A ‘Common Design’ to Infringe

Bayer Pharma Aktiengesellschaft v Genentech, Inc. [2012] FCA 1467 (20 December 2012)

The Australian Federal Court has ruled that biotechnology company Genentech Inc can serve a claim of infringement of an Australian patent on Regeneron Pharmaceuticals Inc at the address of its New York headquarters.

Regeneron has no local presence in Australia, and is not itself directly engaging in any activities that would infringe Genentech’s Australian patent.  However, the court has found that Regeneron has engaged in a ‘common design’ with pharmaceutical company Bayer Pharma AG, and its Australian subsidiary Bayer Australia Limited, to undertake actions in Australia that would, on the face of it, infringe the patent.

Drawing a foreign company or individual with no local address into Australian litigation, while greatly simplified by the Hague Service Convention, nonetheless requires an application to the court, and a showing that a number of requirements are satisfied, as set out in Rules 10.42 and 10.43 of the Federal Court Rules.  The requirements include:

1. that the court has jurisdiction in the matter;
2. that the proceeding has a relevant connection to Australia (as set out in Rule 10.42); and
3. that the applicant has a prima facie case for all or any of the relief claimed in the proceeding.

The first two of these requirements are clearly met – the Federal Court has jurisdiction over matters arising under the Patents Act 1990, and the proceeding relates to the alleged infringement of an Australian patent by activities occurring in Australia.

In this case, it is the third requirement which is of greatest interest, since Genentech does not contend that Regeneron is itself undertaking, or proposing to undertake, any infringing activities in Australia.  The principal allegation is against Bayer Australia Limited.  Regeneron’s alleged liability arises as a result of an agreement it has entered into with Bayer Pharma AG.

Six Tips for Your Business to Avoid Wasting Money on Patents

For many small and medium sized businesses, it can seem difficult to justify spending thousands of dollars on the preparation and filing of a provisional patent application, let alone spending tens of thousands more on obtaining actual granted patents over the subsequent years.

On the other hand, those same businesses may have annual salary costs in the hundreds of thousands, or millions, of dollars.  And they may think nothing of spending ten thousand dollars or more on attending an international trade show to promote their products or services.  These expenses, along with many others, are simply the cost of doing business.  After all, you have to spend money to make money.

A patent can protect innovative features, which differentiate a product or service in the marketplace, from copying by competitors.  Those features may have cost tens or hundreds of thousands of dollars in direct and indirect costs to develop, promote, and bring to market.  They may be the result of particularly innovative thinking on the part of highly-valued (and highly-priced) key staff within the business. 

If this sounds like the kind of thing that happens in your own business, why would you not be looking to protect this investment against copying?  Part of the problem seems to be that many businesses lack experience with intellectual property management and protection, and therefore do not have a sense of what constitutes a ‘reasonable’ cost for these activities.  Intellectual property, by its very nature, is intangible – it is very difficult to determine exactly what it is worth.

So if you are looking to build a patent portfolio, how do you know if you are getting good value for money?  And how do you avoid ‘wasting’ money on services and IP assets that do not contribute value to your business? 

There are no simple answers to these questions, and certainly none that are universally applicable.  Nonetheless, here are a few tips that may help you to avoid some of the mistakes that many businesses make, which cause them to waste money on patents and advice that are not adding corresponding value to the business.

Good News for SMEs as IP Australia Takes Feedback On-Board

IP Australia has published an update on its ongoing IP law reform process, providing its response to feedback received from stakeholders in relation to proposed amendments to regulations implementing the Intellectual Property laws Amendment (Raising the Bar) Act 2012.

The good news for Australian inventors and small-to-medium enterprises (SMEs) is that, among other improvements to the proposed rules, IP Australia has backed away from plans to introduce a compulsory ‘preliminary search and opinion’ (PSO) process for certain new Australian patent applications.  As we explained in an earlier article, the original proposal would have disproportionately impacted smaller local applicants, requiring an additional up-front payment of A$2200 at filing of an Australian complete standard patent application. 

The PSO process will be available, upon payment of the fee, to any applicant wishing to take advantage of it voluntarily.

Other changes to be made to the draft regulations as a result of feedback received by IP Australia include:

1. a reduction in a new search fee – proposed to be levied in all cases in which no existing Australian, foreign or international search results are available – from A$1710 to A$1400;
2. the requirement for an applicant to provide a statement of entitlement will be shifted from filing (as previously proposed) to the time of requesting examination;
3. the regulations will be amended to ensure that it is not necessary for a simple name change of a patentee to be advertised for opposition purposes;

Additionally, IP Australia has recognised the desirability of some modifications to proposed practices, which will not require amendment of the regulations.  This will include using electronic means (e.g. email) whenever possible for the filing and giving of evidence and documents in oppositions, to avoid disadvantaging parties due to postal delays.

Various minor amendments, corrections and clarifications will also be made to the draft regulations, based on stakeholder feedback.

Scams – a Timely Reminder

The latest (13 January 2013) issue of WIPO’s PCT Newsletter (which can always be found here in HTML format, with back issues available here in PDF format) includes a timely reminder about unofficial requests for payment of fees, otherwise known as IP registration scams.

It has been a while since we have reminded readers about patent application registration scams.  Only slightly more recently, we reported on the rise of trade mark renewal ‘services’, which send unsolicited letters to trade mark owners offering to pay upcoming renewal fees for a not-so-modest commission.

Clearly, the trade mark renewal services are still operating, no doubt with some success.  We recently handled a phone enquiry from a client who had received a notice from the company calling itself Patent & Trademark Organisation offering to pay the renewal on a trade mark that was not due for 18 months!  That is certainly getting in early, since it is not even possible to pay the renewal fee until 12 months prior to the current expiry date.  Of course, an organisation sending unsolicited offers to pay renewal fees needs to make sure they get in ahead of the owner’s existing service providers!

Additionally, we received a new comment on our earlier post just this month, from somebody who had unfortunately been taken in by a renewal service letter, as well as one back in December 2012 from somebody else who was not.

White House in Disappointing Death Star Rebuff

The response of the White House to a recent petition urging the US government to construct a Death Star demonstrates exactly what has gone wrong with America today.

The Administration provided three main reasons for deflecting the will of the people, which basically boil down to:

1. it is too expensive;
2. it is too dangerous; and
3. it is just not good enough.

Once upon a time, we could have expected better from the executive leadership of the world's most powerful nation.  When someone suggested that America stick it to the commies by putting the first man on the Moon, did JFK say 'nah, it costs too much'?  No, he did not.  He said:

We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

And in doing so, he inspired a nation, and a world.

Then he set about applying great American ingenuity to the task, as provided by great Americans like Dr Wernher Von Braun, who was flexible enough to move from the V-2 to the Saturn V since, as the equally great American political analyst Tom Lehrer would later put it, 'Once ze rockets go up, who cares vere zey come down: zat's not my department...'.

Australian Patent Grants Plateau in 2012, Microsoft Slips to No. 6

The chart to the left shows the total numbers of patents granted in Australia on an annual basis between 1992 and 2012. Having reached unprecedentedly high levels in 2010 and 2011, the number of granted patents appears to have plateaued.

In 2012, the Johnson & Johnson-owned surgical supplies company Ethicon Endo Surgery was the number one recipient of newly-minted patents in Australia, more than doubling the number of Australian patents it received in 2011, to reach a grand total of 250 for the year.  This could hardly have been a more different outcome from the corresponding US results, where not just the top 10, but the entire top 50, is dominated by ICT and other tech-sector companies.

The other notable fact about the number of patents granted in Australia in 2012 is that the total appears to have plateaued at around 19,500 per year.  However, as we have explained previously, since IP Australia still has a significant examination backlog, the number of patents granted is not a function of the number filed in the previous years, but rather of the number and efficiency of examiners working their way through the waiting list.  Apparently, there was little change in the available resources last year, although we understand that IP Australia has recently been recruiting more new examiners.

As for the US results, this week, patent research company IFI CLAIMS Patent Services released its annual list of the top 50 assignees of US patents issued in the previous year.  There are no surprises at the top of the list, with IBM coming in at number one for the 20^th successive year.  Samsung is again number two, though this year IBM has actually pulled ahead a little.  Third-placed Canon is not even close to the top two, running nearly 2000 patents behind Samsung.

‘Software Patents’ – A Problem of Definition?

It is no secret that the folks at the technology news site Ars Technica are no fans of patents in general, or of ‘software patents’ in particular.  It was Ars that got stuck into Australian scientific research body CSIRO last year, because it had the temerity to invent something useful for wireless communications nearly 20 years ago, and then sue those companies that made millions from devices implementing the technology, while stubbornly refusing to enter into meaningful negotiations over licensing.

Last month, Ars reported the donation of US$500,000 to the Electronic Frontier Foundation (EFF), and the creation of the ‘Mark Cuban Chair to Eliminate Stupid Patents’, while bemoaning the fact that the EFF is looking ‘only’ to reform the patent system, while ‘[shying] away from calling for the abolition of software patents altogether’.

In our opinion, however, it is to the credit of the EFF that it is at least trying to engage with the issues around ‘software patents’ in a more nuanced manner.  However, there is a far greater problem with almost all debate around this issue than whether or not it should be about ‘abolition’ or ‘reform’.  The single most fundamental matter that must be resolved before we can have any type of meaningful discussion about ‘software patents’ is for us to agree on what we are talking about.

To put it simply, what is a ‘software patent’?

Not only has the EFF so far failed to address this question, it appears to have completely failed to recognise that it is an issue.  To see this, you need look no further than the EFF’s ‘Defend Innovation’ project site.  Starting with the first point of the proposed reforms, we see that ‘a patent covering software’ should have a shorter term than other patents.  OK, this is something we could meaningfully talk about.  Many software-based inventions do not require the same duration of protection in order to provide a fair return to their inventors when compared to, say, pharmaceutical products.

But what is a patent ‘covering software’?  Does this mean a patent with claims that could encompass a software-based implementation of the invention, even if the patent specification additionally, or alternatively, describes a hardware-based implementation?  What if part of the invention is implemented in software, and part in hardware?  Should a competing product have some form of defence to infringement after the shortened period if it is implemented in software, but not if it is implemented in hardware?  What if the invention cannot be implemented in software at the time of patenting, but then advances in technology and processing speeds make this practical later in the term of the patent?

Top Fives: What You Read, and What We Liked, in 2012

Firstly, we would like to wish all of our readers a very happy New Year, and all the best for 2013!

As arbitrary as the exercise may be, the roll-over of the date provides a prompt for many people to review the past year, take stock, evaluate successes and failures, and prepare for the challenges of the coming year.  Those who thought that the ‘Mayan Apocalypse’ would get them off the hook this time around are no doubt sorely disappointed, and under-prepared for the annual soul-searching!

In this general spirit, we are pleased to present your, and our, ‘top fives’ of 2012.