Australia: Fall From Grace: Patents Invalidated By Inventor Disclosures Before Priority Date Not Saved By Reasonable Trial Grace Period

In today's fast-paced business world, though it can be difficult to file a patent application before you launch your new product or service, it is necessary because making your invention public bars you from obtaining a valid patent—except in certain narrow circumstances where “grace periods” are available.

Australia provides various grace periods that allow, under certain circumstances, valid patenting even if the invention has already been publicly disclosed by the patentee (or predecessor in title, e.g., an inventor). The best known grace period may apply if you file a complete application (i.e., not a provisional) within 12 months of the disclosure. A perhaps lesser known grace period is the “reasonable trial” grace period that can apply up to 12 months prior to filing even a provisional application, which can be followed by a complete application 12 months later¹. Thus it may be possible to patent an invention disclosed up to 2 years before a complete application is filed, under certain narrow circumstances considered in this case,  Fuchs Lubricants (Australasia) Pty Ltd v Quaker Chemical (Australiasia) Pty Ltd,² by the Full Court of the Federal Court of Australia.

In this decision, the Full Court unanimously concluded that the two patents owned by Quaker were invalid, thus overturning the first instance decision (of Robertson J.) where the patents were found to be valid and infringed by Fuchs.

In particular, the Full Court dealt with the statutory construction of the grace period provisions relating to ‘reasonable trial' (under s 24(1)(a) of the Patents Act 1990  (Cth) and reg 2.2(2)(d) of the Patents Regulations 1991  (Cth) – as they were before the ‘Raising the Bar' (RTB) amendments took effect in 2013).

While the Full Court did not delve into the meaning of a ‘reasonable trial', this decision confirms that the reasonable trial grace period is only likely to apply in a narrow set of circumstances, and will not prevent disclosures easily capable of being subject to confidentiality from destroying the novelty or inventiveness of an invention.

Key practical takeaways

The reasonable trial grace period is a narrow exception to prevent reasonable trials, which must take place in public, from invalidating a subsequently filed patent due to lack of novelty or inventive step. As Quaker Chemical has discovered, it is unwise to rely on the reasonable trial grace period for disclosures made in relation – even as a necessary precursor – to a public trial of an invention. Wherever possible, such disclosures should be subject to an express or implied obligation of confidentiality. A simple way of imposing such an obligation may be via the use of a confidentiality agreement, also known as a non-disclosure agreement or NDA.

Background: fluid injection injuries

Quaker and Fuchs compete in the supply of industrial fluids to mine operators. These industrial fluids are often kept under very high pressure in mining machinery. Due to the very high pressure, fine streams of the fluid can escape from machinery and inject themselves into the body of a person. Fluid injection injuries are often difficult to initially recognise because they do not always cause immediate pain.  However, if not imminently treated they can cause serious damage.

On 2 September 2011 Quaker filed a provisional patent application for a method for detecting fluid injection in a patient. The claimed method involved adding a fluorescent dye to an industrial fluid, such that fluid injected into a person can be identified using UV/blue light. The relevant patents, a standard patent and an innovation patent, both claimed priority to this provisional application.

In 2016, Quaker commenced infringement proceedings against Fuchs in relation to Fuchs' supply of hydraulic fluids containing fluorescent dye to a number of customers. In turn, Fuchs alleged that Quaker's patents were invalid on a range of grounds. At first instance, Robertson J's found that the patents were valid and infringed by Fuchs.³

Public disclosures by inventor

Fuchs' appeal turned on whether the claims lacked novelty due to public disclosures made by the inventor Mr Thomas before any patent applications were filed. The disclosures occurred just under a year before the priority date, and each disclosed all integers of the patent claims.

The public disclosures arose in the following way. In about September–October 2010, Mr Thompson conceived the idea of using dyes in hydraulic fluid to enable detection of fluid injection injuries. Because he considered it would be necessary to conduct trials and experiments using hydraulic fluid in real operational mining equipment, Mr Thompson approached the engineering manager of Peabody Energy Australia Pty Ltd, which operated the Metropolitan mine in NSW. Mr Thompson explained his proposed method (i.e., the invention) and discussed the possibility of running trials and experiments at the Metropolitan mine. A further disclosure occurred about a month later when, in the carpark of the Metropolitan mine, Mr Thompson demonstrated his invention to two Peabody managers. Quaker was unable to establish that these disclosures were confidential.

Quaker claimed these disclosures were protected from anticipating its claims by virtue of the ‘grace period' found in s 24(1)(a) and reg 2.2(2)(d) of the pre-RTB Act and Regulations.

Section 24(1)(a) provided:

Meanwhile, reg 2.2(2) relevantly provided:

At first instance, Robertson J agreed with Quaker – finding the disclosures were ‘a necessary precursor for the reasonable trial' and thus ‘for the purpose of and part of the working in public of the invention' such that the grace period applied.⁴

Findings of the Full Court

1. Does the grace period (reg 2.2(2)(d)) extend to disclosures beyond the ‘actual working' of the invention?

Unlike Robertson J, the Full Court did not accept the broad interpretation of s 24(1)(a) put forward by Quaker that the protection of s 24(1)(a) was not limited to information made publicly available by the actual working of the invention in public for the purposes of reasonable trial.⁵

Importantly, the ‘prescribed period' of 12 months relevant to the reasonable trial grace period was set by reference to the ‘working in public of the invention'. As the Court noted, an anomalous consequence of Quaker's proposed interpretation was that the grace period could be indefinitely extended to disclosures made ‘at a potentially unlimited time prior' to the public working. Furthermore, on Quaker's interpretation, it appeared that no trials at all may be necessary for the reasonable trial grace period to be engaged – such as where information is published in relation to a trial which then fails to proceed.⁶

Since the focus of the grace period provisions is on how the information is made publicly available, the information to be disregarded is that made publicly available ‘through [the working in public of the invention]'. Whether the information disclosed was ‘relating to', ‘for the purposes of' or ‘as a necessary precursor' of the working of the invention in public for the purposes of reasonable trial was beside the point.⁷

2. What is the scope of ‘reasonable trials' grace period?

Given that the reasonable trial grace period was not found to extend beyond ‘the working in public of the invention', the next issue to be resolved was whether these words had sufficient scope to apply to Mr Thomas' disclosures.

The Full Court accepted that the ‘working in public' referred to in reg 2.2(2)(d) may cover written or oral communications that are ‘part of the working', such as signs or instructions to those involved in performing the invention, which may be disclosures taking place prior to the ‘actual physical working'. However, there still should be ‘some direct or close connection with the physical working', and it must be possible to sensibly describe the communications as being ‘part' of the working.⁸

Though the Full Court declined to demarcate communications that should be considered ‘part' of the ‘working in public' of an invention, it found that Mr Thomas' disclosures would find themselves outside any reasonable boundaries.⁹ Not only were the disclosures too temporally distant from the actual trial at the Metropolitan mine, occurring over six months later, to be considered ‘part' of such working, but it was not ‘reasonably necessary' for these disclosures to take place in public. In the Court's opinion, there was ‘no good reason why they could not have been kept confidential'.¹⁰

Since Mr Thomas' disclosures could not receive the benefit of the reasonable trial grace period, the appeal was allowed and the patents were held to be invalid for lack of novelty.¹¹

Ongoing significance of this decision

The grace period provisions were re-drafted for the RTB amendments to the Patents Act and Patents Regulations in 2013. However, this Full Court decision is likely to have relevance to the scope of the amended reasonable trial grace period now found in reg 2.2B. It is useful to set out reg 2.2B(2) with the newly introduced language emphasised:

Like the pre-RTB grace period considered in this case, it is likely that the above post-RTB grace period provision will not be afforded an overly broad construction. This means public disclosures made merely in relation to the working of an invention in public will not necessarily be protected from destroying the invention's novelty. The amended grace period only applies to information ‘made publicly available because the invention was worked in public', which suggests that temporal considerations will retain importance. Further, even where disclosures are made because an invention was worked in public, it remains essential that ‘it was reasonably necessary for the working to be in public' because of the nature of the invention. In particular, disclosures that ‘could easily have been subject to confidentiality constraints',¹² are unlikely to be protected by the reasonable trials grace period.

Footnotes

1 Now found in Patents Regulations 1991  (Cth) reg 2.2C.

2 [2021] FCAFC 65 (‘Fuchs v Quaker').

3 Quaker Chemical (Australasia) Pty Ltd v Fuchs Lubricants (Australasia) Pty Ltd (No 2) [2020] FCA 306.

4 Ibid, [761].

5 Fuchs v Quaker, [230].

6 Ibid, [242].

7 Ibid, [231]–[233].

8 Ibid, [271].

9 Ibid, [272].

10 Ibid, [277].

11 Ibid, [279]; [302].

12 Ibid, [275].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.