18 February 2011

IP Australia’s ‘Case Management’ of Divisional Applications

Senomyx, Inc [2011] APO 5 (2 February 2011) ; Qualcomm Incorporated [2011] APO 6 (2 February 2011) ; McNeill-PPC, Inc. [2011] APO 8 (4 February 2011) ; Scott Laboratories, Inc. [2011] APO 9 (4 February 2011) ; Schering Corporation [2011] APO 10 (4 February 2011) ; E.I. De Pont De Nemours and Company [2011] APO 11 (16 February 2011)

Ask not for whom the
Division Bell tolls...
We reported back in September last year (‘IP Australia Gets Tougher on Patent Applicants’) on the first steps in IP Australia’s reform agenda. 

One of these steps is a new ‘case management’ approach to the processing of potentially ‘abusive’ divisional applications, i.e. those that may have been filed primarily to maintain a pending patent application after the expiry of the 21-month acceptance period of the original application.  IP Australia’s concern about such applications is that they create undue uncertainty for competitors in the Australian marketplace, since the scope of any patent rights that may ultimately be granted remains unknown.

It appears that this approach is starting to bite, although it is not entirely clear whether it is the patent applicant or IP Australia that is getting more severely bitten.  In the past two weeks or so, IP Australia has issued no less than six written decisions refusing divisional applications that have been subject to case management!

APPLICATION OF THE ‘CASE MANAGEMENT’ APPROACH

Under the new practice, all divisional applications are processed by IP Australia as follows:
  1. requests for examination of all divisional applications are expedited, which means that a first examination report will typically issue within one-to-two months;
  2. where grounds for objection exist, a first adverse report issues in the normal way;
  3. however, if a ground of objection is substantially identical to a ground previously raised in relation to the parent application and not addressed by substantial amendment or written submissions, the gives notice to the applicant that if no response is filed within two months, overcoming the ground of objection, then the Commissioner will consider whether to direct amendment,  or proceed to refuse the application;
  4. if a response overcoming the objection is not filed within the two-month period, IP Australia contacts the applicant or their attorney to discuss the case before setting the matter for hearing according to established practice;
  5. where the matter is subject of a hearing, the hearing officer will consider all grounds of objection whether raised previously or not.
Where a ground of objection is capable of rectification, a reasonable period is provided for the applicant to do so.  Otherwise, the application is refused.

IMPACT TO DATE

IP Australia indicated that the practice of expediting examination of divisional applications would be implemented in stages following commencement of the new approach on 1 October 2010.  We have seen a number of such cases already in our own practice, and to some extent attorneys and applicants have been taken a little by surprise. 

While it has been possible to plan and advise clients appropriately on the prosecution of divisional applications filed after the new approach was announced, there have been a number of cases in which requests for examination were filed prior to the practice changes, while the first examination report has issued after the changes and has been subject to the two-month time limit.

It does not help that the notice of the shortened response period appears at the end of the examination report, where it is likely to be missed by the clerical staff who, in many larger firms, handle the processing of incoming correspondence and diarying of deadlines.  Much of this type of ‘high volume’ work is conducted on behalf of foreign applicants, which can make it challenging to obtain urgent instructions in such cases.

Overall, therefore, the change in practice is creating a few headaches, and we have no doubt that there are cases in which the shortened deadline has been missed because an attorney or applicant simply failed to recognise the unanticipated need for urgency.

THE ‘CASE MANAGEMENT’ PROCESS AND RECENT DECISIONS

As noted above there have been six Patent Office decisions published in the past couple of weeks, all refusing divisional applications in which no reply was filed within the two-month shorted response period.

All six decisions have been written by Hearing Officer Dr Steven Barker, whom we imagine may already be growing tired of the repetition!

In all six instances, a first adverse examination report was issued including a notice in the following  form:

Objection 1 of my report is based on the same grounds objected to in the examination of patent application xxxxxxxxxx.  Please note that if a response overcoming those objections is not filed within two months of the date of this report the Commissioner will consider whether to direct amendment of the application under section 107 or proceed to refuse the application under section 49(2) of the Act.  If intending to proceed under either of these provisions the Commissioner will notify you in writing and indicate the time and place you may be heard on the matter.  In deciding the matter the Commissioner will consider all possible grounds of objection to the application not only those identified above.  Please see the Manual of Office Practice and Procedure at part 2.10.11 for more information.

In each case, no reply was received within two months, and a Hearing Notice was issued in the following terms:

The examination report of (d mmm yyyy) raised an objection equivalent to that in the parent application. In line with our approach to case management of divisionals, you were given two months to respond to that report. As no response has been received, the matter will now be set for hearing.

I believe that it is possible to hear this matter on the basis of written submissions, so I allow you two (2) weeks from the date of this letter to file any submissions you wish. Your submissions should address the ground of objection identified in the examination report. Once your submissions have been received, or alternatively if no submissions are received, the matter will be passed to a hearing officer to issue a written decision. Please note that it is possible for the Commissioner to refuse the application.

No submissions were filed in any of the six cases, and only E.I. Du Pont De Nemours and Company expressly indicated that they had no further interest in their application, and would not be making submissions.

The outstanding objection in the case of Senomyx’s application was simply lack of unity, i.e. the claims were alleged to relate to three separate inventions.  This could easily have been overcome by deleting two of the three groups of claims.  New objections might have been raised once the remaining claims were substantively examined, however these would not have been subject to case management.

McNeill PPC’s application, Schering’s application and Du Pont’s application were also cases in which the initial objections were merely to lack of unity.

Qualcomm’s application and Scott Laboratories’ application each faced substantive objections of lack of novelty and inventive step, which may have required more effort to overcome.

COMMENT

With the exception of Du Pont’s application, it is not really possible to draw any inference as to why there was no response in each of these cases.  The applicants may have lost interest, although it may seem odd that they would have done so after paying the costs of filing a divisional application, and requesting examination.

However, it is probably no coincidence that all of the applicants in these cases are substantial foreign companies.  Obtaining instructions from overseas clients – particularly those that are busy managing global patent portfolios – can be difficult and slow.  The clients understand the problem, and so they often leave standing instructions to take steps to keep rights pending unless expressly instructed otherwise.  Australian attorneys therefore sometime find themselves filing divisional applications, and requesting examination, shortly before the relevant deadlines on the basis of an absence of instructions from the applicant.

It is possible that this is what has happened in some or all of these cases.

Of course, it is also possible that one or more of the applicants in these cases simply ran out of time, or failed to recognise the urgency, as a result of inexperience with the new practice.  If so, then an adversely affected applicant can appeal the decision to the Federal Court.  Certainly, many of the applicants in these cases could well afford to do so.  Qualcomm, for example, as we reported just last week (‘Microsoft Tops Australian Patent Grants for 2010’), was fourth on the list of top recipients of Australian patents for 2010.

It will be interesting to see whether this rate of written decisions of refusal continues, or if they fall off as applicants, and attorneys, become more familiar with the ‘case management’ process.

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