14 December 2014

The EPO – Dysfunctional or Just a Misunderstanding?

Locking HornsIn recent times, strange and disturbing things appear to have been afoot within the European Patent Organization.  While the goings-on within the EPO have been reported by other IP blogs, by some specialist IP media outlets and (to a much lesser degree) in the general media, I have so far chosen quite deliberately not to comment.

The primary reason for my silence on the issue has been the very great difficulty in getting at anything even vaguely resembling the ‘truth’ about what is actually causing the ructions at the EPO.  One thing that people have often said to me about this blog (and of which I am quite proud) is how well-researched the articles often are, and how much time it must take me to write them.  I can safely say that the ongoing disputes at the EPO would constitute the most heavily researched article I have never written!  This article does not even try to account for all of the material I have read in trying (and failing) to get a handle on what is going on at the EPO.

Which is not to say that I do not care.  I care very much.  And the reason I care very much is simple – if the EPO becomes dysfunctional and ineffective, it is the applicants for European patents who ultimately suffer.  Those applicants include some of my clients, the clients of dozens of other Australian patent attorneys and, perhaps, numerous other Australian applicants who are more directly represented before the EPO.  And, of course, applicants from all around the world.

So what is going on at the EPO?  Is it dysfunctional?  Is there, as some are alleging, ‘corruption’ at the top?  Or, as I am coming to suspect, is all of the recent negative publicity largely the result of a messy and increasingly vitriolic labour dispute?  (Which is, of course, not to say that all of the above are mutually exclusive.)

07 December 2014

Are Subject Matter Rejections Hurting the Patent System?

BandaidsThe primary requirements for an (alleged) invention to be patentable are that it must relate to eligible subject matter (e.g. not be a law of nature, mathematical equation or abstract idea), it must be new (i.e. possess novelty) and it must not be obvious (i.e. must involve an inventive step).

Subject matter eligibility is currently highly contentious in many jurisdictions.  As recent decisions of the US Supreme Court (in the Alice and Myriad cases) and the Australian Federal Court (in the Research Affiliates and Myriad cases) demonstrate, the most strongly contested subject matter relates to the areas of business processes, computer software and biotechnology. 

But even so, qualification as patent-eligible subject matter remains a threshold test, and should not be a substitute for the proper evaluation of an invention for novelty and inventiveness.

The problem with evaluating novelty and inventive step is that it often involves hard work.  To show that something is not new, or that it is obvious, requires evidence of prior art, which in turn may require diligent searching, extensive reading, and careful construction of legal and technical reasoning to explain why the requirements for patentability are not satisfied.

It is, therefore, so much easier if an invention can be knocked out at the first hurdle, and be deemed fundamentally ineligible for patent protection, without having to go to all the trouble of conducting a comprehensive prior art search.

Recent developments in various jurisdictions (e.g. the US, Australia and the UK) suggest that, in ‘difficult’ fields of technology, the cart is getting put before the horse.  Subjective evaluations of the ‘merit’ of an invention, i.e. that it perhaps seems unworthy of patent protection, may be leading decision-makers at all levels to turn too quickly to subject matter grounds as a basis for rejecting claims.  Legal reasoning may therefore be developed in order to arrive at the desired outcome, without sufficient regard to consistency across different cases. 

Subject matter is becoming a form of ‘obviousness by stealth’ as courts start looking for the ‘inventive contribution’ made by a claimed invention as a basis for assessing eligibility.  The case law is becoming increasingly incoherent, as decision-makers try to rationalise their own findings in light of prior decisions that are themselves inconsistent.  Certainty is eroded as a result, and applicants, patentees and other stakeholders are losing faith in a system that appears increasingly capricious.  I also suspect that the quality of prior art searching may be suffering, with examiners now relying on subject matter rejections in cases that appear ‘too hard’ to search effectively.

30 November 2014

‘Pro Bono’ Patent Assistance Program Makes No Sense

Asking for HandoutIn September 2011, the America Invents Act (‘AIA’) was signed into law in the United States.  The most significant legal reform implemented by this legislation was the switch from the long-standing US ‘first to invent’ priority system to a ‘first (inventor) to file’ system similar to that which exists throughout the rest of the world.  The AIA also introduced other legal and procedural changes, such as new mechanisms for third parties to challenge patents and applications, and the provision of a ‘fast track’ process enabling applicants to accelerate examination for a fee.

Aside from these changes to the patent laws and procedures themselves, the AIA package included further measures aimed at enhancing US innovation and competitiveness.  One such measure, set out in section 32 of the AIA, requires the USPTO to ‘work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.’

The USPTO duly established its Patent Pro Bono Program, to provide free legal assistance to under-resourced inventors and small businesses interested in securing patent protection for their inventions.  As USPTO Deputy Director (and current Acting Director) Michelle K Lee explained in a recent blog post, the program also supports a White House executive action aiming to expand pro bono patent assistance to all 50 states.  Currently, patent pro bono assistance is available in Alaska, Arizona, California, Colorado, the District of Columbia, Hawaii, Idaho, Louisiana, Maryland, Massachusetts, Minnesota, Montana, Nevada, New York, North Carolina, Ohio, Oregon, South Carolina, Texas, Virginia, and Washington.

This all seems very admirable.  However, a recent article on waybetterpatents.com questions the effectiveness of the program, suggesting that the requirements that must be satisfied in order to qualify for pro bono patent assistance are set too high, and that those who might benefit most from the program are unlikely to qualify.

To my mind, however, the flaw in the Patent Pro Bono Program is far more fundamental than overly-restrictive qualifying requirements.  With all due respect to the efforts of the USPTO, and the well-meaning attorneys who are offering their services for free, I do not believe that providing free assistance to secure patent protection makes any sense at all.  In fact, it could even be harmful – to the patent system, and to small business and innovators more generally.

23 November 2014

Research Affiliates: A ‘Hard’ Case Making Bad Law

Chaos and OrderIt is sometimes said that ‘hard cases make bad law’.  This is not actually generally true, and good and bad law emerges from a wide variety of different cases.  Perhaps, in fact, the quality of judges, or the quality of argument presented at trial, are more important factors than the difficulty of the case.

That being said, ‘hard’ cases do present judges with special challenges.  In this context, a hard case is one in which the most literal or straightforward application of the law – i.e. the binding precedents and relevant statutory provisions – is liable to produce a result that may strike the judge as illogical, unfair, absurd, unjust, or just plain wrong.

The temptation in such cases must be very great to try to find a ‘creative’ approach to applying the law in order to make the legal outcome match the subjectively ‘right’ decision.

Patent law is not immune from such ‘hard’ decisions.  Sometimes, for example, an alleged infringer’s efforts to ‘work around’ a patent, and escape infringement on a technicality, are so flagrant that judges are inclined to find ways to broaden the interpretation of patent claims in order to capture the infringer’s variation.

So what would happen if a judge (or, indeed, three judges) were to look at an invention and think ‘surely that cannot be eligible for a patent?’  And what if they then looked at the current state of law and found that, in fact, a literal and straightforward application of the law could well lead to the conclusion that the suspect invention is patent-eligible?  The answer might be that you end up with a decision like that of the Full Court of the Federal Court of Australia in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150.

16 November 2014

‘Patent Box’ Tax Break Prospects Plummet at G20 Meeting

Box and figureThe Australian Government looks set to abandon the sole IP-related initiative it took into last year’s federal election, with treasurer Joe Hockey reportedly all but ruling out the prospect of a ‘patent box’ tax concession being introduced in this country.

Indeed, according to coverage of this weekend’s G20 Summit taking place in Brisbane, Hockey is also pushing for other countries that currently have patent box schemes to amend their own rules to ‘ensure that they are not inappropriately used for tax avoidance’.

I think this is all very unfortunate, particularly because much of the anti-patent-box sentiment appears to be based upon gross misunderstandings (or, possibly, wilful disingenuousness) about what patent box schemes are about, and how they work.  Even the economics editor at The Age newspaper, Peter Martin, seems to be spreading the misinformation, writing that ‘patent boxes allow companies that have developed new technology overseas to register the patent in the host country in order to avoid tax in the country in which the technology was developed.’ 

However, as I explained in an earlier article, patent box schemes are designed to encourage investment in R&D within the jurisdiction where patented technology is developed, by offering a reduced tax rate on profits that can be specifically attributed to that technology.  This is not tax ‘avoidance’.  It is a tax concession that is offered on income that might not have been generated at all – or that might have been generated in another country – were it not for the incentive provided by the scheme.  Pharmaceuticals giant GlaxoSmithKline credited the introduction of a patent box concession in the UK for its decision to build its first new factory there in 40 years, and to follow up with a further 200 million pound investment in 2013.