelty Test), and in my view the grace period provisions simply do not apply to ‘whole of contents’ citations.

Hopefully this question will one day arise in a case before the Federal Court, so that we can get some additional clarity on how the Australian grace period works in these circumstances.  Who knows – maybe Rozenberg will appeal this aspect of the opposition decision?


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