19 March 2018

Is Australia Headed for a ‘Technology’ Test for Patent-Eligibility?

Which wayLast week I reported on IP Australia’s response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  Now, hot on the heels of that development, IP Australia has also published the submissions it received in its other ongoing consultation process, commenced in September 2017, along with its corresponding further response.  This consultation also relates largely to implementing recommendations made by the Productivity Commission, and accepted by the Australian Government, including: amending inventive step requirements; introducing an objects clause into the Patents Act 1990; amending the provisions for Crown use of patents (and designs); and amending the provisions for compulsory licensing of patents.  In this case, however, proposed legislation has yet to be drafted, and the initial consultation has been directed to obtaining feedback from stakeholders on a number of potential implementation options for each recommendation.

A total of 18 non-confidential submissions were received in response to IP Australia’s consultation papers.  Once again, a number of these submissions argued against changes in the law, notwithstanding that the Government has already decided to implement the various Productivity Commission recommendations, and doing nothing is therefore not an option that is open to IP Australia.  Fifteen non-confidential submissions provided comments on the options for amending the inventive step requirements, of which 14 did not support making any changes.  Fourteen non-confidential submissions were received in relation to introducing an objects clause, of which just six submissions were in favour, and eight did not support the change.

There was less stakeholder interest in Crown use and compulsory licensing, however among those that did make submissions on these issues there was somewhat greater support for change.  Of seven non-confidential submissions relating to Crown use, five supported amending the law.  In relation to compulsory licensing provisions, three out of eight non-confidential submissions supported change.

Crown use and compulsory licensing provisions have rarely been invoked in Australia (and no compulsory licence has ever been granted).  Furthermore, the proposed amendments are unlikely to result in any increase in the use of these provisions.  The relative lack of interest in these areas is therefore not very surprising.

However, the proposed changes to the inventive step requirements, and the preferred wording of the objects clause, could have the more profound effect of introducing a ‘technology’ requirement into Australian patent law, creating tension with previous statements of the Full Bench of the Federal Court of Australia rejecting the proposition that patentable inventions be required to fall within an ‘area of science and technology’.

12 March 2018

Continuing Opposition to Abolition of the Innovation Patent Falls On Deaf Ears at IP Australia

Hard of hearingIP Australia has published its response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  The period for comment on the proposed legislation closed on 4 December 2017.  The draft legislation contains measures to implement aspects of the Government’s response to the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, along with amendments to strengthen plant breeder’s rights (PBR) enforcement, streamline official processes, and make technical improvements to the legislation.

While the majority of Productivity Commission recommendations addressed by the draft legislation relate to PBRs and trade marks, the most significant patent-related provisions are those implementing the abolition of the innovation patent system.  The proposed approach would see a fairly gentle transition, with applicants given a year’s notice within which innovation patents would still be granted under the current system, followed by eight years during which all existing innovation patents would gradually cease or expire, and restrictions would be imposed on new applications and the certification of innovation patent claims.

When the draft legislation was published, I argued that the proposed transition could be viewed as too gentle, considering the Productivity Commission’s relatively strong objections to the strategic use of divisional innovation patents, and the uncertainty caused by uncertified claims.  This was, however, very much a contingent view – i.e. given that the innovation patent system is to be abolished based upon the Productivity Commission’s recommendation, the abolition should be implemented in a way that most-effectively addresses the Commission’s reasons for making that recommendation. 

In fact, I would prefer to see the innovation patent system given a second chance, in an improved form.  However, since the Government has accepted the Productivity Commission’s recommendation, and the consultation was directed to its implementation, rather than being a further opportunity to canvas objections to this decision, I did not make a submission.  This did not, however, prevent a number of others from taking the opportunity to once again express their opposition to abolishing the innovation patent system.

Unsurprisingly, these repeated objections fell on deaf ears, with IP Australia focussing in its response on the few submissions that actually addressed the merits of the proposed legislation.  On this basis, it appears at this stage that – absent a last-minute reprieve at the parliamentary level – the process of abolishing the innovation patent system is likely to proceed in substantially the manner set out in the draft legislation.

04 March 2018

The Need to Perform ‘Complex, Time-Consuming and Expensive’ Clinical Trials Does Not Make a Patent Invalid

ChemistryPatents play an important role in the development of new pharmaceutical compounds, and therapies based upon the use of such compounds.  The primary global model for drug development is based upon private enterprise and competition.  Within this model, the carrot of a potential patent ‘monopoly’ provides an incentive for companies to deploy the considerable resources – with costs commonly estimated in the billions of dollars – necessary to discover, research, trial, and market new drugs and therapies.  Although not everyone agrees that this is the best approach, it is difficult to dispute that it has, nonetheless, contributed to the delivery of great benefits to humanity over the past century or so.

Within the realm of conventional ‘small molecule’ drugs (i.e. setting aside, for present purposes, recent developments in biotechnology and biologics) four broad categories of patent protection can be identified.
  1. New compounds.  When an innovator discovers or synthesises a compound that was not previously known to exist and/or to have any useful therapeutic effect, a patent may be obtained for the compound itself.
  2. Formulations.  While it is one thing to identify a biologically-active compound, it is often another altogether to find a safe and effective way of delivering it to a patient.  When an innovator develops a new and/or more effective formulation (e.g. a particular tablet or other oral dosage form), a patent may be obtained for that formulation, even if the active ingredient is well-known and no longer patentable.
  3. New therapeutic effects.  When an innovator discovers that a compound already known to have one or more therapeutic effects has a further, and unforeseen, therapeutic use (e.g. in the treatment of a different disease or condition), a patent may be obtained for a method of using or making the compound specifically for the new therapeutic purpose.
  4. Improved methods of treatment.  When an innovator discovers that a known compound with a known therapeutic use can be made even more effective, e.g. by combining it with other compounds or therapies, or using a different dosing regime, a patent may be obtained for the new method of treatment.
Of course, a patent will only be validly granted in any of these cases if all of the legal requirements for patentability – novelty, inventive step, sufficiency of description, and so forth – are all satisfied.  These requirements are intended to balance the rewards available to innovators against the rights of the broader community to access knowledge and to engage in free competition.

From a policy perspective, getting the balance right is particularly important in the case of pharmaceutical products.  If it is too difficult to obtain a valid patent, there may be insufficient incentive for companies to invest billions of dollars in new drug development.  On the other hand, it is important to keep in mind that, one way or another, it is the wider community – either individually, or through taxes in countries where healthcare is substantially subsidised by government – that ultimately pays for that development, through the higher prices charged for patented drugs.  Allowing patents to be granted too easily therefore may therefore represent a significant social cost.

A major component of the cost of bringing a drug to market is the need to conduct extensive clinical trials in order to prove the effectiveness and safety of the drug, and thus to obtain regulatory and marketing approval.  Such trials typically take years to complete, following the initial discovery of a new compound, or of a new use for an existing compound.  However, a patent application must be filed as early as possible to ensure that any available protection is secured in the event that the trials are successful.

A recent appeal decision of a Full Bench of the Federal Court of Australia sheds light on how the balance between an innovator’s need to file early, and the community’s right to receive a full disclosure of the invention, is struck in the case of a patent for a new therapeutic use of a known compound: Warner-Lambert Company LLC v Apotex Pty Limited (No 2) [2018] FCAFC 26.  The court has confirmed that the fact that the clinical trials required to establish an effective and safe dosage of a drug for a new therapeutic use may be ‘complex, time-consuming and expensive’ will not render invalid a patent that was filed prior to conducting this essential research.

25 February 2018

Venerable Brands Snuffed Out as IPH Group Merges Firms Into Flagship Spruson & Ferguson

Merger AheadOn 6 February 2018, Australian Securities Exchange (ASX) listed company IPH Limited (ASX:IPH) announced [PDF, 156kB] that two of its smaller group businesses – Fisher Adams Kelly Callinans (FAKC) and Cullens – are to be merged into its original and largest firm, Spruson & Ferguson (S&F).  Operation under the single S&F brand is expected to commence in April 2018, with full integration to be completed by July 2018.  The merger announcement comes on the heels of IPH’s settlement of its acquisition of New Zealand IP firm AJ Park on 31 October 2017 [PDF, 189kB].

The merger will erase two of Australia’s oldest IP brands – Callinans and Cullens – from the marketplace, once and for all.  Notwithstanding the preservation of its name within FAKC, however, the Melbourne firm of Callinans – which had over 100 years of history at the time of its merger with Fisher Adams Kelly in 2015 – is already effectively defunct given that, to my knowledge, not one of the firm’s attorneys at the time of that merger remains with FAKC.  For its part, Cullens was the first patent firm in Brisbane, having been founded by George Cullen in 1936.

The new merger is significant in terms of its impact on clients’ choice of patent attorneys in Queensland.  According to the Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB), FAKC and Cullens collectively employ 26 patent attorneys (and one trade marks attorney) registered at Queensland addresses, out of a total of 93 patent attorneys registered in Queensland.  Following the merger, the largest patent attorney practice in Queensland will be Davies Collison Cave (five attorneys registered in the state), followed by Eagar & Martin, IP Gateway and Pizzeys (all with four Queensland patent attorneys, although Pizzeys also has six patent attorneys based in Canberra).  Of these, Pizzeys is itself a member of the IPH group (though not – yet – merging with S&F) while Davies Collison Cave is Australia’s largest IP firm and a member of the QANTM IP Limited (ASX:QIP) group.  Thus any client in Queensland wanting to work with a mid-tier patent attorney firm will most likely need to look interstate.

I predict that this will not be the last merger of firms within the three publicly-listed ownership groups (the third being Xenith IP Group Limited, ASX:XIP).  While it is commonly believed that the scope for mergers may be limited by the need to avoid conflicts of interest between the clients of the separate firms, my own conversations with people within the groups suggest that this is not necessarily viewed as a major obstacle. 

Furthermore, the updated Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018, which came into effect on Friday 23 February 2018, creates a presumption of non-independence of firms within an ownership group.  The Code also imposes new obligations on the firms within a group to inform clients of the arrangements, and to obtain informed consent, in writing, from clients on both sides of any contentious matter (e.g. a patent opposition) represented by different firms within the same group.  It is my view that, in some cases at least, these more-onerous obligations may tip the balance in favour of merging firms, rather than maintaining separate operations.

The real question, then, is not if there will be further mergers, but who will be next?

How Much Should a Patent Application Cost?

Juggling DollarsI recently wrote about IP Australia’s new Engaging an Attorney Toolkit, which is an online ‘guide on how, why, what and when to engage your patent attorney’ that is intended primarily to assist people and businesses with minimal knowledge and experience of the patent system in preparing to engage with an attorney.  The toolkit includes a section entitled ‘6 Myths about getting a patent’, the first of which is that ‘a patent will cost me hundreds of thousands of dollars’.  The myth-busting reality, according to the toolkit, is that ‘prices vary, but the cost of drafting and filing an initial patent application (known as a provisional application) for your invention typically costs somewhere between $3000 and $6000.’

Is this information correct?  Or – as one commenter suggested – is a price range of $3000-$6000 liable to create unrealistic expectations, particularly for those prospective clients looking to engage with a major attorney firm?

The toolkit’s estimate is not, in fact, unreasonable, in the sense that the median cost to have a patent specification drafted by an Australian patent attorney is almost certainly somewhere in the range given.  But it is also true that costs for a substantial proportion of all specifications drafted in Australia would fall outside this range.  There are individual attorneys and small firms that might be willing to draft a patent specification for a technically simple invention for as little as $2000.  At the other extreme, an experienced attorney at a top-tier firm might end up charging $12,000 or more for a specification for a complex invention in a sophisticated and challenging field of technology.  Since many attorneys charge by time, and hourly rates vary significantly with experience and across different firms, there are no hard-and-fast rules about what a patent application may cost.

There are, however, hard-and-fast rules about what a patent attorney must tell a client up-front about who they are, how they work, and how much they will charge.  It is timely to mention this, because the new Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018 just came into effect, on Friday 23 February 2018.  All registered patent attorneys in Australia and New Zealand are subject to the Code, which requires (among other things) that they inform each new client, in writing:
  1. that they are, in fact, registered as a patent attorney, and are bound by the Code;
  2. that they have appropriate competency to perform the work required by the client, including suitable expertise in the technology of the invention;
  3. whether the attorney works for an incorporated firm and, if so, whether it is privately or publicly owned;
  4. whether the firm for which the attorney works is part of a group of commonly-owned firms and, if so, the identity of the other members of the group; and
  5. the procedures, timing and estimated cost of doing the work required by the client.
(With regard to registration, prospective clients should also be aware that Australian law effectively prohibits anybody who is not a registered patent attorney from drafting patent specifications on behalf of others.  In particular, under subsection 201(1) of the Australian Patents Act 1990 only a registered patent attorney or legal practitioner may act as a patent attorney in Australia, and section 202 further provides that, other than in very specific circumstances, ‘a legal practitioner must not prepare a specification, or a document relating to an amendment of a specification’.)

So any prospective client can be assured of being made aware of anticipated costs before any work commences, and can, if they wish, shop around for the best deal.  But how is a newcomer to the patent system to determine what is reasonable, given the very wide range of cost estimates that may be provided?

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