31 March 2013

The Growth Profession of ‘IP Economist’

Economics The Managing IP blog reported this week on comments made by Professor Sir Robin Jacob in his speech inaugurating the Sir Hugh Laddies Chair in IP Law at University College London.  In particular, Managing IP blogger James Nurton took Sir Robin to task for his criticisms of the increasing role being played by economists in IP policy.

I recently had the privilege of hearing Sir Robin speak at the University of Melbourne, on the topic of 'Patents – is Europe making a mess of things?'  In that talk, he also touched on what he sees as the inappropriate, unnecessary and potentially damaging influence of economists over IP policy in various jurisdictions.

I have to say that I am inclined to similar views.  We are seeing a corresponding rise of economists to positions of influence within the Australian IP system.

27 March 2013

High Court Declines (Again) to Weigh In on Innovative Step

Judge - gavel The High Court of Australia has turned down an opportunity to review the standard of ‘innovative step’ under the Patents Act 1990, effectively confirming once again that the Full Bench of the Federal Court in Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd [2009] FCAFC 81 correctly decided the matter back in 2009.

This latest opportunity arose in relation to a dispute over mining processes, between SNF (Australia) Pty Ltd (‘SNF’) and Ciba Specialty Chemicals Water Treatments Limited (‘Ciba’).  Ciba is the owner of a number of innovation patents covering methods for processing waste products from mining, i.e. the so-called 'tailings', which generally comprise a slurry of particles (clay, sand, dirt, etc) suspended in water.  Ciba accused SNF of infringing its patents, and SNF in fact conceded that it had been using a process which fell within the scope of Ciba's claims, and thus would be liable for infringement, if the claims were valid.

Naturally, SNF contended that Ciba's patents claims were invalid for (among other grounds) lack of novelty, and lack.of innovative step.

I wrote about another aspect of the original decision in this case (the application of the indirect infringement provisions in section 117 of the Patents Act) back in July 2011.  The issues of novelty and innovative step, which appeared to have been decided in accordance with the established legal principles, did not seem very interesting at the time.

The Story In Brief

The primary judge found in favour of Ciba, i.e. that its claims were novel, and involved an innovative step.  SNF appealed this ruling to a Full Bench of the Federal Court, which handed down its decision upholding the original judgment in June last year (SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Limited [2012] FCAFC 95).  I did not report on that largely unremarkable decision at the time, however it has taken on new interest in view of the fact that SNF sought Special Leave to appeal to the High Court of Australia.

The Special Leave application was heard – and denied – on 15 March 2013.  SNF presented the High Court panel (comprising Chief Justice French and Justice Gageler) with an interesting proposition in relation to innovative step.  Specifically, counsel for SNF contended that if a point of difference between a claim of an innovation patent and the prior art could, in at least some circumstances, have a negative or disadvantageous effect, then this should mean that the claimed feature makes 'no substantial contribution to the working of the invention', and thus does not comprise an innovative step.

The High Court was profoundly uninterested in taking up this point.  Nor did it consider the other ground of appeal raised by SNF – regarding interpretation of the term ‘improved rigidification’ – to involve any legal principle worthy of its attention.  Indeed, the Court did not even need to hear from counsel for Ciba before refusing the application for Special Leave, with costs awarded against SNF.

21 March 2013

Patents Not to Blame for High Cost of Drugs in Australia

Drugs and money An article in the Fairfax media this week contends that ‘Australia is wasting more than a billion dollars a year by paying up to 64 times too much for some prescription drugs’.

The claim derives from a report (wittily entitled Australia’s Bad Drug Deal) prepared by Stephen Duckett, former secretary of the Australian Commonwealth Health Department, for the non-aligned think tank The Grattan Institute.

Casual readers skimming over this news might well be inclined to assume that the usual suspects are to blame for high drug prices, i.e. ‘big pharma’, and its pushing of patented ‘blockbuster’ drugs.  However, the report makes for very interesting reading, and tells a very different story.

In reality, according to Duckett, patents pay only a minimal role in the excessive prices being paid, in comparative terms, by the Australian people, mostly by way of the government support provided by the federal government under the Pharmaceutical Benefits Scheme (PBS).  Most of the A$1.3 billion annual savings identified in the report would be made on generics, not patented original drugs.

The real culprits, according to Duckett, are the government itself – for failing to compel more substantial price reductions when drugs go off-patent – and retail pharmacies – for cosy arrangements with both the government and the generic suppliers, which net the industry A$105 million per year in government subsidies, along with an unknown amount resulting from manufacturer discounts.  Duckett describes these discounts, which put money directly into the pockets of pharmacists, as ‘windfall income [that] was not intended when PBS prices were agreed.’  A more recent price disclosure policy has gone some way towards reining in excess profits resulting from discounts, although there appears to be evidence that pharmacists and suppliers are finding creative ways around this policy.

16 March 2013

How PatentlyApple Harms Patents – Including Apple’s

One bad apple Up until now I have had an informal, unwritten policy of not critiquing other blogs.  After all, I know as well as anyone just how much hard work goes into maintaining a blog, coming up with ideas for articles, and finding the time and energy to actually write them.  Anybody who does that deserves a certain degree of respect, even if I happen to disagree with everything they say!  After all, everyone is entitled to their opinion.

However, there are opinions, and then there are facts.  And when a widely read blog consistently posts false or misleading information, there is absolutely no good reason not to call them on it.  This is particularly true when that misinformation has the potential to influence views in a matter of significant public interest, such as the debate over the merits (or otherwise) of patents for computer-implemented inventions (please note that I am deliberately avoiding the meaningless term ‘software patents’).

One blog with which I have a huge problem in this regard is PatentlyApple.  For those unfamiliar with the blog, it is an overtly partisan celebration of all things (allegedly and actually) innovative at Apple, Inc.  Occasionally, this involves spiteful attacks on all things (allegedly and actually) imitative at Apple’s competitors, such as Samsung and Microsoft.  However, it is not these matters of opinion or rhetoric with which I have a problem.

My big issue with PatentlyApple is the way in which it consistently misconstrues and misrepresents the content and scope of the patents and applications – of Apple and others – which it purports to explain.  The reason for this is simple – PatentlyApple is not written by a patent attorney.  The fact is that it takes many years of training and experience to interpret a patent specification, and particularly the claims, which are ultimately determinative when it comes to assessing what the patent covers.  And having typically spent a number of illustrated paragraphs purportedly explaining to a large audience what a patent application is all about, PatentlyApple’s disclaimer that it is necessary to read the ‘full text’ of the document to obtain complete details just does not cut it!

13 March 2013

Innovation Patent Claims Found Invalid in Dynamite Decision

Dynamite Games Pty Limited v Aruze Gaming Australia Pty Limited [2013] FCA 163 (4 March 2013)

Dynamite Australia’s innovation patent is widely considered to have an unreasonably low threshold of validity – so much so, in fact, that last year IP Australia put forward a proposal to eliminate the ‘innovative step’ standard entirely, and require that innovation patent claims meet the same test for ‘inventive step’ as a standard patent.  You could therefore be forgiven for thinking that pigs might sprout wings and take to the air before an innovation patent would be found invalid on grounds of lack of innovative step.

Yet – until and unless there is a successful appeal – you may need to keep your eyes peeled for porcine aviators, because a judge in the Federal Court of Australia has done just that, striking down all asserted claims of an innovation patent held by Dynamite Games Pty Ltd (‘Dynamite’) for failing to meet the innovative step threshold.  Dynamite had sued Aruze Gaming Australia Pty Ltd (‘Aruze’) for infringement of various claims of a standard patent relating to gaming machines, along with a number of claims of a related innovation patent.

Aruze, in turn, sought revocation of the patents on numerous grounds available under the Patents Act 1990 – that none of the claims is for a manner of manufacture; that the claimed invention is not novel; that the claimed invention does not involve an inventive step or an innovative step; that the claims are not clear and succinct; and that the claims are not fairly based on the matter described in the body of the respective specifications.

The decision is interesting for a number of reasons, starting with the fact that it is a judgment of Justice Emmett, the same Federal Court judge who recently found the ‘business method’ claims of a patent application filed by Research Affiliates, Inc, to be invalid on the basis that they were not patent-eligible under the ‘manner of manufacture’ test.  Justice Emmett considered all of the asserted grounds of invalidity of Dynamite’s patent claims, but declined to formally rule on any of the others after first finding the standard patent claims to be obvious, and the innovation patent claims to lack an innovative step.  However, he did indicate that, had he needed to do so, he would have been inclined also to rule against Dynamite on the grounds of lack of novelty and lack of ‘manner of manufacture’.  In doing so, he reprised some of the themes of his Research Affiliates decision.

07 March 2013

Yvonne D’Arcy Appeals Decision Upholding Patenting of Genes

Cancer definitionOn 4 March 2013 the law firm of Maurice Blackburn filed an appeal to a Full Bench of the Federal Court of Australia, on behalf of cancer survivor Yvonne D’Arcy, challenging the 15 February ruling of Justice Nicholas, in which the court confirmed the patent-eligibility of isolated gene sequences.

The original challenge was launched by Ms D’Arcy, along with Cancer Voices Australia Pty Ltd, asking the Federal Court to revoke claims 1 to 3 of Australian Patent no. 686004, each of which is directed to ‘an isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide…’.  Mutations in the BRCA1 gene are correlated with increased breast cancer risk, and can therefore be used as a basis for early detection of a predisposition towards development of cancer.

Other claims of the patent, directed to related subject matter such as ‘probes’, ‘cloning vectors’, ‘expression vectors’, ‘transformed host cells’, along with methods of testing and diagnosis, have never been challenged in these proceedings.

The recent decision of the court was therefore directed to a very narrow single issue: whether isolated genes are inherently eligible for patent protection (assuming that they meet all of the other requirements, such as novelty, inventive step, utility and so forth).  Justice Nicholas essentially ruled that since an isolated gene, removed from its natural environment with a cell, and separated from the remainder of a DNA molecule, can only occur as a result of human intervention, it constitutes an ‘artificial state of affairs’ which is eligible, in principle, for patent protection.

04 March 2013

Inventiveness – It’s Just Not Obvious!

Light BulbI am going to go out on a limb, and suggest that the Holy Grail of patent law is an objective standard of nonobviousness.  Despite everybody having an opinion about how much ‘inventiveness’ should be required to justify the grant of a patent monopoly, there has never been a universally-accepted standard against which this can be assessed, and I suspect that there never will be.

I think it is worth having another look at this issue now, with new Australian legislation set to ‘raise the bar’ on inventive step (among other requirements) from 15 April 2013.  How successful will this latest effort be in striking the right balance of ingenuity against the reward of a patent?  I confess to being somewhat sceptical, based on the history of inventive step in the Anglo-Australian tradition, especially when other countries seem to be faring little better with their own approaches.

Arguably, the most disastrous attempt to introduce objectivity into inventiveness has occurred in Australia.  The Patents Act 1990 set out a formula for the assessment of inventive step that was so inflexible it proved possible, metaphorically speaking, to crawl under the bar, leading to what was possibly the worst ever patent judgment by the High Court of Australia, Philips v Mirabella [1995] HCA 15.

02 March 2013

Research Affiliates Appeals ‘Business Method’ Loss

PleadingOn 27 February 2013, Research Affiliates, LLC (‘RA’) filed an application for leave to appeal the decision of a single judge in the Federal Court of Australia, which upheld the Patent Office’s rejection of a patent application directed to the construction and use of passive portfolios and indexes for securities trading.

As I explained in my report of the recent decision, I believe that there are a number of questionable aspects of the court’s reasoning which leave the law regarding the patentability of computer-implemented business processes in an unsatisfactory state of uncertainty.  I am therefore very pleased to see that RA is seeking to take this issue to the next stage, and I am hopeful that the Full Court will agree to hear the appeal.

In many disputes that come before the Federal Court, there is an automatic right of appeal to a Full Bench (three judges) of the court.  However, this is not the case where the initial decision is itself the result of an appeal from a decision of the Commissioner of Patents.  Subsection 158(2) of the Patents Act 1990 states that:

Except with the leave of the Federal Court, an appeal does not lie to the Full Court of the Federal Court against a judgment or order of a single judge of the Federal Court in the exercise of its jurisdiction to hear and determine appeals from decisions or directions of the Commissioner.