28 February 2021

Australian Patent Office Rejects Amazon Cloud Computing Invention as Patent-Ineligible

Cloud ComputingA delegate of the Commissioner of Patents has refused an application (no. 2018204629) by Amazon Technologies, Inc (Amazon) on the basis that it is not for a patent-eligible invention under Australia’s ‘manner of manufacture’ requirement: Amazon Technologies, Inc [2021] APO 7.  Amazon’s claimed invention relates to the execution of processing tasks within a cloud computing system, presumably such as its own Amazon Web Services (AWS) platform.  Specifically, it provides a mechanism for applications executing on ‘virtual machines’ within the cloud system to access additional resources as required during bursts of high demand.

This is yet another case in which a computer-implemented invention that appears at least superficially ‘technical’ has been found to be unpatentable because it is, as a matter of ‘substance’, in fact an ineligible business innovation, rather than a technical innovation.  There are many, many, words in Amazon’s main claims, and a lot of them seem highly technical, principally because they define the operation of a process within a technical system.  But does this mean that the inventive process is, itself, technical in nature?  The delegate determined that it is not.  He found that Amazon’s claims were directed to a scheme in which ‘business rules’ are applied for scheduling processing tasks, while the scheduler itself was performing only its ‘usual independent function’, with ‘no improved operation of the computing technology’.

In this case, I think that the delegate’s decision is a reasonable application of the law on patent-eligibility of computer-implemented inventions, as it has been interpreted by the Australian courts.  It is, however, a long decision, which could not fairly be described as light reading.  It is unfortunate that decision-making in this area of the law has become increasingly arcane and obtuse.  So rather than picking over the delegate’s decision, dissecting the lengthy patent claims, or reviewing the Federal Court authorities, I am instead going to do my best to explain Amazon’s invention and why it failed the patent-eligibility test in my own way, as plainly as I can.  And while I believe that the delegate’s decision is justified under the current law, I shall also explain why I think the law under-emphasises the technical context in which inventions such as Amazon’s are devised, and why a more nuanced approach might be more appropriate.

26 February 2021

DABUS Denied Down Under – Australian Patent Office Formally Rejects AI Inventor

Access DeniedBack in December 2020 I reported on the progress of an Australian patent application naming an ‘artificial intelligence’ going by the name DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) as inventor.  The application – no. 2019363177 – was derived from an international application filed under the Patent Cooperation Treaty (PCT), and names Dr Stephen Thaler, the developer of DABUS, as applicant.  At that time, the Australian Patent Office had raised an objection to the naming of a machine as inventor, and sought further submissions from the applicant on this issue.  I anticipated that the case would be referred to a hearing officer to determine the matter by way of a formal decision, and predicted that Dr Thaler’s rather unconventional assertions that an AI can be an inventor, and that he is entitled to receive any resulting patents by virtue of ownership of the AI, were unlikely to be accepted by the Patent Office.

That has all now come to pass, with a decision of a delegate of the Commission of Patents issued on 9 February 2021: Stephen L. Thaler [2021] APO 5.  In accordance with the plan language of the Australian Patents Act, and established legal principles, the delegate has determined that a patent can only be granted to a person, that a machine is not a person, and that there is no mechanism whereby the right to apply for a patent on an invention devised by a machine can be legally transferred to any person.

In short, a patent application naming a non-human inventor cannot be validly filed, regardless of who is named as the applicant.  A corollary of this (although not addressed in the decision) is that a patent on an invention devised by a machine can never be validly granted, even if the true nature of the inventor is concealed from the Patent Office, because there is simply no mechanism for any named applicant to derive a legal right to apply.  In practice, applicants are required to provide the Patent Office with a declaration of entitlement, and in the case of a machine invention this declaration would necessarily be invalid and/or false.

01 February 2021

Why Do Applicants File Divisional Applications, and Are They as Important as ‘Original’ Applications?

DivisionIn its 2020 IP Report, IP Australia introduced a novel measure of patent application filing intensity to identify top applicants – namely, the number of ‘original’ applications filed, excluding any divisional applications.  For the uninitiated, divisional applications are patent applications that are based on subject matter that is ‘divided out’ from previously filed applications (typically termed ‘parent’ applications), as distinct from ‘original’ applications that comprise new content filed for the very first time.  I took issue with the ‘original applications’ metric, on the basis that I did not consider there to be any coherent or logical basis for simply ignoring divisional applications when comparing applicant activity.  My views have not changed significantly over the intervening months.

It is certainly true that not all divisional applications are created equal.  At one end of the spectrum there are divisionals filed primarily as a way to buy additional examination time, with the parent application being allowed to lapse.  To distinguish these kinds of divisionals we can call them ‘continued examination’ applications. At the other extreme, there are divisional applications that are filed for the primary purpose for which they exist – to enable an applicant to obtain a patent for a distinct (second or subsequent) invention disclosed, but not claimed, in the original application – where the original application typically goes on to be granted, while the divisional proceeds independently.

Within the latter category of divisionals, there are also degrees of ‘independence’.  Sometimes the invention claimed in a divisional application is closely related to that of the original application.  For example, it might be substantially the same invention, where the applicant is seeking a different (e.g. broader) scope of protection.  In many cases, however, the invention claimed in a divisional application is distinct from the original invention.  There are numerous reasons why an applicant may end up disclosing multiple inventions in a single initial filing, either intentionally or unintentionally, and a discussion of all of those reasons is beyond the scope of this article.  But regardless of how it comes about, such an initial filing is best viewed as equivalent to a ‘bunch’ of applications, all of which are just as entitled to be counted as if they had been filed separately on the same day.

It is difficult to identify the purpose of each divisional application, other than by drilling down and comparing what is actually claimed against the parent application from which it has been divided.  However, some information can be gleaned from the eventual fate of the parent application.  For example, if the parent lapses without ever being accepted, it might be inferred that the divisional was filed for the purpose of continuing examination of the claims.  Conversely, if the parent application is accepted, then it is more likely that the divisional application was filed to pursue claims to a further invention, or to an alternative scope of the original invention.

To get an initial idea of the way in which applicants use divisional applications in Australia, I have analysed the outcomes for parent applications since 2002.  Over this period, divisional applications have become considerably more ‘popular’, with the number of divisional filings increasing more than threefold, compared with an overall increase in standard application filings of just 30%.  Most of this growth occurred between 2010 and 2016, with a slight decline in divisional applications from 2018.  Over time, around 70% of parent applications have been accepted, indicating that the majority of divisionals are not filed merely for the purpose of continuing examination of the original application.

29 January 2021

China to Cancel Patent Subsidies, and Emphasise Quality Over Quantity

Great WallAs highlighted in a report recently published by the US Patent and Trademark Office (USPTO), entitled Trademarks and Patents in China: The Impact of Non-Market Factors on Filing Trends and IP Systems, the high rate of Chinese patent and trademark filings in recent years is widely believed to have been influenced by government subsidies and other ‘non-market factors’.  Since at least 2011, some Chinese applicants appear to have been taking advantage of the Australian innovation patent system to maximise the subsidies they are able to claim for foreign patent grants.  In 2020, Chinese residents were by far the largest users of the system, filing more innovation patent applications than all other nationalities combined.

But could it be that the days of government subsidies, and an associated massive growth in patent applications originating in China, are drawing to a close?

On 27 January 2021, the China National Intellectual Property Administration (CNIPA) announced, in a notification entitled ‘Notice of the CNIPA on Further Strictly Regulating Patent Application Behaviour’ (in Chinese) (‘Notice’), that many lucrative subsidies must end by the middle of this year, with all others to be phased out by 2025.  (A brief report of the Notice can be found on the China IP Law Update blog, while a Google translation of the Chinese original is quite comprehensible.)

The Notice states that the overriding objective of the new regulations on patent application behaviour is:

In order to thoroughly study and implement Xi Jinping’s thoughts on socialism with Chinese characteristics in the new era; to earnestly implement the decisions and deployments of the Party Central Committee and the State Council; and to earnestly promote China’s transformation from a major importer of intellectual property rights to a major country of IP creation, and from the pursuit of quantity to the improvement of quality.

19 January 2021

Australian Patent Filings Fell in 2020, Despite Significant Growth (Again) in Applications from China

New Year 2021In 2020, the number of standard patent applications filed in Australia fell by 1.8%, to 29,240 from 29,786 in 2019.  Much of this decline can be attributed to domestic applicants, which filed around 10% fewer applications in 2020.  On the other hand, Chinese applicants filed nearly 20% more applications in 2020 than in 2019, falling only 48 applications short of the number filed by Australian applicants.  US residents remained the top users of the Australian standard patent system, being named on 13,037 applications, which was a 1.6% decline on 2019.

Among the leading origins for Australian patent filings, China, South Korea, the UK and Japan all increased their application numbers over 2019, while Canadian, Australian, French, and Swiss applicants filed substantially fewer applications.  The leading applicant, for the second year running, was Chinese telecommunications device manufacturer OPPO, which increased its new filings by 39%, to 435, eclipsing second-placed LG Electronics with 236 applications.  Rounding out the top three was Huawei, with 229 new applications in 2020.  Huawei’s heavy investment in Australian patents is interesting, considering that the company is barred from supplying advanced equipment for use in Australian telecommunications networks due to ‘security concerns’.  Perhaps it may yet expect to derive income from the Australian market in the form of licensing revenues from its standards-related and other patents.

The picture is very different for innovation patents – the second-tier rights that are now well into their final year of full availability before being phased out.  Chinese applicants seem to have treated the impending abolition of the system as if it is a ‘going out of business’ sale, increasing filings by over 400% and becoming by far the largest users of innovation patents.  Indian applicants seem also to have caught on, rather late in the piece, to the advantages of a system that enables a patent to be granted without the time and expense of substantive examination, with applications originating in India jumping from just eight in 2019 to 529 in 2020 (growth of over 6500%, if such a measure were meaningful off this small base).  Some US applicants also seem to have jumped at the final opportunity to obtain innovation patents, nearly doubling their filings from 86 in 2019 to 159 in 2020.

As usual, provisional applications were filed almost exclusively by Australian applicants.  The total number filed in 2020 was down by 2% on 2019.  However, it is likely that the number of ‘quality’ provisional has fallen by more than this number would indicate, with applications prepared and filed with the assistance of external patent attorneys having dropped by nearly 5%, while self-filing increased by a similar proportion.


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