Who wants to be a patentee?

By Nicholas Tyacke.

Key Points:
Generally anything (including products, processes and methods) that is novel and inventive (standard patent)/innovative (innovation patent) is patentable in Australia.

Five things executives, corporate counsel and inventors need to know about patents

A few years ago, many considered intellectual property to be an esoteric area of law that impacted little on their businesses. Today, much has changed, with a company's intellectual property often being considered among its most valuable assets. Despite this, intellectual property law is often poorly understood by those to whom it is not their daily focus. As a result, issues are often not spotted when they occur, with the result that intellectual property assets are often not adequately protected and/or exploited and actions are taken (or not taken) as a result of a misunderstanding about a competitor's intellectual property, all to a company's detriment.

In this, the first of a series of brief articles, we discuss five things executives, corporate counsel and employees need to know about patents. Subsequent articles will provide similar brief discussions of the top handful of issues in other areas of intellectual property law.

1. What is a patent?

Although discussions of patent law (like this one) often talk about "patents" generically, there are in fact two types of patents in Australia. The most common type of patent is known as a "standard patent." It is this type of patent that is generally being referred to when something is said to be "patented." The second type of patent is an "innovation patent." Innovation patents have only been available since May 2001 and are available for inventions that are not sufficiently inventive to meet the inventive threshold required for a standard patent.

A standard/innovation patent (hereinafter collectively "patent" unless a distinction needs to be drawn) is a document that defines the boundaries of a legally enforceable temporary monopoly granted to the patentee with respect to the new, inventive/innovative and useful product, process or method claimed in that patent. For a standard patent, this monopoly is generally for 20 years, while for an innovation patent, it is for up to eight years. Contrary to common perceptions, this monopoly does not grant the patentee the right to do what is claimed in the patent, it merely grants the patentee the right to prevent others doing what is claimed in that patent.

2. What is patentable?

It is the answer to this question that causes the most surprise. For, except for a very few narrow exceptions, generally anything (including products, processes and methods) that is novel and inventive (standard patent)/innovative (innovation patent) is patentable in Australia. Only narrow fields are specifically excluded from patentability, such as human beings (and the biological processes for their generation), inventions whose use would be contrary to law, inventions that are capable of being used as a food and which are a mere mixture of known ingredients, inventions that would hurt trade or cause prices to rise, and artistic creations, mathematical models, plans, schemes and other purely mental processes.[1]

Hot ticket areas like software and business systems (business methods), which are provoking considerable uproar in Europe over their patentability, have long been patentable in Australia, as has gene technology, the subject of recent public discussion in Australia.

Provided an invention does not fall within one of the narrow exceptions, then the first hurdle it must overcome in order to be patentable is that it must be "novel." This means that it must be new and unique - essentially that no-one has done the exact same thing the exact same way before. A more difficult hurdle is inventiveness (non-obviousness)/innovativeness. For a standard patent, this is a subjective determination by a patent examiner (and, if subsequently litigated, by a judge) that the invention is more than a mere obvious variation of items already known to a person of ordinary skill in the relevant art. For an innovation patent, it is a subjective determination that the invention represents a substantial contribution to the working of the invention relative to items already known to a person of ordinary skill in the relevant art. To be patentable, an invention must be both the novel and the inventive/innovative.

If your company is doing something that does not fall within the narrow exceptions mentioned above, which your competitors are not, and that something is considered to be of value to its business, you should inquire as to whether that invention is patentable.

3. Who owns a patent?

The inventors of the invention claimed in the patent will own the patent unless they have assigned that patent or have a duty to do so. Contrary to what many think, it is not a foregone conclusion that inventions created by employees are automatically owned by their employer. Generally, an employer is entitled to an invention produced by an employee working under a service contract if that invention was arrived at in the course of the employee's normal duties. Where the invention is totally unrelated to the employee's job and their employer's business, the employee will generally own the invention. A middle ground arises where the invention falls outside the employee's job description but within the business of the employer. In that case, it has been held that an employer will need to demonstrate that the nature of the employment relationship suggests that the invention was made in the course of employment unless express contractual provisions exist establishing ownership.

The situation with respect to contractors and consultants is somewhat different. Generally, inventions created by contractors and consultants are owned by those contactors and consultants unless there is a written contract to the contrary.

Though the above describes the general situation with respect to employees, contractors and consultants, the result may be different in a specific situation depending on all of the facts.

The best way to avoid any uncertainty with respect to this issue is to put in place a written agreement setting out the nature of the employment relationship (such as a detailed, regularly updated, job description) or contractor/consultant relationship that clearly states who owns inventions created in the course of that relationship, who may apply for patents on such inventions, and the obligations of the respective parties with respect to signing documents necessary to obtain such patents.

4. What does a patent cover (infringement)?

Whether assessing the ability to sue a competitor for patent infringement so as to protect your company's assets, or determining whether a path your company is about to head down will infringe one of its competitors' patents, it is important to determine what the relevant patent(s) covers. This can be a very difficult task. For, although it is the claims at the end of the patent that determine the boundaries of the patent monopoly, construing what these claims mean is governed by a series of judicially determined rules. As a result, something that appears to fall within the literal language of one or more of a patent's claims may not actually do so when the claim is properly construed, while something that appears to fall outside the literal language of a claim may actually fall within it once that claim is properly construed. To ensure that any relevant claims are properly construed in light of the governing rules, advice should always be sought from a patent lawyer or patent attorney.

5. Does a patent give global protection?

Like copyright and trade mark protection, patent protection is national in scope. This means that your company's conduct (eg., making, using, selling, etc) in Australia can only infringe an Australian patent. It cannot, for example, infringe a US patent even if what it is doing is exactly what is claimed in that patent. Conversely, if your company holds an Australian patent, that patent cannot be used to stop a foreign competitor performing conduct that is exactly what is claimed within that patent, if that conduct takes place outside Australia. To prevent such conduct, it is necessary to get a counterpart patent to the Australian patent in foreign jurisdictions where there is a business case to do so (there are procedures in place that facilitate a patent application being filed in multiple countries following an initial filing in Australia, although it is important that subsequent filings occur within 12 months of the Australian application to avoid a loss of potential patent rights in those foreign jurisdictions).