23 September 2010

IP Australia Gets Tougher on Patent Applicants

IP Australia has published an Official Notice announcing changes to patent examination practice.  The changes are intended to improve quality and certainty in the validity of granted patents, and are part of IP Australia's ongoing patent reform agenda, which has been progressing through a series of reports and public consultations over the past 18 months.

Many of the proposed reforms will require changes to legislation and/or regulations, however some can be implemented within the existing framework by changes in Patent Office practice.  This announcement therefore signals the commencement of an expected series of reforms.

The initial changes are intended firstly to "raise the bar" in relation to examination for inventive step, and secondly to limit the impact of certain practices relating to the filing of divisional applications, which IP Australia considers to be undesirable.

Changes to the way in which inventive step is assessed have the potential to affect all applicants, while the impact of the current changes in divisional practice will mainly impact on applicants attempting to use divisional filings in order to extend application pendency.

RAISING THE INVENTIVENESS THRESHOLD WITH 'OBVIOUS TO TRY'

As a first step in raising the standard required for an invention to involve an inventive step, IP Australia has endorsed the use of an "obvious to try" analysis in examination.  We first noted this change, and queried its validity under the current law, not long after the Examiners Manual was updated, on 2 August 2010, to reflect the new practice.

Our views have not changed in the meantime.  We should be clear about this – we are not necessarily opposed to "obvious to try" being part of the assessment for inventive step in appropriate cases, and we agree with IP Australia that this has the potential to improve the quality of patents granted in Australia.  We just do not believe that this test is, in fact, part of the current Australian law.

We maintain that IP Australia, in its published guidance on "obvious to try", is conflating two separate forms of obviousness analysis considered by the High Court in Aktiebolaget Hassle v Alphapharm Pty Ltd ([2002] HCA 59).  In our view, the court clearly rejected "obvious to try".  The test endorsed by IP Australia, which it characterises as "obvious to try with a reasonable expectation of success", and persists in asserting was supported by the High Court in the Hassle decision, is in fact drawn from the court's reasoning in relation to a different approach, namely "matters of routine".

As we reported more recently, the Federal Court appears to share our views on this.

The substantive guidance provided to examiners is that it is appropriate to consider the following question in assessing inventive step:

Would the person skilled in the art (in all the circumstances) directly be led as a matter of course to try the claimed invention in the expectation that it might well produce a solution to the problem?
This approach is indeed supported by the High Court in Hassle, and it was applied recently by the Federal Court.  However, it is the High Court's test for a "matter of routine", and not for "obvious to try".  We reiterate our earlier observation that for nearly eight years following the Hassle decision, the Examiners Manual provided almost precisely the opposite guidance to the current entry (see earlier version in the Internet Archive):

The decision of the High Court in Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59 (12 December 2002) established that the "obvious to try" test which had been applied in the lower court decisions on this matter and in numerous UK decisions was not part of Australian law.
We consider that conflation of the two tests – one legitimate, and one illegitimate – is certain to lead to incorrect decisions, and additional headaches and expense for applicants.

LIMITING "ABUSIVE" DIVISIONAL PRACTICES

Australian patent law allows an applicant to file a divisional application, with claims directed to any subject matter having appropriate support in the parent specification as filed, at any time up until the day three months following advertisement of acceptance of the parent application (ie the end of the pre-grant opposition period).  Divisional applications may be, but are not necessarily, directed to additional inventions that were deleted from the claims of the parent application following an objection of lack of unity.

One strategic use of the divisional process is to maintain a pending application for an extended period.  There are a number of reasons why an applicant may wish to do this.  The most straightforward is to extend the period for responding to objections raised in an examination report.  Although the applicant is allowed up to 21 months from the first report date to secure acceptance of an application, it is not uncommon for examination in other jurisdictions – such as the US or Europe – to take longer than this.  Some applicants would prefer to base their ultimate Australian claims on granted claims in other jurisdictions, and may require additional time to do this.

In this first scenario, a divisional application may be filed with the same claims as the parent in order to effectively "continue" examination.

Another strategic use of divisionals is as a defensive measure.  By filing a divisional application prior to the end of the opposition period, an applicant can maintain pending rights, even if the parent application is opposed and, perhaps, ultimately found invalid.

Yet another strategic use of divisionals is as an offensive tool.  Once the original application is accepted, it is subject to restrictions on amendments.  If the applicant wishes to retain a more general capacity to target a prospective infringement, a pending application is more "flexible" than an accepted application or granted patent.

To counter these types of strategic uses – which IP Australia considers to be undesirable – there will be a change of practice in examination of divisional applications.  This will comprise:
  1. expediting examination of divisional applications, which will reduce the potential pendency of these application by up to 20 months; and
  2. if a ground of objection to acceptance of the divisional application is "substantially the same" as a ground raised in the parent (which will arise, in practice, when the specification and one or more claims of the parent are reproduced in the divisional), the applicant will be provided with a restricted period of two months to respond, or the Office will commence rejection proceedings.
IP Australia  hopes to severely curtail the practice of "daisy chaining" divisional application through these measures.  In effect, a divisional application that includes claims already rejected in the parent case will typically require the applicant to file a substantive response to an examination report in under one year from filing of the divisional.  This compares with the present system, under which an applicant might be able to keep a divisional application pending for over 3.5 years (and then file a further divisional application, if desired).

This new practice, which will commence from 1 October 2010, certainly appears to be within the powers granted to the Commissioner of Patents under the Patents Act 1990 and Patents Regulations 1991Paragraph 142(2)(e) of the Act, in combination with Regulation 13.4(1)(b), allows 21 months from the date of issue of a first examination report before an application will lapse, if not yet accepted.  However, subsection 49(2) of the Act additionally empowers the Commissioner to refuse an application if a lawful objection exists.

Aside from the automatically expedited examination, "legitimate" divisional applications (which include different claims from those of the parent) will be unaffected by this change in practice.

CONCLUSION

IP Australia intends to "toughen up" examination of Australian patent applications, to raise the standard and quality of granted patents.  The present practice changes, which require no legislative or regulatory amendment, are only the first step in this process.  We expect to see further developments over the coming months.

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