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Secret use - can you profit while developing your invention?

So you’ve concocted an invention that you’re thinking of patenting, what next? Keeping your invention secret is an important start, since any public disclosure may invalidate your later patent application. But what can you do while your invention remains secret? Can you conduct experiments? Can you make money? Can you make money while conducting experiments?

The secret use prohibition in Australia

In Australia ‘secret use’ of the invention before the priority date of a patent application is prohibited. This prohibition generally relates to secret commercial use of your invention, and does not apply where the use is ‘for the purpose of reasonable trial or experiment only’.

As you may have expected, you can secretly trial/develop your invention before applying for a patent. But what about profiting from your trials? Let’s say your invention relates to a feed product improving milk yield in cows. Could you trial your invention on a working dairy? Could you sell the milk?

Firstly, to avoid ‘public disclosure’ during your dairy trials, you must ensure anyone accessing your invention has signed a confidentiality agreement. This may include anyone working at / visiting the dairy. Were anyone free to take and analyse a sample of your feed for their own unrestricted purposes (i.e. free to publish their results), then you may have publicly disclosed your invention.

The sale of milk in itself is unlikely to be a public disclosure, given the difficulties in identifying features of your feed product from milk analysis. But is it a prohibited secret use? A similar issue was considered in Grove Hill Pty Ltd v Great Western Corporation Pty Ltd[1], where it was noted that ‘if the true purpose of the use is for trial, and the trial is reasonable, any collateral commercial advantage to the inventor is irrelevant.’ However, if you continue to sell milk after suitably satisfying yourself that your invention works, you are likely to be using your invention commercially in a prohibited manner.

What about trialling your feed product on another farmer’s dairy? Confidentiality agreements would need to be in place, and the farmer would of course need to understand that your supply is for the purposes of a trial - since you likely would need access to trial data, etc. This should all be set out in a written agreement with the farmer.

Could you sell your feed product to the farmer during your trials for a price? At this point I would cautiously say yes (so long as the primary purpose of the supply remains trial and experiment, and the trial is reasonable). A delegate of the Commissioner considered a similar issue in the opposition hearing SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Limited[2]. The delegate noted that the applicant had charged a mine operator a premium to trial use of flocculants at a mine, and concluded (at paragraph [443]):

that the work carried out at all of the mines was part of reasonable trial and experiment. The invention was still being developed during that period. It would appear that Ciba did not undertake the trials at a financial loss, and took advantage of any opportunity to turn a profit. Canny business practice does not mean that the work was not trial or experiment.

Despite the above, I would be cautious in charging a premium while conducting trials, since it could suggest objectively that the supply was primarily directed to a commercial transaction, rather than for research and experiment. In those circumstances, it may be safer to supply the feed product at a reduced price given its experimental nature, and in view of purchaser’s existing consideration of allowing you to conduct the trials. Nevertheless, it appears that charging a fee for supply of the invention during a trial may not invalidate a later patent.

Conclusion

Most inventions require some level of trialling and experimentation before patent filing is considered. This can be expensive, and often the best way of conducting the experiments are as part of your commercial operations. Provided your use of the invention during this time is primarily for research and experiment, and not for making money, it should not invalidate your later filed patent. Nevertheless, this can be a matter of judgment and reasonableness in the circumstances.

FAL IP is here to assist you in planning in research planning to ensure you don’t invalidate any patents for your invention.

Rhys Munzel, Patent Attorney and Lawyer

[1] [2002] FCAFC 183, paras [229]-[232]

[2] [2016] APO 8.