28 February 2023

Zombie Patents! Can Expired Innovation Patents Still Be Examined and Certified?

ZombiesThe Australian Patent Office recently issued two decisions on the examination and certification of innovation patents owned by UK company Diogenes Limited: Diogenes Limited [2023] APO 5 concerning innovation patent no. 2020104437 (‘Diogenes 1’); and Diogenes Limited [2023] APO 8 concerning innovation patent no. 2021103809 (‘Diogenes 2’).  Both patents claim inventions relating to electronic pool wagering systems and – unsurprisingly, given this subject matter – both were found to be unpatentable under Australia’s ‘manner of manufacture’ approach to patent-eligibility.  However, it is not the substantive reasons for refusing to certify the patents that is of most interest.  What is unusual about both patents is that they had each expired before an initial examination report had even been issued.  Despite this, IP Australia proceeded with examination, issuing three reports on patent no. 2020104437, and two reports on patent no. 2021103809, before in both cases accepting requests to be heard and issuing the decisions noted above.  Just to repeat for emphasis, all of this activity occurred after the patents had expired.

The rationale for proceeding with examination is given in Diogenes 1 at paragraph [10], where the Hearing Officer observed:

It is not usual for the Commissioner to undertake actions on an expired patent. However, I note that, in order for the patentee to enforce their rights in relation to an innovation patent, it is necessary for that patent to be examined and certified. In such circumstances, and noting that the patentee could potentially bring infringement proceedings up to 6 years after expiry (assuming infringement proceedings occurred just prior to the expiry date – see subsection 120(4) of the Act), undertaking examination (and this decision) after the expiry date is appropriate.

I find this statement confusing, and suspect that the Hearing Officer may have meant to suggest that the infringement itself – rather than the ‘infringement proceedings’ – may have occurred prior to the expiry date of the patent.  In any event, we will get to the circumstances in which an expired innovation patent, that was not examined and certified within its lifetime, may nonetheless be enforceable.

Diogenes 2 was decided by a different Hearing Officer, who (at paragraph [4]) adopted the reasoning of Diogenes 1 for proceeding with examination of an expired innovation patent.

In the Diogenes cases, examination of the innovation patents was requested while they were both still alive – albeit, as we shall see, just barely!  But these decisions raise the question of whether a (former) patentee could request examination of an expired innovation patent and, in such a case, whether the expired patent could be retrospectively certified and enforced up to six years after expiry.  If so, then this might apply not only to patents that expired at the end of their maximum eight year term, but also to patents that ceased earlier than this due to non-payment of an annual renewal fee.

The upshot is that zombie innovation patents are able to rise from the dead and reach back in time to capture historical infringements!

Standard Patent Applications Cannot Rise from the Dead

To understand why innovation patents can become zombified, it may be helpful to understand why standard patents cannot.  The issue arises because of how the Australian Patents Act 1990 deals with the publication of patent applications, which is addressed in section 57.

The first rule of enforcement is that a standard patent cannot be enforced until it is granted.  However, in certain circumstances the enforceable rights (e.g. the ability to obtain financial compensation for infringement) may reach back to the date upon which the application was published.  In Australia, publication typically occurs some time – often a number of years – prior to grant.  For the patentee to obtain this benefit:

  1. the allegedly infringing activity must fall within the scope of the published claims: s 57(3)(b); and
  2. the published claims that are alleged to have been infringed must be claims that could have been validly granted: s 57(4).

The simplest example in which these conditions are satisfied is where the application is examined and a patent granted without amendment of the claims.  In this case, the published claims are the same as the granted claims, so if the patent is valid then the patentee’s rights will extend back to the date of publication.

In any case, the principle at work is that publication of the application serves a public notice function.  Once people have access to the published claims, they are able to determine for themselves whether or not any act in which they are considering engaging is at risk of infringing a potential valid and granted claim.  From the perspective of the patent applicant it is only fair, having provided a full disclosure of the invention through publication, that the promised benefits of the patent, if it is ultimately granted, should begin to accrue.

However, these provisional rights associated with standard patent applications cannot be revived once the applicant has allowed the application to lapse.  A lapsed application cannot be examined; it cannot pass examination and be accepted; it cannot result in a granted patent.  The provisions of section 57 can therefore never be enlivened.  A lapsed standard patent application truly leaves no rights outstanding, and the public can be confident that no future hand of the undead will be able to reach back in time to punish any activities conducted prior to the lapsing of the application.

The Trouble with Innovation Patents

Innovation patents are granted and published within weeks of an application being filed, without any substantive examination being conducted.  On the face of it, therefore, grant of an innovation patent serves the same public notice function as publication of a standard patent application.  However, an innovation patent still cannot be enforced until it has been examined and certified.

Unfortunately, it appears that nobody gave much thought to the rights that might accrue to the owner of an innovation patent prior to certification.  As a result, the courts have had to deal with this question over the years.

In 2012, Justice Middleton found, in Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 3] [2012] FCA 1019, that a certified innovation patent may be infringed from its effective filing date!  This was an astonishing outcome, and a high water mark for the rights of innovation patent holders.  In the case of an innovation patent divided from a pending standard patent application – or a chain of prior applications – the relevant date would have been the date of filing of the original patent application, even though this may have occurred years earlier than the filing of the divisional innovation patent application itself, and would normally have preceded the first publication of the specification.  Furthermore, in the absence of an equivalent to section 57 for innovation patents, Justice Middleton found no requirement that the valid, and infringed, claims be present in any earlier publication of the patent specification.

Essentially, under Justice Middleton’s approach, the patentee of a certified innovation patent would have enforceable rights over the full eight year term of the patent, irrespective of when it was certified.

Eventually, in 2017, the Full Federal Court (in a judgment authored by Justice Burley) overruled Britax, deciding that compensation for infringement of an innovation patent could only be obtained back to the date of grant (and publication) of the specific infringed patent: Coretell Pty Ltd v Australian Mud Company Pty Ltd [2017] FCAFC 54.  This remains a fairly good deal for innovation patent owners, since certification and finalisation of the certified claims may be delayed for some time after grant.  But at least Coretell reined-in the obvious overreach of Justice Middleton’s approach in Britax.

Certifying Zombifying Innovation Patents

The only condition placed upon examination, under section 101A of the Patents Act is that it can only occur ‘after the grant of an innovation patent’.  Beyond this, no time limit is specified.  In particular, there is nothing in the Act that requires an innovation patent to be alive when examined or certified.  In the event that certification could serve no practical purpose, the Commissioner of Patents could presumably refuse on administrative grounds, since it would be a pointless waste of resources.  But, as we have seen, a certified innovation patent is potentially enforceable, retrospectively if need be, for the full period between grant and expiry.  Furthermore, as observed by the Hearing Officer in Diogenes 1, enforcement action could be commenced up to six years after any allegedly infringing activity has taken place.

In most cases, therefore, the Commissioner is not in a position to determine that certification of an expired innovation would serve no purpose, and would therefore generally be obliged to proceed with examination if requested to do so.

Limited Consequences in the Diogenes Cases

As I have already noted, Diogenes was unsuccessful in its attempts to have its expired innovation patents certified.  But even if it had succeeded, it is not apparent that it would have obtained any significant benefit.  The patent in Diogenes 1 was granted on 28 July 2021 and expired on 20 August 2021, while the patent in Diogenes 2 was granted on 4 August 2021 and expired on 19 August 2021.  The period over which these patents could potentially have been enforced was about three weeks and two weeks, respectively.  And while gambling might well be a lucrative enterprise, I find it hard to imagine that it would be worthwhile pursuing damages corresponding with such short periods of operation.

There are, however, many innovation patents for which the period between grant and expiry is much longer, and where the consequences of zombification could therefore be more significant.

Conclusion – Expired Innovation Patents Remain a Source of Risk

The innovation patent system is being phased out.  But, despite this, granted innovation patents, as well as ‘new’ innovation patents derived from pending standard applications filed prior to 26 August 2021, will continue to exist until 25 August 2029.  Furthermore, enforcement of some of these patents will remain possible until six years beyond that date.

Unlike published standard patent applications, the retrospective enforceability of a subsequently certified innovation patent does not appear (under Coretell) to be dependent on the claims actually published at grant.  Anybody attempting to determine whether a proposed activity might one day be found to infringe a currently uncertified innovation patent therefore needs to consider not merely whether they might infringe the published claims, but whether they might infringe any claims that could one day be validly certified.  What is more, the risk of proceeding with the activity does not vanish when the patent expires. 

Keep in mind: every expired innovation patent is a potential zombie!


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