06 June 2022

Aristocrat’s EGM Inventions Set for Showdown in the High Court

Arm WrestleOn 10 March 2022, the High Court of Australia granted Aristocrat’s application for special leave to appeal the decision of a Full Bench of the Federal Court, which found its claims directed to an Electronic Gaming Machine (EGM) implementing a new ‘feature game’ to be ineligible for patenting under Australia’s ‘manner of manufacture’ test of subject matter.  The case – which is Case No. S40/2022 – has since been making rapid progress.  Aristocrat filed its written submissions [PDF, 711kB] on 20 April 2022.  Two parties have applied for leave to appear as amici curiae: the Institute of Patent and Trade Mark Attorneys of Australia (IPTA), which filed its written submissions [PDF, 483kB] on 5 May 2022; and Fédération Internationale des Conseils en Propriété Intellectuelle (FICPI), which filed its written submissions [PDF, 382kB] on 4 May 2022.  The Commissioner of Patents filed her written submissions in response [PDF, 718kB] on 11 May 2022.  Finally Aristocrat filed its reply [PDF, 310kB] on 20 May 2022.  The scene is now set for a hearing, which is set down to take place on 9 and 10 June 2022 before a Full Court of seven judges, which is somewhat unusual (a panel of five judges is more common) and suggests that the High Court may have decided that it is finally time to settle the question of patent-eligibility of computer-implemented inventions in Australia.

The Aristocrat case raises interesting questions.  The claims of the patents at issue recite various hardware elements, some of which are common to all computers and some of which are specific to EGMs, along with software-implemented processes comprising the ‘feature game’.  (A ‘feature game’ is a secondary, or bonus, game triggered by the occurrence of a defined event in the ‘base’ game of spinning reels.)  It is common ground that the hardware elements are well-known in the field of electronic casino gaming, and that the new and inventive contribution resides wholly in the feature game implementation. 

At first instance, the primary judge (Justice Burley) considered that the appropriate approach to such a case involves a ‘two step’ analysis.  The first step is to construe the patent specification, from the perspective of the person skilled in the relevant art, to identify the claimed invention.  This is to be determined as a matter of substance, and not merely based on the particular form of the claims.  If the invention thus identified comprises patent-ineligible subject matter, such as a mere scheme, idea, or business method, then the second step involves an enquiry into whether the claimed computerisation involves some further contribution sufficient to render the invention patent-eligible.  Applying this approach to Aristocrat’s claims, Burley J found at the first step that Aristocrat’s claims were for ‘a machine of a particular construction which implements a gaming function’.  As a result, the question of patent-eligibility was resolved immediately – an EGM is not a mere scheme or a business method, and is thus a ‘manner of manufacture’.  There was, the judge concluded, no need to proceed with step two.

On appeal, a Full Bench of the Federal Court rejected the test proposed by the primary judge.  The majority (Middleton and Perram JJ) proposed an alternative two step test which asks firstly whether the claimed invention is ‘a computer-implemented invention’ and then – if so – ‘can the invention claimed broadly be described as an advance in computer technology’.  They determined that Aristocrat’s EGM was in substance a computer-implemented invention, and that the asserted contribution of the claimed invention ‘pertains only to the use of a computer’ and not to ‘the development or advance of computer technology’, such that the claims were not directed to patent-eligible subject matter.  In a separate judgment (which Aristocrat characterises as a ‘dissent’), Nicholas J arrived at the same ultimate conclusion, but disagreed with the majority that ‘an advance in computer technology’ is necessary for a computer-implemented invention to be patent-eligible.  In his view, such an invention may be patent-eligible if it results in innovation in ‘different fields of technology’ where technical problems that lie ‘outside the computer’ may be solved using ‘generic computing technology.  He proposed that the proceeding therefore be remitted to the primary judge to consider whether the inventions may be patentable as an advance in the field of gaming technology.

With all of these different lines of reasoning present in the judgments of the lower courts, the stage is surely set for a showdown before the High Court.  So what are the main arguments that each of the parties will be relying upon?

31 May 2022

Privately-Held Attorney Firms Have Built Filing Share Over the Past Decade, Thanks Largely to IPH!

Building While some doomsayers predicted that the rise of publicly listed groups of patent attorney firms would lead to terrible problems, including a reduction of competition, in the Australasian market for IP services, the sky has yet to actually fall.  After a few years of upheaval in the profession, two listed holding companies – IPH Limited (ASX:IPH) and QANTM IP Limited (ASX:QIP) – have established themselves, while the number of mid-sized firms has fallen slightly, as a result of acquisitions and mergers within the listed groups. 

Despite this, however, there is no evidence of any lessening of competition.  On the contrary, patent filing data shows that IPH’s strategies, in particular, have resulted in an increase in the share of new applications being handled by non-IPH, independent, firms.  Indeed, in the present financial year, a greater proportion of Australian patent applications have been filed by smaller independent firms than was the case a decade ago.

How has this happened?  Based on the data, I speculate that IPH’s strategies of acquisitions and mergers have resulted in its stable of firms becoming generally smaller – in the sense that they now collectively employ fewer attorneys than before acquisition – but also more efficient.  They can therefore be more profitable, despite attracting a smaller share of new filings.  Meanwhile, many of the attorneys who have left the IPH group firms have rejoined the independent sector, either as employees of established firms, or in a number of cases by establishing their own new firms.  The net effect is that IPH’s overall share of filings has risen – although by less than would have been the case if the firms it acquired had maintained their own individual shares – while the share of filings going to new and established firms in the independent sector has also risen.

As a result, rather than lessening competition, the rise of the listed groups may have strengthened the viability of many existing independent firms, while also contributing to the successful formation of a number of new independent firms.  It seems counter-intuitive, but that is what the data tells us is happening.  Of course, these gains have not come from nowhere, and it is probably fair to say that the ‘losers’ have been the firms, such as Fisher Adams Kelly, Callinans, Cullens, Watermark, Baldwins, and Shelston IP, that have been acquired and ‘integrated’ out of existence.

In this article, I will present the data that underlies my speculation.  In particular, I have analysed the share of Australian standard patent application filings by firms over the past decade (i.e. since before the public listings), to evaluate the relative performance of firms that are now incorporated into the listed groups, before and after acquisition, as against that of independent firms and attorneys.  You can decide for yourself whether you agree with my conclusions.  I would welcome any thoughts, in agreement or otherwise, in the comments.

26 May 2022

Division and Conversion – the Continuing Life of the Australian Innovation Patent

It's a convertible - geddit?!In the Patents chapter of its recently-published 2022 IP Report, IP Australia provides the usual annual filing statistics for 2021.  According to the report, there were 23,371 Australian standard patent applications filed as National Phase Entries (NPEs) from international applications under the Patent Cooperation Treaty (PCT), 9,026 standard applications filed directly in Australia, making up a record total of 32,397 new standard applications.  There were also 4,297 provisional applications filed, and 7,844 innovation patent applications ‘including … standard patents converted to innovation patents’.  On IP Australia’s figures, the top five applicants in 2021 were LG Electronics (259 applications), Huawei (255), OPPO (197), Nestle (157) and Apple (151).

All patent data is a moving target.  The patent office database is a living entity which is updated daily with new applications, and changes to existing applications, including status updates, completion of missing information, and even occasional backdating of records for reasons such as correcting errors or actioning successful applications for extensions of time to complete various actions.  It is not surprising, then, that there are some minor discrepancies between figures in the IP Report and numbers that I published back in January, when the dust was still settling on 2021.  The most notable difference is probably that I awarded the top filing spot to Huawei because, at that time, LG had only 251 filings officially recorded – an additional eight LG applications filed in December 2021 were yet to be fully processed.

A more substantial discrepancy is that I counted only 7,657 innovation patent filings in 2021.  A difference of 187 applications is hard to explain as a consequence ‘late year’ filings, given that most new innovation patent applications were filed prior to 26 August 2021, when the phase-out of the innovation patent system commenced.  The key to this difference is in the words I quoted from the Report above in italics – IP Australia’s numbers include applications that were converted from existing applications of other types, as well as newly-filed applications.

Whether conversions should be included with new filings or not really depends upon what you are trying to count.  On the one hand, converting an existing application to an innovation patent application does not add to the total number of applications in progress, because the original application is effectively replaced by the conversion.  On the other hand, the converted application is assigned a new number and a record of the original application remains in IP Australia’s database, and can be found via the AusPat online search system.  And, from IP Australia’s perspective, the ‘new’ innovation patent application has to be processed through the formalities examination, and granted as a patent, in exactly the same way as a ‘fresh’ filing.

A better approach may be to look more deeply at the circumstances in which conversions are occurring, and to try to account for the applicant behaviour in detail.  It is then possible to make an informed decision on how to account for all applications, depending upon your purposes.  Conversion of other application types to innovation patents remains relevant because, despite the phase-out of the system, it remains possible to convert any pending application filed prior to 26 August 2021.  It also continues to be possible to file new innovation patent applications as divisionals of any standard patent application with a filing date prior to 26 August 2021.

In this article I will therefore look at both division and conversion to innovation patents, and the circumstances in which these strategies have been used, as an insight into the continuing life of the Australian innovation patent during the phase-out period.  I will also endeavour to provide a ‘definitive’ count of new applications filed in 2021.

03 May 2022

Attorney Code of Conduct Passes ‘Health Check’ with Flying Colours

Health Check The Trans-Tasman IP Attorneys Board (TTIPAB) has published a report, and its response, on a Health Check of the Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018 [PDF, 2.05MB].  The Report was prepared by Professor Andrew Christie, who was commissioned by the Board to conduct the review, commencing in July 2021.  The ‘health check’ covers not only the Code of Conduct, which is a statutory instrument by which all registered patent and trade marks attorneys are bound, but also the Guidelines to the Code of Conduct [PDF, 95kB].  The Guidelines are non-binding and are intended to assist people to understand the Code and the conduct it covers.  The purpose  of the review was to confirm whether the Code was working as intended, and to identify any improvements or clarification to the Code and Guidelines.  The review process included conducting structured interviews with 26 stakeholders (attorneys, general counsel of listed groups, representatives of attorney professional associations, and clients).  The interview questions were based on an analysis of issues raised by complaints made to the Board over the past few years.

The headline outcome of the ‘health check’ is that no amendments to the Code of Conduct were found to be necessary.  More particularly, Professor Christie concluded that the Code ‘has no major deficiencies, and there are no major problems with its provisions’.  He found, however, that ‘there is significant scope to provide more guidance on the application of the Code’s provisions by enhancement of the Guidelines.’  The Board has accepted a number of recommendations for specific improvements to the Guidelines.

Other key observations of the Report include:

  1. most stakeholders have a satisfactory awareness and understanding of the Code, and of the Board, but there is scope for improvement among junior attorneys and clients that do not have a registered attorney on staff;
  2. firms within the two publicly listed ownership groups provide appropriate disclosure to clients of their group membership, however individual firms (as opposed to the holding companies) need to improve the clarity with which they disclose the identities of other firms within their group;
  3. the evidence is that firms within ownership groups act independently from other members of their group in the provision of attorney professional services, as required under the Code;
  4. there is no basis to believe that attorneys in ownership group firms are in breach of their core obligations under the Code (i.e. to place following the law, and the interests of clients, the public and the profession, ahead of other considerations, including the interests of shareholders);
  5. clients of firms in ownership groups are being appropriately informed when their consent is required for firms within the same ownership group to act on opposing sides in adversarial matters; and
  6. some dissatisfaction with the Board’s complaint handling process has been identified within the profession.

The Board has identified and responded to 34 recommendations in the Report.  Ten of these are recommendations for no action to be taken, which the Board has merely ‘noted’ (there being nothing for it to do).  Of the remainder, the Board has ‘accepted’ 17 recommendations for enhancements to the Guidelines.  The Board has also ‘noted’ six substantive recommendations, where it recognises that a relevant issues has been raised, but proposes to pursue a different course from that which has been recommended.  Finally, there is one recommendation, relating to specific circumstances around potential conflicts of interest, that the Board has ‘not accepted’ because of concerns that it ‘would introduce unnecessary complexity and ambiguity’ to the Code.

I do not intend to go through every recommendation in detail – anybody who is that interested (which should include all registered attorneys) can read the Report and Response!  However, I would like to highlight the points that caught my attention, and add a little of my own commentary.

27 April 2022

Upcoming Online Conference on ‘Inventorship in Patent Law’

EPO LogoOn Monday 16 May 2022 the European Patent Office (EPO) is running an online conference on ‘Inventorship in Patent Law’.  It commences at 1.30pm Central European Summer Time (CEST), which is 9.30pm on the east coast of Australia (AEST), 9.00pm in South Australia, and a positively civilised 7.30pm in Western Australia.  It is, unfortunately, a little less accessible to people in New Zealand, where it will be 11.30pm.  The total running time is two hours and forty minutes, so the event will finish a little after midnight here in Melbourne.

I am promoting the conference because I will be participating on a panel discussing the DABUS ‘AI inventor’ decisions in various jurisdictions.  It is not in doubt that I will be the least illustrious of the panellists.  The other participants are:

  1. Wolfgang Sekretaruk, who is Chairman of the Legal Board of Appeal of the EPO, Deputy of the President of the Boards of Appeal and Head of the Legal Services of the Boards of Appeal, and will be discussing the EPO decisions on the DABUS applications;
  2. Professor Duncan Matthews, of the Queen Mary, University of London School of Law, who will be discussing the UK decisions;
  3. Professor Dr jur. Ansgar Ohly, of the Ludwig Maximilian University of Munich, and the University of Oxford Faculty of Law, who will be discussing the German case; and
  4. Professor Dan L Burk of the University of California, Irvine, who will be discussing the US case.

I will, of course, be talking about the position in Australia – which is arguably the most interesting, given that we were the only country to (briefly) recognise DABUS as a legitimate inventor.

Our session of the conference will comprise a series of brief (10 minute) presentations on the position in each jurisdiction, followed by a 30 minute panel discussion.

Prior to the panel session, there will be a 20 minute presentation from Axel Voss, Member of the European Parliament, on the European approach to AI.  This will be followed by an introduction to the DABUS applications by the EPO’s Heli Pihlajamaa as a lead-in to the panel.

The panel session will be followed by a presentation on ‘the right to a patent, its origins and the consequences of the fundamental principle that the right to the patent is originally vested with the inventor’ from Martin Stierle, Associate Professor in Intellectual Property Law at the Faculty of Law, Economics and Finance at the University of Luxembourg.

The conference is free of charge, however registration is required in order to obtain the link to the online session (via Zoom).  Registered trans-Tasman patent attorneys should be able to claim 2.5 CPE hours for attendance at the full event.


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