Secret use for patent invalidity in Australia – a toothless tiger?

Print Friendly, PDF & Email

By Alex Dunlop, Special Counsel

In Australia, an invention must satisfy several criteria in order to be patentable, including that it is novel (new).  To be novel, the invention must not have been publicly used or disclosed anywhere in the world, including by the inventor, prior to filing.

To avoid making a public use or disclosure of an invention prior to filing, standard industry practice is to conduct trials and experiments that involve third parties pursuant to non-disclosure agreements (NDAs).  It is also standard practice to use an NDA when seeking out potential investors or business partners.  In either case, a properly drafted NDA can transform what would otherwise be a public use or disclosure into a private use or disclosure.

However, as well as being novel, the invention must not have been “secretly used” in Australia prior to filing of a patent application.[1]  Inventors must therefore be conscious of the distinction between:

  • on the one hand, conducting reasonable trial and experiments, or making confidential disclosures, such as to potential investors or business partners (which if done appropriately, are allowed); and
  • on the other hand, secretly using the invention (which is forbidden).

Secret use

As the name suggests, “secret use” refers to the use of an invention undertaken in secrecy.  To be “secret use”, the relevant use must have a commercial element to it.

As a matter of public policy, this is consistent with the “patent bargain” which underlies the patent system: in exchange for being granted a patent (a statutory monopoly), the patentee must disclose its invention to the public.  If a patentee could commercially exploit its invention in secret, and then obtain a patent later, the patentee would enjoy an extended monopoly.  This would undermine the patent bargain and the patent system.

Reflecting this policy, Australian Courts have explained that the practical question to be asked is whether what has occurred “amounted to a de facto extension of the patent term?”[2]

Exceptions to secret use

The Patents Act provides five exceptions to secret use.[3]  Conduct falling within any one of those exceptions will not be secret use, and is therefore allowable.  This article considers the three most commonly encountered exceptions.  In proceedings to oppose (pre-grant) or revoke (post-grant) a patent, the impugning party bears the onus of establishing that the invention was secretly used, and that the use does not fall within one of the allowable exceptions.[4]

In practice, establishing secret use is more difficult than establishing “conventional” prior use.  Firstly, a potential impugning party must first learn of conduct which has necessarily occurred in secret.  Secondly, recent decisions of the Federal Court of Australia demonstrate that the Court will hold the impugning party to a very high standard to establish secret use.

Reasonable trial and experiment

The first exception to secret use is where the conduct in question is for the purpose of “reasonable trial or experiment only”.[5]

However, a question arises where the patentee undertakes a “trial or experiment”, and reaps a commercial benefit from that conduct – for example, by charging a customer who benefits from the trial or experiment.  When will that commercial benefit transform the conduct from “reasonable trial and experiment” into secret use?

SNF v BASF[6] concerned the validity of two of BASF’s patent applications.  The applications had originally been filed by Ciba, and later transferred to BASF.  The patents claimed a process of using a polymer (a flocculant) to treat mineral waste tailings (ie, mining waste).  Justice Beach heard evidence that Ciba sold 29 tonnes of flocculant for a value of $93,315 for use in three trials at a mine on North Stradbroke Island in Queensland before the relevant priority date.[7]  The mine operator signed an NDA before those trials were undertaken.

His Honour referred to five factors which were relevant to whether the use was for “reasonable trial and experiment”, being:

  • Whether the “true purpose” of the use was for reasonable trial and experiment. If yes, the fact that the patentee derives some commercial benefit will not be invalidating.
  • When making that assessment, the Court must take the nature of the invention, and the tasks and conditions it was designed for, into account.
  • The patentee must have had some intention that the trial develop or validate the invention.
  • Receiving remuneration for the trial may point away from reasonable trial or experiment. On the other hand, the receipt of remuneration may be significant.
  • Finally, if any negotiations for the ongoing supply of the invention conclude before the priority date, this may support a finding of secret use. If negotiations were not concluded until after the priority date, this would point away from secret use.[8]

His Honour was satisfied that the true purpose of the trials was to test whether the claimed process worked, rather than commercially exploiting the invention.[9]  Ciba also did not reap a commercial benefit from the trials because the costs of undertaking them were greater than the amount recouped from the sale of flocculant used in the trials.[10]  His Honour was also satisfied that trials of the process at two other mines were also for the purpose of reasonable trial and experiment.

Use occurring during the course of a confidential disclosure

An act will also not constitute secret use if it occurs “solely in the course of a confidential disclosure of the invention”.[11]

Encompass v Infotrack concerned the patentability of a computer implemented invention covered by two patents.  The decisions at first instance[12] and subsequent appeal[13] have received considerable attention for this reason.  Less attention has been given to InfoTrack’s claim, at first instance, that Encompass had secretly used the invention prior to filing.

In broad terms, each of the uses involved Encompass demonstrating its invention to potential customers or business partners.  In each case, Justice Perram found that Encompass had not engaged in secret use, because the parties to whom the invention was disclosed were subject to obligations of confidence (either by reason of written confidentiality agreements or implied by the circumstances).[14]  This aspect of Justice Perram’s decision was not at issue in the appeal to the Full Court.

In SNF v BASF, Justice Beach was also satisfied that Ciba’s conduct was protected by this exception.  Justice Beach observed that Ciba’s conduct was no different to the conduct of the patentee in Encompass v Infotrack, characterising Ciba’s conduct as a disclosure as part of trial work to secure a future business partner.[15]

Use of the invention within 12 months prior to filing of a complete application

Finally, any use of the invention for any purpose within 12 months of a complete application being filed will not constitute secret use.[16]  This is consistent with the 12 month “grace period” which exists in Australia for public uses of an invention prior to filing a complete application.


In practice, the principle of publicly policy which prohibits commercial exploitation of an invention before filing is significantly limited by the statutory exceptions to secret use.  A commercial benefit derived from a trial or experiment will be allowable, provided the “true purpose” of the use was for reasonable trial and experiment.  Alternatively, the “confidential disclosure” exception provides very broad protection.  Finally, patentees enjoys a 12 month grace period prior to filing a complete application in which their conduct cannot be impugned.

Secret use is an important and nuanced area of Australian patent law.  We recommend seeking legal advice where secret use may be an issue, for example where:

  • You have undertaken trials of a proposed invention, or made disclosures to potential investors, and wish to consider filing a patent for that invention, or
  • You believe that a third party’s (such as a competitor or supplier) invention may have been secretly used prior to filing.



[1] Section 18(1)(d), Patents Act 1990 (Cth) (Patents Act)

[2] See Azuko Pty Ltd v Old Digger Pty Ltd [2001] FCA 10749 at [181]

[3] Section 9, Patents Act

[4] SNF (Australia) Pty Limited v BASF Australia Ltd [2019] FCA 425 at [1412] (SNF v BASF)

[5] See section 9(a) Patents Act

[6] The author acted for SNF in that proceeding.

[7] SNF v BASF at [1429]

[8] SNF v BASF at [1423-1427]

[9] SNF v BASF at [1573]

[10] SNF v BASF at [1584]

[11] Section 9(b) Patents Act

[12] Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421

[13] Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161

[14] Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421 at [208-216]

[15] SNF v BASF at [1713-1716]

[16] Section 9(e) Patents Act

For further information, please do not hesitate to contact us.

Warning: Undefined variable $postsToDisplay in /home/millsoakleycom/public_html/wp-content/themes/millsoakley/single.php on line 327

Get the latest news insights and articles straight to your inbox, simply enter your details.




    *Required Fields

    Intellectual Property

    Business names and Trademarks – What you need to know