Prior Use as a Defence to Patent Infringement – the Devil is in the Detail

Prior use is a legislated exemption to infringement of a patent in Australia. The public policy behind the exemption is that a party should be able to continue doing what they were doing before a granted patent application was filed without fear of infringement. However, those proposing to rely on the defence need to know that not all prior use scenarios will trigger the exemption and it likely does not give the prior user permission to ‘improve’ its technology within the scope of the patent . We explain more below.

Legislation

Section 119 of the Patents Act 1990 provides that a person may exploit a patented product, method or process, without infringing the patent, if they were doing so before the invention was patented. ‘Exploitation’ includes making, hiring, selling, using, importing or keeping a product.

This exemption also applies to the exploitation of a product that is the result of a patented method or process, even if the patent includes no claims directed to the product.

The relevant date with respect to the rights of a prior user is the priority date of the claim in question. Of course, different claims within an Australian patent can have different priority dates and in some circumstances a single claim can have multiple priority dates, but that is a topic for another day.

There are a number of conditions that must be met in order to rely on the prior use exemption. These include:

  • exploitation of the invention must have occurred in Australia immediately before the priority date of the claim;
  • exploitation must not have stopped (except temporarily);
  • knowledge of the invention must not have come from the patentee, unless the patentee made that information public.

Thus the prior use exemption extends to all situations where the invention was being exploited before it was patented and where that use did not stop prior to the priority date. This can include a scenario where a person has taken preliminary steps to exploit (within the terms of the legislation) an invention in Australia before the patent application was filed, but has not actually exploited it. In the words of the legislation, ‘definite steps (contractually or otherwise)’ must have been taken before the priority date. What steps are considered ‘definite’ will always be a question of fact, and the intent, of the defendant as determined by evidence.

If a person has met all the necessary requirements and is exempt from infringement under the prior use provision, they are able to transfer their entitlement to the exemption to another person. Disposing of the right to exploit an invention without infringing a patent must be done in its entirety: the right cannot be partitioned such that part of an otherwise infringing activity is retained but other aspects are transferred to a third party.

Examples

The following are hypothetical scenarios exemplifying how the prior use defence might apply.

1.  A granted Australian patent, with a priority date in 2015, covers a process for the manufacture of a sunscreen. There are no claims directed to the sunscreen, only the process for its manufacture. Another party has been operating the manufacturing process in Canada since 2014. This third party began exporting and selling the sunscreen made according to the patented process in Australia in 2014 but stopped doing so in 2017. They are considering whether to resume their commercial activities in Australia.

The other party may resume its activities without concern of infringing the patent. The prior use infringement exemption continues to apply since the exploitation in Australia stopped after the priority date.   Notably, the defence applies to a product resulting from a patented process.

2.  A granted Australian patent, with a priority date in 2015, covers a particular pacemaker. Another party began constructing a manufacturing plant in Australia in 2014 with the intention of making that pacemaker in the plant. The plant became operational in 2016 and the other party has been making and selling the patented pacemakers in Australia ever since.

The other party is exempt from patent infringement because they had taken definite steps to exploit the patented product in Australia immediately before the priority date.

Case Law

There are few cases dealing with the prior use exemption However, two cases from which important lessons in the application of the law can be learned are worthy of note:

  • Quite substantial and conclusive evidence is required for a successful defence under s119: ‘an allegation of prior use should be strictly proved, in the sense that the court determining that question must be satisfied that the proof given is sufficient in the circumstances, having regard to the gravity of the allegation’ Morellini v Mizzi Family Holdings Pty Ltd (2016) 116 IPR 411
  • As explained above, entitlement to rely on the prior use defence may be transferred. However, a person’s entitlement to this defence does not provide protection from contributory infringement: ‘the defence under s 119(1) is limited to the alleged infringer’s own acts that exploit a product, method or process in a way that would infringe a patent. The defence does not cover the act of authorising another person to exploit the invention’ Vehicle Monitoring Systems Pty Ltd v Sarb Management Group Pty Ltd (2013) 101 IPR 496

There is currently no case law on how the exemption applies to further developments of the prior use. However, it is generally understood that the exemption applies only to ongoing use which is not changed in any way.

Summary

Prior use is one available defence to patent infringement. However, its availability may be fact dependent and so careful analysis is required to ensure that the defence may be relied upon in any proceeding. It should be regarded as a narrow defence rather than as permission for the prior user to do as it wishes within the scope of the patent.

 

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