Secret Use – Australia’s ‘On-Sale’ Bar

As readers will be aware, the publication or public use of an invention prior to the filing of a suitable patent application to establish a priority date, constitutes prior art which may invalidate the subsequent patent claims, unless excused by some form of grace period (see ‘Grace Periods’ – Consequences of Disclosure Before Filing).

But what about use of an invention which is not public?  For example, a new manufacturing process may be patentable, and it may be possible to make use of such a process within a secure facility such that it is not disclosed to the public.  As another example, it may sometimes be possible to manufacture a new patentable product, such as in the form of a prototype, which might even be demonstrated to prospective customers under conditions of confidentiality before any patent application is filed.

The question that then arises is whether, and in what circumstances, such use may invalidate a subsequently-filed patent application?

It is timely to look at this question now, because the Raising the Bar reforms in Australia, and the America Invents reforms in the US, will both result in changes to the treatment of non-public prior use in the early part of 2013.

Under the current US law, 35 USC 102(b) provides that if an invention is ‘in public use or on sale in this country [i.e. the US], more than one year prior to the date of the application for patent in the United States’ then the inventor will lose the right to obtain a patent.  This is generally known as the ‘on-sale bar’, since it bars a person from obtaining a valid patent if they have been making commercial use of the invention any earlier than one year before the filing of a US patent application.

As we shall see, the Australian law relating to ‘secret use’ focuses similarly on commercial benefit (although this is to be found in the case law, rather than in the words of the Patents Act 1990), however there is currently no grace period available in relation to such use.  But, as we shall also explain, there will be key changes next year to the working of the grace period in relation to prior commercial use in both Australia and the US.

Innovation Patent Consultation Closes

Today was the due date for submissions on a proposal to amend the Patents Act 1990, to raise the patentability threshold for innovation patents to the same level of inventiveness as required for standard patents.  The proposal was announced on 24 September 2012, and you can read our initial reaction in IP Australia Gazumps ACIP, and Revives the Petty Patent!  We also published the contents of a notice circulated by the Institute of Patent and Trade Mark Attorneys of Australia (IPTA), in IP Australia Proposal Renders Innovation Patents ‘Obsolete’ – IPTA.

It would be fair to say that we have not heard much in the way of positive responses to the proposal.  While many of those we have spoken with concur that the innovative step threshold has proven to be too low, few seem to agree with the proposition that it should be eliminated altogether, particularly not without a proper review to consider a range of options for improving the innovation patent system.

The most common sentiment seems to be that it would be premature to make changes to the law governing innovation patents at this time, without waiting for the outcomes of the ongoing ACIP review of the system.

Patentology made a submission to IP Australia in response to the innovation patents Consultation Paper.  It is likely that all submissions will be published in due course.  In the meantime, we are publishing the content of our own submission below.  This version has been edited only slightly, to remove background information that is unnecessary in the context of this blog, and to be more ‘web friendly’, e.g. format changes and the inclusion of additional live links.

Surplus Stupidity Puts Australia’s Future at Risk

Australian politicians would gouge out their own eyes, and cut off their own arms, if they thought it would get them re-elected.  Of course it will not – that would just be stupid.  Almost as stupid as, say, jeopardising Australian research and innovation activities in pursuit of a symbolic budget surplus.  So, of course, that would never happen either, would it?

Except that it did happen, and it is still happening.

Last month there were a few, relatively low key, reports that the Australian government had frozen payouts of a broad range of research and commercialisation grants.  The unannounced freeze apparently commenced on 30 August 2012, with the affected programs including those operated by the Australian Research Council (ARC), the National Health and Medical Research Council (NHMRC), Commercialisation Australia and the Clean Technology Investment Program.

Australian Life Scientist reported the halt in payments, quoting a spokesperson for the Industry and Innovation Minister Greg Combet who stated that the freeze was a ‘normal part of the Budget process’.  However, such freezes have not occurred regularly in previous years.

It appears that the freeze may have been Mr Combet’s immediate response to a directive issued to all cabinet ministers at the end of August that they must review all grants not yet made or contracted in order to curb expenditure.  Obviously such reviews take time, so a halt in payments – at least temporarily – would be an inevitable consequence of such a directive.

Having not announced that there is a freeze on innovation funding, the government has also, not surprisingly, failed to given any indication of when it might end.  However, there were some signs of a thaw the in the past week, with A$652 million in long-awaited funding for medical research finally being allocated by the NHMRC.  While this is clearly good news for those in the medical research sector, the declaration by Australian Life Scientist that ‘the freeze is over’ may yet prove premature.

Yet Another Patent System Review – Pharmaceutical Patents

On Monday this week (15 October 2012), the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus QC, announced a new review of pharmaceutical patents in Australia.

Our initial reaction?  A great sigh… because surely what the Australian patent system needs right now is yet another review, enquiry or proposal for reform!  Frankly, stakeholders in the system – including innovators (small and large) and their professional advisors – are already reeling from the pace of evaluation and change being imposed upon the patent system in Australia.

In the first decade of the 21^st century, a number of reviews of the patent system were initiated under the Howard conservative government – including the Australian Law Reform Commission (ALRC) enquiry into Gene Patenting and Human Health, and the Advisory Council on Intellectual Property (ACIP) review of Patentable Subject Matter (see ACIP Reports on ‘Patentable Subject Matter’) – without any action being taken to implement any of the resulting recommendations.

That inaction was wrong.  It was wrong firstly because it failed to address the real concerns of the Australian public, and users of the patent system, that were identified in the enquiries.  Secondly, it was wrong because for a government to commission a review, receive a report, and then take no real action on the recommendations made, is nothing more than a waste of valuable resources and taxpayers’ money.

However, in the past few years there appears to have been an over-correction, as our elected representatives and taxpayer-funded bureaucrats have engaged in a seemingly continuous series of new enquiries and real reforms. 

Timeframes Slashed in Second Stage of Proposed Regulations

The primary objective of Schedule 3 of the Raising the Bar reforms to Australia’s intellectual property laws is to improve efficiency in procedures relating to approving and challenging patent and trade mark applications, so as to reduce delays in the system (see, e.g., Major Australian Patent Reform Passes in Senate).  It therefore comes as no surprise that in the second (and final) stage of draft amendments to the Patents Regulations 1991, released by IP Australia on Thursday, 11 October 2012, a number of allowed time periods for completing various actions in relation to patents and applications have been substantially cut.  These changes were clearly foreshadowed in the original consultation process, prior to release of the proposed legislation.

The second stage of proposals also includes regulations implementing Schedule 6 of the Raising the Bar reforms, which are directed towards simplifying and streamline various processes.

In a nutshell, the major time-related proposals are:

1. significant reductions in the time available for examination of a patent application, and for the applicant to overcome all objections and achieve acceptance (or ‘allowance’, as it is more-commonly called in some other jurisdictions) of the application;
2. reductions in some of the periods allowed for completing steps in opposition proceedings – particularly ‘procedural’ oppositions, such as opposing an amendment or the grant of an extension of time; and
3. major reform to the test applied to determine whether an extension of time to file evidence in an opposition is justified – under the current Regulations it has become difficult for the Patent Office to refuse an extension request, while the proposed Regulations will place the onus of establishing the case for an extension firmly on the requestor.

We have updated our ‘redlined’ copy of the present Regulations, showing the changes that would be made by the proposed amending regulations, which can still be found at the following links:

1. Volume 1 (Chapters 1 to 23 and Schedules 1, 1A and 2) [PDF 1.6 MB]; and
2. Volume 2 (Schedules 2A to 8 and the Notes) [PDF 422 kB].

The due date for written submissions on the draft regulations is unchanged by the release of this additional tranche.  Any submissions must still be filed by the unextendable deadline of 5.00pm, on 21 November 2012. Submissions may be emailed (Word or RTF format preferred) to reform@ipaustralia.gov.au.

IP Australia Proposal Renders Innovation Patents ‘Obsolete’ - IPTA

As reported here last month (see IP Australia Gazumps ACIP, and Revives the Petty Patent!), IP Australia recently released a consultation paper proposing to replace the present ‘innovative step’ test for innovation patents with the ‘inventive step’ test as will apply to standard patents following implementation of the Raising the Bar Act.

If the proposals become law, innovation patents will have exactly the same patentability requirements as standard patents, but with a shorter term, limited number of claims and restricted subject matter.  As we argued in our earlier article, this would effectively represent a return to the ‘petty patent’ system, which was widely regarded as a failure – rarely used, except for tactical purposes.  This was precisely the reason the Australian Council on Intellectual Property (ACIP) recommended the introduction of the innovation patent as a new ‘second tier’ system of protection for lower-level advances.

The stated purpose of the innovation patent system was to stimulate innovation in Australian small-to-medium enterprises (SMEs) and to provide for protection of their lower level inventions.  Without a distinct ‘innovative step’ test, this purpose will not longer be satisfied.

Patentology is not alone in holding these views.  The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) has circulated a notice to members regarding IP Australia’s proposal, to which was attached a letter setting out IPTA’s position on the proposed reforms.

As many readers will be aware, Patentology is steadfastly independent.  We are not a member, or otherwise formally affiliated, with IPTA, although we are always happy to publish the sincerely-held views of people or organisations with a genuine interest in the Australian patent system, even if they do not accord with our own.

On this issue, however, we are absolutely as one mind with IPTA.  What follows is a copy of the letter setting out IPTA’s position on IP Australia’s proposal for the innovation patent system, and we encourage readers – particularly those connected with Australian SMEs – to consider making formal submissions to IP Australia, and to bring this article to the attention of like-minded associates and colleagues.

Smartphone Wars, Gangnam Style!

There is an incredible video on YouTube which shows South Korean pop star PSY performing his global viral hit Gangnam Style in front of a Seoul audience of 80,000 fans.  The entire audience pulses with the waving of arms in time to the music, which is itself barely audible over the noise of the crowd which, to a man, woman and child, appears to know every single word of the song.

To find a comparable achievement by an artist in the western world, you might have to go back to Queen's performance at the Live Aid convert in 1985, which was remarkable for the fact that, while the crowd of 72,000 was slightly smaller than PSY's, Freddie Mercury had them eating out of his hand despite the fact that they were not a dedicated Queen audience.

But if the PSY phenomenon demonstrates anything more broadly, it is that Apple should be afraid… very afraid!

So what has K-Pop got to do with smartphones, we hear you cry? We think quite a lot, as we shall explain.

Dangerous Opinions

A couple of weeks ago I received a call from a person – let’s just call them ‘X’ – who is involved, in a professional capacity, in one of the Australian Federal Court matters about which I have written over recent months.

To be clear, X was perfectly courteous, and the conversation that we had was not at all inappropriate.  While I do not know X personally, they are well-known and highly-regarded within the Australian IP professions as a person of the highest integrity.  X did not pressure me to change anything I had written, but simply wanted to provide some additional background information so that I would have the opportunity to ensure that my reporting was as factually accurate as possible.

It seems, additionally, that some concerns had been raised about what X’s clients might infer if they were to read my articles on the case.

With all due respect to those involved in the case (and I mean that sincerely, not in the disingenuous way the phrase is sometimes used in legal argument), what I would hope anybody reading any of my articles would infer is that they are written by a patent attorney who is not – unless expressly disclosed – privy to any inside information regarding the matters under discussion, and that they provide commentary comprising a mix of facts and personal opinions.  I credit the readers of the Patentology blog with intelligence (an assumption generally supported by the quality of comments and other feedback I receive), and I would hope that X’s clients, like any other reader, would have the reading comprehension skills necessary to distinguish between fact and opinion.

However, there are undoubtedly dangers in expressing opinions online, particularly when those opinions relate to legal proceedings and might reflect on matters such as the correctness of a judge’s decision, or the effectiveness of a legal team’s strategy.  There is sometimes a fine line between writing commentary which may provide some insight into a matter for readers who are not experts in the area, and writing something which might be perceived as prejudicial or defamatory.

It might therefore be useful to set down a few of my thoughts on these issues, and suggest some of my preferred options for people who disagree with me, who think I have got something wrong, or who feel aggrieved by something I have written.

Reading Prior Art When the Times, They Are A-Changin’

Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2012] FCA 944 (31 August 2012)

Construction – consideration of how a person skilled in the art would have interpreted and understood the prior art – time at which prior art is to be construed

There are many issues of patent law touched upon in the 369 paragraph decision of Justice McKerracher in Bradken Resources v Lynx Engineering, however in this article we will look at just one – the continuingly vexed question of the date at which a prior art document is to be interpreted (the more common terminology in patent law being ‘construed’).

As the court noted in this recent case (at [211]) there appears to be a schism in the authorities on this question.  Two different dates – possibly very different in some cases – are generally proposed as being the relevant time to assess the meaning and content of a prior art document:

1. the date of publication of the prior art document; or
2. the priority date of the claim which is being assessed (e.g. as to novelty or inventive step) in relation to the prior art document.

As we shall explain, there are sound reasons why either one of these dates might be chosen, although generally for different purposes.  There are (at least) three different reasons for which one might want to understand exactly how a document should be understood:

1. to determine what is meant by various terms used in the document;
2. to determine whether the document shows that something was fully known and/or used at some time in the past (e.g. to assess novelty of a claim); and
3. to determine whether a skilled person would be able, after reading the document, to arrive at something which, while not fully described, could nonetheless then be derived by routine steps (e.g. to assess obviousness of a claim).

We would argue that only the third of these reasons should involve any consideration of the state of the art, or the knowledge and understanding of a relevantly skilled person, at the priority date of the claim(s) under consideration, and even then the meaning of the document at its date of publication remains a relevant consideration.

In this case, the court construed a prior art document at its date of publication (in 1936), for the second purpose above, i.e. to assess the novelty of Lynx’s patent claims, which we consider was the correct approach.

Can I – and Should I – Patent My Smartphone App?

One of the most common types of enquiry we receive in our day-to-day practice is about patenting of smartphone (i.e. iOS or Android) apps.  Indeed, if we had a dollar for every prospective new client who had rung up or emailed to ask how to protect their ‘million dollar app’ idea, we would have… well… probably more money than we have made from actually preparing and filing patent applications based on these enquiries!  Because most of them end up going nowhere, once we have had a conversation about the pros and cons of patenting.

This post will explain why.  And it is not because smartphone apps cannot be patented – many of them most probably can be.  However, for most inventors the appropriate question is not ‘can I patent my smartphone app?’ but ‘should I patent my smartphone app?’  This second question is difficult to answer without having a solid business plan, which is something that has rarely been considered by people calling a patent attorney because a fried or relative told them: ‘that is a great idea, you should patent it!’

These days, the Apple iTunes App Store and Google Play (the Android equivalent) are incredibly competitive marketplaces.  According to recent data from app analytics specialists Flurry, there are over 600,000 apps now available from each of these markets.  Wikipedia entries for the two stores place these figures for September 2012 at 700,000 apps in the Apple App Store and 675,000 apps on Google Play.  Whichever figures are most accurate, this is an awfully large number of apps!

If you are going to make any money in these markets – whether by app sales, through in-app revenue and/or via advertising – you are going to have to get noticed first.  And clearly there is much more to this than just having a great idea.  (In fact, this may be the least important element, unless you are the sort of person who thinks that flinging kamikaze birds at green pigs with a slingshot is a ‘great’ idea!)

Ask not, therefore, whether your app idea can be patented.  Ask instead whether it is worth patenting.  This is as much a business question as an IP issue, and for many – perhaps the majority – of app inventors, the answer may well be ‘no’.