Innovation Patents Reach Back in Time for Infringement

Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 3] [2012] FCA 1019 (18 September 2012)

Innovation patents – divisional applications – relevant dates for assessment of infringement – claim construction – omnibus claims

According to a recent decision of the Federal Court of Australia, innovation patents may, in some common circumstances, be infringed before they have even been filed!

In a third decision in the ongoing Britax v Infa-Secure saga (see earlier articles Federal Court Conducts Markman-Style Hearing in Hot Tub and Shocking – Judge Compels Experts Actually to Assist the Court!), Justice Middleton has considered the dates from which infringement of divisional innovation patents can be considered.  This is an important issue, because a patentee may be entitled to claim compensation for the commercial activities of an infringer going back to this date.

While it is well-established that the earliest possible date of infringement of a standard patent is the day on which it was published, Justice Middleton has found that an innovation patent may be infringed from its effective filing date.  In the case of an innovation patent which has been divided from a pending standard patent application, the relevant date is the date of filing of the original patent application, even though this may have occurred years earlier than the filing of the divisional innovation patent application itself.

For this early infringement date to apply, it does not appear to be relevant whether the claims of the innovation patent were present, or clearly foreshadowed, in the original patent specification.  According to Justice Middleton’s reasons, any valid innovation patent claims (i.e. novel claims which are adequately supported by the original disclosure, as well as satisfying the low ‘innovative step’ threshold) can potentially be enforced back to the original application date.

The court also considered the interpretation of so-called ‘omnibus claims’, i.e. claims which define an invention by reference to all or part of a specification, or by reference to examples or drawings that have been included in the specification in order to illustrate the invention.  The provisions of the Raising the Bar Act 2012, which will come into effect of 15 April 2013, will largely prohibit the use of such claims, although they will continue to exist legitimately for the lifetime of many existing patents and applications.

Champagne Corks Popped as NZ Court Finds US Patent Infringed

Stewart v Franmara Inc [2012] NZHC 683 (26 March 2012)
Stewart v Franmara Inc no.2 [2012] NZHC 1771 (19 July 2012)

Breach of confidence – Patent infringement –Jurisdiction – whether New Zealand court has jurisdiction to decide infringement, in the US, of a US patent, where ownership and validity are not at issue

In what might be described as a ‘courageous’ ruling, a judge of the New Zealand High Court in Auckland has found, in Stewart v Franmara Inc no.2 [2012] NZHC 1771, that New Zealand courts have jurisdiction to decide on infringement of a US patent, committed in the US by a US-based company, at least in cases where there is no dispute over ownership or validity of the patent rights.

Having reached this conclusion, the judge (Justice Toogood) further found that, in this particular case, infringement of the US patent in question had occurred, and that the New Zealand-based patentee was entitled to a remedy in the form of damages.  However, the judge declined to apply a multiplication of damages for wilful infringement, which would be permitted under 35 USC § 284 if the case had been brought in a US federal court.

In reaching this decision, the New Zealand court has shown a remarkable willingness to reach outside the national jurisdiction, and to decide a question arising under a foreign patent law which is, frankly, very different from the law in New Zealand.  It was no doubt of assistance to the local plaintiff that the foreign defendant did not appear.  Had it done so, it might have pointed out some of the relevant differences, such as the US approach to claim construction, the operation of the US doctrine of equivalents, and the need to refer to the US patent prosecution history to determine questions of construction and possible estoppel.

This particular ruling could be an anomaly.  Nonetheless, it may provide some encouragement for other New Zealand holders of foreign patents to consider using their local courts to enforce international rights.  Having received a favourable judgement, however, the next challenge for the plaintiff will be to enforce the High Court’s damages order against the Californian infringer.

IP Australia Gazumps ACIP, and Revives the Petty Patent!

Having published the initial tranche of draft Regulations implementing the Raising the Bar patent reforms just last Friday, IP Australia has today sprung upon the world a new consultation paper: Innovation Patents – Raising the Step. 

And what a surprise it is!  If IP Australia has its way, the innovation patent system will be effectively eviscerated.  The plan is to completely eliminate the distinction in inventive threshold between standard patents and innovation patents, such that an ‘invention’ and an ‘innovation’ would be required to meet exactly the same inventive step threshold. 

Thus, if an invention is not a sufficient advance over the prior art to qualify for a standard patent, it will also not qualify for an innovation patent.  Conversely, anyone with a qualifying patentable invention will have the choice of obtaining a right which is valid for only eight years, is limited to five claims, and is subject to additional exclusions from patentability.  Or they could just apply for a standard patent.

Furthermore, the intention appears to be that the ‘raised step’ will come into effect as soon as possible, in view of the commencement of the Raising the Bar reforms in April 2013.  IP Australia is concerned that the raising of the inventive step threshold ‘will lead to an increased disparity between the threshold for Standard and Innovation Patents, if Innovation Patents continue to be judged against the current innovative step threshold.’ 

The solution, in IP Australia’s submission, is not merely to raise the innovative step threshold, but to abolish it entirely, such that in one fell swoop the entire concept of a genuine second-tier patent right in Australia will be eliminated.

IP Australia’s publication of its consultation paper – which comes complete with drafting instructions for the proposed amendments to the Patents Act 1990 – appears to pre-empt the ongoing review of the innovation patent system currently being conducted by the Australian Council on Intellectual Property (ACIP).  Despite the consultation paper recognising the ACIP review, it is difficult to see what useful purpose a review of the existing innovation patent system could serve if that system effectively no longer exists once a final report is published.

IP Australia is inviting written submissions in reply to the consultation paper, but you will need to be quick!  The deadline is 5.00pm on 25 October 2012, and you will need to find time to squeeze this in while also working your way through the draft Raising the Bar regulations and preparing your submissions in relation to that consultation also.

Draft Regulations Reveal Applicants to be Slugged with Search Fee

Draft amendments to the Patents Regulations 1991, published by IP Australia on Friday 21 September 2012, reveal plans to introduce a new search fee which may see customers (as applicants are known these days) paying at least A$2,200 to the government authority for search and examination of an Australian patent application.

The primary purpose of the draft regulations is to implement the Intellectual Property laws Amendment (Raising the Bar) Act 2012 (see previous articles on Patentology, including Bar Raised, as IP Law Reforms Signed Into Law). 

IP Australia has indicated that it will publish the draft regulations in two stages, so as ‘to maximise the time for public comment’.  At this time, draft regulations implementing Schedule 1 (relating to enhanced standards of patentability), Schedule 4 (reforms to the regulatory regime for patent and trade marks attorneys) and Schedule 5 (trade mark and copyright enforcement have been made available for consultation.

We have prepared a ‘redlined’ copy of the present Regulations, showing the changes that would be made by the proposed amending regulations, which we will update when the further draft regulations become available:

1. Volume 1 (Chapters 1 to 23 and Schedules 1, 1A and 2) [PDF 1.3 MB]; and
2. Volume 2 (Schedules 2A to 8 and the Notes) [PDF 414 kB].

IP Australia is inviting written submissions on the draft regulations, due by an unextendable deadline of 5.00pm, on 21 November 2012.  Submissions may be emailed (Word or RTF format preferred) to reform@ipaustralia.gov.au.

Over the coming weeks we will take the opportunity to review some of the proposed regulations in more detail, just as we did with the exposure draft of the Raising the Bar Bill (see Australian Patent Reform – Wrap-Up).  Some of the amendments to the Patents Regulations are extensive, and will require careful consideration. 

However, we intend to start with one of the least extensive changes: the amendment of a single row in the table of fees in Schedule 7 of the Regulations, simultaneously eliminating the fee for ‘modified examination’ (which has been repealed by Raising the Bar) while adding a new fee of A$1,710 for a ‘search by the Commissioner in relation to a patent request and complete specification as part of an examination, if the complete application was made on or after 15 April 2013’.

In the remainder of this article we will look at this new fee, the purpose and justification for its introduction, and a comparison with similar fees in other jurisdictions.  While the search fee may be justifiable from a cost-recovery perspective, it appears to us to be problematic from an innovation policy perspective.  Indeed, we believe it is time for Australia to consider introducing US-style ‘small-entity’ fee reductions.

Shocking – Judge Compels Experts Actually to Assist the Court!

Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 2] [2012] FCA 1018 (17 September 2012)

Infringement – expert evidence following Markman-style claim construction hearing – whether appropriate to appoint assessor or referee

Earlier this year Justice Middleton, in the Federal Court of Australia, broke new ground in this country by holding a hearing, and issuing a decision, purely on the issue of claim construction as a preliminary matter in patent infringement proceedings (see Federal Court Conducts Markman-Style Hearing in Hot Tub). 

This week, Justice Middleton has issued two further decisions in the patent infringement case brought by Britax Childcare Pty Ltd (‘Britax’) against Infa-Secure Pty Ltd (‘Infa-secure’).  In the first of these decisions, he has rejected efforts by Infa-Secure to have the court order that infringement issues be referred to an independent third party for assessment.  Instead, the two experts will be returning to the so-called ‘hot tub’ to provide joint evidence to the court, based upon a claim construction with which neither one of them wholly agrees.

If all goes to schedule with this plan, the parties will be back in court for three days in December, for a further hearing to decide whether or not Infa-Secure infringes Britax’s patents.

The ABCs of Patent Publication

You have probably noticed the letter/number codes which sometimes appear after patent or application numbers, and if you are not a professional patent attorney or searcher you might have wondered what – if anything – they mean, and whether you should care about them. 

The short answer is that if you care enough to be looking at published patent documents in the first place then, yes, you should care about the codes which appear at the end of the publication numbers.  For one thing, they tell you whether or not the document you are looking at represents a granted patent (i.e. a right that you might potentially infringe) or merely a pending application (which may or may not be granted, now or in the future, in the form you have in front of you). 

To give an example of what we are talking about, Australian patent no. 2007286532 (i.e. Apple’s ‘heuristics patent’, which is among those it is asserting against Samsung in Australia) has been published six times – as AU2007286532-A1, AU2007286532-A8 (twice), AU2007286532-B2, AU2007286532-B8 and AU2007286532-C1.

Since we are sometimes asked by clients what all these added letters and numbers mean, and it is sometimes helpful to know, here is a brief explanation.

NZ Patents Bill Second Reading Debate

On 12 September 2012, the New Zealand parliament debated the new Patents Bill, in its ‘second reading’ speeches.  For readers unfamiliar with the British-style parliamentary system, a ‘first reading’ is when a bill is introduced into parliament, the ‘second reading’ is generally when it is substantively debated and amendments proposed, and a ‘third reading’ is when it is either passed, or rejected (with or without various amendments).

As we have reported recently, the big issue regarding this legislation – which will replace the horrendously outdated Patents Act 1953 – is whether, and/or to what extent, computer programs will be patentable.  Unsurprisingly, therefore, the heated debate which has surrounded this issue in recent days was reflected in the New Zealand parliament.

New Zealand is a politically interesting country.  It has been quite some time since it has had a true majority government.  The conservative National Party currently governs, but holds only 59 of the 121 seats in the parliament.  The main opposition parties are the Labour Party (which holds 34 seats) and the Green Party (with 14 seats).  The remaining seats are held by five minor parties, three of which are currently supporting the Nationals’ government.  However, none of the minor parties are bound to vote with the government on issues not directly affecting its ability to retain power.

So while the Nationals only need to find two votes in order to push legislation through, there can never be absolute certainty that this will happen.

As we explain in greater detail below, as of this moment it appears likely that the Nationals will succeed with their proposed ‘European-style’ software patent exclusion (see NZ Government Backtracks – to Europe – on Software Patents).  However, the Labour opposition has introduced its own more radical exclusion, which would ban all software patents with the sole caveat that this does not prevent ‘an invention that makes use of an embedded computer program from being patentable’, i.e. the same provision championed by the No Software Patents in NZ lobby group (see ‘My Software, My Choice’).

Additionally, the Green Party has gene patents in its sights, although this does not appear to be the same hot-button issue it has been in Australia (see, most recently, ‘Gene Patents’: Lies, Damn Lies, and Statistics).

‘My Software, My Choice’

[Note: This article has been translated into the Serbo-Croatian language by Anja Skrba from Webhostinggeeks.com.  My thanks to Anja for making the effort to share this information with the people of the Former Yugoslav Republics: Serbia, Montenegro, Croatia, Slovenia, Macedonia, Bosnia and Herzegovina. - MS]

Last week we reported the last minute backtrack by the New Zealand government, deleting a controversial provision in its new Patents Bill stating that ‘a computer program is not a patentable invention’, and replacing it with a controversial provision which still says that ‘a computer program is not an invention’, but only to the extent that it is ‘a computer program as such’.  (See NZ Government Backtracks – to Europe – on Software Patents.)

The basic idea behind this change is to import about 30 years of European and UK jurisprudence on what it means for something to be a computer program ‘as such’, in the expectation that this will allow – amongst other things – inventions implemented using embedded software systems to be patented.

Not unexpectedly, some people are unhappy with this ‘watering down’ of the proposed computer program exclusion.  In particular, a group calling itself No Software Patents in NZ has set up a site no.softwarepatents.org.nz with an online petition requesting that the ‘as such’ caveat be replaced with a clause specifying that the computer program exclusion ‘does not prevent an invention that makes use of an embedded computer program from being patentable.’

In our view, this would be a bad idea for at least two reasons.  Firstly, there is no agreed definition of an ‘embedded computer program’, leaving huge scope for uncertainty, and for any patent applicant whose application is rejected on this basis to go running to court armed with arguments and expert evidence in support of an assertion that their particular invention does (or perhaps merely ‘can’) relate to an embedded computer program.  And even if there were a clear definition today, it is unlikely – based on past experience – that it will survive the test of time.

Secondly, while the NZ debate appears to have become strangely fixated on embedded software controllers for home appliances such as washing machines, these are not the only types of software for which there is a clear benefit in allowing patent protection to be granted.

It has been our observation, over time, that those who are opposed to software patents have a very limited view of the role that software plays across a whole range of scientific and engineering applications.  Objections to patents on common web technologies, widespread operating system features, and components of extensively deployed consumer and developer applications such as word processors, web browsers and compilers, are actually quite understandable.  But the typical response to these objections – to call for the banning of all software patents, or all except for some narrowly-defined exceptions – makes no sense at all.

Merck Injunction Gets Up Apotex’s Nose

Merck Sharp & Dohme Corp v Apotex Pty Ltd [2012] FCA 928 (31 August 2012)

Interlocutory injunctions – prima facie case – balance of convenience – permanent impact of generic competition upon market for pharmaceutical products

The Federal Court of Australia (Justice Jagot) has issued a preliminary injunction barring generic pharmaceutical manufacturer from marketing and selling nasal sprays containing the corticosteroid mometasone furoate (MF) for the treatment of allergic rhinitis.  The injunction will remain in place pending a final hearing to determine the validity of Merck’s Australian Patent No. 691880, entitled ‘use of mometasone furoate for treating airway passage and lung diseases’. 

Merck sells its own MF-based product in Australia under the brand name NASONEX, which enjoyed sales worth $24.6 million in 2011.  Apotex had commenced marketing, and proposed to commence sales in September 2012 of generic versions APO-MOMETASONE NASAL SPRAY, APOTEX-MOMETASONE NASAL SPRAY, CHEMMART MOMETASONE NASAL SPRAY, GENRX MOMETASONE NASAL SPRAY and TERRY WHITE CHEMISTS MOMETASONE NASAL SPRAY.

Apotex did not deny that its proposed activities would infringe Merck’s patent, but argued that the patent is invalid, and that the claimed invention was obvious at the relevant priority date.  The court was not persuaded that Apotex’s case for invalidity was sufficiently strong to deny Merck’s establishment of a prima facie case of infringement.  Furthermore, the court found that the balance of convenience in this case favoured granting the preliminary injunction sought by Merck.

The injunction means that generic competitors to the NASONEX product will most likely be kept off the market in Australia until at least the second half of 2013.

Should Compulsory Licensing Provisions be Abolished?

We wrote recently about the ‘issues paper’ which has been released by the Australian Government’s Productivity Commission in relation to its inquiry into the compulsory licensing provisions in the Patents Act 1990 (see Compulsory Licensing Inquiry – Issues Paper Released).

On 15 August 2012, senior representatives of the Licensing Executives Society (Australia and New Zealand) – a.k.a. LESANZ – met with members of the Productivity Commission, at the Commission’s invitation.  Following the meeting, LESANZ published a summary, and an invitation to members to provide input to a formal written submission (currently available here, on the LESANZ web site, dated 16 August 2012).  This publication includes the intriguing statement that LESANZ proposed to the Commission that:

…consideration be given to replacing the existing statutory provisions with a streamlined, potentially deregulated access regime which better reflects market forces in technology transfer.

It is interesting to take this notion of ‘deregulation’ to its logical conclusion – the complete abolition of all of the non-voluntary access provisions (compulsory licensing, Crown use and compulsory acquisition) in the current Patents Act.

The fact is that these provisions are rarely used.  They are complex and expensive to invoke.  In many ways they are anachronistic, having their origins in an earlier time when there were genuine concerns that patent monopolies might be used by unscrupulous proprietors to slow the rate of industrialisation within the realm.  Such fears turned out to be largely unfounded – actually providing an increasingly affluent society with desired products and services has generally proven to be more lucrative than holding it to ransom!

So do we really have anything to fear from the abolition of non-voluntary access provisions, or would we be better off removing this burden from the statute books?  And how would someone go about persuading the Productivity Commission to recommend such radical reform?