By: H. Sam Frost
This paper is based closely on a paper given at the Spring 1999 meeting of the Intellectual Property Institute of Canada (formerly the Patent and Trademark Institute of Canada), due to be published in the Canadian Intellectual Property Review. It has been reworked to give a more international emphasis.
For the purpose of the present discussion, we are concerned with the significant changes to the Canadian novelty standard that occurred in 1989; the further changes to the Patent Act (see Endnote 1) that occurred in 1996 do not fundamentally affect any of the points made here, as will be explained. Shortly after the amendments in 1989, John Orange presented a paper to this Institute addressing much the same issues that are addressed here, and it is believed that the concerns he raised did not generate much interest in the profession (see Endnote 2).
The author of the present paper, prompted by a review of relevant aspects of Canadian, U.S. and Mexican law for another meeting, developed what was thought to be a useful analysis of the "made available to the public" test. Because of the widespread adoption of this test in Europe, the paper was directed to a European audience. It suggested, contrary to all prevailing trends, consideration of a "sale bar". (See Endnote 3) This latter paper generated minimal interest; at best some European practitioners may have some sympathy with the views expressed, but certainly no complete approval. Moreover, there has been no recent Canadian jurisprudence that would prompt a review of this aspect of the law. The author has also recently become aware of a paper by S.J. Ferance, providing a comprehensive review of the amendments to the Canadian act and reference to recent U.K. law (see Endnote 4).
A further consideration is that single unitary novelty standard based on a "made available to the public" test, as set out in the Patent Cooperation Treaty (PCT) (see Endnote 5) appears to becoming an international standard, and internationally one hears few, if any, voices questioning this standard. The PCT, on any measure, is growing at a surprising rate. All of which begs the question: Why question the scope of the present novelty standard now?
However, it is suggested that there are many good reasons to review this topic now, and the most important of these are as follows:
1. A close parallel can be drawn with the experience in the U.K. The U.K. law changed, in 1977 (see Endnote 6), to adopt a novelty standard closely similar to the current Canadian standard, and which not surprisingly closely follows that in both the European Patent Convention (EPC) (see Endnote 7) and the Patent Cooperation Treaty, which the U.K. joined at the same time. With the great benefit of hindsight, it is clear that initially in England the vast scope of the new novelty definition, compared to the older provisions with territorial limitations (see Endnote 8) dazzled many commentators. The effect of the elimination of the former provisions including "secret use" in the novelty definition was not fully appreciated; one can note that a report justifying the adoption of the 1977 act in England suggested that the inclusion of a prior user right would be an adequate substitute for the former provisions covering secret use (see Endnote 9) but overlooked secret use by the applicant or inventor.
However, as a result of numerous decisions from the British courts and from the European Patent Office, this aspect of the law has been developed extensively and subject of much discussion in the U.K. at least. One of the most respected commentaries is the guide to the British Patents Acts published by the British Chartered Institute of Patent Agents (CIPA) (see Endnote 10). Their commentary on the relevant section 2 of the Act, over the past 20 years, has contained much analysis of "difficult cases of prior use", and many complex arguments trying to determine whether some of the older concepts, such as a "right to work" test, still apply or not. The discussion is replete with language such as "counterintuitive", "clash of principles" and the like. From this side of the Atlantic, it appears that the British were extremely reluctant to acknowledge that prior secret use is no longer covered by the novelty definition. Indeed only recently as a result of the House of Lords decision in Merrell Dow (see Endnote 11) has the CIPA commentary on the British Act (see Endnote 12) acknowledged that the "clash of principles" has been resolved. This is detailed below.
When one looks at the situation here in Canada, one finds many parallels. Like the U.K., many commentators appear to have been dazzled by the apparent breadth of the new novelty standard, which eliminated the territorial limitations of the previous novelty definition. Again, like the U.K., this has apparently caused some commentators to overlook the restriction on the definition of novelty caused by the removal of the previous provisions relating to an invention being "on sale in Canada" (see Endnote 13) . This could be forgiven in the early days of the current legislation, but now nearly ten years have elapsed since the law was changed and still one finds many leading commentaries either suggesting that the current novelty standard is at least equivalent to the old one, or failing to mention the effect of the loss of the sale provision of the former statute. Given the long and agonizing debate that has gone on in the U.K. for a period of 20 years, this is really quite surprising (see Endnote 14) .
2. A comparison with our former law raises the issue of whether or not we should even consider the reintroduction of some form of a "sale bar", even though this is contrary to all prevailing international trends. Opponents of such an approach would argue that this is ridiculous for a number of reasons. Firstly, a sale bar is incompatible with the present novelty standard based on a unitary "made available to the public" test. Secondly, third parties do not need protection for their own secret commercial use when another has patented an identical invention because they are protected by the prior user rights provision. Thirdly, inventors and applicants would be foolish to commercially exploit an invention before filing and should always be advised to file first. Finally, sales of an invention prior to filing in the absence of an enabling disclosure only occur rarely and difficult cases can be decided on a case-by-case basis.
In response to these arguments, it is submitted that it is necessary to first determine if there is a sale bar or provision compatible with the existing law, before the policy issue can be addressed. Remarkably, this policy issue has never been debated to any extent. It will be argued that a sale bar can be defined which is wholly compatible with the present novelty standard. If this is correct, then this argument reduces down to a pure public policy question: Should inventors be permitted to commercially exploit inventions before the relevant critical date?
3. Other aspects of the law in reported cases suggests that the problem of commercial exploitation by applicants or inventors before the critical date is not significant. For many inventions, public use or commercial exploitation is synonymous with public disclosure, so that an applicant cannot both commercially exploit an invention and prevent it from entering the public domain. As well, even if an invention is amenable to secret commercial exploitation, there are still problems of maintaining it secret and confidential, and these become greater as the extent of commercial exploitation increases. Finally, there is always the risk that a third party may independently invent the same invention and file first, leaving an inventor with the somewhat restricted provisions provided in the prior user section (see Endnote 15). However, it is submitted that with changing technology, there is a much larger range of technology that can be commercially exploited in secret, and that for such technology it is easier to keep it secret.
4. Reported decisions typically involve relatively small amounts of commercial use. Hence, there is no real sense that there is a practical problem. Also, many commentators, particularly in Europe, seem either unable or reluctant to extract any broad principles from these cases. The real question here is: what decision will a court reach when faced with a case where an applicant has engaged in widespread and extensive commercial use, in secret, before the relevant date? Will they hold that this has somehow "made the invention available to the public"? This, it is submitted, is another reason to consider at least a theoretical sale bar. By first postulating a theoretical sale bar, and then removing it, one can define the scope of activities that are permitted under the present novelty standard. This can be contrasted with the approach of most commentators which is to define the activities prohibited by the statute.
1.1 SCOPE OF THE PRESENT PAPER
This paper is intended to provide a broad view of how the present Patent Act covers secret use of inventions. As such, it is not intended to provide a comprehensive review of the novelty standard nor a detailed review of all relevant cases, with a careful explanation of how they fit together. The following are the major topics not covered in this paper:
1. The differences between the old law and the new law with respect to judging novelty at the date of filing/priority date, as compared to the date of invention provisions in the old law.
2. The effect of the present one-year grace period or the older two-year grace period. (See Endnote 16)
In essence, this paper simply reviews activities, in isolation, relevant to the issue of novelty and the right to a patent.
2.0 HISTORICAL BACKGROUND
It seems simplest to review this chronologically and to start at the beginning. For the present purposes, the beginning is Section 6 of the Statute of Monopolies 1623 (see Endnote 17). This generally put an end to the use of monopolies that the Crown had granted beforehand and is set out below:
Provided also, and be it declared and enacted, That any Declaration beforementioned shall not extend to any Letters Patent and Grants of Privilege for the Term of fourteen Years and under, hereafter to be made, of the sole Working or Making of any manner of new Manufactures within this Realm, to the true and first Inventor and Inventors of such manufactures which others at the Time of Making such Letters Patent and Grants shall not use, so as also they be not contrary to the Law, nor mischievous to the State, by raising Prices of Commodities at home, or Hurt of Trade, or generally inconvenient: the said fourteen Years to be accounted from the Date of the first Letters Patents, or Grant of such Privilege hereafter to be made, but that the same shall be of such Force as they should be if this Act had never been made, and of none other.
At the outset, one can remark how well this definition has stood the test of time. If one attempted to summarize present patent law in 160 words or less, it would be difficult to improve upon it. Not surprisingly, it is not perfect, and for the present purposes one glaring ambiguity is to be noted. This is the reference to "new Manufactures ... which others ... shall not use".
The ambiguity arises as the issue of secret use is not squarely addressed. Does this definition apply to secret use? British case law, developed from this definition and common law principles, has held that it does apply to secret use (see Endnote 18). Conceptually, this looks at the issue of novelty from a third party’s viewpoint. A third party prior user doesn’t care if his/her use is secret or not, but simply wants to be able to continue with that activity and not be blocked by a later inventor; hence the broad interpretation to cover secret use.
This had two main effects. It was intended, firstly, to protect the general public in cases where prior use had indeed made the invention available to the public, and secondly to enable prior users to carry on any process or invention that they had secretly used. The first of these rights is fairly uncontroversial; it enables the public to carry on working what was already in the public domain. The second right is properly a right belonging only to the actual user. However, it has been stated that, until the enactment of the British Patents Act 1977, the "Statute of Monopolies and all British legislation have continued to kill these two quite different birds with one stone." (See Endnote 19). Effectively, for third party activities, British law treated both public use and non-disclosing secret use together. They were both lumped together as a part of the prior art and could affect the patentability of an invention. The focus was thus essentially on the activity, and not on the rights resulting from the activity.
One consequence of this approach was that no clear distinction was made between activities of the applicant and activities of others, although this section 6 clearly referred to use by others. Consequently, statutory definitions of novelty were developed defined just by the activities themselves, so as to cover activities of both the inventor/applicant and others. Since the older British statutory definition of novelty covered secret use, courts could readily interpret this provision to ensnare applicants who had commercially exploited an invention before the relevant critical date.
3.0 BRITISH PATENTS ACT 1949
The 1949 Act included unqualified "use" as a ground of opposition (see Endnote 20) while recognizing that the Patent Office was not equipped to consider issues of secret use (see Endnote 21). The provisions for revocation included the ground of "secret use"(see Endnote 22), with a qualification that this did not encompass "reasonable trial or experiment" (see Endnote 23).
This type of prior art definition has been described as a "right to work" test (see Endnote 24). Alternatively, it has been expressed as a post-infringement test as explained by the maxim "that which infringes, if later, would have anticipated if earlier".
This statutory framework had both advantages and disadvantages. Its advantages were that it was broad, and required no separate provisions governing the effects of premature use by the applicant, and in particular premature commercial activities which did not disclose the invention. The disadvantages were that no clear distinction was made between the different types of activities, nor between the persons carrying out the activities. The courts always had to fit the fact situation into one of the statutory provisions governing "use", "secret use", etc. This both created and reinforced a notion that there is some continuum of use, which can be said to include experimental use, secret use, etc., and which makes no distinction between activities of the applicant and activities of others, apart from the exception for reasonable trial and experiment. More particularly, there was no clear recognition that prior commercial activities of the applicant should be treated separately. However, a review of earlier British decisions shows that the courts were quite receptive to recognizing prior commercial use as a bar to obtaining a valid patent, and they contain the germ of a notion that such an activity needs to be treated separately.
3.1 DECISIONS UNDER THE BRITISH PATENTS ACT 1949
A much cited case under the former law was the judgment delivered by the British House of Lords in Bristol-Myers Company (Johnson’s) application (see Endnote 25). There, an improved form of ampicillin, in a trihydrate form, was knowingly made and sold by another company (Beecham) before the priority date of the patent. It was held that this sale of capsules containing the trihydrate form amounted to an anticipating use under the Patents Act 1949. As this was an opposition case, the relevant grounds excluded secret use. Hence, one issue was whether the use had indeed been "secret".
Lord Diplock rejected the proposition that unless the composition is "susceptible of ascertainment by some means known to science at the time of the sale, the sale cannot amount to such prior use as will invalidate the patent" (see Endnote 26).
This decision is of interest, since as a practical matter the invention was not placed in the public domain and the earlier use had not been enabling. Beecham mixed the batches of ampicillin prior to sale so that it was impossible to find that some of the ampicillin was in trihydrate form. Also, the earlier use had been by another company, not by the applicant. The court nonetheless managed to find that the use was sufficient to anticipate. In effect, the court held that any commercial sale would constitute use, unless it was secret.
Lord Diplock made some extensive comments on this issue, which have been quoted at length in some of the other cases. For example, at 157, one finds:
"If the inventor, after discovering how to make it, had himself dealt with the substance commercially before applying for a patent for it, he would be disqualified from obtaining a grant; but this was not because of any prior use of it by others, but for the different reason that the invention having been put by him to "public use" was no longer a manner of new manufacture within the meaning of the Statute of Monopolies. For the other mischief against which that Statute was directed was that even monopolies of new manufacture should not extend beyond 14 years. If the inventor had already reaped commercial benefit from a de facto monopoly in his discovery owing to his concealment from all other traders of the way in which a new substance could be made, he was not to be permitted to prolong his monopoly for an additional 14 years. So ‘public use’ in the sense of commercial dealing in a product claimed as an invention, by any trader even though it were by the inventor himself, rendered invalid any patent for the product claimed."
Further down the page, he states:
" ... any commercial sale by any trader before the priority date of a claim to a product as an invention is ‘use’ of that invention within the meaning of that paragraph [Section 14(1)(d) of the Patents Act 1949] and, unless it falls to be disregarded as ‘secret use’ under section 14(3), constitutes a bar to the grant of a patent for that product."
What is clear from this line of cases is that the courts were quite prepared to find that premature commercial use was a bar to obtaining a valid patent. The courts seemed to start with the premise that such premature commercial activity was not permissible, and then looked for ways to fit the different fact situations to the "use" provisions in the statute. The reasoning became quite complicated and convoluted, particularly where "secret use" could not be relied upon. This lead to a vicious circle, which prevented the concept of a "sale" bar developing as an independent concept. The courts would often make bold statements that relevant commercial activity is clearly a bar to obtaining a valid patent, irrespective of what was or was not put in the public domain. But, because of the statutory definitions, they always had to find that the commercial activity fitted into one of the definitions of "use", reinforcing the notion that commercial activity is just another species of use and part of the prior art.
In another case (see Endnote 27), the opponent to a patent argued that a patent for a nylon production process should not be granted on the grounds that they had in fact used the same process many years prior to the filing of the application. Because this was an opposition, the issue of prior secret use could not be used to invalidate the patent (see Endnote 28). The opponent had sold the nylon to another company who sold it in turn to others with the admonition that the nylon was of an experimental type. A crucial part of the process (the oxygen content) could not be ascertained from the end product. No secrecy measures were taken with respect to the process of manufacture. The court found that the prior use was in fact secret use as it was not known to the public and that the employees were bound from discussing the details with others. However, great stock was placed in the fact that the use of the low oxygen content was deliberate. As well, the court stated that
"I think [the 1949 Patents Act] plainly contemplates that a patent may be bad on the ground of use even though the public at large are not one whit the wiser as to the nature of the invention because of the prior use..." (see Endnote 29).
and at 165:
"If this be a decision that there cannot be prior use unless the prior use gives means of knowledge then in my judgment it is wrong."
Because the prior use was found to be secret, the opposition failed.
These cases clearly indicate that novelty under the old Patents Act could be destroyed by prior use even if that use could not be ascertained by members of the public. Availability to the public, or the fact that the public could gain knowledge of the technology was not an issue when considering prior use.
4.0 EUROPEAN PATENT CONVENTION (EPC) AND PATENT COOPERATION TREATY (PCT)
The British Patent Act was amended in 1977, to bring it into alignment with both the EPC and PCT, with Britain joining those conventions simultaneously with implementation of amendments to its domestic legislation. Accordingly, the provisions of the EPC and PCT are reviewed before the new and current British novelty standard. The European approach to the issue of secret use has taken the exact opposite track from that taken by older British and Canadian law and the current U.S. law. Thus, rather than considering the viewpoint of a notional third party user, novelty under European law has developed from the viewpoint of the inventor or applicant.
From this perspective, an inventor will, perhaps grudgingly, accept his/her invention being challenged by relatively obscure prior art documents, but an inventor will argue that his/her invention should not be subject to challenge by any secret activity or document. As such, the novelty standard is based on an "informational" principle, i.e. what information has been placed in the public domain. This focuses attention on issues of public disclosure and availability of the art to the public.
The European Patent Convention (EPC) itself arose out of the Strasbourg Convention, and it is understood that the novelty standard derives, to a large extent from former French law (see Endnote 30).
The state of the art is defined in article 54 (EPC) as comprising "everything made available to the public by means of written or oral description, by use, or in any other way." Now, where use is relied upon, the test is whether "on the balance of probabilities" there is convincing evidence of prior disclosure (see Endnote 31). Issues of prior use commonly arise in opposition proceedings in the European Patent Office (EPO), where the EPO has said that the Opposition Division and the patentee must be able to determine the alleged date, subject matter, and circumstances of the alleged prior use (see Endnote 32). These matters must be strictly proven. Hidden or secret use is not a ground of objection against European patent because such use has not been "made available to the public". (See Endnote 33).
Effectively, a fairly high standard is maintained. When examining allegations of prior use, it is necessary to consider both what was actually used and "what was made available to the public". It will be appreciated that there are many examples of use activities which do not in fact disclose anything relevant. For example, demonstration of a complex invention, to prospective purchasers at a trade show, where the public only sees the outside of the device and does not gain any knowledge of the internal workings, would not amount to public disclosure. As another example, where it was alleged that a claimed apparatus had been available for inspection for up to six years before the relevant date, it was found that it would have been difficult to recognize the technical characteristics from a distance and difficult to identify certain physical parameters included within the claims (see Endnote 34).
In the Patent Cooperation Treaty (PCT), Article 33 states that novelty will be lost when an invention is anticipated by the prior art. The term "prior art" is defined in Rule 64 as "everything made available to the public anywhere in the world by means of written disclosure ... prior to the relevant date". Thus, "oral disclosure, use, exhibition or other non-written means" can only be relied upon if indicated in a written disclosure before the relevant date.
As can be seen from examining the novelty provisions of the PCT, it is obvious from the references to the phrase "made available to the public" that the novelty standard is a disclosure-based standard. Because the PCT is an examining system and not a granting one, there is no case law which will confirm this conclusion. However, the PCT Examination Guidelines further define the term "made available to the public". A written disclosure will be deemed to have been made available to the public, if "it was possible for members of the public to have access to the content of the document and there was no bar of confidentiality restricting the use or dissemination of knowledge gained thereby." (See Endnote 35). Thus confidential commercial disclosures do not destroy novelty for the purposes of the PCT.
The provisions are similar to the European Patent Convention’s novelty requirements and the new U.K novelty requirements. It is clear that the same principles which guided the PCT novelty provisions also guided the EPC. The expansion of the PCT around the world adds pressure to other countries to conform to PCT-like novelty standards, as shown by Canada’s adoption of these standards.
5.0 THE BRITISH PATENTS ACT 1977
The Patents Act 1977 changed the U.K. novelty requirements to conform with the European Patent Convention. The Act now reads:
"2. (1) An invention shall be taken to be new if it does not form part of the state of the art.
(2) The state of the art in the case of an invention shall be taken to comprise all matter (whether a product, a process, information about either, or anything else) which has at any time before the priority date of that invention been made available to the public (whether in the United Kingdom or elsewhere) by written or oral description, by use or in any other way."
The obvious interpretation question revolves around the meaning of "made available to the public". The scope of this term has been the subject of much discussion over the last 20 years in England, although one suspects that continental European practitioners, also practising under the EPC, have had much less difficulty with it, since it follows many of their former national laws. In particular the issue of whether it encompasses secret or non-disclosing activities has caused considerable difficulty. Ingenious arguments have been developed in England in an attempt to construe the law to cover secret or non-disclosing activities. For example, it has been stated that the concept "that a patent cannot take away the public’s right to do what it was doing before the patent was granted is described as a ‘golden thread’ running through patent jurisprudence". (See Endnote 36). The same author concludes by suggesting that the "available to the public" standard embodies two concepts, namely, "availability in the sense that the public is given enough information to perform the invention, or availability in the sense that the public can buy or otherwise get hold of the patented invention". (See Endnote 37).
The House of Lords decision in Merrell Dow (see Endnote 38) is the current leading U.K. case on prior use. The case clearly endorsed an informational standard for determining whether a prior use constituted making the invention available to the public. In this case, the plaintiff filed for a patent on a drug known as Terfenadine in 1972. The defendant started manufacturing the drug after the expiry of the original patent. After developing the drug, the plaintiff researched the mechanism of action of the drug and discovered that an acid metabolite is formed in the liver. The plaintiff filed an application for the acid metabolite in 1979 and sued the defendant for infringement on this patent which was still in force. The court stated clearly that because the novelty provisions were based on the EPC provisions, they should be interpreted consistently with decisions of the European Patent Office. As a result, the court found that the Patents Act 1977 was based on a disclosure standard and chose to follow the line of rulings that stated that a prior secret use or sale did not bar obtaining a patent for the invention:
"This provision [EPC Article 54] makes it clear that to be part of the state of the art, the invention must have been made available to the public. An invention is a piece of information. Making matter available to the public within the meaning of section 2(2) therefore requires the communication of information. The use of a product makes the invention part of the state of the art only so far as that use makes available the necessary information.
The 1977 Act therefore introduced a substantial qualification into the old principle that a patent cannot be used to stop someone doing what he has done before. If the previous use was secret or uninformative, then subject to section 64 [prior user right], it can. Likewise a gap has opened between the tests for infringement and anticipation. Acts done secretly or without knowledge of the relevant facts, which would amount to infringements after the grant of the patent, will not count as anticipations before.
The construction of section 2(2) is supported by a number of authorities both in the courts of this country and the EPO. ... In PLG Research Ltd. v. Ardon International Ltd.  F.S.R. 197, 225, Aldous J. said:
‘Mr. Thorley submitted that if a product has been made available to the public, it was not possible thereafter to patent the product whether claimed as a product claim or as a product-by-process claim. That submission is too broad. Under the 1977 Act, patents may be granted for an invention covering a product that has been put on the market provided the product does not provide an enabling disclosure of the invention claimed. In most cases, prior sale of the product will make available information as to its contents and its method of manufacture, but it is possible to imagine circumstances where that will not happen. In such cases a subsequent patent may be obtained and the only safeguard given to the public is section 64 of the Act.’ "(see Endnote 39) (emphasis in original).
The court thus rejected the theory that prior use inevitably constituted making the invention available to the public. In this case, because the prior use did not disclose the information that the acid metabolite was formed in the liver, the claim was not invalidated on this ground. The court did find however, that the publication of the previous patent did constitute anticipation by disclosure as the process described inevitably created the acid metabolite.
The U.K. courts have clearly stated that "making available to the public" requires an enabling disclosure. There was some dispute on this point until the House of Lords resolved the disagreement in Asahi. (See Endnote 40). The court stated that an anticipation by making available to the public was indistinguishable from the test for an anticipation by prior publication in a patent application; that is, for anticipation to occur either the prior making available to the public or the prior patent publication had to contain sufficient information to allow a person skilled in the art to apply the invention. The Asahi case followed the Genentech (see Endnote 41) decision. At 633 the judge in the latter case stated:
"However, it seems to me that whether the subject invention of a patent, or patent application, has been made available to the public in a prior document so as to make that document an anticipation must still be governed by the principle [that the alleged anticipation must be such that a person of ordinary knowledge of the subject would be able to apply the invention]. Accordingly, in my judgment, applying that principle, to constitute anticipation of a claim to a new chemical compound by a prior document the disclosure in that prior document must be an enabling disclosure..."
The courts have been quite strict in applying the finding of an enabling disclosure. In PLG Research Ltd. v. Ardon International Ltd (see Endnote 42), the patentees had created a form of netting from a method of manufacture known to them. The claim at issue stated that the netting’s starting material was uniplanar. The defendant argued that the invention was anticipated by the plaintiff’s disclosure of the netting to its licensees and that the method of manufacture could be reverse engineered from the netting. Essentially, they argued that the netting was an enabling disclosure of the process claim. The court found that novelty was not destroyed by this disclosure because it was not possible to know from the netting that the starting material was uniplanar.
6.0 CANADIAN LAW PRE-OCTOBER 1989
Before the changes to the Patent Act in 1989, s. 27(1), as is common, defined novelty in negative terms:
"27(1) Subject to this section, any inventor ... of an invention that was
(a) not known or used by any other person before he invented it;
(b) not described in any patent or in any publication printed in Canada or in any other country...
(c) not in public use or on sale in Canada for more than two years prior to his application,
may ... obtain a patent."
The "public use or on sale" provision has been discussed in very few cases. One of the most significant cases was Gibney v. Ford Motor Co. of Canada (see Endnote 43). The patent at issue was for a metal hield for car generators. The defendant admitted infringement but argued that the patent was invalid in part because of prior use and sale in Canada. The court outlined the purpose of the sale bar in Canada at 157:
"Any inventor may, therefore, get a patent providing he applies for it within two years of the time in which he first puts his invention in public use or on sale on Canada. Were it not for the above section, an inventor could market an invention for any number of years and apply for a patent only when someone else decided to duplicate his invention. He would then, instead of obtaining a 17-year monopoly, obtain one covering a longer period of time. It is, therefore, in the public interest that an inventor apply within two years of the first public use or the placing on sale of his invention or forfeit his right to obtain a patent."
The patentee had provided a makeshift version of the shield to a customer and told him "I hope this will help you." There were no admonitions of secrecy or confidentiality. There was no direct evidence from the customer because the name of the customer was not known to either party. The patentee argued that the use was experimental and thus not a public use. The court inferred from the lack of evidence from the customer that others did see or hear of the invention. The court found that the invention was in public use prior to the relevant date and that the patent was invalid.
The decision is interesting for a number of reasons. First, the court found invalidity on the grounds of prior public use and not sale. It would have been easier to find invalidity on the grounds that the invention had been sold given the admission by the patentee; unfortunately, the shield in question was fitted for free, so the sale bar was not examined in any detail. Second, the court quite rightly pointed out the policy reasons for the sale bar. The same policy reasons apply to an even greater extent when an invention is not easily reverse engineered.
In Leithiser v. Pengo Hydra-Pull of Canada Ltd. (see Endnote 44), the patentee placed an advertisement in a U.S. magazine for his invention prior to the relevant date. Approximately 800 copies of the magazine were circulated in Canada. The advertisement contained a description and picture of the invention. The machine was far from simple and the advertisements could in no way be described as "enabling" disclosures. The plaintiff received no responses to the advertisement and made no sales as a result. However, the invention was produced and sold in the U.S. prior to the relevant date. The patentee argued that since the magazine was a U.S. publication, the invention was not on sale in Canada. The trial judge followed the test in a U.S. case and assessed whether the activity was a "competitive use" of the invention and therefore "on sale". The court found that the advertisement constituted putting the invention on sale because the purpose of the advertisement was to generate sales. On appeal, the Federal Court of Appeal did not make a specific ruling on the issue of whether the invention was "on sale in Canada" as invalidity was found on other grounds. However, Jackett C.J. did state at 112 that "I am not, at present, prepared to adopt the view of the breadth of the meaning of those words that it was necessary for the learned trial judge to adopt to reach the finding that they apply to the facts of this case."
In Owens-Illinois Inc. v. Koehring Waterous Ltd. (see Endnote 45), the parties were engaged in conflict proceedings. A representative of a third party visited Koehring’s plant and was given a rough sketch of a predecessor machine to the invention. The third party also saw some of the components of this machine. The court stated that for a public use to be found, the disclosure made "must be operative and practical except in the case of the disclosure of something impractical in which case it must be immediately obvious how to remedy the defect." As well, the court found that experimental use was not a public use. The court found that this disclosure was insufficient to find that a public use had taken place. Firstly, the device was not completed and was still in the experimental stage. Secondly, the third party representative, in his report, discussed a number of potential problems with the invention and did not offer any easy solutions to those problems. The Federal Court of Appeal affirmed the decision with no mention of the public use arguments. It is interesting to note that the trial judge made no mention of the fact that the disclosure was not protected by any implied confidentiality.
7.0 GRAPHICAL REPRESENTATION OF NOVELTY STANDARDS
A key issue in all of this discussion is: what is the relationship between use and public disclosure/making the invention available to the public? This is introduced at this point, as it is useful in explaining the changes in the Canadian novelty standard, which follows.
Turning back to the question just raised: to what extent are these two related? It is submitted, and this is a key concept to the arguments that follow, that in the most general sense, use and public disclosure are not related and are independent from one another. Clearly, there is a significant and large class of inventions for which use and public disclosure are closely related and more importantly, commercial use is necessarily synonymous with making the invention available to the public, in the sense of enabling the public to perform or recreate the invention. However, in the most general or abstract sense they can be analyzed as being independent. This is explained in greater detail below.
Let us picture an axis demonstrating the concept of use (see Figure 1). At the origin, the invention is a seedling in the mind of the inventor. As the inventor discloses the idea through drawings and building a prototype, he moves along the axis. Further up the axis, the invention is tested and actually "used" to perform the function it was meant to perform. Further research is performed and the invention is modified and refined as one moves along the axis. At some point on the axis, the invention is used in a commercial sense and here a boundary is indicated as "commercial exploitation" begins. This may involve demonstration of the invention to potential investors, manufacture of the invention and sale of the invention or sale of the end product of a process invention. As the extent of usage and commercial exploitation increases, one moves along the scale. At the very end of the scale, the invention is fully utilized to effect its desired functionality and achieving maximum market penetration throughout the world. It is of course impossible to list all the possible or different steps along the way to this end or to quantify the steps on some sort of numerical scale. Figure 1 below shows some possible stops along the way to significant market penetration.
Similarly we can picture an axis demonstrating disclosure (see Figure 2). At the origin, the invention, again, is a kernel or concept of an idea in the inventor’s mind. We move along the scale as the inventor discloses the invention to more people and in more meaningful ways. Commonly, an inventor will disclose the invention to an increasing number of co-workers and suppliers in order to develop the invention. Showing the invention to others moves one further along the scale. At some point, a non-confidential disclosure is made, that is the invention is "made available to the public", and a boundary to this effect is indicated. Activities past this boundary include disclosing the invention to people who do not have any sort of confidential relationship with the inventor. These public disclosure activities could include: committing the invention to paper and distributing a paper description (e.g. an article in a trade magazine or a technical journal); a product or article susceptible of reverse engineering. Again a sample axis is provided in Figure 2.
7.3 TWO-DIMENSIONAL GRAPHICAL REPRESENTATION
Now, if use and disclosure are indeed independent, then this should suggest to any reader with a scientific background, that it should be possible to represent this in a two-dimensional graph or chart, with the horizontal and vertical axes representing the level of use and the level of disclosure, and this is done in Figure 3.
The path that an invention will take can also be represented on the chart. Line "A" on Figure 3 traces the path of a common invention susceptible of reverse engineering, e.g. a simple mechanical invention. The invention starts as an idea in the mind of the inventor at the origin. The inventor performs research and develops the invention. He creates prototypes and production tools. This moves the invention upwards on the use axis. At the same time, he or she tells more and more people about the invention and requires their involvement in the creation of the invention. Drawings of the invention are created. These actions move the inventor across on the disclosure axis. Eventually, the sale of a product embodying the invention occurs and this provides a public disclosure of the invention. Hence, this sale simultaneously moves the invention past the "made available to the public" and "commercial exploitation" boundaries.
By way of illustration, the invention path may then branch out into two possible outcomes. As he generates sales the invention becomes more widely known moving him further away from the origin on the chart. Line "A1" shows an invention, e.g. a mining machine, which is commercially successful, but due to the nature of it there is limited public disclosure. Line "A2" shows a much less commercially successful invention but an invention that is readily understood and becomes known widely through advertising publications and the like.
Line "B" is a more extreme invention path. This invention is by nature one that cannot be reverse engineered. As the inventor develops his invention, he maintains the secrecy of the invention by controlling the information that is released to third parties through non-disclosure agreements. Eventually, he produces the invention and generates significant sales. However, the invention itself is kept secret. The invention may be a "black box" with anti-tampering features; it may be a secret formula for a chemical; or, even more likely, it is a process from which a product is produced and reverse engineering of the process is not possible from examining the product. Whatever the invention, it is kept a trade secret. Practically, for most inventions, after any significant commercial use, the line will veer close to the "made available to the public" boundary; that is, the number of people having knowledge of the invention will increase and it will be increasingly difficult to keep that knowledge secret.
Line "C" is a variation on the path of Line "B". Here, the invention is eventually disclosed to third parties. As a result, the invention line begins to veer away from the "use" axis. The disclosure might occur through reverse engineering or from inadequate security measures. In any event, its status as a complete trade secret is lost and the "made available to the public" boundary is eventually crossed.
Line "D" is the opposite of Line "B". In this case, the invention is disclosed early and fully by the inventor. The invention might be featured in trade journals while still in a development stage or might be disclosed in a published patent application or a deliberate defensive disclosure. Eventually, it is found, for example, that the invention will not work, that it is too expensive or that there are better options for meeting the same goals. No sales are made and the invention is abandoned.
7.4 ANALYSIS OF CANADIAN LAW PRE-1989 IN GRAPHICAL FORMAT
The representation in Figure 3 focuses essentially on the activities of the inventor or applicant. Clearly, as the law has always recognized, relevant activities, more often than not, will in fact be carried out by a third party or other person. This is dealt with simply by providing two similar charts, as shown in Figure 4, the left-hand indicating the inventor’s activities and the right-hand one activities of another person or third party, but these both indicate the effect of these activities on the inventor's rights.
The boundary definitions of "commercial exploitation" and "made available to the public" were introduced in Figure 3 as they, respectively, seem more applicable to modern technology and follow the current novelty standard, and will be used to explain the present law below. In broad conceptual terms, the boundary labels used in Figure 4 are equivalent, but these different labels are used to follow the former definitions more closely, as is explained below.
Consider now how the former novelty provisions can be indicated on these charts. Firstly, to keep this simple, the provisions of former s. 27(1)(a) are simply going to be ignored. This was a provision that related to the date of invention, and was qualified by the provisions of former s. 61. (See Endnote 46). The main argument to be made here is that the scope of the novelty provisions have in fact been reduced. If full consideration was given to this former s. 27(1)(a), it would simply emphasize this difference even further.
The provision in s. 27(1)(c) as mentioned above, provided for anticipation if the invention was "on sale in Canada". Thus, this is a provision defined, not in terms of the level of disclosure, but rather in terms of the extent of usage. This therefore can be represented by a rectangular hatched area extending vertically from the "on sale" boundary in Figure 4.
"Public use" in old Section 27(1)(c) is construed as use that gives the public access to and knowledge of the invention. While not wholly clear, this appears to be interpretation taken in the Gibney v. Ford (see Endnote 47) case cited above; as such, it is, despite the reference to "use", a public disclosure test. It has been argued that the public use test is met simply by "use in public", even if the public gains no knowledge of the invention. Certainly, there are older British cases suggesting that simple use in a public place, without any enabling disclosure, is a "public use"; this clearly would be a measure of just the extent of the use, i.e. along the vertical axis, but this interpretation is not taken here.
Section 27(1)(b) referred to description "in any patent or any printed publication printed in Canada or any other country...". This clearly is a disclosure test. Combining this with the "public use" factor, just construed as disclosure test, gives a definition for the boundary along the horizontal or disclosure axis of "patent, printed publication or public use", and this is shown by the hatched rectangle to the right of a boundary with this label.
Now, both paragraphs (b) and (c) of old Section 27(1) were not limited by the person carrying out the activity. Thus, we can chart these areas on the two sides of Figure 4, indicating that any of these activities, whether carried out by the inventor or some other person, would be relevant to the novelty of the invention as made by the inventor. The third party chart shows areas in which the third party’s independent activities destroyed the novelty of the inventor’s invention.
Some of the invention paths of Figure 3 are also shown in Figure 4. Invention path "A" again crosses the disclosure and use boundaries at the same time, and is shown for both the invention and a third party. This is due to the fact that this invention is easily reverse engineered and any public use or sale discloses it. Many inventions will follow this path if commercial exploitation occurs before disclosure by way of printed publications or the like.
We can see that for the invention path "B" (for both the inventor and a third party), the "on sale" provision prevents the inventor from patenting the invention after the invention has been put "on sale" by anyone. However, where the inventor follows path "B", the inventor is able to maintain his trade secret and his protection as a trade secret remains. The only threats are loss of secrecy, e.g. from industrial espionage, or a third party independent inventor who makes the same invention. Such an independent inventor cannot obtain a patent in view of the earlier sale, but can compete in the marketplace. The inventor following path "C" is less lucky. Secrecy of the invention is not maintained, and this disclosure of the invention and the commercial sale prevent a patent being obtained. As secrecy is lost, competitors are then free to use the invention. Essentially, the inventor gambled that the invention could be kept secret and lost. For path "C", on the third party side of Figure 4, both sale and disclosure by the third party will prevent the inventor obtaining a valid patent.
8.0 CANADIAN PATENT ACT, OCTOBER 1989, AS AMENDED OCTOBER 1996
The relevant portion of the current novelty definition in the Patent Act is as follows:
"28.2(1) The subject-matter defined by a claim in an application for a patent in Canada ("the pending application") must not have been disclosed
(a) more than one year before the filing date by the applicant, or by a person who obtained knowledge, directly or indirectly, from the applicant, in such a manner that the subject-matter became available to the public in Canada or elsewhere;
(b) before the claim date by a person not mentioned in paragraph (a) in such a manner that the subject-matter became available to the public in Canada or elsewhere; ..."
For all intents and purposes the amendments of October 1996, introducing the concept of a claim date into s. 28.2(1)(b), did not affect the substance of this provision.
One has the sense that this novelty definition has been arrived at over a period of many years, or even decades and centuries, as a result of distilling down complex and fragmented provisions from various national sources. It has an appealing simplicity and unitary concept. However, it depends fundamentally on a single test, namely that of "making the invention available to the public". As noted above, it has been suggested by Robin Jacob that this could have two meanings; (see Endnote 48) his use of the phrase "can buy or otherwise get hold of the patented invention" causes one to recall the former Canadian provision of s. 27(1)(c).
If both these alternative definitions (i.e. (1) public given information about an invention; and (2) public can buy or get hold of the invention) were taken together, then one could indeed develop overlapping rectangular representations of this novelty definition, as for the former Canadian law (Figure 4). However, it now seems well settled by the Merrell Dow decision that such a broad interpretation will not be taken, at least in the U.K. courts. It is submitted that given the close parallel between the Canadian provision and the U.K. definition, a similar interpretation will surely be taken here.
A further consideration is that the present Canadian definition includes a key word not found, to the author’s knowledge, in this type of novelty definition in any other statute or convention. Thus, current Section 27(1)(c) refers to the invention being "disclosed...in such a manner that it became available to the public...". One senses that this reference to "disclosed" was perhaps inserted merely as linking language, and perhaps with the thought that it had no effect on the substance of the provision. Given suggestions that the "made available to the public" test could be interpreted more broadly, this word "disclosed" takes on a new significance. Surely the presence of this one word "disclosed" will prevent any interpretation covering an activity where the invention has not, in fact, been "disclosed" to the public, in the sense of putting the invention in the hands of the public so that they can perform the invention or recreate the invention.
8.1 REPRESENTATION OF CANADIAN LAW POST-OCTOBER 1989 AND NOVELTY STANDARD UNDER EPC AND PCT IN GRAPHICAL FORMAT
This representation was originally developed for current Canadian law. In view of its close similarity with the novelty definitions in the EPC and the PCT, and in view of the fact that this simply addresses broad, basic principles, this graphic representation can also be applied to the EPC and PCT as well.
Figure 5, below, shows such a graphical representation of the current novelty standard. As noted, this is limited to a definition based on the level of disclosure. Hence, we can represent this quite simply by two hatched rectangular areas on the two halves of the diagram, indicating activities to the right of the boundaries for making the invention "available to the public". These rectangles are identical for activities of third parties and for inventor activities.
Now, it has long been recognized in various patent laws, that such a novelty definition by itself is unreasonably biased against third parties. In particular, the issue rises as to what are the rights of a third party prior user, who has not actually "made the invention available to the public". To allow for this, a so-called prior user right is commonly provided, and this is found in the current Canadian Patent Act at s. 56 (see Endnote 49). This is shown on the chart in different hatching, to indicate that this a provision which gives rise to some limited rights applicable to the other person or third party, rather than a provision which affects the novelty of the invention in the hands of the inventor.
Two things seem to be immediately clear from this graphical representation. Firstly, the inventor or applicant is given no provision equivalent to the prior user rights. This seems reasonable, since an inventor or applicant does not, as it were, need any protection from his or her own sword.
The second point is that the inclusion of a prior user right seems to indicate, quite clearly, that secret or non-disclosing use in the hands of a third party will not be destructive of novelty, and it is for this reason that the prior user right is necessary. But, if secret or non-disclosing use by a third party, even use on a commercial scale, is not destructive of novelty, then surely the same argument applies to secret or non-disclosing use by the inventor/applicant. If this is the case, then the absence of any provision governing this would, taken at face value, appear to indicate a conscious legislative intent to permit such secret use by the applicant or inventor before the critical date, even if it amounts to extensive commercial use, without affecting the right to a patent. At least in a Canadian context, this is almost certainly reading too much into the law; it is quite clear that the novelty provision was introduced, simply to bring Canadian law into alignment with the PCT and other international provisions.
As will be explained in greater detail below, if this analysis is correct, this necessarily and surprisingly creates two classes of inventions. The first class is that of "self-disclosing" inventions, which, upon examination or reverse engineering of the invention will disclose how the invention works, its composition or its method of manufacture. The second class is that of "non-disclosing" inventions which cannot be easily reverse engineered. If one’s invention is in the first class, filing of a patent application must take place prior to a critical date determined from the first sale of the invention as a sale will constitute "making available to the public". However, if one’s invention is "non-disclosing", then an effective monopoly can be maintained through the use of trade secret protection for a number of years while commercial exploitation continues unabated. The inventor can then file for a patent application on the eve of reverse engineering or independent efforts of a competitor to obtain a greater monopoly. The inequity warned of by Noel J. in Gibney is now apparently available to those with non-disclosing inventions in Canada, but, as will be emphasised at a number of points, there is not yet a decided case that directly addresses a relevant fact situation, so as to confirm this analysis.
9.0 WHAT IS THE SCOPE OF SECRET USE PERMITTED TO THE INVENTOR/APPLICANT?
This question appears to be one of the most difficult to answer, for the simple reason that there is a lack of case law that adequately defines the boundaries of secret or non-disclosing use, which the inventor/applicant can engage in before the critical date.
If one looks at the left-hand chart of Figure 5, for the inventor’s activities under the new law, an initial reaction would be why even bother with the second, vertical dimension, since the chart clearly indicates that the novelty definition is defined solely in terms of the level of public disclosure? Put another way, the level of use is simply not a factor in determining whether an invention has been "made available to the public", and there are plenty of decisions from the EPO that take this approach.
The problem arises when one considers the difficult cases of prior use. Looked at in one dimension, one would see a cluster of cases just to the left of the "made available to the public" boundary (indicated as "x"). Thus, these are cases where the disclosure did not quite reach the level of a public disclosure or putting the invention in the public domain. However, the difficult cases cause unease, essentially because the inventor or applicant is engaging in a level of use which, intuitively, seems to extend beyond what should be permitted.
Accordingly, in order to explore this further, this second dimension, i.e. the vertical dimension of use, is retained. Difficult cases of use are indicated schematically by a series of "X" marks in Figure 5. These are placed to the left of the "made available to the public" boundary, to indicate, as is mentioned, activities which do not quite meet the "made available to the public" test. At the same time, they are located some way up the vertical or use axis, to indicate that a significant degree of use has occurred.
Now, when considering secret use, any patent system must permit an inventor or applicant to develop an invention in secret; at minimum, this is necessary for the system to be workable (see the former provision of the old British law (see Endnote 50) which provided an exemption for "reasonable trial and experiment"). The question is, to what extent should an inventor be permitted to secretly use an invention, before the critical date? Following the old Canadian law, surely the limit should be when the invention is ready for sale or commercial exploitation. Hence, if a commercial exploitation boundary is added, one has the chart shown in Figure 6, retaining the markings to indicate difficult cases.
It will be seen that the problem area is the top left-hand quadrant of the diagram for the inventor in Figure 6, that is use which is: (1) carried out by the inventor; (2) secret or does not make the invention "available to the public"; and (3) extends beyond any development of the invention and amounts to commercial exploitation of the invention. In theory, it should be possible to extract some broad principles from cases in this area. However, the cases themselves do not present comprehensive fact situations, since, as is indicated, they all tend to be clustered in one corner of this zone. Certainly, a review of European commentaries suggests that writers are either unable or reluctant to extract broad principles from these cases covering the whole of this quadrant. So, perhaps an alternative approach is required, and this a major reason for considering a theoretical commercial exploitation provision.