22 October 2017

Patent Applicants Are the Most Prolific Patent Opponents

Arm WrestleA few weeks back I looked at the geographical origins of participants in Australia’s patent opposition system, finding that Australian residents are overwhelmingly the most likely to oppose patents, and proportionately the most likely applicants to be opposed (although, numerically, US-originating applications are opposed slightly more often).  Under the current Australian law, anyone can oppose the grant of a standard patent, or the certification of an innovation patent, for any reason, although it is reasonable to suppose that most oppositions are filed by companies or individuals with concerns about prospective infringement.  It is, of course, perfectly possible to infringe somebody else’s patent without having had any prior involvement with the patent system.  There is certainly no requirement to have any patents or applications of your own in order to be at risk of infringement, or to have reason to wish to oppose a competitor’s application or patent.

Nonetheless, from analysing data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have found that one thing that the vast majority of patent opponents have in common is that they are also the owners of their own patents and/or applications.  Of 1,234 oppositions to standard patents (under section 59 of the Patents Act 1990) and to innovation patents (under section 101M) between 2004 and 2016, an overwhelming 82% were filed by entities (which I shall call ‘applicant-opponents’) that also filed at least one patent application during this period. 

Furthermore, while applicant-opponents made up only 0.33% of all patent applicants, they were collectively responsible for filing 6.6% of all Australian patent applications between 2004 and 2016.  The top 30 patent filers over this time includes 10 applicant-opponents. 

In one respect, this is not a surprising discovery.  Parties that are engaged with the patent system in one aspect (e.g. as patent applicants) are presumably more likely to be engaged in  range of other aspects, such as searching of patent registers and databases, monitoring their competitors’ patenting activities, identifying and watching applications that may present an infringement concern, and opposing in cases where it is deemed to be worthwhile in order to mitigate risk or curb overly-expansive patent claims.

On the other hand, as I have already noted anybody can become an infringer, whether wittingly or unwittingly.  It is therefore a little disturbing that the opposition data indicates that parties without patents or applications of their own appear to take little interest in the risks potentially presented by their competitors’ patent applications.

15 October 2017

Australian Patent Law Contains, Includes, and Comprises Dangers for Foreign Applicants

Balancing ActIt is the function of a patent claim to define the scope of the invention protected by the patent.  Infringement occurs when an accused system, article, or process is covered by the particular terminology used in a patent claim.  Many inventions are combinations, e.g. a system, article, or process made up of two or more elements, components, or steps that work together to provide some new and useful function or result.  Claims directed to such inventions must therefore recite the relevant combination.

A generic example of a combination claim is: ‘a widget including element A, element B, and element C.’  In this example, the word ‘including’ is a transitional term signifying that what follows is a list of elements, each of which must be present in a widget that falls within the scope of the claimed invention.

The choice of transitional terms in combination claims can be significant.  To illustrate, if I tell you that my breakfast this morning included coffee and toast, you would probably not assume that this was necessarily the entire content of my breakfast.  My statement would be true if I also had cereal and juice.  Similarly, if I were to add that my coffee contained milk, you might suppose that I could also have added sugar.  On the other hand, if I were to say that my breakfast consisted of coffee and toast, you would naturally understand me to be saying that this is all that I had for breakfast today.

But what if I were to tell you that my breakfast comprised coffee and toast?  If you are a patent attorney, and you know that I am also a patent attorney, then in all likelihood you would understand that I am not excluding the possibility that my breakfast included other elements.  If you are not a patent attorney, then you might think it odd that I would choose an uncommon and potentially confusing word like ‘comprised’, when I could just as easily have been clear and said ‘included’ or ‘consisted of’.

The fact is that in a number of major jurisdictions the transitional term ‘comprises’ (and variations, such as ‘comprising’) is essentially regarded as a ‘term of art’ in patent drafting.  The US Patent and Trade Marks Office Manual of Patent Examining Procedure, Section 2111.03, lists a number of rulings of the US Court of Appeals for the Federal Circuit (CAFC) to the effect that the term ‘comprising’ is ‘inclusive or open-ended and does not exclude additional, unrecited elements or method steps.’  In the 1997 case of Genentech, Inc. v Chiron Corp. 112 F.3d 495 the CAFC expressly stated that: ‘”Comprising” is a term of art used in claim language which means that the named elements are essential, but other elements may be added and still form a construct within the scope of the claim.’  Similarly, the European Patent Office Guidelines for Examination, Part F, Chapter 4, Section 4.21, states that: ‘While in everyday language the word “comprise” may have both the meaning “include”, “contain” or “comprehend” and “consist of”, in drafting patent claims legal certainty normally requires it to be interpreted by the broader meaning “include”, “contain” or “comprehend”.’

Internationally, then, the settled expectation of many practitioners drafting patent specifications and claims is that the words ‘comprises’ and ‘comprising’ can safely be used to indicate that the elements or steps recited in a combination are not intended to be exhaustive.  Thus a claim defining ‘a widget comprising element A, element B, and element C’ will be infringed not only by an unauthorised widget consisting only of elements A, B, and C, but by widgets including these elements along with one or more additional elements that are not essential to the functioning of the claimed invention.

Those international practitioners may therefore be surprised to learn that ‘comprises’, and its variants, enjoy no such presumption of non-exhaustiveness in Australia, as a judge of the Federal Court of Australia recently reminded us in Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 4) [2017] FCA 864.

01 October 2017

Users of the Australian Pre-Grant Patent Opposition System

SparringAustralia has a pre-grant patent opposition system, meaning that an opportunity is provided after a standard patent application has been approved by an examiner, but before a patent is actually granted, for third parties to raise objections.  Specifically, once an application has be accepted for grant, the accepted specification is published and there is then a three-month period during which anybody who believes that the granted patent would be invalid (wholly, or in-part) may file a notice of opposition.  The filing of such a notice commences the formal opposition procedures defined in the Australian Patents Act 1990 and Patents Regulations 1991, which are described in greater detail in this earlier article.  It is also possible to oppose an Australian innovation patent, via a similar procedure.  However, since innovation patents are initially granted quickly, without substantive examination, and can only be opposed after examination and certification, the corresponding opposition proceedings are necessarily initiated post-grant.

The World Intellectual Property Origanization (WIPO) web site includes a handy primer on opposition systems, which suggests that pre-grant systems are relatively uncommon in the developed world, with Australia being counted among such IP luminaries as Costa Rica, Honduras, Mongolia, Pakistan, and Zambia in providing for pre-grant opposition proceedings.  Although the completeness of the WIPO summary is questionable – it does not, for example, include New Zealand, which has a pre-grant system similar to Australia’s – it is certainly true that none of the so-called ‘IP5’ offices (i.e. the European Patent Office, Japan Patent Office, Korean Intellectual Property Office, State Intellectual Property Office of the People's Republic of China. and the United States Patent and Trademark Office) has such a system.  Other than Australia and New Zealand, it appears that the most significant countries having pre-grant opposition systems are India, Spain, and Portugal.

So, who uses the Australian pre-grant patent opposition system?  Using data available in the 2017 edition of IP Australia’s IP Government Open Data (IPGOD) set, I have analysed information on oppositions to standard and innovation patents commenced since 2004 (when the IPGOD opposition records commence).  This analysis shows that:
  1. Australians are overwhelmingly the most common participants in opposition proceedings, with Australian-resident companies or individuals having filed 771 oppositions, and Australians being applicant and/or opponent in two-thirds of all oppositions filed;
  2. Australians are almost equally likely to oppose applications by other Australians (261 oppositions filed) and by US residents (262 oppositions filed);
  3. the US is the second most common origin of opponents (258 oppositions filed), and US-resident companies or individuals are involved, as applicant and/or opponent, in around one-third of all oppositions;
  4. in terms of absolute numbers, US-resident applicants are the most common targets of opposition proceedings (453 cases), however this largely reflects the fact that US residents are by far the largest users of the Australian patent system – in relative terms, Australians are the most likely to be opposed, with oppositions being filed against just over 2% of all accepted applications naming Australian applicants;
  5. the Australian opposition system is rarely used by residents of countries other than Australia and the US, with the next most common origins of opponents being New Zealand (45 cases), Germany (34 cases), and the UK and Denmark (tied on 21 cases each);
  6. even accounting for the generally low usage of the Australian opposition system other than by Australians and US residents, Japan is a notable anomaly – while Japanese applicants were the second largest beneficiaries of the Australian patent system between 2004 and 2016, receiving over 17,500 patents, Japanese applications were opposed only 22 times, and Japanese residents were responsible for only nine oppositions during this period; and
  7. other than relatively high usage by Australians and New Zealanders, and the notably low usage by Japanese, residents of other countries tend to use the Australian opposition system in fairly consistent proportion with their use of the Australian patent system.

11 September 2017

Australian Government Commences Consultation on Proposed Patent Law Reforms

OptionsThe Australian Government recently issued its response to the Productivity Commission’s final report on its Inquiry into Australia’s Intellectual Property Arrangements, indicating support for a number of the Commission’s recommendations.  IP Australia has now published a set of consultation papers discussing proposed implementation of the Government’s response to a number of recommendations in the report, as well as a 2013 report by the Commission on Compulsory Licensing of Patents.  Four of the five consultation papers that have been released relate to patents, and address: 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.  (Additionally, a fifth paper addresses introducing divisional applications for international trade marks.)

Written submissions in response to questions presented in the consultation papers are due by Friday 17 November 2017, and should be sent via email in Word, RTF, or PDF format to consultation@ipaustralia.gov.au.

It is presently intended that legislative amendments relating to the issues discussed in the consultation papers be included in a Bill for introduction to Parliament in 2018.  Prior to this, it is expected that there will be further consultation on an Exposure Draft of the proposed amendments.

IP Australia will conduct further consultation on other measures covered by the Government’s response to the Productivity Commission’s report – including  phasing out of the innovation patent system – later in 2017, with a view to introducing corresponding further amendments in a Bill as soon as possible.

04 September 2017

Proposed Code of Conduct for Trans-Tasman Attorneys Risks Unintended Adverse Consequences for Firms and Clients

Red TapeFollowing publication of a consultation paper in April 2017, the Trans-Tasman IP Attorneys Board (TTIPAB) – the regulatory body formerly known as the Professional Standards Board for Patent and Trade Marks Attorneys – has now released a Draft Code of Conduct 2018 (‘draft Code’), Draft Guidelines to the Code of Conduct 2018, and Explanatory Notes for public consultation.  The draft Code and other documents, including the original consultation paper, and non-confidential submission received in response, can be found on the TTIPAB web site.

In many respects, the draft Code is an update and improvement on the existing Code of Conduct for Patent and Trade Marks Attorneys 2013, that codifies what most in the IP professions would regard as good ethical and business practice, and plain ‘common sense’.  For example, the draft Code confirms, in a new section 19(1), that ‘a registered attorney is a fiduciary in respect of the registered attorney’s dealings with a current client, and owes a duty of loyalty to a current client’, which is the basis upon which most attorneys have conventionally operated anyway.  Additionally, it draws on comparable international regulations, and in particular the UK Rules of Conduct for Patent Attorneys, Trade Mark Attorneys and Other Regulated Persons, to ensure that the standards applicable to patent and trade marks attorneys in Australia and New Zealand are on-par with the expectations of corresponding professionals in other jurisdictions.

Unsurprisingly, given recent developments in the Australian profession, the main area in which the draft Code includes provisions that are specific to local circumstances is that of firm ownership.  In particular, the draft Code seeks to specifically regulate the way in which Trans-Tasman (i.e. Australian/NZ) attorneys communicate their legal and ownership structures to clients.  In the specific case that an attorney firm is a member of what the draft Code calls an ‘ownership group’ – i.e. two or more firms, often operating independently at least in relation to the provision of attorney services, and having a common owner – the draft Code proposes further obligations to obtain written consent of clients when separate firms within the group act on opposing sides in certain contentious matter.

While the draft Code represents an improvement upon the current Code in many respects, the provisions relating to business structures and ownership groups are unprecedented, and very much influenced by the recent developments in the IP professions in Australia.  As such, I am concerned that they are unduly prescriptive, and have the potential to create unintended (although certainly not unforeseeable) consequences.  In particular, draft provisions relating to client communications are likely to place unduly onerous obligations not only upon Australian and NZ attorneys, but also upon the foreign attorneys with whom they work, and those attorneys’ clients, around the world. 

Furthermore, draft provisions relating to independence of firms within an ownership group may actually have the unintended effect of encouraging firms to form alternative structures.  This could involve mergers of firms, leading to an actual reduction in competition and choice in the marketplace for IP services, or it could involve the development of new structures that have perhaps yet to be imagined.

It is my opinion that a Code of Conduct for attorneys should focus on the fundamentals.  If appropriate ethical obligations are in place, that apply to individual registered attorneys, attorneys who are partners/directors of firms, and incorporated attorneys, then desirable behaviours can be expected – and undesirable behaviours can be addressed through disciplinary proceedings – regardless of legal and ownership structures.  It is not the role of the Code of Conduct to regulate how attorneys go about the day-to-day operations of their businesses, so long as the interests of clients are adequately protected.

As I will explain in this article, I therefore consider that the draft Code is, in some respects, unduly prescriptive.  I anticipate that firms operating within ownership groups will share this view.  However, even independent attorneys should be concerned that the draft Code, if brought into force, would oblige them to communicate information regarding their legal and ownership structure to all clients – domestic and foreign – for whom they act.

Written submissions in response to the draft Code are due by 28 September 2017, and should be sent via email to MDB-TTIPABCodeofConduct@ipaustralia.gov.au.

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