06 December 2019

Repipe Rebuffed in Appeal Against Rejection of Patent on Computer-Implemented Invention for Workplace Safety

Networked SystemIn a decision issued on 22 November 2019 (Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956), Justice McKerracher in the Federal Court of Australia has found two innovation patents owned by RePipe Pty Ltd to be invalid, and thus liable to be revoked, on the ground that neither was for a patent-eligible ‘manner of manufacture’ under Australian law.  Coming on the heels of the recent five-judge decision in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 (for more on which, see ‘Generic’ Implementation of an Abstract Idea is not Patentable, but Does Prior Art have Anything to Do with It?), the Repipe decision is further evidence – assuming any such evidence was needed – of the difficulties now inherent in securing patent protection for computer-implemented inventions, even when the inventions in question satisfy all other requirements for patentability, and reflect considerable investment in the development of innovative and useful technology that was not previously available in the market.

Repipe confirms that where the overall functionality of a computer-implemented invention relates only to excluded subject matter, such as an abstract idea or a business scheme, then the fact that the functionality is embodied via software in a technical system is, in itself, insufficient to confer patent-eligibility.  There must, additionally, be some patentable ingenuity (whatever that might mean) in the implementation itself.  Of course, the relevant implementation details would necessarily be reflected in the claims, and the scope of protection available is therefore correspondingly limited.  This applies regardless of the cost and business risk involved in devising, developing, and bringing the invention to market.

As a result, many software innovators seem to be second-class citizens under the Australian patent system when compared with those working in other fields of technology.  It is difficult to discern any coherent policy basis for this distinction.  The classical economic rationale for having a patent system is to provide an incentive for the risky process of invention, development, and marketing of new products and services.  Once an invention has proven to be commercially successful, competitors can enter the now-established market at considerably reduced risk, even if their production costs are the same as those of the innovator.  Why, then, should patent protection be considered justified for, say, a ‘packing box for shuffled playing cards’, but not for RePipe’s invention of a sophisticated networked system for improving workplace health and safety?  I know which one of these involved the larger investment and business risk in development, and I know which one offers the greater social benefit … and it is not the one that is entitled to patent protection in Australia!

27 November 2019

Another Venerable Brand to Vanish, as IPH Folds Watermark into Griffith Hack

Merger AheadOn 20 November 2019 IPH Limited (ASX:IPH) announced its intention to ‘integrate’ Watermark into Griffith Hack, to create one firm that will operate under the Griffith Hack brand from April 2020.  This is the second time that IPH has merged long-established brands out of existence, following its absorption of Fisher Adams Kelly Callinans and Cullens into Spruson & Ferguson last year.  The latest move will, sadly, spell the end of the oldest continuously-operating specialist IP firm in Australia – Watermark can directly trace its history over 160 years, back to 1859 when Edward Waters co-founded the firm of Hart and Waters in Melbourne, later to become Edward Waters and Sons, and eventually adopting the Watermark branding.  (Although I would be remiss not to mention that Watermark’s IPH stablemate, Shelston IP, also has a claim to this lineage, being descended from Edward Waters’ Sydney branch office, which was established in 1882.)  As many readers will be aware, I worked at Watermark for nearly 15 years, and I will be very sorry to see the brand disappear from the Australian market, as will many others who have passed through the firm over the years, along with those who work there still, clients past and present, and members of the wider profession for whom Watermark has always been part of the firmament.

Since the acquisition of Xenith IP Group Limited (formerly ASX:XIP) back in August, IPH’s portfolio has included Spruson & Ferguson, Pizzeys, A J Park, Shelston IP, Griffith Hack, and Watermark.  It was to be expected that IPH would review this portfolio, with an eye to improving the overall performance and productivity of the group.  Clearly, the conclusion from this review is that Watermark does not stack up as an independent operation.  Certainly, it covers much of the same territory as Griffith Hack – both have offices in Melbourne, Sydney, and Perth (with Griffith Hack also having a presence in Brisbane); both operate IP law firms alongside their patent and trade marks attorney businesses; and both have a similar mix of domestic and foreign-based clients.  But Griffith Hack is significantly larger than Watermark – for example, it employs about two-and-a-half times as many patent and trade mark attorneys, and files a correspondingly larger number of patent applications each year.  From a business perspective, operating two firms with comparable profiles, but such different scales, does not make a lot of sense.

Sad as it is, Watermark’s passing serves as a timely reminder that nothing lasts forever, and change is inevitable and unavoidable.  And while IPH may regard Watermark – no doubt rightly, in the context of its portfolio of firms – as a ‘sub-scale’ business, it remains, at the very end, a profitable business, with a strong reputation commensurate with its long history of service to clients, which is something of which its people can continue to be proud.  There are certainly many less auspicious ways to bow out than by merging into what will become, in all likelihood, the second largest IP services firm in Australia after Spruson & Ferguson.  Indeed, I have little doubt that in the years to come we will witness the demise of other firms in more unpleasant circumstances.

05 November 2019

Australian Senate Condemns the Innovation Patent, but Grants an Extra Six Months on Death Row

Sad GravestoneOn 16 October 2019 the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 was passed by the Australian Senate. Among other purposes, this bill includes long-anticipated provisions to phase out Australia’s second-tier patent right, the innovation patent – despite concerted last-ditch efforts by opponents of the move to persuade non-government senators, in particular, to vote against the legislation. This lobbying did not fall entirely upon deaf ears, with Centre Alliance Senator Rex Patrick speaking passionately on behalf of Australian companies that wanted to see the innovation patent retained and unsuccessfully moving an amendment removing the phase-out provisions from the bill.

In the end, however, the Labor opposition voted with the government, thus ensuring passage of the bill, albeit on condition that the legislation be amended to provide for a statutory review to be undertaken to assess the impact on Australian small to medium enterprises of abolishing the innovation patent system, and make recommendations to facilitate access to standard patent protection for small business in Australia. The review is required to commence within three months of the legislation coming into effect, and must be completed within 12 months.

To allow time for the review, the period before the phase-out begins is to be extended from 12 to 18 months. During this period, it will remain possible to file new innovation patent applications. Once the phase-out commences, however, new innovation patents will only be available where they are based on existing applications filed prior to the phase-out date, e.g. as divisional applications or via conversion of pending standard patent applications.

To become law, the bill must still pass through the House of Representatives. However, its passage there is certain, since the government has a majority. The House will sit for the final time in 2019 between 25 November and 5 December, and I anticipate that the bill will pass during this period, and then be sent on to the Governor General for ‘Royal Assent’ (i.e. to be signed into law) before the end of the year. On this timetable, the statutory review will have to commence no later than March 2020, and be completed no later than March 2021. The phase-out will then begin by June 2021.

16 September 2019

‘Generic’ Implementation of an Abstract Idea is not Patentable, but Does Prior Art have Anything to Do with It?

Abstract ComputersOn Friday the 13th of September 2019, an expanded five judge panel of the Full Bench of the Federal Court of Australia handed down its much-anticipated judgment in the appeal by Encompass Corporation Pty Ltd against the finding of a single judge that its computer-implemented method for displaying information gathered from multiple sources was ineligible for patenting under Australia’s ‘manner of manufacture’ subject matter test: Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161.  For those of us who had been hoping that this case would bring some much-needed clarity to the law relating to patent-eligibility of computer-implemented inventions, the decision is something of an anticlimax.  The Full Court has unanimously dismissed Encompass’ appeal, easily finding, at [112], that there was ‘no error’ in the primary judge’s ‘ultimate conclusion that no manner of manufacture is involved in the method and apparatus as claimed.’

The concern that many interested stakeholders had with the first instance decision in the Encompass case was the way the judge appeared to conflate considerations of novelty and inventive step with his evaluation of the subject matter of the invention.  As I pointed out at the time, this would violate what I called the ‘ball point pen principle’ (after an analogy drawn in the earlier unanimous Full Court decision of CCOM Pty Ltd  v Jiejing Pty Ltd [1994] FCA 1168).  According to this principle, while advances in technology will generally restrict what is subsequently patentable on grounds of anticipation or obviousness, the question of whether or not something is suitable subject matter for a patent is – or should be – independent of the state of the art.  Put simply, a ball point pen does not cease to be the ‘kind of thing’ for which a patent might, in principle, be granted simply because it is no longer new and inventive.

This issue has significance beyond the Encompass case, because it is now the published official practice of the Australian Patent Office to take the prior art into account when assessing patent-eligibility under the ‘manner of manufacture’ test: see Section of the Patent Manual of Practice and Procedure (as archived on 8 March 2019).

For this reason I had hoped – in vain, as it turns out – that the five judge panel in Encompass would take the opportunity to state expressly, once and for all, whether the Court had intended, by various comments in its two previous decisions on patentability of computer-implemented inventions (Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177) to bring considerations of prior art into the assessment of patent-eligibility.  My own view is that it did not, and that Encompass implicitly reinforces that position.  However, in seemingly being reluctant to expressly criticise the primary judge’s reasoning, the Full Court in Encompass stops short of making any explicit statement to this effect.

The fact is that Encompass was not an appropriate case for the Court to consider broader principles for patentability of computer-implemented inventions.  It was readily able to find the alleged invention ineligible on the well-established basis that the claims merely required generic computer implementation of an otherwise unpatentable abstract idea or scheme.  This finding requires no consideration of the state of the prior art, notwithstanding that the primary judge might have appeared to follow such an approach.

11 August 2019

Patent Attorney Survey Part 2 – How Life Within Listed Groups Compares with Privately-Owned Firms

Masks - happy and sadIn this article, I am going to look at responses to the second section of the survey of trans-Tasman IP professionals (primarily patent attorneys) that I conducted earlier this year.  This part of the survey addresses various aspects of job satisfaction and the working environment, including ‘happiness’, professional support, and opportunities for career development and advancement.  In particular, I will compare the responses across groups defined by firm structure (i.e. ‘listed group’ firms versus traditional privately-held firms) and seniority, distinguishing between those at the ‘top’ of their organisations (i.e. owners of privately-held firms and employed principals, or the equivalent, within listed group firms) and employees at the levels below who are perhaps aspiring to these roles in future. 

I selected these four categories (‘private owner’ – sample size 54; ‘private employee’ – sample size 97; ‘listed principal’ – sample size 28; and ‘listed non-principal’ – sample size 68) after initially analysing the data, and finding that the responses of firm owners are quite different, in many cases, from those of their employees.  It therefore would not make sense to divide the data only into ‘listed’ versus ‘private’.  And, having made this division among attorneys within privately-held firms, it made sense to make a corresponding division among the listed group respondents.  Indeed, as you will see, there are a number of areas in which the views of principals within the listed group firms differ measurably from those of their less senior colleagues.

If you have not already read my earlier article on respondent demographics, then I recommend you do so.  That article makes the case that the survey responses are, overall, reasonably representative of the profession as a whole – not least because around 25% of all registered patent attorneys working in private practice responded, and this sample of the population is broadly representative of the whole, on characteristics such as gender, firm structure/ownership, and firm size.

In the following analysis, you will find various statements regarding the survey results that are supported by p-values, i.e. measures of statistical significance.  I have written an article explaining how these values were derived, and what they do, and do not, mean.  I recommend reading this article if you really want to understand what can, and cannot, reasonably be concluded from the survey results.  Furthermore, if you intend to take these results and use, or quote, them in a different context, you would be performing a great disservice to yourself (and me) if you do not make the effort to read this article so that you properly understand what you are doing.

While it is difficult to summarise all of the results in brief, I will make a few observations by way of introduction.  Firstly, owners of privately-held firms stand out as being more satisfied with their circumstances in every respect.  This is perhaps unsurprising, in that they are essentially a self-selecting group of individuals who presumably wanted to be business owners, and have achieved that objective.  What might have been less expected is how little difference there is between the other groups.  Certainly there are differences, and many of those differences are statistically significant, even where they may be relatively small.  In many respects, employees of privately-held firms consider themselves on a fairly equal footing with employed principals of listed group firms.  To the extent that there is a difference, listed group principals are far more polarised in their views – broadly speaking, many in this group appear to be either highly satisfied or highly dissatisfied with their circumstances, while fewer take up the middle ground than in other groups.  Non-principal employees of listed group firms appear to be least content with their circumstances, but even so there are many in this group that report agreement, or strong agreement, with positive statements about their employment conditions.

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