09 June 2019

The Patent Office is Granting Time Extensions to Australia’s Grace Period for Filing After Self-Disclosure

Deadline The Australian patent law and regulations provide applicants with a 12-month ‘grace period’, enabling an application to be validly filed following an inadvertent, or intentional, act of self-disclosure of an invention.  As most readers will doubtless be aware, this is significant because in the absence of such provisions, any disclosure – such as publication or public use – of an invention before securing a priority date becomes prior art that can be used to invalidate patent claims on the basis of lack of novelty or lack of inventive step.  While there are a number of countries that provide a general period of grace of this kind, notably including the USA and Canada, the majority of countries do not.

Furthermore, most countries (Australia included) have provisions in their patent laws to permit time limits to be extended in appropriate circumstances, such as when an inadvertent error or omission has occurred, or when circumstances beyond someone’s control have prevented them from meeting a deadline.  Typically, however, grace periods cannot be extended beyond the legislated period (i.e. 12 months, in Australia’s case).  There are a number of ways to rationalise this restriction.  One approach is to observe that an inventor (or successor in title, such as an employer) is under no obligation to file a patent application at all and, until an application of some sort is filed, does not make themselves subject to any provisions of the patent system.  Thus, once a disclosure has occurred, the onus is entirely upon the prospective applicant to ensure that an application is filed before the expiry of any applicable grace period, given that there is no public record within the system of any relevant filing ‘deadline’ that could be extended.

Another approach is to consider that a grace period operates retrospectively, rather than prospectively.  That is, when applying the patent laws to an application, the effect of the grace period is to permit certain disclosures to be disregarded, so long as they occurred no more than 12 months prior to the actual filing date of the application.  This is in contrast, for example, to the filing of an initial priority application, which formally establishes a specific date 12 months in the future by which any further applications must be filed in order to obtain the benefit of the priority date.  Extending a grace period thus has the effect of increasing the period further back in time, as opposed to granting the applicant additional time to complete an act for which a specific time limit has already been established within the system.

Permitting extensions to grace periods is problematic for a number of reasons.  Firstly, it may leave no obvious trace of the fact that a patentee has been permitted to obtain a patent despite having made a public disclosure of the invention more than 12 months prior to filing an application.  A member of the public would need to dig into the details of the Patent Office files to discover exactly what additional period of grace has been allowed, and in what circumstances.  Secondly, due to the retrospective effect of a grace period extension, the applicant is effectively permitted to file an application later than should have been allowed, which is advantageous because a patent that is filed later also expires later than would otherwise be the case.  In priciple, however, the grant of an extension of time should do no more than place the applicant in the same position that they would have been in had they not missed the deadline in the first place, and no better.

Notwithstanding these issues, it has recently been brought to my attention that IP Australia is, in fact, granting extensions to the grace period.  I must confess that I had not believed such extensions to be possible (although, as I shall explain, there is a single published Patent Office decision from 2002 that suggests otherwise).  Indeed, as will become clear, I remain sceptical about the validity of extending the grace period, in the absence of any judicial consideration of the matter.

28 May 2019

Patent Attorney Survey Part 1: Respondent Demographics

Analysis As many readers will already be aware, between mid-March and April I conducted a survey with the objective of gaining some insights into how members of the trans-Tasman IP profession (primarily patent attorneys) are faring in the face of a challenging market and substantial structural changes within the profession.  Over the coming weeks I will be publishing a number of article reporting on the results of the survey.  This is no small task, in view of the number and diversity of responses received.  While some of the observations resulting from the survey will be uncontroversial, there are others that I expect (and, indeed, hope) may lead to further conversations about the impact of change on the profession.

This first article, however, should be relatively free of controversy.  It is primarily concerned with an analysis of the overall demographics of respondents to the survey, by comparison with the profession as whole.  What these results indicate is that there is a sound basis for belief that responses to the survey are broadly representative of the wider profession.

In the end, I received 247 responses to the survey.  Unsurprisingly, the overwhelming majority – over 90% – of these were from patent attorneys, and trainees, working in private practice in Australia and New Zealand.  (I am using the term ‘private practice’ in its conventional sense here, i.e. to mean attorneys providing services in the role of external advisors to clients, regardless of whether they are doing so as sole practitioners, members of privately-held practices, or members of publicly-listed groups.)  Many of the survey questions were not generally applicable to patent attorneys working other contexts (e.g. in-house), or to trade mark attorneys or lawyers.  I received a few complaints from people who felt excluded as a result, and I do appreciate that those people genuinely felt that they were being denied an opportunity to express their views.  However, this survey was intentionally focussed on those who are are most directly affected by current market conditions and the ongoing structural changes in the profession.

14 May 2019

Chinese Applicants Are Bypassing Local Patent Attorneys to Obtain Australian Standard Patents

Somewhere in Canberra... According to IP Australia records, somewhere in this unprepossessing block of apartments in suburban Canberra is the Australian ‘office’ of not one, but at least 47 Chinese companies, which collectively filed 164 standard patent applications between the beginning of January and the end of April, 2019 (link to Google Sheet with full listing).  In each case, it further appears that expedited examination of the application was requested at filing.  A number of the applications have already been accepted.  In some cases, examination reports have been issued, and responses filed.  These have generally been of high quality and, but for formalities in a couple of instances, have resulted in acceptance of the applications concerned.  In no case, however, has any registered trans-Tasman patent attorney been involved.  Purportedly, each response letter has been signed by an inventor on behalf of the applicant company, i.e. presumably their employer.  The actual occupant of the Canberra address is a mystery – unnamed on any application, and seemingly uninvolved other than to assist the applicants in meeting the requirement, under regulation 22.10 of the Patents Regulations 1991 to provide an ‘address for service’ in Australia or New Zealand.

Unusual Australian patent filing behaviour by Chinese companies is nothing new.  I first wrote about the phenomenon of Chinese companies obtaining relatively large numbers of Australian innovation patents back in February 2013, a practice that – notwithstanding some limited efforts by the Patent Office to curb abuse of the system – continues largely unabated to this day.  I recently estimated that around a quarter of all innovation patent applications filed in 2018 were made by Chinese applicants (upon further analysis, I would probably now revise that number upwards, closer to one third).  It is widely believed that this behaviour is motivated by direct financial incentives provided by Chinese authorities to companies that obtain foreign patents.  In this context, the Australian innovation patent has the advantages of being cheap to apply for, fast to issue, and providing an official ‘patent certificate’ upon grant that can, presumably, be used for the purposes of claiming the Chinese government hand-outs.

These latest applications are something different, however.  First and foremost, they are for standard patents, for which no certificate will issue until and unless the applications pass substantive examination (and the opposition period).  They all claim priority from earlier Chinese national patent applications which were, in most cases, filed only shortly before the corresponding Australian applications (and certainly well within the 12-month period allowed under the Paris Convention).  And, as I have already noted, it appears that expedited examination has been requested in each case, with the applicants having a genuine intention of securing a granted Australian patent, even where objections have been raised by the examiner.

In short, these Chinese applicants are not looking merely to obtain an official patent certificate by any means available, at the lowest possible cost.  Rather, they are seeking enforceable patent rights, and in doing so they are willing to incur the additional costs of examination fees, acceptance fees, and dealing with any examination objections that may arise.

Even so, these companies do not appear to be willing to incur the costs associated with engaging Australian patent attorneys to assist them in applying for or obtaining patents.  This naturally raises the question of whether this is a problem for the applicants, for the occupant of that Canberra apartment, or for anybody else who might be involved in these filings?

26 April 2019

IP Australia Launches 2019 Annual IP Report on World Intellectual Property Day

World IP Day 2019 World Intellectual Property Day is celebrated each year on the 26th of April.  This year, the theme is ‘Reach for Gold: IP and Sports’.  To read more about World IP Day 2019, and to explore how ‘innovation, creativity and the IP rights that encourage and protect them support the development of sport and its enjoyment around the world’, feel free to head on over to the website of the World Intellectual Property Organization (WIPO).  Because this article is not about World IP Day, or the role of IP in sports.  It is about how IP Australia is marking the occasion – with the launch of its Australian Intellectual Property Report 2019.

As I reported at around this time last year, the 2018 annual report attracted a fairly negative response in certain circles, with InnovationAus reporter Stuart Kennedy calling it a ‘damning report card on patent filing’, after earlier writing disparagingly about the allegedly ‘shocking’ revelation that ‘poker machine king Aristocrat Technologies’ had been the top Australian-resident patent applicant for 2017 which, in its ‘quest to find fresh ways to relieve pokie players of their dough, crushed the patent application efforts of CSIRO by a factor of more than three.’

In light of last year’s experience, it is perhaps unsurprising that the ‘patents’ section of the 2019 IP Report avoids mention of the fact that Aristocrat was once again the top Australian filer.  As I reported back in January, in 2018 the company increased its haul of new standard patent applications by 60% over 2017, to 252 – reaching almost five times the number of applications (55) filed by CSIRO.  If the ratio of the number of applications filed by a leading commercial entity in the gaming industry to the number filed by Australia’s flagship public research organisation is any kind of measure of research output – which it emphatically is not – then this would be a far worse result than the previous year.  Of course, not all patents are created equal, and the truth is that there is no conflict in celebrating the international successes of both Aristocrat – a great Australian company in its field, setting aside personal views on the merits, or otherwise, of gambling – and CSIRO – which has generated globally-significant outcomes including influenza drug Relenza, polymer banknote technology, and key technologies underlying high-speed Wi-Fi, among many others.

26 March 2019

Competition Regulator OK With QANTM/Xenith Merger, But Notes That Group Firms ‘Lack Incentive to Compete’

Tick of ApprovalLast Thursday, 21 March 2019, the Australian Competition and Consumer Commission (ACCC) completed its public review of the proposed merger of QANTM IP Limited (ASX:QIP) and Xenith IP Group Limited (ASX:XIP), which commenced back in January.  The outcome of the review was ‘not opposed’, i.e. the competition regulator found no basis to object to the proposed merger under the ‘substantial lessening of competition’ test established by section 50 of the Australian Competition and Consumer Act 2010 (‘CCA’).  Focussing primarily on patent services (for reasons that I will explain further below), the ACCC concluded that ‘a merged QANTM and Xenith is likely to continue to face competition from a number of alternative large and medium suppliers’.

Notably, however, the ACCC distinguished between the independence of firms providing attorney professional services within the QANTM and Xenith groups, for avoidance of conflicts as required under the Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018, and the presence of actual competition between such firms.  In particular, the ACCC stated that:

While firms within the same ownership group have regulatory obligations to maintain independence for the purposes of managing conflicts of interests, the ACCC considered that firms within a merged QANTM and Xenith do not have the incentive to compete with each other.  (Emphasis added.)

This is, I think, a subtle but important distinction, which indicates that the ACCC has developed a fairly good understanding of the dynamics within the market for IP services in Australia.  This will carry over into its ongoing review of the prospective hostile takeover of Xenith by IPH Limited (ASX:IPH), with the consequence that the absence of any objection to a QANTM/Xenith merger does not necessarily imply a similarly smooth passage for an IPH acquisition of Xenith (although, personally, I rate the likelihood of the ACCC actually blocking such an acquisition at virtually nil).

While this regulatory hurdle has now been overcome, it remains uncertain whether the QANTM/Xenith merger will proceed, in light of IPH’s opposition as owner of nearly 20% of Xenith shares.  On the one hand, Xenith now requires nearly 94% of the remaining votes (i.e. 75% of the total) to be in favour for the merger with QANTM to go ahead.  On the other hand, IPH still requires a green light from the ACCC, and would then need to secure 75% of the votes it does not control in order to succeed in its takeover bid for Xenith.  So even if IPH is successful in blocking the QANTM/Xenith merger, this is no guarantee that it will get its own way in the end.

For my further thoughts on these most recent events, and where they may lead, please read on.

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