I have recently received a number of inquiries regarding patent protection for web applications. Unfortunately most have already made their web sites public. Those with a "dangerous" level of understanding believed that it was safe to do so because details of the software were not made available. Those with an even more dangerous level of understanding believed that they could make use of the grace period.
Section 18 of our Patents Act governs "secret use". In short, an invention is patentable if, inter alia, it has not been secretly used in the patent area before the first application for a patent covering the invention is filed.
But what is "secret use"? Azuko Pty Ltd v Old Digger Pty Ltd  FCA 1079 contains an excellent discussion on the meaning of "use". In Heerey J's opinion, the term "use" refers to the exercise of any of the rights which would be conferred by a patent for the invention in question. Section 13(1) of the Act does use the word "exploit". But his honour said that the choice of "exploit" instead of "use" would hold little weight if the meaning was otherwise clear. As he set out: "The definition of "exploit" in the present Act is not exhaustive; it "includes" the matters specified. In the case of a product, those matters amount to twenty different alternatives, one of which is "use".
Heerey J. made reference to the Sargent Committee Report (1931) in which it is set out that the prior secret user "... should invalidate any patent subsequently granted, since patentees might otherwise postpone indefinitely the communication of their inventions to the public, and might in practice obtain a monopoly not only for the ordinary period of 16 years under the Statute but also for any prior period during which they had contrived to retain the secret of their inventions."
The "monopoly" referred to is the monopoly to enjoy the exclusive rights which a patent confers. There is a natural symmetry between what patentees can do with the invention after grant and what they could do secretly before grant, were it not for the doctrine of prior secret use.
It follows that the simple question to be asked is: "If I had a patent on my web-based application and someone else was doing what I was doing, would there be an infringement of my patent rights?". If the answer is yes, then there is "secret use" of the application. This is supported by Lord Diplock's use of a reverse infringement test in In R v Patents Appeal Tribunal, Ex parte Beecham Group Ltd  AC 646.
Where use has been public it may be possible to assert that the use has been by way of "reasonable technical trial and experiment". Such use would not invalidate a patent granted for the invention, provided the application is filed within 12 months of the use. However, in the case of a web application, the use is not in public and this proviso does not apply to "secret use".
It appears that Heerey J would have been prepared to accept that use without a "taint of commerciality" would not be "secret use". So, if the web application was made available in such a way that it did not invite commerce, use of the application might not be secret use. For example, if the web application was made available via a public website to team members for use with a password, that would more than likely not be secret use.
The grace period
In terms of section 24(1)(a) and regulation 2.2(1A) of the Act, 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.
Clearly, "secret use" does not attract the provisions of the grace period because it's not "public".
A final word
The cost of filing patent applications for web-based applications can be very high. So it is understandable that an application needs to be tested before a patent application is filed. But it is critical that all beta testing of an application be carried out "in house" or via password-protected websites if patent protection is being sought. Any establishment of a website that offers a commercial transaction before the patent application is filed would destroy the validity of a patent granted on that application.