25 June 2017

Does Your Patent Attorney Possess ‘Reasonable Skill and Knowledge’?

Skills tighropeIt is a general principle of patent law that publication of a patent specification and claims serves to put the public on-notice of the existence and scope of the patentee’s rights.  In an effort to ensure that this is the case, the Australian Patents Act 1990 requires that ‘the claim or claims must be clear and succinct and supported by matter disclosed in the specification’ (subsection 40(3)), while the analogous US provision, 35 USC § 112(b) states that ‘the specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.’  In Australia we usually refer this as the ‘clarity’ requirement, while the US courts have developed a corresponding doctrine of ‘indefiniteness’.  In its 2014 decision Nautilus, Inc. v Biosig Instruments, Inc, the US Supreme Court interpreted this to mean that ‘a patent is invalid for indefiniteness if its claims … fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention’.  Other jurisdictions have similar requirements.

This is all very well, but what happens if the claims change?  It is not uncommon for a patentee to seek amendment of its patent specification, for example in preparation for, or in the course of, litigation.  Granted patent claims can only be amended in ways that do not broaden the scope of a patent, i.e. no valid amendment can result in any act becoming an infringement that would not have been an infringement prior to the amendment, so this does not provide a mechanism for a patentee to ‘capture’ a previously non-infringing activity.  However, a claim could, in principle, be narrowed by replacing unclear, vague, or ambiguous wording with clearer and more definite wording that specifically targets the actions of a competitor.

In such a case, the patentee would no doubt argue that it was simply ‘tightening up’ the language of its claims to limit the issues to be addressed during infringement proceedings, and perhaps as a pre-emptive defence against a cross-claim for invalidity.  The accused infringer, on the other hand, might argue that it was not properly on-notice of scope of the patent prior to the amendment, as a result of the ambiguity in the wording of the claims.

Fortunately, the Australian legislation anticipates this situation.  Subsection 115(1) provides that:

Where a complete specification is amended after becoming open to public inspection, damages shall not be awarded, and an order shall not be made for an account of profits, in respect of any infringement of the patent before the date of the decision or order allowing or directing the amendment:
        (a)  unless the court is satisfied that the specification without the amendment was framed in good faith and with reasonable skill and knowledge…

In layperson’s terms, if the job was not done honestly and properly in the first place, then the patentee should not expect to be able to obtain any compensation for alleged infringement that occurred prior to the amendment.

But what constitutes ‘reasonable skill and knowledge’?  Does your patent attorney (or, if you are a patent attorney, do you) possess these attributes?  And what responsibility does a patent applicant, in instructing a patent attorney, bear in ensuring that reasonable skill and knowledge are employed?  These issues were recently considered by Justice Jagot in the Federal Court decision Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 250, who confirmed that ‘the words “reasonable skill and knowledge” require the specification as framed to be in the form in which a person, with reasonable skill in drafting patent specifications and a knowledge of the relevant law and practice, would produce given the patentee's knowledge of the invention.’  The judgment also provides some interesting guidelines as to what, exactly, might be expected of a patent attorney in order to meet this standard.

The question was not merely academic, with over $25 million in damages at stake.  And it may not yet be finally settled, with various aspects of the case now in appeal to a Full Bench of the Federal Court of Australia.

Background – The Amendment

The litigation between Bayer and Generic Health, in relation to oral contraceptives comprising a pharmaceutical combination of ethinylestradiol and drospirenone (or DRSP), has been ongoing for some time.  I wrote about the decision in the substantive trial, in which the patentee Bayer was successful, back in April 2013.  In brief, Bayer sells its products under the brand names Yasmin and Yaz in Australia.  The generic respondents commenced sales of an oral contraceptive product under the name Isabelle in January 2012.  Almost immediately, Bayer commenced infringement proceedings.

At the same time, Bayer applied to amend its patent claims. The amendments sought are represented by claim 3 of Australian patent no. 780,330, as follows (in which deleted text is shown in strike-out and added text underlined):

A pharmaceutical composition in oral dosage form comprising;
from 2 mg to 4 mg 3 mg of drospirenone and 0.01 mg to 0.05 mg of ethinylestradiol, together with one or more pharmaceutically acceptable carriers or excipients, wherein the oral dosage form is a tablet, and
wherein at least 70% of said drospirenone is dissolved from said composition within 30 minutes, as determined by USP XXIII Paddle Method II using 900 ml of water at 37C as the dissolution media and 50 rpm as the stirring rate.

It is clear that the amendments narrow the scope of the claim: a range of ‘from 2 mg to 4 mg’ of drospirenoneias is limited to 3 mg; the ‘oral dosage form’ is limited to ‘a tablet’, and the solubility measurement is restricted to the use, specifically, of 900 ml of water.  The amendment is therefore allowable under section 102 of the Patents Act, so long as it is supported by the specification.  In December 2012, Justice Yates determined that the requested amendment should be allowed (Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2012] FCA 1510).

As I have already noted, Bayer was ultimately successful in establishing that the generic manufacturers has infringed its patent claims, as amended.  The generics argued (amongst other things) that as a result of section 115, Bayer should not be entitled to claim compensation for infringement that occurred prior to allowance of the amendment, because ‘Bayer has not satisfied the Court that its original specification, before amendment, was framed in good faith and with reasonable skill and knowledge’ (at [5]).

Proving ‘Good Faith’ and ‘Reasonable Skill and Knowledge’

The court confirmed that the onus of proof lies with the patentee (Bayer, in this case) to show that the specification prior to the amendment was framed in good faith and with reasonable skill and knowledge, and that while an absence of evidence to the contrary may support an inference of good faith and or reasonable skill and knowledge, ‘the exercise is one of inference, and not of assumption’ (at [24]).

According to the court, the requirement that the specification prior to amendment have been framed in good faith and with reasonable skill and knowledge does not mean that the claims must necessarily have been valid.  Nor can it be inferred from the patentee’s decision to amend that there was necessarily some defect in the specification or claims.  The court accepted the relevance of the observation of the UK Court of Appeal in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] RPC 203m that:

It is common practice to include in good faith a wider claim so as to have the benefit of a wider search in the Patent Office. It is also common practice for an applicant to decide that in terms of commerce a narrower claim suffices, and therefore to drop a wider claim which will not serve him commercially and may land him in opposition litigation. On the question of good faith it is not to be expected that the patentee should in evidence first raise up and then exorcise the ghost of every possible defect in the unamended claim: if he destroys the defects that are suggested, that suffices.

For example, if a claim is potentially invalid for lack of novelty or inventive step in view of prior art that was unknown to everybody involved in the preparation of the patent specification, this does not imply a lack of good faith, or of reasonable skill and knowledge. 

In relation to the ‘good faith’ requirement, the court accepted (at [36]) that:

(a) In order to establish the good faith requirement, the plaintiff must prove that the specification was framed honestly with a view to obtaining a monopoly to which, on the material known to him or her, he or she believed he or she was entitled …
(b) The inclusion of something known by the framers of the patent specification to be detrimental to it may be evidence of a lack of good faith …
(c) The patentee has to establish that in the original specification it “meant and intended to claim that which [it] had invented and no more … .”

In relation to the requirement for ‘reasonable skill and knowledge’ the court accepted (at [37]) that:

(a) The words “reasonable skill and knowledge” require the specification as framed to be in the form in which a person, with reasonable skill in drafting patent specifications and a knowledge of the relevant law and practice, would produce given the patentee’s knowledge of the invention …
(b) Where the draftsperson was not properly instructed, the “patentee cannot be in a better position than the patentee who properly instructs the draftsman” …

(d) Any mistake must be considered in the context of the whole specification, making allowance for any difficulty the drafter had and the importance of the passage containing the mistake.
(e) … the relevant knowledge must encompass the knowledge of the person that formed the basis of the information in the specification. Thus, where a specification contained an obvious mistake due to work done by a contractor, however skilled, the patentee had to shoulder the burden of establishing that the specification was framed with reasonable skill and knowledge.

What Level of Knowledge and Skill is Reasonable for an Attorney?

The court was provided with evidence from two experienced patent attorneys (my former Watermark colleague Karen Sinclair, and former Principal at Spruson & Fergusson, John McCann) regarding the role of a competent attorney in drafting patent specifications.  The court gleaned a number of propositions from this evidence (at [52]-[56]), including:
  1. patent drafting is a collaborative process between the inventors or client and the patent attorney, who each bring different skills and information to the process;
  2. the drafting of a patent is a ‘balancing act’ between the commercial, legal and technical position of the patent applicant;
  3. claim drafting involves an exercise in judgment as to how broadly an invention can be defined;
  4. while it is typical and reasonable for a patent attorney to rely on information provided  by the inventor/client, this does not mean that a patent attorney will ‘simply parrot’ the instructions given, but rather instructions should be reviewed ‘with a critical eye to make sure that they’re not going to potentially cause issues in the future’;
  5. although a patent attorney possesses relevant technical background, they necessarily rely upon the inventor/client who has the detailed expertise in relation to the invention; and
  6. generally it is the role of the client, and not the patent attorney, when drafting a patent specification, to make ‘sound predictions’ of a technical nature. unless the attorney has particular technical expertise in the specific area.
The court also noted (at [61]) that the witnesses possessed particularly high levels of expertise, and that:

it is not necessarily the case that the standards they apply to their own practice … set the boundaries of competent practice for a patent attorney. If anything, their personal practices are likely to exceed the minimum standards of competence.

A patent attorney is therefore not expected to be an expert in the specific technical field of every client.  An attorney does, however, need to have sufficient technical background to understand the invention and to ask appropriate questions to obtain relevant details from the client.  It is also the attorney’s role to have an eye on the potential legal consequences of particular drafting choices since this is, of course, the particular area of expertise that they bring to the process.  Even so, what is required of an attorney, at least for the purposes of assessing ‘good faith’ and ‘reasonable skill and knowledge’ under section 115, is not perfection, nor some superhuman prescience, but rather a minimum standard of competence that is to be expected from the profession generally.

Conclusion – The High Value of ‘Reasonable Skill and Knowledge’

Bayer was successful in satisfying the court that its specification, prior to amendment, had been ‘framed in good faith and with reasonable skill and knowledge’, and that it was therefore entitled to compensation for infringement occurring before the amendment was made.  The total damages subsequently ordered by the court, to be paid by the generic infringers to Bayer, were A$25,437,966 plus interest (see Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd [2017] FCA 428).  This covered sales of infringing products between 23 January 2012 and 19 June 2014.  Nearly 40% of this period preceded allowance of the amendment on 14 December 2012.  It therefore appears that, in this case, something on the order of $10 million rested on the application of reasonable skill and knowledge in drafting the patent specification.

Depending upon complexity and the field of technology, the cost of having a patent specification drafted by an experienced attorney in Australia is likely to be somewhere between A$5000 and A$15,000, with a majority of cases lying in the lower half of this range.  Some applicants appear to consider this an unacceptable expense – I have written previously about the number of applications filed in Australia without professional assistance, and the very poor outcomes that often result from this.  But even if a self-represented applicant is able to navigate through the examination process, and secure a potentially enforceable patent, further problems may arise should it ever be necessary or desirable to amend the specification in preparation for enforcement.  Bearing in mind that the onus of proof lies with the patentee to establish that the unamended specification was framed with reasonable skill and knowledge, it might be difficult for a patentee who had not engaged an attorney to obtain compensation for any infringement prior to the date of amendment.

As matters stand, this case thus provides a further illustration (if any were needed) of the potential false economy of taking on the complexities of the patent system without appropriate professional advice.  I note that an appeal to the Full Bench of the Federal Court of Australia has been filed by Generic Health (NSD717/2017).  It remains to be seen whether the issues under section 115 will be revisited on appeal.  If so, however, the appellant will presumably be seeking to establish that a higher standard of competence is necessary then has been found at first instance.


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