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Secret Use in Australia

In essence, “secret use” offends the principle that a patent monopoly is granted in return for disclosure of the invention. A period of secret use prior to the patent’s monopoly period commencing would give the patentee an effective monopoly period longer than that allowed under the Australian Patents Act 1990 (Cth) (“the Patents Act”) by virtue of the fact that the period of secret use is in itself a period of monopoly use.

Secret use as a ground of invalidity is intended to prevent patent right owners from deriving some initial commercial benefit under a shroud of confidentiality and then subsequently filing for patent protection.

The Patents Act provides that an invention is not patentable for the purposes of a standard patent (sect. 18(1)(d)) or an innovation patent (sect. 18(1A)(d)) if the invention, so far as claimed in any claim was secretly used in the patent area (Australia) before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.

Even confidential “secret use” under a confidentiality agreement for the purpose of trade or commerce i.e. negotiations regarding offers to sell or license the process/product will destroy novelty and inventiveness and therefore a patent application’s validity chance if a provisional patent application is not already in place.

It is noteworthy that secret use of the invention outside of Australia does not give rise to any bar to patentability.

The test to determine secret use is whether the patentee has obtained any commercial benefit before the earliest priority date of the patent or the relevant claim. This commercial benefit could be a sign-on fee or a milestone payment or even acceptance of an order for a product. It should be pointed out, however, that the mere receipt of an unsolicited order is not deemed to be secret use.

There is, however, provision in the Patents Act (sect. 9) of a list of acts that are not taken to be ‘secret use’. These acts include:
• Reasonable trial or experiment;
• Use solely in the course of a confidential disclosure of the invention; and
• Use for any other purpose other than the purpose of trade or commerce.

Thus, a use which is for “the purpose of trade or commerce” and is not for reasonable trial or experiment may be a “secret use”.

Sect. 24(1)(a) and reg. 2.2(1A) of the Patents Act provides that any public use of the invention is not to be regarded for the purposes of assessing the validity of a patent provided a patent application for the invention is filed within 12 months of such use (i.e. grace period).

However, an applicant cannot rely on the grace period if commercial benefit has been gained from the invention prior to filing a patent application. In this regard, the grace period specifically excludes “secret use”.

In summary, any secret commercial use of an invention in Australia by the patentee prior to the priority date will invalidate the patent.

Jon Wright