13 April 2014

Australian Patent Office Gets Serious About Inventive Step

Cronk v Commissioner of Patents [2014] FCA 37 (10 February 2014)

Dictionary - ExperienceThe Australian Patent Office has taken the (to my knowledge) unprecedented step of engaging an expert witness to assist in the defence of a Federal Court appeal from a decision to reject a patent application.  Furthermore, in a result that should act as a warning to future applicants finding themselves in a similar position, the approach has been successful!

The commencement on 15 April 2013 of the ‘Raising the Bar’ IP law reforms lifted the standard of inventive step (or nonobviousness) in Australia to a level comparable with that of comparable developed economies, such as the US and Europe.  However, the less stringent former law continues to apply to the multitudes of patents granted prior to the reforms, and to a majority of the thousands of applications that were still pending when the law changed.

But even before the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 had been drafted, IP Australia had announced its intention to begin the process of raising standards through changes in examination practice that would include a more rigorous approach to assessing inventive step.  This may have been the reason for the difficulty experienced by applicant Paul Andrew Cronk in overcoming the rejection of his application no. 2008229901.  An examiner’s rejection of the majority of claims in the application was upheld following a Patent Office hearing.  I wrote about this original decision back in May of 2012.

This outcome was unusual in itself.  Historically it has been very difficult for the Patent Office to maintain objections of obviousness, or lack of inventive step.  The inquiry into whether or not a claimed invention is obvious or not is strongly evidence-based under Australian law.  An applicant who provided even relatively weak evidence of inventiveness has usually been able to prevail, since the examiner is rarely in a position to provide any evidence at all, beyond documents found in the prior art search.

Standing by a rejection of this type was therefore a bold move, leaving the applicant with the options of abandoning the application, or appealing to the Federal Court.  Mr Cronk called the Patent Office on its decision, and appealed.  The Patent Office, in turn, raised the stakes, and obtained new evidence for use in the appeal.  The court has found that the Patent Office’s evidence is more relevant and credible, and dismissed Mr Cronk’s appeal.

The Original Patent Office Decision

In my earlier article I criticised the Patent Office decision.  While I did not necessarily disagree with the final outcome, I questioned whether it was actually supported by the available evidence.  Neither side, it seemed to me, had a particularly strong case.  But Mr Cronk at least had statements from two people who actually work in the industry (hydroponics) in which the invention (a lighting assembly) is used.  The Patent Office, on the other hand, relied upon inference and supposition based upon a number of earlier patent documents showing features similar to a key element of the claimed invention.

On balance I thought that, rightly or wrongly, Mr Cronk should have succeeded in the Patent Office hearing.  While the claimed invention did not appear to provide a particularly significant step forward, actual evidence from persons working in the industry should have trumped the inferences drawn by the examiner and the hearing officer based upon their own view of the prior art.

(As an aside, I also noted that the examiner and the hearing officer appeared to have applied the wrong version of the law and that, had they applied the correct version, then the case for lack of inventive step would have been stronger.  This issue does not seem to have been raised by either side in the appeal and, given that the outcome would have been the same, is no longer of any consequence.)

A Patent Office Without Evidence…

Had the Federal Court appeal proceeded on the basis of the same materials that were before the Patent Office, I have little doubt that Mr Cronk would have prevailed.  As the court stated at first instance in Emperor Sports Pty Ltd v Commissioner of Patents [2005] FCA 996 (upheld on appeal in [2006] FCAFC 26), at [100]:

Whether the information in the Cited Documents:
(a) formed part of the common general knowledge of [the skilled person] in the patent area before [the priority date]; or
(b) is information which such a person, confronted with the problem identified in the complete specification, could, before that date, be reasonably expected to have ascertained, understood and regarded as relevant,
cannot be known in the absence of evidence. Without evidence, resolution of these issues is a matter of mere speculation.

The Emperor Sports case represents a low water mark in the evaluation of inventive step in Australia, where an absence of evidence resulted in patent claims that most observers regarded as manifestly obvious being upheld by a single judge of the Federal Court, and then again on appeal to a full bench of three judges of the court.  This decision alone would have been enough impetus for reform of the Australian law of inventive step (see my 2011 article Patent Reform Exposed, Part I – Raising the Inventive Step).

Clearly the Patent Office would not have wanted to see a repeat of Emperor Sports!

Viewing the Matter Through Fresh Eyes

The Federal Court reviews decisions of the Patent Office on appeal ‘de novo’, i.e. the court starts again from scratch, bringing ‘fresh eyes’ to the matter and without deference to the Patent Office proceedings or decision.  One consequence of this is that new, or different, evidence may be introduced on appeal.

The Patent Office engaged an expert witness, Mr Stephen James Furzey.  The court described Mr Furzey (at [67]) as having:

…wide experience in the lighting industry, as an industry participant, as a teacher and from sitting on relevant standards and advisory committees. He was a relevant skilled addressee in the field of the Application, giving evidence about the lighting industry in Australia as at the priority date.

In additional to his own knowledge and experience, Mr Furzey provided examples and illustrations of product catalogues and other materials from his own collection, which were available before the priority date of Mr Cronk’s claims.  The court found Mr Furzey to be an experienced and credible witness, whose evidence was significantly stronger and more relevant than that of Mr Cronk’s witnesses. 

Mr Furzey’s evidence established that the supposedly inventive features of the lighting assemblies claimed in the patent application were well-known in the lighting industry before the priority date of the claims, and that employing them would have been merely a matter of routine, and thus obvious in the relevant sense (at [100]-[103]).

Conclusion – Applicants On Notice!

In the case of Mr Cronk’s application, the Australian Patent Office has demonstrated that it has learned the lesson of Emperor Sports, and is willing and able to do what is necessary to defend an appeal against the rejection of a patent application on grounds of lack of inventive step.

In the past, many in the patent profession would have found this scenario inconceivable, and would have operated on the assumption that overcoming an obviousness rejection was largely a matter of persistence.  However, it seems that the Patent Office can now be expected to stand by such rejections at the level of an internal hearing, and also put on a strong defence in the case of a Federal Court appeal – including by engaging expert witnesses if appropriate. 

Applicants will therefore need to consider carefully the strength of their case, and the value of obtaining granted patent rights, before committing to the expense of an appeal.  It is worth noting that the court dismissed Mr Cronk’s appeal with costs, as is usual under the Australian system.  This means that Mr Cronk is not only out of pocket for his own costs of running the appeal, but is also liable for the Patent Office’s reasonable costs of the court proceedings, including the cost of engaging its expert witness.

Image Copyright (c) 123RF Stock Photos

27 comments:

Mark Summerfield said...

There is an urgent need for IP Australia to clean up its corrupt practices before moving forward to actually implementing the new law.

Mark Summerfield said...

"Clearly the Patent Office would not have wanted to see a repeat of Emperor Sports!"


But still the law remains unchanged. It seems that IP Australia's true intention isn't to raise the standard & quality of IP examination. but to SELECTIVELY reject patent applications without clear support of the law.



Clearly, IP Australia does not have the expertise or resources to examine every application in detail and therefore could not have carried out a fair and objective examination for all applicants unless examiners were given strict guidelines to follow the precedents.



Is anyone interested in finding out WHO might be behind IP Australia's change in practices?

Mark Summerfield said...

Unfounded allegations of corrupt practices followed with a helping of conspiricy theory an hour later.

Did you put your foil hat on too tight this morning Alex?

Mark Summerfield said...

IP australia has been wrong since about 2010. There is no question that someone with alot of political muscles and probably an owner of alot of IP has been trying to sabotage other people's work without actually changing the law.

Also, lets not forget that Australia implements first-to-file IP system not a first-to-disclose system.

Mark Summerfield said...

Someone had to say it!

All we need now is for someone to mention 'drinking the Kool-Aid' and this place will be just like Patently-O.

Of course, everything that happened in this case is available on the public record. The applicant exercised his right to appeal under the Patents Act. He had his day in court, and lost fair and square.



Some people might disagree with the way IP Australia went about it, but with this degree of transparency accusations of corruption and conspiracy are clearly without foundation.


Incidentally, my point about the Emperor Sports case was that the Commissioner might well have been successful there as well, had she obtained suitable expert evidence. The court seemed to assume that AFL and NRL coaches and administrators are too stupid, blinkered or ignorant to identify and employ ideas from foreign codes. I doubt that is correct in this day and age or professionalised and corporatised sport. With the right expert, I habe no doubt the Emperor Sports case was winnable.

Mark Summerfield said...

Did you actually read and understand the article? This case is not about 'manner of manufacture', it is about inventive step. And the court found that the evidence clearly supported a conclusion that the claimed invention was obvious.

Mark Summerfield said...

IP Australia was also wrong about the tests for inventive steps perhaps not in this particular case but i am sure the tests were being incorrectly applied to some of the decisions i have read.

Mark Summerfield said...

The allegations are not entirely unfounded. Have you read some of the confusing decisions for rejecting computer / software related applications?

Mark Summerfield said...

I hope this decision does not result in over-zealous Examiners raising inventive step objections that lack substance, reasoning and legal precedent. I believe that if the Office wishes to go down this path, the Exam reports need to be a lot more detailed and clearly establish a skilled addressee before invoking the relevant statutes to raise inventive step objections. It is often a waste of money when objections are upheld during examination for incorrect or poor reasoning. Instead of following the correct approach only during appeal and not during examination (because the Office can do so) it is waste of the patent applicant's resources (time and money) to pursue the same rejection on appeal. I remain hopeful that at least at the hearing stage, the Patent Office will come up with reasonable basis for raising inventive step that could also include expert evidence.

Mark Summerfield said...

i think we can expect to see more decisions that lack substance and legal support from IP Australia. I thought that over-zealous examiners would be economically beneficial to patent attorneys that needed more business from their clients but it seems that the real beneficiaries would be people who are directly or indirectly in competition with the materials being disclosed and rejected in an examination.

Mark Summerfield said...

I agree that it is often true that applicants deserve a better standard of reasoning in examination reports. Australian examiners frequently rely on US and European Office Actions as the basis for objections, so they are well-aware of the standards expected in other jurisidctions in which examiners have a greater ability to sustain obviousness objections without expert evidence.

We should hope to see similar standards of examination being established in Australia for applications to which the new laws apply, though I am not holding my breath!

It is not apparent to me that the Patent Office can rely on new expert evidence during examination, or at an ex parte hearing. It seems to me that allowing the body responsible for making the decision to engage experts to support a position will almost inevitably lead to procedural unfairness. In court, the judge acts as an impartial arbiter, with each party being free to present their case as they see fit (subject to the relevant rules, of course).

An examiner, or hearing officer, may have regard to any available documents or other materials already in existence. One case in which this occurred was a re-examination in Delnorth Pty Ltd [2011] APO 55, in which a significant amount of evidence was available as a result of earlier litigation and opposition proceedings. (See Re-examination Limits Rights to Flexible Roadside Posts.)

Mark Summerfield said...

Actually, it will be interesting to see if IPA starts using expert testimony on obviousness as another angle of attack against software/computer-implemented-method patents, if they can't get the courts to agree with them on manner of manufacture. It shouldn't be hard to find computer science experts prepared to testify that a great many computer-based patents (although not all of them) are profoundly obvious.

Mark Summerfield said...

IPA will win the obviousness battle whether or not the materials being disclosed and examined are truly obvious. Applicants simply do not stand against examiners who are determined to reject applications that should, logically pass the obviousness tests. The problem is power politics not law.

Mark Summerfield said...

There is really no evidence to support this claim. I have handled literally dozens of Australian applications in which obviousness objections have been overcome, either by argument alone or by relatively minor amendment. In my experience, Australian patent examiners have never sought to maintain unsustainable obviousness objections.


You know nothing of an 'obviousness battle' until you have come up against a determined US, European or Japanese examiner! The Chinese are getting tough these days, too. We can only hope that the new laws under the Raising the Bar reforms result in similar standards being established in Australia. It is not in this country's interests for standard patents to be available here for 'inventions' that are not entitled to equivalent protections elsewhere.


If you have been having trouble establishing an inventive step in any of your own applications, have you considered the possibility that the problem may not be within IP Australia?

Mark Summerfield said...

Clearly, the bar/standard was raised before the implementation of the new law was even confirmed. We have witnessed what had happened to the numerous application that were rejected with absurd reasoning and with no clear evidentiary support.

There is a big difference between "getting tough" and getting ignorant and "over-zealous".

Your own clients had experienced the same problems. I think its time to dismiss some of the senior examiners that only care about their own job security.

Mark Summerfield said...

The topic here is inventive step. As I have already indicated clearly, none of my clients have experienced any such problems.


'Manner of manufacture', incidentally (which is what I believe you are referring to), does not generally require 'evidentiary support'. It is a question of law. Inventive step, on the other hand, is a mixed question of law and fact, hence the requirement for evidence.

Mark Summerfield said...

I understand your need to be 'fair' in your accusations but i have experienced problems in IP Austrlia's handling of M of M and inventive steps.

Clearly, the goal was to selectively reject applications because the issues i have experienced weren't really about M of M or inventive steps, even though the examiners claimed that they had to reject the application because it failed the tests (...nonsense)...

Hence, I am convinced that the real issue isn't law but politics.

Mark Summerfield said...

2010: I am puzzling. Why? Alex, would you referring to Fang case in


http://blog.patentology.com.au/2012/01/ip-australia-and-us-courts-grapple-with.html

Mark Summerfield said...

what about the case?

Mark Summerfield said...

Sit fur, sit sacrilegus, at est bonus imperator

Mark Summerfield said...

Potentially defamatory. But in a dead language, so I'll let it pass!

Incidentally, I think you may have misspelled 'Cicero' (and 'Caesar').

Mark Summerfield said...

I appreciate your well thought out presentation of the facts, although I can't say I'm convinced that any questionable motives by Pooley are outweighed by Mr. Gurry's desire to stamp out Pooley's report. We have your (hearsay) statements about the credibility of Pooley's report, but not the report itself. Perhaps "none of the mud has stuck" since 2008 because it's repeatedly getting hosed down by an overzealous legal team trying to suppress information about a public institution. We can draw our own conclusions, as you suggest, when we have your comments, Fox News' comments, and the Pooley report altogether.

Mark Summerfield said...

Thanks for your comment. I can't say I disagree with you that WIPO and Gurry have hardly covered themselves with glory in all of this! There is no question, however, that the allegations against Gurry are, and always have been, harmful to his reputation, and thus potentially defamatory. The question is whether those responsible for making (or repeating) the allegations have truth as a defence!

While 'heavy-handedness' may be an issue, I am not sure that Gurry, or WIPO, could reasonably be expected to stand by and take no action in the face of the allegation. People are entitled to be presumed innocent, and to defend themselves accordingly, until proven guilty. And over many years, proof has not been forthcoming. Even now Pooley is not claiming to have 'proof'. What he is claiming is that there is sufficient 'evidence' to justify a formal investigation, compelling Gurry to 'answer questions', and forcing him to stand aside while all this runs its course.

If nothing else, all of this seems to demonstrate a degree of disfunction within WIPO!

In Australia there is no 'First Amendment' style right to free speech, nor is there a broad 'public figure' defence to defamation. The High Court has held only that there is an implied freedom of political speech in the Australian Constitution. This implied right supports our democratic system by allowing citizens to say defamatory things about people engaged in political debate without fear of being sued if they prove to be untrue. The goings-on within a UN body based in Geneva, even if they happen to involve an Australian citizen, are not going to qualify as 'political debate' in the relevant sense!

Additionally, I am not a journalist, and in Australia only journalists are legally protected from being ordered to reveal their sources in the event of legal proceedings. This means I also have to be careful on behalf of others, as well as myself.

Arguably, it is a pretty crappy system that prevents me from publishing a document which is of genuine public interest not only in Australia, but internationally. However, I am not the only one - further recommended reading is Note to WIPO and Francis Gurry: shooting the messenger does not destroy the message over at the IAM Magazine blog.

Mark Summerfield said...

Thank goodness for communism. Can you imagine a world where a few self serving moguls manipulated us to believe that we have democracy. This is what US has provided us with. True democracy is practised in the Scandinavian countries. Patent law was supposed to give sole rights to the inventor in exchange for allowing creative impetus for the rest - it's lost it's meaning thanks to these litigious individuals with so much money and power that they can buy and manipulate any country they like. We talk about wiping out patent trolls, what about large companies that behave exactly the same as trolls. The world could use more people like Gurry - let's hope the UN takes over.

Mark Summerfield said...

There is little, if anything, positive to be said about the appalling 'communist' regime in North Korea.

How could anyone 'thank goodness' for a state that is responsible for some of the most heinous human rights abuses imaginable? Hundreds of thousands of people are reputed to have died in prison camps by starvation, execution, or other means. Tens of thousands of people have 'disappeared', and are probably suffering in these camps right now. Women suspected of being pregnant to non-Koreans have had forced terminations, through chemical means, beatings, and surgery without anaesthetic. On top of all this, the country starves its own 'free' people as a means of control.



There is no comparison between this and the distortion of power and influence that sometimes occurs as a result of the unequal distribution of capital in Western democracies.


There are agencies, including the UN, that provide all kinds of aid and assistance to the people of impoverished and disadvantaged nations, in the hope that it will go some small way towards improving their lot. But this is in no way an endorsement of the oppressive regimes that hold power in many of these countries.


My impression of Gurry (I have seen him speak on a couple of occasions) is that he is a principled pragmatist. In the sense that I think this is quite a good thing to be, the world probably does need more people like him - far more, at least, than it needs more Kim Jong-Uns (or even Rupert Murdochs). But since there is no guarantee that the cream will rise to the top (often quite the contrary, indeed), I would not like to see the UN take over. The proper role of the UN is to serve its members, not to rule over them!

Mark Summerfield said...

Pooley is a trade secrets expert, not a patent lawyer. So I don't know how you qualify him as a highly regarded patent lawyer. Maybe IP lawyer, but not patents. Check the USPTO register. Not listed.

Mark Summerfield said...

Thanks for sharing your insight. I was merely quoting Fox News - deliberately so, since I think we can all assess for ourselves how reliable a source of information this is!


Of course, the fact that Pooley is not on the USPTO register means only that he is not currently registered to practice before the Patent Office. It does not preventing him from acting before the courts as a patent litigator. I have no idea whether or not he has ever done so.

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