01 January 2014

Patents 2013/2014 – A Review and a Preview of the Year Ahead

2014It can safely be said that the year just passed was a relatively eventful one for the global patent system.  With my particular focus on Australia and New Zealand, I would highlight the commencement of the Raising the Bar reforms in Australia, and the passage (finally!) of the New Zealand Patents Act 2013 as particularly noteworthy developments in this part of the world.  But, of course, the commencement in March of the America Invents Actbringing to an end the first-to-invent system in that country – was far more significant in the overall scheme of things.

Yet these legislative changes were, in many ways, just the tip of a veritable iceberg of patent-related news in 2013.  The patentability of genetic technology was in the spotlight, with decisions being issued by the Australian Federal Court in February, and by the US Supreme Court in June, in relation to Myriad Genetics’ patents on the BRCA1 gene and associated tests for assessing breast cancer risk in women.  An appeal of the Australian decision (in favour of Myriad’s claims) was heard by a panel of five judges of the Federal Court in August.

In the realm of software and ‘business method’ patents, the Australian Federal Court upheld one Patent Office decision to reject claims on the basis that they were not directed to patent-eligible subject matter, and overturned another.  Both decisions are currently on appeal to a full bench of the court.  In the US, the Court of Appeals for the Federal Circuit completely failed to come to terms with patent-eligibility of software-implemented inventions in the case of CLS Bank v Alice Corporation which is, as a consequence, now on its way to the Supreme Court.

Australia’s High Court confirmed the patent-eligibility of methods of medical treatment, and in particular of methods for treating conditions using known pharmaceutical substances that have not previously been known to be effective for that purpose.  Meanwhile, in India the Supreme Court dealt a blow to ‘Big Pharma’ by declaring Novartis’ cancer drug Glivec/Gleevec to be ineligible for patent protection on the narrow basis that the active ingredient showed no significant improvement in therapeutic efficacy over its predecessor (although it had other beneficial properties).

‘Patent trolls’ were consistently in the news.  And while Congressman Goodlatte was successful in securing House of Representatives support for ‘troll-busting’ reforms in the US, the Australian Federal Court demonstrated how the system in this country is unfriendly to those who would seek to use extortionate tactics to monetise patents.  (And, in June, even Hitler received a threat from a patent troll!)

Late in the year there was a changing of the guard at the highest level within IP Australia, while the USPTO (controversially) continues to operate without the benefit of a permanent Director, despite the announcement in December that former Googler Michelle Lee will commence as Deputy (and Acting) Director this month.

This is a highly selective list, based largely on what I have chosen and managed to cover over the course of the past year.  And 2014 is shaping up to be just as eventful as 2013.

So what do I think we can look forward to over the coming year?  Many things, of which the following is a small but significant sampling.

Gene Patents

In the realm of gene patents, the five-judge panel of the Australian Federal Court will issue its decision in the Myriad BRCA case.  I expect that this will happen in the first half of the year, and if I were pressed to predict an outcome I would say that the court will most likely uphold the decision of the primary judge, finding Myriad’s claims to isolated DNA to be patent-eligible.  However, this is no certainty, and I think a majority (rather than unanimous) judgment is likely, whichever way it goes.

The losing party in the Myriad case is also likely, in my opinion, to seek leave to appeal the decision to the High Court.  Whether the High Court will agree to hear such an appeal will depend upon the outcome and reasoning in the Full Federal Court decision, and the proposed basis for the appeal, so it is difficult to predict the prospects of an Australian High Court ruling on patent-eligibility of genes.  But it is certainly on the cards, particularly in view of the High Court’s interest in reviewing the patentability of methods of medical treatment last year.

Computer-Implemented Inventions and Business Methods

In relation to software and business method patents, I anticipate that the three-judge panel of the Australian Federal Court will issue its decision in the Research Affiliates appeal during the first few months of 2014.  I attended the hearing in this case, and I consider it to be very finely balanced.  I hope that Research Affiliates succeeds, primarily because I expect that this will result in a simpler, more practical and workable test for patent-eligibility.  The US experience shows that efforts to draw a clear boundary between eligible and ineligible computer-implemented inventions are prone to failure and confusion.  The ‘merit’ of an invention is better assessed on the basis of obviousness rather than the blunt instrument of subject matter eligibility.

The Research Affiliates case is also one which could go before the High Court, and I anticipate that an application to appeal is likely if Research Affiliates loses.

I will not speculate at this stage about the progress of the other software patent case currently before the Australian Federal Court, RPL Central.  Whether the Full Court appeal proceeds, and/or whether it does so during 2014, will depend heavily on how the Research Affiliates case pans out.

In the US, the Supreme Court will hear oral arguments the in the CLS Bank v Alice Corporation case.  Whether it will issue a decision during 2014 is another matter – I will not be holding my breath.

In New Zealand, the Patents Act 2013 will commence operation in September, ushering in a European-style approach to the patent-eligibility of computer-implemented inventions.

Apple v Samsung

During 2014 the Australian Federal Court will finally issue a judgment on at least some of the substantive issues of patent infringement and validity in the Apple/Samsung dispute.

With the court having had the benefit of hundreds of hours of testimony and legal argument, and volumes of written evidence, which of course I have not seen, it is impossible to predict any outcome with confidence.  But I am probably not going too far out on a limb to suggest that Samsung will be found to have infringed some of Apple’s patents, and Apple will be found to have infringed some of Samsung’s patents.  More interesting will be whether any of either company’s infringed patent claims are found to be invalid, considering that it is quite difficult to establish obviousness under the applicable Australian law.

There will be some debate about the grant of injunctions, and the quantum of any damages (particularly in relation to Samsung’s standard-essential patents), and the extent to which the infringement findings apply to any products still on the market.  But much of this will be of little consequence in 2014, because both parties will doubtless take issue with aspects of the first instance decision(s), and will appeal to a full bench of the Federal Court.  The appeal will drag the proceedings out for at least a further year, and in the meantime both companies will continue to sell a range of products to Australian consumers.

To my mind, a bigger question is whether 2014 will finally be the year in which Apple and Samsung bury the hatchet and reach some form of workable global settlement of their disputes.

The Troll Phenomenon

‘Patent trolls’ will continue to make the news, and to have a political impact in the US.

In Australia, the Vringo v ZTE and Upaid v Telstra cases will continue to progress slowly through the Federal Court process.  I have argued that neither Vringo nor Upaid are true patent trolls, and I am currently working on the assumption that both are pursuing genuine infringement claims as a means to secure long-term licence agreements with ZTE and Telstra.  However, if I am wrong about this, and either one is merely pressing an opportunistic claim in the hope of a quick payoff, then I would expect that they could well decide to cut their losses and abandon the Federal Court action.  Upaid has already suffered a setback, which will have given it a taste of the standards it will be expected to meet in order to succeed against Telstra.

Meanwhile, in the US, I have every expectation that the Senate will pass legislation paralleling Congressman Goodlatte’s Innovation Act, and that the two houses of Congress will agree on new laws intended to rein in the activities of patent trolls by erecting some barriers similar to those which Upaid has recently encountered in Australia.

More Reform for Australia?

Further patent system reviews and law reforms lie ahead for Australia, as well.

The final report on the Review of the Innovation Patent System undertaken by the Advisory Council on Intellectual Property (ACIP) is now overdue, and can therefore (hopefully) be expected soon.

A number of further amendments to the Australian Patents Act 1990 were stalled when a federal election was called last year.  Some of these – such as the changes to implement a single application and examination system for Australia and New Zealand, and to introduce a single regulatory regime for patent attorneys in the two countries, along with various minor amendments to correct errors and oversights in the Raising the Bar reforms – are likely to be reintroduced to the Australian parliament in the near future.

Others, including reforms to compulsory licensing provisions, may be delayed for longer, since they were not supported by the (then opposition) conservative coalition parties, which now control the House of Representatives.

In May 2013, the Australian Government’s Pharmaceutical Patents Review Panel delivered its final report to the former government.  A draft report was released for comment in April 2013, and is currently available on the IP Australia web site.  To my knowledge, the final report has not been released to the public, so I cannot comment on whether there were any changes subsequent to the draft (which was not well-received by all stakeholders).  There has also not, as yet, been any government response to the review.  Whether there will be any further progress in 2014, or whether the review will simply be set aside by the new government, remains to be seen.

Conclusion – What Are Your 2014 Predictions?

Obviously in reviewing the year ahead, I have focussed mainly on Australia.  There will be plenty happening here, and I know the landscape well enough to be fairly confident in making a few tentative predictions.

If you think I have forgotten anything significant, got something wrong, or if you wish to add your own predictions for patent-related events in your area of the world, please add your thoughts in the comments below.

My thanks to all the readers who followed Patentology in 2013, and very best wishes for the new year!

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