There are a variety of reasons why it may be important to challenge patent rights. One of the most common reasons is freedom to operate – in other words, to clear the way for a third party's own commercial activity. Patent rights can be challenged on a wide range of grounds throughout the life of a patent, but not all the grounds are available at each stage of a patent's life cycle, and therefore it is useful to know what options are available and the advantages and disadvantages that come along with each of those options.
The most appropriate course of action to challenge the validity of a standard patent will depend on a variety of factors, such as: the commercial objectives, the appetite for risk, the costs which are likely to be incurred, and of course the specifics of the challenge and which grounds lend themselves to those specific issues. For example, the grounds relating to entitlement or secret use can only be examined during opposition proceedings before the patent office, or revocation proceedings before a Court. Additionally, there are strategic considerations. For example, it can be important to coordinate challenges in different jurisdictions, and therefore the timing of these challenges can also affect which option to pursue. However, this needs to be balanced against the grounds available and the ability to intervene in the proceedings.
Generally speaking, the cost to challenge patent rights can become more expensive the further along the patenting process those rights are challenged. Accordingly, it can be advantageous to challenge patent rights early in the life of a patent. The following is a summary of the options available and the advantages and disadvantages inherent in each.
Notice of matters affecting validity (i.e., "third-party observations")
At any time after publication of a standard patent, and until 3 months after the date of publication of the Notice of Acceptance in the Official Journal, a Notice of Matters Affecting Validity can be filed (sometimes known as a "s27" notice). If the standard patent application is a national phase entry from a Patent Co-operation Treaty (PCT) application, publication has already occurred during the international phase and the Notice can be filed as early as national phase entry.
The only grounds available are novelty and inventive step. In other words, matters relating to support, sufficiency of disclosure, or clarity, are not taken into account. The Notice must provide information on prior art documents and/or evidence of prior acts, and a submission explaining why the validity of any patent issued on the application would be affected under novelty or inventive step. If the Examiner considers the third-party observations persuasive, these matters will be incorporated into an Examination Report.
Interested parties should keep a close watch on the progress of an examination, for example by having the application watched by an attorney, and act quickly to make a submission should one be required. The risk in not closely monitoring prosecution is that the Applicant could respond quickly to an Examination Report, and in turn the case could be quickly reviewed and accepted by the Examiner before there is a chance for the third party to file a Notice before acceptance.
Procedurally, once a Notice is filed, the Commissioner informs the Applicant of the Notice and sends the Applicant a copy of any accompanying document. However, the Notifier (who can remain anonymous, for example by engaging a local attorney to file the submission), takes no further part in the proceedings. Because the Notifier is not sent copies of subsequent examination exchanges between the Examiner and the Applicant, it will be necessary to monitor progress of the examination on the patent office records and potentially file further Notices, if required. It is worthy of note that there is no limitation on the number of Notices that can be filed.
In order to avoid telegraphing a third party's interest in the application, it may be preferable to wait until the first Examination Report issues to see if the Examiner repeats some or all of any third-party observations already raised in co-pending prosecutions, or perhaps any highly relevant prior that it is already aware of. This minimises costs, as it avoids having to prepare and file a third-party submission.
From a strategic perspective, it is also worthy of note that if the standard patent application is not yet under examination, a third party can require the Commissioner to direct the Applicant to request examination in order to accelerate the examination process, with the aim of forcing the crystallisation of potential claim rights in the short term. If the Commissioner receives such a request, the Commissioner "must" direct the Applicant to request examination.
An advantage of third-party observations is that they do not preclude later filing an opposition. Disadvantages include the limited grounds available, that they are ex parte, and that filing a Notice often prompts an Applicant to file a divisional application, which needs to also be dealt with, thereby potentially increasing cost and complexity as an interested party will also need to monitor that divisional application and potentially challenge those rights, too.
If the arguments mainly relate to inventive step, a more effective option may be to pursue opposition proceedings, where evidence can be supplied from an expert on the common general knowledge in the art, and who can provide interpretation of prior art information.
In the event that a Notice of Acceptance issues, there is a limited window of time of 3-months after publication of acceptance in the Official Australian Journal within which to file a Notice of Opposition. A patent application can be opposed at any time during this 3-month opposition period, but oppositions are usually filed at the 11th hour on the last day to prevent telegraphing intentions to the Applicant, who might respond by filing a divisional application, which would also need to be dealt with. Oppositions are inter partes and involve the opponent(s) and the applicant(s) in the proceedings. Any person can oppose grant of a patent application, including a "straw man" opponent. A "straw man" opposition usually involves an attorney or attorney firm opposing on behalf of the true opponent to conceal their identity. There can be disadvantages in using this strategy, which is a topic beyond the scope of this article.
Substantive oppositions follow steps of:
- filing a Statement of Grounds and Particulars setting out the grounds upon which the opposition will be based,
- the evidentiary phase, comprising: the opponent's evidence in support, evidence in answer from the applicant, and any evidence in reply the opponent chooses to file, and
- preparing for and attending the hearing.
There is an appeal step (to the Federal Court) after the decision issues, which either party can pursue, after which the patent application is either refused or granted. In the event the decision finds some of the claims unallowable, the applicant is usually provided with a period of time to propose amendments to address any deficiencies, which in many cases resolves the adverse findings (in some cases to the satisfaction of the opponent).
Most of the steps set out in items 1 and 2 have a 3-month deadline, and whilst extensions of these deadline are possible they can be difficult to obtain and are generally regarded as effectively non-extendable. The hearing usually occurs around 6 months after the evidentiary stages are complete, and a written decision will issue around 3 to 6 months thereafter.
In addition to "substantive oppositions", there is another kind of opposition termed the "procedural opposition", which deals with matters such as amendments filed during the substantive oppositions. These kinds of oppositions are beyond the scope of this article.
The grounds for opposing a patent application are more extensive than third party Notices, and include matters of: entitlement, patentability (i.e., novelty, inventive step, utility, and manner of manufacture), and "internal validity" (e.g., sufficiency of disclosure, support, clarity, best method, and succinctness).
Some advantages of oppositions include: the ability to challenge validity without the complication of potential infringement proceedings, they allow for evidence of facts to be filed and expert opinion (these facts may not have been available to the examiner previously), oppositions are less costly than revocation proceedings, and allow the flexibility to pursue a narrow opposition on only select grounds and issues with other issues potentially being reserved for revocation proceedings, if required. It is also possible to file a Notice to Produce to seek production of documents and reports.
There is also a limited exposure to an award of costs against the unsuccessful party in an opposition. In particular, the exposure to costs is only through a schedule of charges that is set out in the Patent Regulations. That schedule is intended to offset the actual costs of the proceedings incurred by the successful party but is not intended to reflect the actual costs incurred or a portion thereof, like a Federal Court might award costs. What this means is that successful parties are often left out of pocket, even though they have "won" the proceedings.
Re-examination (pre- and post-grant)
If a standard patent application has been accepted and the
patent has not been granted, the
Commissioner may re-examine the complete specification on essentially the same grounds as examination. The decision on re-examination of an accepted application is entirely at the discretion of the Commissioner, i.e., no third party (including an opponent) has a right to ask for re-examination to occur before grant. The Commissioner has the power to re-examine a patent on its own volition.
A decision to re-examine will typically arise during the period after acceptance and before grant as a result of new information that comes to light, such as after a withdrawn opposition, or from a third party pursuant to third party observations that have been filed. The Commissioner will rarely consider re-examining where an opposition is afoot.
Typically, however, re-examination is conducted as a post-grant procedure. The Commissioner may revoke a patent after re-examination, either wholly or so far as it relates to a particular claim. However, the Commissioner must not revoke a patent unless the Commissioner has given the patentee a reasonable opportunity to be heard and has, where appropriate, given the patentee a reasonable opportunity to amend the relevant specification for the purpose of removing any lawful ground of objection and the patentee has failed to do so. It is possible to appeal to the Federal Court against a decision to revoke. Re-examination is ex parte.
Revocation before the Courts
The only other option to challenge the validity of a standard patent application post grant is revocation before a Court. Revocation proceedings are initiated by filing an application with the Federal Court of Australia.
The Federal Court can consider all grounds of invalidity, and all forms of prior art, including prior public or commercial use, which may be evidenced by witness testimony and documents which may not themselves have been publicly available at the time, but which nonetheless help to establish what was in public use.
An application for revocation can be filed pre-emptively with the Court – there is no requirement for there to be an existing dispute or controversy, or for the applicant to have any expectation that the patentee may commence infringement proceedings. However, if there are convincing grounds for revocation of the patent, it may be an effective strategy to contact the patentee before commencing Court action in an effort to negotiate a settlement, which could include persuading the patentee to voluntarily amend the patent, or to grant a license.
As a practical matter, the true party in interest in Court proceedings cannot remain anonymous, and in appropriate circumstances the patentee may use the proceedings to file a cross-claim for infringement of the patent, which may significantly increase the complexity and cost of proceedings. It would be relatively unusual for there to be no cross-claim on a revocation application.
Advantages of revocation proceedings in Court include that almost all grounds are available 1, including that the patent was obtained by fraud, false suggestion or misrepresentation, which is a ground not available in oppositions or re-examination. Also, Court proceedings provide some certainty – oppositions can be appealed, but in contrast, when the Court process and any appeals in Court are exhausted, that should be the end of the matter.
Disadvantages of Court proceedings include the relatively higher costs than oppositions, no anonymity, relatively slow resolution, the risk of retaliation (e.g., a cross-claim for infringement), an order as to costs, which would include an account of profit or damages, and that strict laws of evidence apply, which do not apply for opposition or re-examination proceedings.
This article wouldn't be complete without a brief word on Australia's second tier patent – the Innovation patent.
As reported in previous articles ( The end is nigh: Innovation Patents closing soon – Don't miss out and Australia Update: The end of the Innovation Patent – Finally. Eventually.), the Australian Government has now phased out the innovation patent. However, it is still possible to file a divisional innovation patent application or to convert a standard patent application to an innovation patent application, provided the standard patent application was filed on or before 25 August 2021. Existing innovation patents will continue in force until their expiry such that no current right holders will be disadvantaged.
An innovation patent application follows a slightly different path to the standard patent application. In particular, the innovation patent application publishes soon after filing, proceeds directly to a formalities check (and without examination as to substantive issues), and then proceeds to grant. The innovation patent cannot be enforced until it has been examined (termed "certification"). Third party observations can be filed at any time after publication and before certification. After certification, an interested third party can request re-examination, or oppose the innovation patent, or seek the revocation of it. Unlike standard patents, there are no provisions for opposition to an innovation patent prior to certification.
In terms of key takeaways, a number of options exist to challenge the validity of a patent in Australia, each providing their own unique advantages and disadvantages. Re-examination is the least costly and the fastest option but the available grounds to challenge a standard patent are the narrowest, and a requestor cannot participate in the process once the request is filed. Opposition proceedings are typically more costly than re-examination, but less costly than revocation proceedings, and allows both parties to file evidence of fact, which can be supported by expert opinion. Revocation proceedings are typically a long, complex and expensive process, however the advantages include the broadest grounds of validity attack.
1With the exception of unity of invention, which is only considered in examination
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.