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The end is nigh for Australian innovation patents

Further to previous posts, time has now been called on the Australian innovation patent system. On 26 February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 came into force. The Act phases out, and eventually abolishes, innovation patents.

Deadline to act

  1. The final deadline for filing new innovation patent applications is 25 August 2021

  2. An innovation patent application can be filed after the deadline if it is a divisional of a parent application filed on or before the deadline

  3. A standard patent application can be converted into an innovation patent application after the deadline if the standard application was filed on or before the deadline

The final expiry date of all innovation patents is 25 August 2029.

Patentability of software and computer-related inventions

This is the first of a two-part post about patentability of software and computer-related inventions in Australia.

This part provides a brief overview of the relevant law and some seminal court decisions to consider when determining whether these types of inventions are inherently protectable. This is by no means a comprehensive review of the case law in this area and there are some points of law and relevant considerations that I have omitted for the sake of brevity. The idea is to provide you with a flavour of some of the more pertinent issues.

Manner of manufacture

Before reviewing the cases, let’s start with some basics. Australian patent legislation, the Patents Act 1990 (Cth), does not specifically exclude computer software from being patented. The Act, however, provides that an invention is only patentable if it constitutes a ‘manner of manufacture’. If you are wondering what on earth this means then congratulations – you are normal! The phrase is derived from an antiquated and long-since-repealed English statute and the Australian courts have, mercifully, confirmed that its literal meaning is not to be interpreted directly. Instead, the broad principles that have been developed by the courts for its application should be considered.

Applying these principles, an invention that consists solely of an abstract idea or mere intellectual information (for example, a pure business scheme) is not a manner of manufacture. It follows that an invention that consists solely of excluded subject matter that is embodied and implemented in a computer program is also excluded. A computer-implemented invention that does not fall squarely within excluded subject matter may, however, be patentable.

NRDC v Commissioner of Patents (1959) 102 CLR 252

The first case to consider is an oldie but a goodie. Whilst it is not a software-related case, NRDC established several important legal principles that have been applied subsequently by the courts in software cases. It was held that to be patentable an invention must (i) entail an end result that is an artificially created state of affairs, (ii) be of utility in a field of economic endeavour and (iii) offer some material advantage in the sense that it belongs to the useful arts (c.f. the fine arts).

If you are thinking this all sounds like something delivered from an ivory tower then you may be forgiven. Admittedly, it is not immediately clear how these principles apply in a software context. Subsequent court decisions have, however, provided some better guidance.

IBM v Commissioner of Patents (1991) 33 FCR 218

OK, time for some tech. In IBM, an improved method for generating curved images using a computer was held to be a patentable manner of manufacture. The method involved an elegant algorithm that used the hardware of a computer that performs integer-based arithmetic to create curved images. Previous methods used floating point computing hardware to create curves which was significantly less computationally efficient.

The Court held that the new method caused a computer’s hardware to operate in a new way foreign to its normal use. The method occasioned a commercially useful result and was more than just an abstract algorithm running on a computer.

CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260

In CCOM, a computer-implemented method for characterising key strokes that enabled Chinese characters to be selected was held to be patentable. The Court made significant reference to the above-discussed principles in NRDC when reaching its decision. In a nutshell, the Court held that the invention achieved an end result that was an artificially created state of affairs (being the retrieval of graphic representations of desired characters). The Court also held that the invention had utility in a field of economic endeavour (being the use of word processors to assemble text in Chinese characters).

Personally, from a practical perspective I do not think that the reasoning given in this case is particularly useful when evaluating patentability of software inventions. Nevertheless, the case at least serves as a good example of an invention that was held to be patentable under the judicial approach that was followed at the time.

Welcome v Catuity (2001) 113 FCR 110

In Catuity, an invention that involved the use of smart cards (an example of an embedded computing technology) to implement multiple trader loyalty programs was also held to be a manner of manufacture. The Court held that the invention comprised a method and device involving tangible components (including smart card devices) used in business that produced an artificial state of affairs (namely, availing multiple loyalty programs on a single smart card). The Court also held that the invention was beneficial in a field of economic endeavour (namely, retail trading).

Grant v Commissioner of Patents (2006) 154 FCR 62

In contrast to the above cases, in Grant a method for protecting assets from unsecured judgment creditors was held to be a mere business method and, therefore, not a patentable manner of manufacture. The Court elaborated on the meaning of artificially created state of affairs, as first articulated in NRDC. The Court held that to be patentable the invention must produce a concrete effect, phenomenon, manifestation or transformation.

Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150

In Research Affiliates, the full Federal Court of Australia was tasked with deciding whether or not a computer-implemented method for generating an index for use in securities trading was patentable. Although the patent’s claims provided that the method was computer executed, they did not define any specific computing hardware or technologies used or their mode of operation.

The invention’s value in economic endeavour was not disputed. The principal issue was whether the fact that an abstract method required a computer to operate was sufficient to make it a manner of manufacture. The applicant, Research Affiliates, contended that this was sufficient and that its invention, when implemented, employed unique functions or computer instructions to create an artificially created state of affairs. The respondent, the Commissioner of Patents, contended that this was not sufficient and that the invention comprised mere intellectual information.

The Court, as part of its analysis, emphasised that a distinction exists between a pure business method and one that, in practice, results in a new machine or an old machine giving a new result. The Court ultimately held that the applicant’s invention was not a manner of manufacture because it was an abstract method and a computer, as claimed, constituted a mere means, and not the exclusive means, for implementing the method. In the Court’s view, the invention was principally directed to the index generated by the claimed method and this did not occasion the requisite artificial effect.

Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177

In RPL Central, it was held that a computer-implemented method for assessing the competency or qualifications of individuals with respect to recognised standards was not a manner of manufacture. The patent’s two independent claims defined a method and system, respectively, for gathering evidence for the purpose of assessing an individual’s competency relative to a recognized standard.

Both claims recited the specific computing hardware, technologies and data sets used by the invention and the data flows and interaction between these elements that occurred during execution. Despite this, the Court found that the invention entailed a mere business scheme and that its implementation used generic computing hardware operating in a standard way.


It is clear from the above cases that mere computer implementation of an unpatentable abstract method is not, on its own, sufficient to render the method patentable. It is also clear that if the computer implementation only involves generic and routine use of known computing hardware then this is an important factor that must be taken into account when deciding whether or not the invention is a patentable manner of manufacture.

So if an invention of this nature does merely entail such generic and routine use is it necessarily always going to be unpatentable? In a large number of cases the answer will be yes. However, the Courts have emphasised that the manner of manufacture requirement is, ultimately, a threshold requirement (see the NRDC and Grant cases in particular) and that all relevant principles articulated in the applicable case law must be considered.

Part two of this post (coming soon!) will provide some analysis about what generic and routine use means in practice.

What does a Patent Attorney do?

We’re occasionally asked what patent attorneys actually do. So, here goes:

A patent attorney can:

1. Research the novelty of your invention

An invention can only be patented if it is novel. This means that the invention must not have been disclosed anywhere in the world, either through use or publication. Before seeking patent protection it is, therefore, prudent to search for any pre-existing published documents that disclose your invention, or similar inventions. This includes publicly available academic, commercial and patent literature.

A patent attorney can carry out patent searches for you and help you evaluate the results.

2. Carry out freedom to operate searches

Before exploiting your invention commercially, it is also important to carry out patent searches to see if there are any existing granted or pending patents could restrict your freedom to do so. For example, a competitor may have obtained a granted patent in Australia (or have an application pending) that could stop you exploiting the whole or a part of your invention. Patents are territorial in scope so searches should, ideally, be done in each jurisdiction where you want to exploit your invention.

A patent attorney can carry out patent searches for you to identify any potentially problematic patent filings and help you to understand their relevance and scope.

3. Prepare and file a patent application for your invention

Drafting a patent specification that correctly protects your invention is a difficult skill and takes many years of study and practice to master.

4. Prosecute your patent application

Once filed, a patent application must successfully pass the examination and opposition phases of the application process before proceeding to grant. Ushering a patent application through these phases is referred to as patent ‘prosecution’. If any issues are encountered during the prosecution of your patent application, a patent attorney can assist you to overcome them.

5. Oppose a patent application

If a competitor has filed a patent application and you do not consider that they are entitled to patent protection for the invention, you can oppose their application in an effort to stop it proceeding to grant. The patent opposition process is complicated and a patent attorney can advise you and act on your behalf in an opposition.

6. Manage your patent

In most jurisdictions, fees must be periodically paid to government patent offices to keep granted and pending patents in force. Strict payment deadlines apply which, if missed, can lead to loss of rights, sometimes permanently. A patent attorney can track and monitor these deadlines for you and ensure that the relevant fees are paid in a timely manner.

7. Monitor patent applications

A patent attorney can monitor the patenting activities of your competitors. This includes tracking the progress of any specific patent applications that they have pending or monitoring their patent filing activities generally.

8. Assert a patent against an infringer

If a company or person infringes your granted patent, a patent attorney can prepare and send a letter of demand on your behalf to the infringer to enforce your rights.

9. Defend infringement allegations

If a patent owner alleges that you are infringing their patent, a patent attorney can help you to defend the allegations. For example, there may be reasons why your product or process does not infringe their patent and/or you may be aware of prior art that renders their patent invalid.

Use it or lose it laws to be amended

Back in March, we blogged about the Australian Government’s plans to amend the Trade Marks Act 1995 (Cth) (Act) to make it easier to remove trade marks not in use from the register. On 24 August 2018, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018 received Royal Assent and will soon bring these changes into effect.

A trade mark may be removed from the register in relation to particular good/services if the trade mark has not been used in Australia, in good faith, for such good/services for a continuous period of three years. Previously, an application for removal could only be made once five years after the relevant trade mark’s filing date had passed. Section 93(2) of the Act will be amended so that an application may be made once three years after the filing date has passed.

It is hoped that these changes will reduce ‘clutter’ on the register and disincentivize bad faith applications filed without any genuine intention to use the relevant marks in trade.

The amendments will come into effect on a date to be fixed by Proclamation or (at the very latest) 25 February 2019.

Major changes to Australian patent laws back on the table

As previously blogged, in August last year the Australian Government released a set of proposed changes to the Patents Act 1990 (Cth) in response to an inquiry carried out by its advisory body, the Productivity Commission.

Since then, the course of the proposals, and the Government’s plans, has taken various twists and turns. It now, however, looks like things are getting serious. On 23 July 2018, IP Australia released for public comment a draft Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018.

The draft Bill proposes to:

1. Phase out innovation patents

After the laws come into effect, no new innovation patents will be able to pass the formalities check undertaken by the Patent Office when innovation patent applications are filed. Effectively, no new innovation patents will be able to proceed to grant.

2. Add an objects clause into the Act. The proposed clause reads:

“The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.”

While arguably not a significant change, the clause may nevertheless be taken into account by the Australian courts (and perhaps also the Patent Office) when tasked with deciding subtle questions of patent law.

3. Amend inventive step requirements

The Bill proposes to add the following provision into the Act:

“For the purposes of this Act, an invention is taken to involve an inventive step when compared with the prior art base if the invention is not obvious to a person skilled in the relevant art.”

This would align the Act with the equivalent wording found in Article 56 of the European Patent Convention.

4. Amend Crown use rights

Crown use refers to the Australian Government's right to compel a patentee to license its patented technology to a government body. The Bill proposes to provide that:

  1. Crown use may be invoked for any service provided or funded by any Commonwealth, State or Territory government body;

  2. Except in exceptional circumstances, the relevant government body must notify the patentee and endeavour to negotiate an agreement with them before invoking Crown use; and

  3. Crown use may only be invoked with Ministerial authorisation.

5. Amend compulsory licensing rights

Compulsory licensing is similar to Crown use but applies to non-government entities. In certain circumstances, a third party may compel a patentee to license its patented technology to them. The Bill proposes to:

  1. Introduce a public interest test that must be taken into account by a court when determining whether or not a compulsory licence is to be granted. This would replace the ‘reasonable requirements of the public’ test currently in the Act;

  2. Also require the public interest to be taken into account when determining the terms of a compulsory licence; and

  3. Improve various legislative provisions relating to compulsory licensing of dependant patents.

Interested parties have until 31 August 2018 to make written submissions in response to the Bill and can do so here.

Consultation on the Hague Agreement open

IP Australia is currently seeking submissions about an economic analysis that they have conducted about Australia joining the Hague Agreement for designs.

The Hague system allows a design to be registered in multiple countries via a single application filed in one language with one set of fees. The system is administered by the World Intellectual Property Organization.

Currently, persons seeking overseas design protection in Australia must file in each individual country where protection is required. If an overseas application is filed within six months of a corresponding Australian application, the overseas application may claim the Australian application’s priority date under the provisions of the Paris Convention. For a large number of countries, this process can quickly become expensive.

Interested persons are invited to provide written submissions to IP Australia by 31 May 2018. Further information, including a copy of the economic analysis, can be found here.

The importance of patent searches

Before embarking on patent protection or developing a new product, it is always wise to carry out patent searches. Searches can help you obtain an indicative view of the novelty of your invention and your freedom to operate.


To be patentable, an invention must be useful and ‘novel’. This means that your invention must not have been disclosed, either through use or publication, anywhere in the world before a patent application for the invention is first filed. It is, therefore, important to carry out a comprehensive search of published technical and patent literature to see if your invention (or a similar invention) has been disclosed publicly before.

Freedom to operate

Searches can also help you obtain an indicative view of whether any existing granted or pending patents exist that could potentially restrict your freedom to exploit your invention commercially. For example, it may transpire that a competitor has managed to obtain a granted patent in Australia (or has an application pending) that could stop you exploiting the whole or a part of your invention. Please be aware that even if you obtain a granted patent for your own invention, it is still possible that working your invention may still infringe one or more third party patents.

Patents are territorial in scope so searches should, ideally, be done in each jurisdiction where you want to exploit your invention commercially.

Search Costs

A patent attorney can conduct professional patent searches on your behalf and report the results with advice about the relevance and impact of any prior art discovered. Attorneys normally charge for searches at an hourly rate so a budget should be set according to your business requirements. In addition to professional searches (or as an alternative) prospective patentees and innovators should also consider carrying out their own patent searches using freely available online databases, such as Google Patents.

International-type searches

After filing a provisional patent application, the applicant is entitled to apply to the Australian Patent Office (IP Australia) to have an international-type search conducted for the invention described in the application. This is broadly equivalent to the search that IP Australia initially undertakes after an international (PCT) patent application has been filed in Australia.

Further details of international-type searches can be found here.

Innovation Patents granted reprieve

We have previously blogged about the impending fate of innovation patents in Australia. However, IP Australia (see here) has recently announced that the Federal Government will be undertaking further consultation to better understand the needs of SMEs before deciding whether to phase out innovation patents.

At least for now, the Government has yielded to ongoing lobbying to retain the innovation patent system. We will blog about further developments.

Provisional patent applications - first steps

The patent system is complex and there are many different strategies that you can adopt to secure protection in the territories that you are interested in commercially. In many cases, however, the recommended first step is to file a provisional patent application for your invention in Australia.

Once filed, the provisional application provides you with a ‘priority date’ for your invention that is valid in almost all major patent jurisdictions. This is the date at which your invention’s validity will subsequently be tested.

Filing a provisional application has many advantages:

1. It buys you more time

Once filed, you can delay taking any further steps with the patenting process for up to 12 months. You can use this time to test and improve your invention and evaluate its commercial viability. You may, for example, want to start marketing and selling your product or speak to potential customers, suppliers, partners or investors. Any disclosures of the invention described in your application during this period will not affect your subsequent ability to obtain patent protection for it.

One or more ‘complete’ patent applications based on your provisional will need to be filed before the end of the 12 month period.

2. It keeps your options open

There are usually various paths that you can take to secure patent protection in each of your territories of interest. You may, for example, decide to file individual complete patent applications in each territory before the 12 month deadline. Alternatively, you may decide to file one or more regional applications (e.g., a European patent application) or an international PCT patent application.

Filing a provisional application reserves you the right to pursue any of these options.

3. It defers patenting costs

Filing a provisional application also pushes out the costs associated with filing and prosecuting complete patent applications by a further 12 months.

4. Your invention is not published

Once filed, the specification filed with your provisional application is not published by the Australian Patent Office (IP Australia). This allows you to keep your invention hidden from the eyes of competitors should you want to for strategic reasons.

If you decide not to file any complete applications by the end of the initial 12 month period, then the specification will never be published. This may allow you to keep your invention protected as a trade secret.

5. You can incorporate improvements into the complete(s)

If you conceive any improvements to your invention during the initial 12 month period, then provided that you keep these confidential you may incorporate them into each of the complete application(s) subsequently filed. Provisional applications are, therefore, especially beneficial if you are at an early stage with your product R&D.

6. International type search

Filing a provisional application also entitles you to request IP Australia to carry out an international-type search for the invention described in your application. This is broadly equivalent to the search that IP Australia initially undertakes when an international (PCT) patent application is filed. The results of this search may reveal prior art that you were not previously aware of and can help you decide whether and how to continue with the patenting process.

Overseas trade mark protection

Australian brand owners typically seek overseas trade mark protection one of two ways. Firstly, individual applications may be filed in each overseas country where protection is required. Alternatively, a single international application may be filed under the Madrid Protocol.

This post considers some advantages and disadvantages of each approach.

Individual applications


If the list of countries is small and only a few or no issues are encountered during prosecution, this approach can prove to be the cheapest and simplest.

Individually filed overseas applications may be able to claim the priority date of a related Australian application if the relevant countries are signatory to the Paris Convention and the overseas applications are made within six months of the Australian application’s filing date.


If protection in a large number of countries is required, filing individual applications can quickly become expensive and complex. If prosecution issues arise, trade mark agents appointed in each relevant territory will need to tackle them.

Application, translation/transliteration and registration costs may also be incurred on a per country basis. If any administrative details of the applications (or subsequent registrations) need to be updated, these must also be executed per country.

Madrid Protocol

An international application can be filed in Australia under the Madrid Protocol provided that a related registration or application for the relevant trade mark exists in Australia. The process is commenced by filing a single application, in English, designating the countries where protection is initially required.

After a formalities check has been completed, the international registration is then recorded. Each designated country then proceeds to examine the international registration. The registration must pass examination and opposition in each territory, under the country’s trade mark laws and procedure, before enforceable rights are obtained in the territory.


If protection in many territories is needed (typically three or more), pursuing a Madrid Protocol application is often the most streamlined and cheapest. Firstly, only one set of fees needs to be paid. The applicant is also notified, centrally, about any examiner objections or oppositions received in each designated territory. If the registration is refused in an individual territory, this doesn’t affect its status in other designated territories.

Changes to administrative details of the international registration, such as the owner’s name, address, renewals and recordal of assignments, can also be conducted centrally in Australia. If protection is subsequently required in additional countries, these can be added to the international registration.

An international registration can also be converted into a national application in any individual designated country if it becomes necessary to do so for legal or commercial reasons.


Not all countries are signatory to the Madrid Protocol. It is worth noting, however, that the list of signatories is considerable and includes, notably, China, USA and (collectively) the EU.

All registration fees are non-refundable and must be paid up front. If the registration receives objections or oppositions in a designated country, a local agent will likely need to be appointed to tackle the issues under the country’s laws.

An international registration is also dependent on the Australian registration that it is based on for five years after filing. If the Australian registration lapses, ceases or is revoked or amended during this period, then the international registration ends in all designated countries. A third party competitor can, therefore, seek revocation of an international registration by conveniently attacking just the Australian registration.

Patent opposition evidence in Australia and New Zealand

This post compares and contrasts the evidence requirements for patent oppositions in Australia and New Zealand.

Procedure and timing

In both countries, a person seeking to oppose the grant of a patent is entitled to file evidence in support of their case.

In Australia, for standard patents, the opponent has three months from filing their statement of grounds and particulars to file their supporting evidence. For innovation patents, the opponent must file their evidence contemporaneously with their notice of opposition and statement of grounds and particulars.

In New Zealand, the procedure is a little different because the patent applicant must be given a chance to file a counter-statement to the opponent’s opposition notice and statement of case before the opponent may file their evidence. If a counter-statement is served on the opponent, the opponent then has four months to file their supporting evidence. An opponent in New Zealand is, therefore, able to peruse the applicant’s counter-arguments before filing their evidence. This gives them an opportunity to obtain further evidence, or perhaps make necessary adjustments/improvements to the presentation of their existing evidence, before filing it. In my opinion, the New Zealand opposition process is, therefore, more opponent-friendly than the Australian one, at least in these early stages.

In Australia, once an applicant has received all of the opponent’s evidence and a notice from the Commissioner of Patents that all evidence is filed, the applicant is then given three months to file its evidence in answer. Once the opponent has received all such evidence and similar notice from the Commissioner of Patents, the opponent is then given two months to file its evidence in reply to the applicant’s evidence. The New Zealand procedure is materially the same as this, albeit with some variations to applicable deadlines. In New Zealand, after the applicant has received all of the opponent’s evidence, they are given four months to file, and serve on the opponent, their evidence in support of their case. The opponent then has three months to file, and serve on the applicant, their evidence in strict reply to the applicant’s evidence.

Further evidence

In both countries, the ability of the parties to an opposition to file evidence in addition to the evidence described above is substantially restricted.

In Australia, for oppositions commencing before 15 April 2013, a party may request leave to file further evidence. The Commissioner of Patents will have regard to several factors when deciding whether or not to allow the request, including whether the evidence could not have been reasonably obtained earlier and, if allowed, would probably have an important influence on the case.

For oppositions commencing after 15 April 2013, no formal provisions for filing further evidence are available. A party is, however, entitled to submit further information and ask the Commissioner of Patents to use its general discretion to rely on the information in the opposition. The Commissioner may not rely on the information unless the parties have been given an opportunity to make representations about the information.

In New Zealand, further evidence may only be filed if a party applies to file it out of time and the Commissioner of Patents grants the request. The Commissioner may only grant the request if genuine and exceptional circumstances justify doing so and the evidence could not have been filed earlier.

Form and format

In Australia, evidence must be submitted in the form of a written declaration, which does not necessarily have to be statutory declaration. New Zealand imposes more formal requirements and requires evidence to be submitted in the form of a statutory declaration or affidavit. Both countries make provision for the giving of oral evidence at opposition hearings.

Software and computer-related inventions at Mann IP

Mann IP is a boutique patent attorney firm and, as the firm’s principal, I work with innovators in a diverse range of technical fields. One of my particular areas of expertise, however, is software and computer-implemented inventions.

Prior to becoming a patent attorney, I worked for several years as a professional software and systems engineer. Originally, I started out in 2001 as a researcher at HP Labs in Bristol, UK. I worked in a team that was developing software in the field of pervasive computing, which is now more fashionably referred to as the “Internet of things”. One of my prototypes, Cooltown Notes, received a fair amount of publicity at the time and there are still a few articles about my work lying around on the web. See, for example, Mike Elgan’s Computerworld article here (Section Google is building HP's 'Cooltown')

I guess that was my 15 minutes!

I later moved into the videogames industry, where I worked as a programmer, before joining a visual effects company in London which became what is now Framestore. Seven million lines of code later, I packed myself off to law school and started a long chain of life events that led to me becoming a registered patent and trade marks attorney in Australia.

As an attorney, I thoroughly enjoy blending law with technology and working with innovators from all walks of life. I must confess, however, that I occasionally do miss the creative process of software development. Luckily, however, I now get to work with some great developers, both locally and overseas. In the past, I have worked with engineers who have conceived systems and algorithms in technical fields that include networked resource management, hardware virtualization and GPU-level graphics processing. I also still keep my hand in programming in my “spare” time and the propeller at the top of my cap is still capable of spinning pretty fast.

The laws relating to software and business method inventions are ever topical and continually evolving. If you’re developing in this space and would like to discuss in confidence if and how IP may be able to protect you, then please get in touch to arrange a free no obligation consultation.

The following page contains some further information about my software and computing practice.


Employees and inventions

Patent attorneys are frequently instructed by employers who are seeking to obtain patent protection for inventions conceived by their employees. The employer often assumes that it is automatically entitled to such protection as a matter of law. This is, however, not necessarily the case.

Australian legislation is actually silent on the rights of employers to inventions conceived by their employees. In the absence of an express agreement, the Courts have held that, generally, the employer is only entitled if the invention is created in the ordinary course of the employment. When determining whether this is the case, all circumstances of the employment relationship must be considered. This includes, for example, whether the invention affects the employer’s business, is made during work hours using the employer’s resources and, more importantly, is conceived while the employee is doing what they are actually employed to do. For the latter requirement, it is necessary to consider whether the employee is under a ‘duty to invent’.

The types of employment relationships that have been considered in Australian cases broadly fall into two classes: commercial and academic.

Commercial employment

In the British High Court decision in Patchett v Sterling (1955) 72 RPC 50 (which is accepted as good law in Australia), the existence of implied terms relating to inventions in commercial employment contracts was considered. It was held that an employee who makes an invention while undertaking their employment duties holds the invention as trustee for their employer unless the employee can demonstrate a ‘beneficial interest that the law recognises’.

However, when an employee develops an invention outside of their regular duties (with or without using the employer’s resources) the employer is not necessarily entitled to it. Even express contractual terms in an employment contract relating to ownership of inventions may not be sufficient to affect this. For example, in Electrolux Ltd v Hudson [1977] FSR 312 the court decided that an assignment clause in an employment contract that was in the employer’s favour was too broad to be enforceable.

Academic employment

When an employee of an academic institution creates an invention while pursuing commercial endeavours, the employee may well be entitled to patent ownership. For example, in Victoria University [2004] 60 IPR 392 two academics employed by a university developed and patented an online computer system. The Court held that the patented subject matter fell substantially outside of the scope of academic activities ordinarily pursued by the university. This was the case even despite finding that the invention was ‘germane to and useful for the employer’s business’. The university was, therefore, not able to claim any contractual rights to the invention.

It is common for employees of academic institutions to undertake research in addition to their normal teaching responsibilities. This does not, however, necessarily imply that the employee is under a duty to invent. In University of Western Australia v Gray [2009] FCAFC 116, it was found that the university was not entitled to patents relating to inventions conceived by the respondent, Dr Gray, during his employment at the university. Dr Gray’s employment terms required him to teach, supervise work in his field, conduct research and stimulate research amongst staff and students. They did not, however, expressly require him to invent.

The university argued that a duty to research implies a duty to invent. This was, however, dismissed by the Court for several reasons. This included because the outcome of any research is new knowledge or discovery, which is not necessarily patentable. The university’s researchers also enjoyed the freedom to publish research outcomes, which potentially hinders the patentability of their research. Dr Gray was also expected to, and did, collaborate with and solicit funding from external bodies.

The university also argued that academic employment contracts should not be treated any differently to those of ordinary commercial enterprises. The Court, however, identified significant differences in the nature of operation of universities and other organisations. Particularly, it was noted that universities primarily serve a public purpose and provide an environment where academic staff enjoy considerable freedoms in respect to research topics pursued and the choice and manner of publication of research.


In the absence of express contractual terms, employers are not automatically entitled to inventions created by their employees. An employer considering patent protection should always carry out careful due diligence to confirm that they are so entitled and fix any issues as early as possible. This includes by requiring the relevant inventors to execute written assignments in the employer’s favour.

Will 2018 be the year of the Unified Patent Court?

Australian patent applicants considering protection in Europe should familiarise themselves with the proposed new Unified Patent Court (UPC) that may be coming into effect this year.

The UPC is a new European court system that will have jurisdiction to conduct infringement and revocation proceedings for all European patents, including the proposed new European unitary patents. Decisions of the UPC will be binding across all participating states.

Having centrally conducted litigation and revocation proceedings will provide some advantages to patentees in Europe. Currently, under the existing European Patent Convention (EPC) system, national courts of member states are competent to decide on the infringement and validity of European patents. This can lead to diverging decisions, lack of legal certainty and so-called “forum shopping” by persons seeking to assert and attack the validity of European patents. The single UPC will, hopefully, resolve these issues and create a single body of consistent procedural and substantive case law.

On the other hand, it is possible that centrally conducted proceedings may, in certain circumstances, cause problems for patentees. They may, for example, find themselves having to defend a patent in a foreign country where the proceedings are not necessarily conducted in their first language. Also, having a unitary patent invalidated in the UPC will lead to loss of protection in all member states of the system.

The legislation establishing the UPC provides that all existing European patents will automatically come under its exclusive jurisdiction. This will, however, be subject to transitional arrangements. For a period of seven years after the legislation comes into force, infringement and revocation actions for existing European patents will still be able to be brought before a competent national court of an EPC member state. Also, it appears that proprietors and applicants of European patents that are granted or applied for during this transitional period will also be able to opt out of (and opt back into) the exclusive competence of the UPC freely during the transitional period.

The UPC won’t come into effect unless and until all participating signatory states have ratified the system. A commencement date of 1 December 2017 was initially anticipated but 2018 is looking more likely.

What, technically, are technical features?

In an effort to (once again!) raise the bar for Australian patents, it would appear to be the case that the Australian Government is currently intent on modifying Australia’s patent system so that it is more aligned with the laws and procedure of the European Patent Office (EPO).

Further to our earlier post about the proposed reforms to inventive step, the Government has also recently announced that it supports seeking legislative amendments that will require patent applicants to identify the technical features of the invention in their patent claims. The Government also proposes to update the Patent Office’s procedures so that the technical features of an invention must be considered when its novelty and inventive step is evaluated during prosecution.

It is not currently clear what amounts to “technical features” and, unless properly clarified in the relevant legislation, this will likely cause significant uncertainty and woes for patent applicants and their advising attorneys. I suspect that at least part of the policy behind these changes is to equip the Australian courts and Patent Office with some flexibility to adopt the principles and approach of the EPO when assessing inventive step, particularly so in relation to software and business-related inventions.

Currently, the patentability of software and business method inventions is determined in Australia by reference to principles established in a substantial body of case law (which I’ll save for another post one day). Underpinning these cases is a core requirement that in order to be patentable an invention must constitute a “manner of manufacture”. This is a rather vague phrase which has its roots in The Statute of Monopolies, an antiquated English statute repealed many moons ago. This vagueness has, however, given the Australian courts a considerable freedom to define the scope of what does, and does not, constitute a patentable invention.

At the EPO, when software and business methods are being evaluated the non-patentable subject matter test is combined with the inventive step test. Firstly, the EPO identifies the technical and non-technical features of the claimed invention. They then consider if the technical features solve a technical problem. Finally, the EPO considers if the technical features would have been obvious to a skilled person in light of the technical problem and the prior art.

The Australian Government’s proposed changes in relation to “technical features” may prove to be a step in getting our Patent Office (and Courts) to adopt the EPO's approach.