MBIP Delivers Victory in a Hard-Fought Patent Entitlement Dispute
A decision from the Australian Patent Office (CNC Components Pty Ltd v SCD American Vehicles Pty Ltd [2024] APO 18 (15 May 2024) highlights that even though a party challenging patent ownership bears the onus to prove their case for entitlement on the balance of probabilities during an entitlement dispute, the evidentiary burden may shift to the defendant, particularly if the challenging party can prove that the relevant facts lie with the defendant.
This decision relates to a standard Patent application 2021203073 (the application) and innovation patent 2021102546 (the innovation) filed on 13 May 2021, both in the name of SCD American Vehicles Pty Ltd (the Applicant), and both listing the inventor as Eddie Kocwa. CNC Components Pty Ltd (the Requestor) filed requests under section 36(1) and under section 191A(2) of the Patents Act 1990 (the Act) effectively challenging the claim made by SCD American Vehicles Pty Ltd.
Under Australian law, a patent may only be granted to:
- an inventor; or
- a person who would, on the grant of a patent, be entitled to have the patent assigned to them; or
- derives titled from (1) or (2); or
- is a legal representative of a deceased person mentioned in (1), (2), or (3).
Determination of Novelty or Prior Secret Use is Not a Prelude to Determining Entitlement
A significant part of SCD’s submissions focused on disqualifying CNC’s ownership request by relying on the premise that the contributions of Mr Young and Mr Irvine constituted prior art. The Delegate relied on Vehicle Monitoring Systems Pty Ltd v SARB Management Group Pty Ltd (SARB) and confirmed that “the existence of an inventive step within the meaning of s 7(2) of the Act, is not part of the entitlement calculus”. That is, the question of entitlement is separate to and distinct from the question of patentability. In items 63 and 64, the Delegate also clarified that, in SARB, the Court referred to “the requirements of patentability under s 18 of the Act” as not being part of the consideration of entitlement. 58 Section 18 of the Act includes secret use at subsection (1)(d). On this basis, secret use was also not considered for the purposes of assessing entitlement.
Importance of Evidence & Declarations by Patent Attorneys
The only evidence provided by SCD that related to the involvement of Eddie Kocwa was a Statutory Declaration prepared by SCD’s Patent Attorney. In this regard, under item 71, the Delegate confirms that “he did not feel it was necessary to obtain a declaration from Mr Kocwa, in view of his own declaration”.
In item 72, the Delegate confirms that the declaration by SCD’s Patent Attorney indicated that there was nothing extraordinary about a patent attorney developing new material in consultation with clients. The Delegate remarked that “I find it somewhat surprising that in an entitlement dispute, the evidence provided by the Applicant as to the alleged inventors’ contribution, and their relationship to the Applicant, is so scant.”
The well-established principles of University of Western Australia v Gray (UWA) and Polwood Pty Ltd v Foxworth Pty Ltd (Polwood) were applied to determine that any contributions by Eddie Kocwa and their Patent Attorney amounted to non-material contributions that at best represented an alternative to “reduction of practice” of the subject invention.
The Role of Contractual Relationships & Importance of Confidentiality
A draft intellectual property License Agreement had been exchanged between SCD and CNC prior to the filing date of the two Patents in question. Even though the agreement was never signed or executed, CNC had submitted at the hearing that the presence of the draft assignment could be considered evidence that SCD understood that CNC was the owner of the intellectual property in the subject invention. In this regard, the Delegate indicated that “an unsigned agreement is given little weight”.
CNC also indicated that drawings provided to SCD included a note which stated that: “NOTE: This drawing contains proprietary information owned by CNC Components Pty Ltd and is issued under a confidential relationship and may not be used, replicated or disclosed without written authorisation from CNC Components Pty Ltd.”
Even though SCD responded by stating that only some of the drawings sent by CNC included the above note, the Delegate decided CNC had taken sufficient steps to indicate that the drawings were confidential and that SCD were not authorised to use the drawings in the subject patent applications.
In item 79, the Delegate clarifies that “The fact that other drawings exist without this note is not relevant, as the drawings in the application and innovation are based on the drawings which do contain the note. Even the absence of such a note would not positively point to entitlement being transferred to the Applicant.”
Take Aways
This decision reiterates that the focus on crystallising the “inventive concept” to determine inventorship and ownership is critical. While the onus lies on the party that is challenging the ownership, this burden can shift to the applicant.
MBIP’s highly experienced team of patent attorneys have specialist skill sets in conducting patent opposition proceedings. If you need an attorney to guide you in such a dispute in Australia, MBIP’s patent team can help. Contact us today to discuss your situation and how you can move forward.
