Can keeping an invention secret prevent you from getting a patent?
Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd  FCA 944
Bradken’s opposition to Lynx’s patent application relating to rail wagons has given Justice McKerracher of the Federal Court of Australia the rare opportunity to consider the circumstances in which the secret use of an invention before the filing of a patent application will mean that any patent for the invention will be invalid. It also highlights potential risks involved in commercially using an invention in the year after filing a provisional patent application.
The Patents Act states that the secret use of an invention “for the purpose of reasonable trial or experiment only” will not invalidate a patent for the invention. But what, exactly, is “reasonable trial or experiment”?
Lynx’s patent application covers its stronger Golynx wagons
Lynx’s patent application relates to bulk material containers, as embodied in their award-winning Golynx rail wagons. The Golynx wagons are manufactured under licence by UGL Rail (formerly United Goninan), notably for BHP Billiton Iron Ore.
The invention described and claimed in the application relates to structural features of the container which strengthen its sides while using less reinforcing material than previously known designs. This allows it to have an increased carrying capacity for bulk materials, whilst retaining the same external profile and thus continuing to satisfy dimensional constraints imposed by road or rail transport standards.
Bradken had a partial win when opposing the application at the Patent Office, forcing Lynx to amend their claims. However, as the Patent Office was prepared to award Lynx a patent with the narrowed claims, Bradken appealed to the Federal Court.
Were the claims novel and inventive?
With regard to novelty, His Honour found that the claims were clearly new in light of the prior art, including newly discovered prior art not raised during the opposition proceedings. Amongst other things, the prior art failed to disclose the key feature of an internal ridge having particular characteristics as defined in the amended claims. Although the prior art disclosed “corrugations” on the side walls of a container, the configuration and purpose of these were held to be different than those of the internal ridges of the claimed Lynx container.
With regard to whether the claims involved an inventive step, His Honour found that the Lynx container:
- constituted a significant departure from known bulk material containers having smooth internal sides;
- achieved significant benefits in performance and had also achieved considerable commercial success; and
- had been developed as part of a design and invention process which required significant effort and which could not be said to have been achieved as a matter of routine.
On this basis, the claims were found to be inventive.
Had there been a secret commercial use of the invention before the priority date?
Were the claims entitled to their original priority date?
The patent application was based on an earlier provisional application which had been filed on 30 March 1998, prior to the first manufacture of prototype wagons. However, Bradken argued that the claims were not entitled to the original priority date established by the provisional application, instead having a deferred priority date of 30 March 1999 (the date the complete application was filed). The true priority date of the claims was important because of the timing of the manufacture and trials of the prototype wagons.
The claims included a feature for which there was no written disclosure in the provisional specification. Lynx argued that the feature was derivable from the drawings of the provisional specification but His Honour was unpersuaded, finding that this approach to interpretation of the provisional document “turn[ed] drawings of a very general descriptive nature into highly technical and precise engineering drawings, which they are not.” Accordingly, the claims were only entitled to a deferred priority date of 30 March 1999.
Was secret use available to Bradken as a ground of invalidity?
A preliminary procedural issue to be decided was whether secret use could even be raised as a ground of invalidity. At the time the opposition was filed, secret use was not available as a ground of opposition. As a result, Justice McKerracher found that Bradken was not allowed to allege secret use on appeal because it fell outside the statutory basis on which the original decisions were made (relying on the judgment of the Full Federal Court in the New England Biolabs case). It would have been possible for Bradken to introduce secret use into the opposition proceedings by giving appropriate notice, but they had not done so.
Despite this, His Honour proceeded to consider whether there had in fact been secret use, in case his finding on the procedural issue was found incorrect in a subsequent appeal.
Chronology of events
|June 1998||Goninan proposes to supply 3 wagons to BHP for evaluation|
|September 1998||BHP signs contract with Goninan for supply of trial wagons|
|October 1998||Lynx and Goninan sign royalty payment agreement|
|December 1998 – January 1999||Trial wagons secretly supplied to BHP|
|January 1999 – July 1999||BHP subjects wagons to conformance testing|
|July 1999||BHP purchases 109 wagons ( the 3 previously supplied prototypes)|
The Court’s decision on secret use
Justice McKerracher carefully considered whether the trials conducted prior to the deferred priority date (30 March 1999) were for experimental purposes only, thus falling within the exemption provided for by the Patents Act, even though Lynx had ultimately derived a commercial benefit after that date. The following factors were relevant:
- BHP expressly required, as a condition of the trial, that three wagons be supplied for testing;
- unless and until a successful trial occurred, Lynx had no contractual certainty as to whether BHP would decide to purchase additional wagons;
- if the trial was unsuccessful, the wagons would be returned to Goninan and no payment would be made for either the wagons or costs incurred by Lynx and Goninan in conducting the trial;
- there were problems with one of the prototypes during testing, which required design modifications;
- the prototype testing was conducted at no cost to BHP;
- no wagons other than the modified prototypes were manufactured before the deferred priority date.
Taking all the above into account, His Honour held that although the circumstances were “close to the boundaries of the exception or defence to secret use”, the activities of Lynx and its licensee Goninan could still be classed as “reasonable trial or experiment only”, so that the secret manufacture and supply of wagons to BHP was not an invalidating secret use.
The decision is still open to appeal by Bradken.
Lessons for patent applicants on commencing secret commercial activity before a complete application is filed
It is common for Australian patent applicants to file a provisional patent application to secure a priority date, and then to file a complete application based on the provisional application. The present case acts as a reminder that there may still be risks involved in commencing significant commercial activity before a complete application is filed. If for some reason the claims of that complete application cannot rely on the original priority date, there is a risk that any deliberately concealed prior commercial activity may invalidate a subsequently granted patent. Had Lynx received licensing income due to orders from BHP before the deferred priority date, the Court may have found that any patent granted to Lynx would be invalid.
Recent changes to Australian patent legislation will ensure that secret commercial use in the 12 months preceding the filing of a complete application will be covered by the grace period provisions and so will no longer result in invalidity. However, these changes will not take effect until 15 April 2013 and secret use before that date may still lead to invalidity. Patent applicants should remain aware of this potential trap. If in doubt, advice should be sought from an IP professional.