31 August 2014

‘Software Patents’ – Time to End the Uncertainty!

STOPNobody – other than the most deluded fantasists among the anti-software-patents brigade – actually believes that all computer-implemented inventions are, or should be, unpatentable.  To deny patent protection to an invention merely on the basis that it involves the use of a programmed computer leads to absurd outcomes, such as an improved control system for an industrial process being patentable when implemented using gears and pulleys, or using resistors, capacitors and transistors, but not if it is implemented by way of a microprocessor programmed to provide precisely the same functions.

This is a result of the kind of muddled thinking that treats ‘digital’ as a magical incantation rather than what it actually is – another (admittedly powerful) tool in the engineer’s toolkit.

Having said that, it is also apparent that only the most deluded pro-patent fantasist would believe that absolutely anything created on a computer is, or should be, patentable.  In Europe, and many other jurisdictions with similar provisions (including, very soon, New Zealand), patents are expressly prohibited on computer programs ‘as such’.  The recent Alice decision by the US Supreme Court clearly establishes that there are at least some forms of computer-implemented financial processes that are nothing more than ‘abstract ideas’ accompanied by directions to ‘do it on a computer’, and thus unpatentable.

So, we can conclude with some certainty that some computer-implemented inventions are patentable, and some are not.  The problem is that nobody – not the courts, not the national patent offices, not the law-makers – seems to wish to take any responsibility for deciding exactly where to draw the line.  I have no idea where the line is, despite the fact that I read and write about this subject all the time, and practice in this area on behalf of clients every day.  I do not know anyone, inside or outside the profession, in Australia or anywhere else, who knows where the line is – and I would not trust or choose to work with anyone who claims that they do!

24 August 2014

Australia’s Patent Application Backlog Revealed

2013 IPAU BacklogEarlier this month, IP Australia released a ‘report on patent backlogs, inventories and pendency’.  The cover page states that it is ‘an independent report commissioned by IP Australia’, and that ‘[f]indings and opinions are those of the researchers, not necessarily the views of the IP Australia or the Government.’  My understanding is that the author, Ahmer Iqbal Siddiqui, worked on the report as an intern within IP Australia for around three months during 2013.

The research is based upon historical data of pendency for applications disposed of (i.e. either granted or abandoned) between January 2000 and January 2013, i.e. prior to the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.  During this period IP Australia’s inventory (i.e. number of pending applications at any stage between filing and grant or abandonment) rose from just under 45,000 to a peak of almost 100,000 in October of 2009, before falling back to hover around 90,000.

This represents an inventory of around 278 applications per examiner, as compared with the UK Intellectual Property Office with 198, and the USPTO with just 169.  Patents granted in January 2013 had been pending for an average of about three-and-a-half years, up from just two years in 2000, but down from a peak of four years in 2010.

Rainbow Loom Patent Claims Rejected … For Now

LoomI recently noted a potential patent battle brewing in Australia over the popular loom band products originally developed by Malaysian-born and US-based inventor, Cheong Choon Ng, and sold under the RAINBOW LOOM brand. 

Specifically, Ng has recently filed a series of five innovation patents, while local RAINBOW LOOM distributor Funtastic Limited sent letters placing Headstart International Pty Ltd and Moose Enterprise Pty Ltd, distributors of the competing CRA-Z-LOOM and FUNLOOM products in Australia, on notice of the prospective patent rights.  Headstart and Moose fired back by filing notices at the Australian Patent Office, along with numerous prior art documents and other information, contending that Ng’s innovation patent claims are invalid.

First examination reports have now issued in relation to all five innovation patents.  In four cases, all of the claims have been found to lack novelty (and innovative step) in view of various prior art documents, most of which were raised in the submissions made by Headstart and Moose.  All four of these patents include claims directed to the loom device itself, and the difficulty faced by Ng is that there is little structural difference between a loom suitable for use in weaving together rubber bands, and many older looms that have been used for weaving yarn.

For example, one of the documents cited against all of the innovation patents is US patent application publication no. 2008/0156043, entitled ‘Knitting Loom and Method of Use’.

17 August 2014

What is the Starting Point for Inventive Step?

AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99 (12 August 2014)

Running raceAn expanded panel of five judges of the Federal Court of Australia has held that two patents owned by AstraZeneca relating to the cholesterol-lowering drug marketed as CRESTOR (active ingredient rosuvastatin) are invalid.  Subject to the possibility of a High Court appeal, the decision opens the way for generic competition to CRESTOR in Australia, which has been prevented by interlocutory injunctions since 2011.

A particular point of interest in this case lies in the reason for the rare expansion of the Full Court panel from the usual three judges to five.  The judge at first instance (in Apotex Pty Ltd v AstraZeneca AB (No 4) [2013] FCA 162) had found that the AstraZeneca inventions claimed in the patents at issue lacked an inventive step based, in part, on the reasoning of an earlier Full Court panel in Apotex Pty Ltd v Sanofi-Aventis [2009] FCAFC 134.  AstraZeneca contended that the approach taken by the primary judge was wrong, and requested a panel of five judges to enable the earlier Full Court decision to be overruled, if necessary.

So, five judges is better than three, and this decision is inherently important because anything it stands for has precedence over any ‘normal’ judgment issued by a three-judge Full Court panel.  In the event, the appeal court did overrule the reasoning of the primary judge on the approach to the inventive step question at issue.  However, it also found a way to avoid actually overruling the earlier Full Court decision in Sanofi-Aventis.

The key question addressed by the court in this regard is: what is the appropriate ‘starting point’ for assessing whether or not a claimed invention involves an inventive step or, conversely, is obvious? 

The answer to this question is that inventiveness must be assessed by reference to the relevant prior art information, in light of the ‘common general knowledge’ of the person skilled in the art.  The assessment should not be influenced by the description of the invention provided in the patent specification, or by consideration of any problem that the invention is explicitly or implicitly directed at solving, except to the extent that these are, in fact, part of the prior art or common knowledge in the field.

10 August 2014

Rainbow Loom Patents Under Attack in Australia

Rainbow LoomUnless you have been living under a rock, or you literally know no tween-age children (or their parents), you have probably encountered the loom band craze in some form or another.  The brightly coloured rubber bands, which are woven into wearable items such as bracelets using a small plastic loom, have reportedly become one of the top ten toys of all time, and earned their Malaysian-born and US-based inventor, Cheong Choon Ng, well in excess of $100 million.

The original loom band products are marketed by Ng's company under the brand name RAINBOW LOOM.  However, there is no shortage of imitators hoping to cash in on the loom band craze.  Late last year Ng sued Zenacon LLC, makers of FUNLOOM, LaRose Industries LLC, makers of CRA-Z-LOOM and Toys 'R' Us, distributors of CRA-Z-LOOM, alleging (among other things) that the rival products infringe his US Patent No. 8,485,565, which was granted on 16 July 2013.

In Australia, however, it appears that Ng may have a battle on his hands even to secure enforceable patent rights.  Ng's primary patent application is no. 2011324026, which is derived from international PCT application no. PCT/US2011/041553 originally filed on 23 June 2011.  And while this application is encountering some resistance from the Australian patent examiner, Ng has (so far) filed no fewer than five associated divisional innovation patents!

However, all of the innovation patents are currently under attack by various parties who have filed prior art information and corresponding submissions under the provisions of section 28 of the Patents Act 1990.  One of the five (no. 2014100245) has already even been the subject of an application to the Federal Court of Australia, following what appears to have been a rather unfortunate error on the part of the Patent Office (more on that later).

Certainly, there is big money in small coloured rubber bands, and it is unlikely that either Ng, or any of the copycat competitors, are going to give in without a fight.

07 August 2014

Apple v Samsung Ends, Not With a Bang But a Whimper

Duelling TabletsAs is being widely reported this morning, Apple and Samsung have agreed to settle all of their ongoing patent disputes outside of the US. This means that the Australian proceedings, which have occupied, by my estimate, over 150 days of court time, and the attention of two Federal Court judges, will now be terminated, presumably without judgment.

The only thing that is surprising about this is just how freakin' long it took!

I hate to say I told you so (actually, I don't), but I kind of did tell you so, way back at the beginning of August 2011, when Apple first commenced its Australian litigation against Samsung. I made four predictions on day one, and was more right than wrong in everything but the time frame. In my defence, the duration and scope of the case was completely unprecedented, and the assumption that Apple and Samsung would reach a rational commercial resolution failed to take into account the intransigence and emotional investment of the late Steve Jobs.

Here, briefly, are those four predictions, and an assessment of how they stack up against the outcome.

03 August 2014

CSIRO Scores US$16m Wi-Fi Win Over Cisco

CSIRO Wi-FiIn the most recent decision relating to the CSIRO Wi-Fi patent, a US Federal Court Judge in the Eastern District of Texas has ordered networking equipment manufacturer Cisco Systems, Inc, to pay the Australian research organisation US$16,243,069 (plus interest) in damages for infringements dating back to 2005. 

The bulk of the award relates to 18,073,797 consumer-grade products sold under the Linksys brand (Cisco acquired Linksys in 2003), with the remainder being for 1,471,319 Cisco enterprise products.

The case, Commonwealth Scientific and Industrial Research Organisation v Cisco Systems, Inc, Case No. 6:11-cv-343 [PDF, 303kB], is interesting for a number of reasons. 

The judgment is entirely devoted to a determination of damages, based on an assessment of a ‘reasonable royalty rate’, since the parties agreed that liability for infringement, and validity of the patent, were not in dispute.  And although both CSIRO and Cisco had originally demanded a jury trial, in the end they consented to a bench trial (i.e. where the case is heard and decided by a single judge).

Additionally, the dispute has a historical context lacking in CSIRO’s other Wi-Fi litigation.  In 2001, Cisco acquired the Australian start-up, Radiata Communications Pty Ltd, originally established in 1997 by Macquarie University Professor David Skellern and his colleague Neil Weste.  Radiata took a nonexclusive licence to the CSIRO wireless LAN patent with the intention of developing chips implementing the technology (see ‘The Story behind CSIRO’s Wi-Fi Patent “Windfall”’.)

The judgment also addresses issues around CSIRO’s obligations (or not) to licence the patent on ‘reasonable and non-discriminatory’ (RAND) terms, the basis for calculation of royalties (i.e. final product prices, or the value of individual lower-cost components) as well as the usefulness of expert evidence in these kinds of cases.

In the end, CSIRO was largely successful.  Although the final damages award is around half of what it had asked for, it is about fifteen times the amount Cisco argued it should have to pay.  And the court found in favour of CSIRO on almost every other issue that was in dispute.