In 2001 Australia introduced its innovation patent. The intention was to allow for the rapid simple grant of a patent application for a shorter term than a standard patent. The innovation patent now appears to be about to wreak havoc with litigants.

One unique feature of the innovation patent is that the test for obviousness or inventive step was replaced with an innovative step test. This test sets out that the patent should be granted unless the extra contribution "make[s] no substantial contribution to the working of the invention".

Now the first major case on the innovation patent has been decided and highlights looming danger.

In Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225, Delnorth sued on a series of innovation patents filed off a PCT application. The subject matter was road marker fence posts. In the court decision, the judge explicitly acknowledged that obviousness or inventive step was not an issue for consideration. He also held that a minor post modification made a "substantial contribution to the working of the invention". Hence the innovation patent was valid and infringed.

The innovation patent system provides for normal damages and injunctive relief. Delnorth was able to successfully use the system to maximize its leverage in litigation against Dura-Post. The innovation patent could not be found invalid for obviousness. It will be evident to practitioners that such a system is significantly out of step with normal global procedures.

No doubt every sophisticated patent litigant in Australia will now have to consider the enormous advantages of using an innovation patent to shut down competitors. Eventually, after significant litigation has taken place, the government will have to revise the legislation to include the usual obviousness component.

Peter Treloar

Shelston IP
Level 21, 60 Margaret Street
Sydney NSW 2000
Australia
Tel: +61 2 9777 1111
Fax: +61 2 9241 4666
email@shelstonip.com 
www.shelstonip.com