The Hazards of ‘Fast-Tracked’ Patents

Should patent offices issue patents within 18 months from their original date of filing?

The European Patent Office (EPO) recently declined to grant a patent, even though examination had identified no grounds of objection, because it was too soon to be confident that the patent would be valid.  The applicant appealed, claiming that there is no basis in the European Patent Convention (EPC) for the Office to delay the grant of a patent which is otherwise in-order.  The Board of Appeal upheld the decision, finding that the EPO is under no obligation to grant a patent until it is satisfied that a complete examination has been conducted.

I am unaware of any other patent office having a policy of not granting patents within 18 months of the original filing (i.e priority) date.  The Australian Patent Office will do so, and quite regularly examines and certifies innovation patents within this period.  The US Patent and Trademark Office (USPTO) will also do so, as I can attest from recent experience.

There is, however, a real question as to whether other patent offices should be following the EPO’s lead.

There Ain’t No Such Thing as a Free Video Codec

Google, Inc recently achieved something that perhaps no other company or organisation on the planet could have done – it secured an agreement from most of the major corporate owners of patents relating to digital video coding standards, which will enable developers and users to access digital video on the web without payment of patent royalties.

At least, this is what will happen if the World Wide Web Consortium (W3C) takes up the opportunity that Google has created.  However, Google’s recent publication of the proposed terms of a royalty-free cross-licence for implementers of it’s digital video technology has drawn predictable criticism from a number of sources, including Open Source Initiative President Simon Phipps (‘proposal closes door on software freedom’) and FOSS Patents blogger Florian Mueller (effectively accusing Google of hypocrisy and disingenuousness).

It is easy to be cynical about the motivations of a company as large and ubiquitous as Google.  But it is worth having a closer look at exactly what Google has achieved here, regardless of its level of self-interest.  In my opinion, the deal that Google has struck is a significant step forward for royalty-free and open standards on the internet.  And while it is never going to satisfy those individuals and organisations at the more radical end of the free software and/or anti-patent movements, as a practical matter the deal will give the vast majority of internet users an assurance that there will be an open source and royalty-free video standard available for use on the World Wide Web.

Raising the Bar – New Life for Patents of Addition?

If you have never heard of a ‘patent of addition’, I am sure that you are not alone.  Even those of us who practice in a jurisdiction in which these beasts are rumoured to exist have rarely, if ever, actually seen one.  It is not even easy to track one down, or to find out how many of them there may be out there in the wild, since IP Australia’s AusPat database does not provide a facility to search specifically for applications and patents of addition.

However, readers experienced with US patent law and practice may already be familiar with the basic rationale behind the patent of addition, which has much in common with what is known as ‘non-statutory obviousness-type double patenting.’  The principle applied in both cases is that an applicant can be permitted to obtain a second patent for a new, but obvious, variation of an invention already claimed in an earlier patent, but that the second patent may not outlive the first.  In this way, the patentee’s rights are insured, but not improperly extended.

It is possible that one reason why patents of addition have been uncommon in Australia is because the law relating to inventive step has been so weak that they have generally been unnecessary (see my recent article on Australia’s ‘four laws of inventive step’).

However, with the commencement of the Raising the Bar reforms in Australia on 15 April 2013, perhaps the patent of addition will have a new lease on life.  After a decade in the Australian patent profession, I have yet to set eyes on an actual application for a patent of addition, but I have been involved with a number of US applications in which obviousness-type double patenting objections have been raised.

If there is anything to this theory, applicants and their advisors in Australia will want to make sure that they are sufficiently familiar with the patent of addition to identify when it might be useful.

New Zealand Resolves ‘Software Patent’ Impasse

If you read what has been written in the media today (e.g. in The New Zealand Herald, Forbes, The Register, and ZDNet, to name just a few who have jumped on the bandwagon) you might think that New Zealand has just outlawed ‘software patents.’

If so, then you would probably be, strictly speaking, mistaken.  As I shall explain, it is quite likely that a wide variety of computer-implemented inventions will continue to be patentable in New Zealand, assuming the Patents Bill passes in the proposed form.  However, it is also true that many of the types of ‘software patents’ which cause the greatest concern to advocates of free and open source software (FOSS) will be excluded under the proposed provisions, just as they are in Europe.

However, it appears that the amendment put forward by aptly-named Commerce Minister Craig Foss in a new Supplementary Order Paper (SOP) is the result of an extended process of consultation behind the scenes, which has resulted in it receiving broad-based support across the New Zealand IT industry, and political opponents of the previous version of the provision (including Labour MP Clare Curran, who rather hyperbolically refers to the addition of what amounts to a clarification as ‘a humiliating back down’ by the Government).

As I have explained previously, the New Zealand Government had adopted a ‘European-style’ approach to software patents, excluding computer programs from patentability, but ‘only to the extent that a patent or an application relates to a computer program as such’.  Those two little words – ‘as such’ – which also appear in the European Patent Convention, and corresponding national laws, were the cause of great consternation among opponents of software patents, such as the New Zealand Open Source Society (NZOSS) accusing Minister Foss of throwing Kiwi software developers ‘under a bus’ (yes, hyperbole does seem to be par for the course over in New Zealand).

But even though the two evil words remain in the latest SOP, NZOSS is now back on speaking terms with Mr Foss, proclaiming itself ‘gratified by the government's willingness to work with the software industry to reach this stage’.

More importantly, the fact that the New Zealand Government has managed to find an acceptable compromise means that the Patents Bill should now be able to proceed through the remainder of its passage into law.  I can only agree wholeheartedly with NZOSS that this update to the creaky old Patents Act 1953 is long overdue.

Australia’s Four Laws of Inventive Step

As I reported in a recent article, the Australian Intellectual Property Laws Amendment (Raising the Bar) Act 2012 came full effect on Monday, 15 April 2013.  Among the many reforms introduced by the Raising the Bar Act was a change to the procedure for assessing inventive step, which raises standards to bring Australia’s laws more into line with major trading partners such as the US and Europe.

Of course, it would be unjust to make the changes retrospective – there could be many patents previously granted, and applications previously filed, which would have been rendered invalid overnight.  So the new laws apply only to those applications and patents in which a request for examination is filed on or after 15 April 2013. 

My previous article on this topic included some astonishing statistics on the number of new applications filed in the weeks leading up to commencement of the Raising the Bar reforms.  I have since heard that in the first two weeks of April, around 16,000 requests for examination were filed.  To put this in perspective, in 2012 IP Australia granted a total of 17,724 patents, so those two weeks’ of requests alone added the better part of a year’s worth of examination work to the pipeline.

If you have only a casual interest in Australian patent law, or you have not been following the subject for very long, you might think that there are now two different standards of inventive step to keep in mind when considering the validity of Australian patents and applications.  However, you would be wrong.  In fact, right now there are live Australian applications and patents variously subject to no fewer than four different standards of inventive step.

IP Australia Delivers Mixed Report Card on Australian IP

Last month IP Australia launched the Australian Intellectual Property Report 2013.

This report contains an attractively-packaged compilation of data and information about the IP system in Australia, and how the country measures up internationally. 

While the report includes information on patents, registered designs, trade marks and plant breeder’s rights, naturally my primary interest is in the statistics on Australia’s performance in relation to patents and technology innovation.

And what IP Australia’s report has to tell us about this is not exactly discouraging, but will hardly set the world on fire.  ‘Revelations’ in the report include:

1. Australians are filing more patent applications than ever before, both locally and overseas;
2. however, increasing patenting activity is not leading to any significant change in Australia’s ‘IP balance of trade’;
3. foreign nationals file the vast majority of Australian standard patent applications, and receive most of the patents granted here; and
4. it appears that the big challenge for Australian companies lies in capturing and extracting value from intangible assets, currently languishing at only 4% of tangible asset value (compared with 91% in the US).

IP Australia promises that this will be the first in an ongoing series of reports and updates, and it is well worth a read..

“Worthwhile to Try” is Not Obvious Enough in Australia

Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd (No 2) [2013] FCA 279 (4 April 2013)

The Federal Court has again confirmed that, contrary to the impression you might obtain from reading IP Australia’s Patent Examiners Manual, ‘obvious’ or ‘worthwhile’ to try does not form part of the test for inventive step under Australian patent law.

I wrote recently about another aspect of the judgment in Bayer v Generic Health, namely the alleged inconsistency of the testimony of an expert who also provided evidence in a dispute more than a decade ago, between generic manufacturer Alphapharm Pty Ltd and originating pharmaceutical manufacturer Aktiebolaget Hässle.  Coincidentally, the High Court’s decision in Aktiebolaget Hässle v Alphapharm Pty Ltd [2002] HCA 59 is also the source of the current Australian law in relation to ‘obvious’ or ‘worthwhile’ to try (at paragraphs [66]-[76]).

IP Australia changed its ‘practice’ in relation to this aspect of examination of patent applications back in August 2010.  At the time, I questioned this change, noting that ‘the High Court majority drew a distinction between “matters of routine” (discussed at paragraphs [50]-[53]) and “obvious or worthwhile to try” (discussed at paragraphs [66]-[76]).  I also observed that the previous guidance for examiners – which adopted a quite different interpretation of the Hässle case – was still available for comparison in the Internet Archive (a.k.a. ‘Wayback Machine’).  Unfortunately, this is no longer the case, because IP Australia, in its wisdom, has decided that earlier versions of its practices should not be available, for posterity or any other purpose, and has added all of the relevant subdirectories of its web site to its robots.txt file.

It is timely to revisit this issue now, with the Raising the Bar reforms just having come fully into effect, because as a subsequent Official Notice revealed, the change in examination practice was one of the first steps to be implemented in IP Australia’s reform agenda.  Apparently, IP Australia accepted ‘stakeholder feedback’ that ‘“obvious to try with a reasonable expectation of success” … has support in the High Court decision in Aktiebolaget Hässle v Alphapharm Pty Ltd’.

EFF Off the Mark With Latest ‘Abuse’ Allegations

The Electronic Frontier Foundation’s (EFF) Daniel Nazer and Julie Samuels have a tragic tale to tell, which they hope will stir the souls of the online community to action.

In a nutshell, the narrative goes something like this…

Once upon a time, a few innovative, dedicated entrepreneurs started a Little Red Riding Company called Ditto Technologies, Inc, based on the great idea of letting people try on eyeglasses in a virtual environment by using webcam images to build a 3D model of their heads and faces.  Within two years, their hard work in building an appealing product was starting to pay off.  Ditto had received funding to build its business, employ new staff, and continue to improve its product.

But then along came a Big Bad Wolf Company, called 1-800 CONTACTS.  Although the Wolf was already in the business of selling prescription eyewear (i.e. contact lenses) online, it had no product that competed directly with Ditto.  Yet the Wolf had purchased a patent from a ‘defunct company’ which (it alleged) covers Ditto’s virtual try-on service, and was now suing California-based Ditto in the distant Land of Utah.

The cost of litigation (and the possibility of losing) threatens Ditto’s very existence, unless an army of diligent Woodcutters can be rallied to find prior art capable of invalidating the Wolf’s patents!

Poor little Ditto.  But is it possible that there is another side of the story?  One in which the Big Bad Wolf is just misunderstood, and the Little Red Riding Company might be, to some extent, a victim of its own (and its investors’) mistakes?

The Perils of ‘Professional’ Experts

Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd (No 2) [2013] FCA 279 (4 April 2013)

Dr James Rowe has had over 30 years’ experience in the pharmaceutical industry.  He obtained a Bachelor of Pharmacy degree in 1966, a Masters of Science in 1976, and a PhD in Pharmaceutics in 1980.  He is also somewhat familiar with the inside of a courtroom.  In 1998 and 1999 he gave evidence on behalf of generic manufacturer Alphapharm Pty Ltd, in a dispute with originating pharmaceutical manufacturer Aktiebolaget Hässle (a member of the Astra group, now AstraZeneca) over a patent covering the compound omeprazole, better known as heartburn drug Prilosec (or, in some markets, Losec).

The omeprazole case went on to become a leading authority on the law of inventive step in Australia, after it was successfully appealed by Astra to the High Court of Australia (Aktiebolaget Hässle v Alphapharm Pty Ltd [2002] HCA 59).

This year Dr Rowe has again appeared in court on behalf of generic manufacturers – Generic Health Pty Ltd and Lupin Australia Pty Ltd – where it seems his past has come back to haunt him.  In the decision in Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd (No 2), issued earlier this month, Justice Jagot concluded that Dr Rowe’s evidence was inconsistent with the evidence he had given in his 1998 affidavits in the omeprazole case, and that this tended ‘to undermine the weight which would otherwise be given to [his] evidence’. 

There is a lesson in this for all litigants when selecting expert witnesses.  It is natural that the opinions of a skilled professional might change over time, not least because new knowledge and experience may bring to light information that was not previously available.  However, in this case the priority date of the Bayer patent was 31 August 1999, i.e. the critical date for assessing the claimed invention was contemporary with the time at which Dr Rowe gave evidence in the omeprazole case.  And even though the omeprazole patent had a priority date in 1986, it seems to me that it should have been reasonably foreseeable that Dr Rowe’s earlier evidence would be used against him.

Research Affiliates Will Have Its Day Before the Full Court

Last month, I reported on the application by Research Affiliates, LLC (‘RA’) for leave to appeal the decision of the Federal Court of Australia upholding the Patent Office’s rejection of its patent application directed to the computer-aided construction and use of passive portfolios and indexes for securities trading.

On 12 March 2013, RA appeared before Justice Flick to argue its case for the appeal to be heard by a Full Bench (three judges) of the Federal Court.  A decision was handed down on 12 April 2013 (Research Affiliates LLC v Commissioner of Patents [2013] FCA 329), according to which RA has been granted the opportunity to appear before the Full Court.  And while it has not yet actually been decided that the court will hear the appeal, that now appears to be the most likely outcome.

Justice Flick could have heard RA’s full arguments in favour of allowing it to appeal the initial decision, and then made orders that the appeal should either proceed, or be denied.  In the event, however, RA’s application for leave to appeal has yet to be decided.  That question has itself been passed to a Full Bench of the Federal Court, which will have the option of hearing the application for leave either separately from, or concurrently with, the substantive arguments on appeal.

Keen followers of Australian patent litigation may recall that this same approach was taken in the case of Samsung’s application for leave to appeal the decision of Justice Bennett awarding Apple a preliminary injunction blocking sale of the Galaxy Tab 10.1 in Australia.  On that occasion, the court elected to hear the application for leave, and the substantive case, concurrently, resulting in a judgment which both granted leave and overturned the original decision.