17 April 2018

Australian Appeals Court Upholds Patent ‘Promise Doctrine’, but it’s a Question of What the Inventor ‘Intended to Do’

ESCO locking mechanismThe Australian Patents Act 1990 requires, in section 18(1)(c) and 18(1A)(c), that an invention must be ‘useful’ in order to be patentable.  This is also commonly known as the requirement for ‘utility’.  Failure to meet this requirement, i.e. inutility, is therefore a ground upon which a patent application may be rejected, or a patent revoked.  One of of the ‘rules’ that has been developed by the courts over the years for assessing utility is an obligation upon an applicant or patentee to satisfy any ‘promise’ that might be made for an invention in the patent specification.  This is sometimes known as the ‘promise doctrine’ – e.g. in Canada, where it was abolished last year by the Supreme Court.  I had been hoping that a Full Bench of the Federal Court of Australia might decide to do likewise, given that the opportunity had arisen.  In a recently-issued decision, however, it has unfortunately declined to do so: ESCO Corporation v Ronneby Road Pty Ltd [2018] FCAFC 46.

On the face of it, a requirement that an invention fulfil any stated promises does not seem unreasonable.  If, for example, an applicant falsely asserts that an invention is worthy of a patent, at least in part because it achieves some valuable improvement over its predecessors, and receives a patent on that basis, then the Patent Office has arguably been misled in its decision to grant the patent.  However, I do not see what this has to do with utility.  The Australian Patents Act 1990 provides a perfectly good mechanism for revoking patents that have been obtained by ‘fraud, false suggestion or misrepresentation’ in section 138(3)(d).  But if an invention is, in fact, useful for some purpose, and the patent specification otherwise meets all of the requirements for a valid patent, then it is difficult to see why the applicant’s choice to include – or not – some ‘promise’ in the specification should make any difference.

The position becomes even more fraught when a specification includes more than one promise.  This aspect of the utility requirement has not previously been conclusively addressed by the Australian courts – i.e. if a patent applicant makes multiple promises for an invention, it is necessary that all of those promises be met by the claims, individually and/or collectively?  The Full Court’s decision in ESCO Corporation has, at least, clarified this situation, with the court deciding that a claimed invention must indeed meet whatever promise(s) have been made for it in the specification.

However, this does not mean that resolving the question of utility is simple in any given case.  The court has explained that whether or not a relevant promise has been made and met must be addressed, by determining whether the invention as claimed does what it is intended by the patentee to do.  This necessarily involves an enquiry into the patentee’s intentions, through consideration of the specification as a whole, including the claims.  It is therefore not simply a matter of identifying some explicit, straightforward, statement in the specification that appears to make one or more ‘promises’ – as the court did (wrongly) at first instance in the ESCO case – and asking whether the claimed invention satisfies all of the stated ‘promises’. 

As a result of conducting the required enquiry, it can become apparent that the invention, as defined in a specific claim, or group of claims, was not intended to satisfy all of the ‘promises’ made in the specification.  In ESCO’s case this was necessarily so, because its application included two groups of claims defining different aspects of the invention (a component, and an assembly including the component, respectively) that might encompass different subsets of the advantages asserted for the invention as a whole.

So while I would have liked to see Australia follow Canada in cutting ties with old UK law and abandoning the ‘promise doctrine’, the Full Court in ESCO Corporation has at least brought some much-needed sense to the Australian law.  Determining whether or not an invention is ‘useful’ is not some formulaic exercise involving the mere comparison of statements in the specification with the subject matter of the claims.  Rather, it is a matter of substance, whereby the intentions of the applicant or patentee are to be determined, at least insofar as they are expressed in the specification as a whole, in relation to each claim, or group of claims.  On the other hand, the decision may not go far enough, in that it is not clear that it necessarily applies to cases in which there are not two or more distinct groups of claims relating to different aspects of an invention.

10 April 2018

With Second-Tier Patent Rights in Retreat in Australia, Are They Making an ‘Advancement’ in New Zealand?

Dr Parmjeet ParmarWhile the second-tier innovation patent may be out-of-favour with the Australian government (a late stay of execution notwithstanding), there is at least one New Zealand parliamentarian who is bold enough to stand up for the rights of incremental innovators.  Dr Parmjeet Parmar is a list member for the opposition National Party in New Zealand, who has drafted and submitted a private member’s bill titled the Patents (Advancement Patents) Amendment Bill.  The bill proposes the introduction of a new second-tier patent right which has many similarities with – and a few differences from – the Australian innovation patent, and Dr Parmar suggests that it would fill a gap in the availability of intellectual property rights in New Zealand that was widened by the enactment of the Patents Act 2013.

Generally speaking, the proposed ‘advancement patent’ would – like the innovation patent – provide for a shorter-term patent right, permit fewer claims, and feature a bifurcated system of registration and optional examination and enforceability.  Some of the major differences from the innovation patent would be:
  1. terminology, i.e. ‘advancement’ rather than ‘innovation’, and ‘advancement step’ rather than ‘innovative step’;
  2. maximum term, i.e. up to ten years, rather than eight years; and
  3. lifecycle, i.e. an ‘advancement patent’ would be considered ‘provisional’ initially, and only have the status of ‘granted’ following examination/certification.
Reading Dr Parmar’s maiden speech in the New Zealand parliament, it is not hard to see where she finds her enthusiasm for innovators and innovation.  Born, raised and originally educated in India, she moved to be with her husband in New Zealand where she completed a PhD in biological sciences at the University of Auckland.  She subsequently worked in both academic and commercial science and research, before establishing a business manufacturing natural health products.  Clearly this is a level of hands-on experience with research, innovation, business and entrepreneurialism to which few – if any – of the politicians, bureaucrats and economists currently gunning for the Australian innovation patent can lay claim.

Many people will be surprised to see this new bill introduced in New Zealand at the same time that Australia is looking to abolish the innovation patent.  A common theme in the long gestation of the New Zealand Patents Act 2013 and the recent review of Australia’s IP arrangements by the Productivity Commission was the view, held particularly by certain economists, that for net importers of intellectual property and technology, such as Australia and New Zealand, intellectual property rights tend to be owned predominantly by foreign entities, and that it is therefore not in our interests to grant such rights improvidently, or too easily.

My own analysis of innovation patent data over a nine-year period showed that while the target community of Australian small and medium enterprises (SMEs) were indeed, by filing numbers alone, the dominant users of the system, too many of these were ‘self-filers’, who generally gain no value from their patents, while many of the largest individual users of the system are foreign entities that filed innovation patents for strategic reasons (e.g. Apple, Inc), or merely to take advantage of economic incentives in their own home countries (e.g. many Chinese companies).  While probably not enough to justify abolition – rather than improvement – of the innovation patent, this is not a great look, and is hardly a glowing endorsement of the domestic benefits of a second-tier patent system.

Considering these current concerns with the innovation patent, I decided to take the opportunity to reach out to Dr Parmar and ask her about her motivations for drafting her bill, and why she believes that a New Zealand ‘advancement patent’ would fare better than the Australian innovation patent.  She was kind enough to take the time out of her busy schedule to answer my emailed questions, and I am pleased to be able to present her views in her own words.

30 March 2018

A ‘Death Row Reprieve’ for Innovation Patents as IP Laws Amendment Legislation Reaches Parliament

5 minutes to midnightOn 28 March 2018, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 was introduced to the Australian House of Representatives.  Schedule 1 of the Bill, along with associated regulations, will implement various recommendations arising from the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, namely: clarifying the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark; expanding the scope of ‘essentially derived variety’ declarations in the Plant Breeder’s Rights Act; reducing the grace period for filing non-use applications under the Trade Marks Act; and eliminating requirements for patentees to provide certain data relating to pharmaceutical patents with an extended term.

Notably absent from the bill as introduced to parliament, however, are provisions for phasing out Australia’s second tier patent system, the innovation patent.  As recently as early March, IP Australia published its response to submissions on the proposed phase-out, rejecting continuing calls for the innovation patent system to be retained in some form, and indicating its intention to proceed with the transition process set out in the exposure draft of the legislation.  But if a week is a long time in politics, three weeks is a veritable eternity, and IP Australia has now announced that ‘the Government has decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs.’

19 March 2018

Is Australia Headed for a ‘Technology’ Test for Patent-Eligibility?

Which wayLast week I reported on IP Australia’s response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  Now, hot on the heels of that development, IP Australia has also published the submissions it received in its other ongoing consultation process, commenced in September 2017, along with its corresponding further response.  This consultation also relates largely to implementing recommendations made by the Productivity Commission, and accepted by the Australian Government, including: amending inventive step requirements; introducing an objects clause into the Patents Act 1990; amending the provisions for Crown use of patents (and designs); and amending the provisions for compulsory licensing of patents.  In this case, however, proposed legislation has yet to be drafted, and the initial consultation has been directed to obtaining feedback from stakeholders on a number of potential implementation options for each recommendation.

A total of 18 non-confidential submissions were received in response to IP Australia’s consultation papers.  Once again, a number of these submissions argued against changes in the law, notwithstanding that the Government has already decided to implement the various Productivity Commission recommendations, and doing nothing is therefore not an option that is open to IP Australia.  Fifteen non-confidential submissions provided comments on the options for amending the inventive step requirements, of which 14 did not support making any changes.  Fourteen non-confidential submissions were received in relation to introducing an objects clause, of which just six submissions were in favour, and eight did not support the change.

There was less stakeholder interest in Crown use and compulsory licensing, however among those that did make submissions on these issues there was somewhat greater support for change.  Of seven non-confidential submissions relating to Crown use, five supported amending the law.  In relation to compulsory licensing provisions, three out of eight non-confidential submissions supported change.

Crown use and compulsory licensing provisions have rarely been invoked in Australia (and no compulsory licence has ever been granted).  Furthermore, the proposed amendments are unlikely to result in any increase in the use of these provisions.  The relative lack of interest in these areas is therefore not very surprising.

However, the proposed changes to the inventive step requirements, and the preferred wording of the objects clause, could have the more profound effect of introducing a ‘technology’ requirement into Australian patent law, creating tension with previous statements of the Full Bench of the Federal Court of Australia rejecting the proposition that patentable inventions be required to fall within an ‘area of science and technology’.

12 March 2018

Continuing Opposition to Abolition of the Innovation Patent Falls On Deaf Ears at IP Australia

Hard of hearingIP Australia has published its response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  The period for comment on the proposed legislation closed on 4 December 2017.  The draft legislation contains measures to implement aspects of the Government’s response to the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, along with amendments to strengthen plant breeder’s rights (PBR) enforcement, streamline official processes, and make technical improvements to the legislation.

While the majority of Productivity Commission recommendations addressed by the draft legislation relate to PBRs and trade marks, the most significant patent-related provisions are those implementing the abolition of the innovation patent system.  The proposed approach would see a fairly gentle transition, with applicants given a year’s notice within which innovation patents would still be granted under the current system, followed by eight years during which all existing innovation patents would gradually cease or expire, and restrictions would be imposed on new applications and the certification of innovation patent claims.

When the draft legislation was published, I argued that the proposed transition could be viewed as too gentle, considering the Productivity Commission’s relatively strong objections to the strategic use of divisional innovation patents, and the uncertainty caused by uncertified claims.  This was, however, very much a contingent view – i.e. given that the innovation patent system is to be abolished based upon the Productivity Commission’s recommendation, the abolition should be implemented in a way that most-effectively addresses the Commission’s reasons for making that recommendation. 

In fact, I would prefer to see the innovation patent system given a second chance, in an improved form.  However, since the Government has accepted the Productivity Commission’s recommendation, and the consultation was directed to its implementation, rather than being a further opportunity to canvas objections to this decision, I did not make a submission.  This did not, however, prevent a number of others from taking the opportunity to once again express their opposition to abolishing the innovation patent system.

Unsurprisingly, these repeated objections fell on deaf ears, with IP Australia focussing in its response on the few submissions that actually addressed the merits of the proposed legislation.  On this basis, it appears at this stage that – absent a last-minute reprieve at the parliamentary level – the process of abolishing the innovation patent system is likely to proceed in substantially the manner set out in the draft legislation.

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