20 October 2018

Representative Body of Australian Patent Attorneys Seeks to Intervene in Pivotal ‘Software Patent’ Appeal

Balancing interestsOn 19 October 2018, the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) filed an interlocutory application seeking leave to intervene in the appeal (no. NSD734/2018) by Encompass Corporation Pty Ltd against the decision of a single judge of the Federal Court of Australia in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421.  This appeal is of particular significance because it is to be heard by an expanded panel of five judges of the Federal Court, rather than the usual three judges.  Consequently, the decision could potentially overrule (or reconfirm) prior appeal decisions, and will be binding on all Australian courts and tribunals, other than the High Court.

As I reported last week, the Commissioner of Patents recently joined the proceedings as an ‘interested party’ – a development that I suggested may leave many other stakeholders, including numerous current and future applicants for patents on computer-implemented inventions, unrepresented in a case that could substantially shape the patentability of such subject matter for many years to come.  I therefore floated the idea that this presented an opportunity for an organisation such as IPTA to step and speak on behalf of other users of the Australian patent system.  And while I cannot take any credit – I am certain that IPTA would have already had its application in the works before my article was published – I am, naturally, very pleased to see that this has indeed come to pass.

It does seem, however, that the process of joining the proceedings is considerably more fraught for IPTA than it was for the Commissioner of Patents.  While the Commissioner was apparently able simply to ‘appear’ as an ‘interested person’, IPTA has had to make an application to intervene.  That application can be opposed by the principal parties to the appeal, and may be refused by the court.  In fact, the order issued by the court [PDF, 93kB] in response to IPTA’s application includes the following terms:

The application by the Institute of Patent and Trade Mark Attorneys of Australia (IPTA) to intervene on this appeal, pursuant to rule 9.12 of the Federal Court Rules 2011 (Cth), be stood over to the first day of the appeal.

On or before 5pm on Wednesday 31 October 2018, the IPTA file and serve written submissions of no more than 5 pages in length on the question of manner of manufacture within the meaning of s 18(1)(a) of the Patents Act 1990 (Cth) that it would seek to rely upon if intervention were granted.

On the positive side, this process ensures that IPTA will have the opportunity to file short written submissions, although these may be ignored by the court if it decides not to grant the application to intervene.  On the other hand, IPTA will incur the full cost of preparing and filing its written submissions – in addition to the costs of its application and attending court in order to argue its case for intervention – without knowing whether they will receive any consideration by the court.

I have been informed by the current President of IPTA, Richard Baddeley, that while the appellant (i.e. Encompass) has consented to the intervention, the respondent (i.e. InfoTrack) has indicated its intention to oppose IPTA’s application to intervene.  For this reason, IPTA is proposing to confine its intervention to the five-page written submissions, and will not be requesting to present oral submissions at the appeal hearing.

Considering that IPTA’s submissions are likely to support the interests of patentees and patent applicants – the primary stakeholders whose interests are not already represented in the proceedings – it is not surprising that Encompass (the patent owner in the dispute) would support IPTA’s intervention, and InfoTrack would oppose it.  I would like to think, however, that the court will be mindful of the fact that (barring a High Court appeal) it will be setting down legal principles that could endure for a significant period of time, and would therefore welcome all the input it can get to assist it in this task.

Hopefully, then, IPTA’s application to intervene will be granted, and its submissions will be considered by the court in reaching its decision in the Encompass appeal.  It is also my hope that this may finally result in some much-needed clarity, consistency, and coherency in the Australian law, and examination practice, in relation to patent-eligibility of computer-implemented inventions.

17 October 2018

Australian Commissioner of Patents to Participate in Major Software Patent-Eligibility Appeal

AddedThe Commissioner of Patents has been added as an ‘interested person’ to the parties involved in the appeal (no. NSD734/2018) by Encompass Corporation Pty Ltd against the decision of a single judge of the Federal Court of Australia in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421.  As I reported back in June, the case involves a pair of innovation patents owned by Encompass, which survived attacks based on alleged lack of novelty and innovative step, only to be found invalid on the basis that they did not relate to patent-eligible ‘manners of manufacture’.  In reaching this conclusion, the judge appeared to be strongly influenced by the state of the prior art, as represented by the evidence upon which InfoTrack relied for its novelty and innovative step cases.

The Encompass appeal is of particular significance, because an expanded panel of five judges has been assigned.  Usually, only three judges sit on a Full Bench of the Federal Court of Australia to hear appeals against decisions of a single judge.  An expanded panel has the power to overrule prior three-judge decisions (such as those concerning the patent=eligibility of computer-implemented inventions in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177), and its decision will be binding on all Australian courts and tribunals (including the Patent Office), other than the High Court.

The nature of the Commissioner’s interest in the outcome of the Encompass appeal is therefore clear.  The eventual decision may determine whether the current approach of the Patent Office to computer-implemented inventions – which is increasingly reliant upon consideration of the state of the prior art – is legitimate, or whether the Office has in fact been denying patents on the basis of flawed reasoning.  (Not that there is anything – other than filing divisional applications and keeping fingers crossed for a change in law and/or practice – that applicants can do about this.)

Furthermore, the Commissioner is currently involved in three appeals before single judges of the Federal Court which will undoubtedly be impacted by the Encompass decision: Rokt Pte Limited v The Commissioner of Patents, NSD1292/2017; Repipe Pty Ltd v The Commissioner of Patents, WAD323/2018; and Aristocrat Technologies Australia Pty Ltd v The Commissioner of Patents, NSD1343/2018.  Of these, the Rokt case has already been heard and is awaiting judgment, so the potential for an outcome that is inconsistent with whatever the expanded Full Court decides in Encompass will be of concern to all parties involved (including, presumably, the judge).  The Repipe and Aristocrat cases appear unlikely to be heard until well into 2019 (a hearing date is yet to be set for Repipe, while Aristocrat is currently set down for hearing in September 2019), making it likely that a decision will be handed down in Encompass in plenty of time for the parties to consider its effect on their positions – with the possibility of this resulting in settlement prior to trial.

It appears that the Commissioner intends to make substantive submissions, and to be represented at the hearing in the Encompass case.  According to orders issued by the Chief Justice on 2 October 2018 [PDF, 160kB], the Commissioner is to file a summary of submissions of up to 10 pages in length by 4.00pm on 17 October 2018, following which both Encompass and InfoTrack will have a week within which to file and serve any submissions in reply, also of up to 10 pages.  The implication is clearly that one or both of the main parties to the appeal may take issue with what the Commissioner has to say.

25 September 2018

Will an Expanded Full Bench of the Federal Court Bring Sense to Australian Law on Computer-Implemented Inventions?

Chaos and OrderThe law relating to patent-eligibility of computer-implemented inventions – and its practical application by the Australian Patent Office – is currently a mess.  As I have noted recently, over the past few years disproportionate resources have been devoted by both applicants and the Patent Office to disagreements over whether or not particular inventions are patentable according to the ‘manner of manufacture’ test required by the Australian law.  In just the past three years, there have been over 10 times as many hearings held, and decisions issued (42 in total), in relation to this particular aspect of the law than in the entire first decade following commencement of the current Patents Act 1990

Anybody who believes that this is not indicative of a serious problem is fooling themselves.  The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) flagged its frustration with the current situation in a submission [PDF, 123kB] in response to the recent consultation on the exposure draft of the Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018, noting that:

IPTA is particularly concerned by the current approach being adopted by IP Australia, and lower courts, in relation to the assessment of patentability of inventions based on software. Many inventions which satisfy novelty and inventive step requirements are being rejected outright by IP Australia, even when such inventions are considered patentable in Europe. IPTA is so concerned about this current trend within IP Australia that it has recently set up a working group to study this area to see what can be done to head off this disturbing trend.

While this is a valuable initiative, there is a real prospect that the issue will be resolved in the courts over the coming months.  In the past year or so there have been four appeals filed with the Federal Court of Australia against Patent Office decisions refusing applications for computer-implemented inventions: Todd Martin v The Commissioner of Patents, QUD374/2017; Rokt Pte Limited v The Commissioner of Patents, NSD1292/2017; Repipe Pty Ltd v The Commissioner of Patents, WAD323/2018; and Aristocrat Technologies Australia Pty Ltd v The Commissioner of Patents, NSD1343/2018.  Of these, the Todd Martin case was discontinued following an (unsurprisingly) unsuccessful mediation.  The Rokt case was heard on 18-20 July 2018, and is currently awaiting judgment.  The Repipe and Aristocrat cases are currently in preliminary stages, and are yet to be set down for a hearing.

However, the case that will trump them all is one that does not involve the Commissioner of Patents.  Back in June I wrote about the decision of a single judge of the Federal Court of Australia in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421.  In that case, a pair of innovation patents owned by Encompass survived attacks based on alleged lack of novelty and innovative step, only to be found invalid on the basis that they did not relate to patent-eligible ‘manners of manufacture’.  In reaching this conclusion, the judge appeared to be strongly influenced by the state of the prior art, as represented by the evidence upon which InfoTrack relied for its novelty and innovative step cases.

Encompass has appealed that decision (Encompass Corporation Pty Ltd v InfoTrack Pty Ltd, NSD734/2018) to a Full Bench of the Federal Court of Australia.  Notably, the Court has empanelled an expanded bench of five judges – Chief Justice Allsop, and Justices Kenny, Besanko, Nicholas, and Yates.  This is a rare event, that usually only occurs when a case is of particular importance, and/or where there is some prospect that the Court may be called upon to overrule an earlier decision of a three-judge panel.  In this case, however, there is reason to suppose that the prospects of the Full Court overruling either of its two most recent decisions on patent-eligibility 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, are fairly slim, given that the expanded panel includes two of the three judges – Justices Kenny and Nicholas – responsible for those decisions.  The third judge, Justice Annabelle Bennett (as she then was), retired from the Federal Court in 2016.

The Encompass appeal is scheduled to be heard on 8-9 November 2018, and a decision is therefore likely in the first half of 2019.  A five-judge ruling can override not only all of the ongoing appeals currently before single judges of the court, but also any or all of the existing first instance and Full Court decisions on patent-eligibility of computer-implemented inventions.  In my view, the Patent Office has good reason to be concerned that the Encompass decision, when it comes, will invalidate the approach that it is currently taking to the examination of computer-implemented technologies. 

19 September 2018

How Can an Innovative National IP Office Balance Its Roles as Technology Examiner and Technology Developer?

BalancingIP Australia incorporates the Australian Patent, Trade Marks, Designs, and Plant Breeder’s Rights (PBR) Offices, the core ‘business’ of which is to provide services to their ‘customers’ in respect of the administration and registration of Australian IP rights.  Indeed, IP Australia may be seen as a significant ‘exporter’ of such services considering that, for example, over 90% of applicants for Australian patent rights are foreign residents, as are over 50% of applicants for design registrations and PBRs.  In respect of its core services, IP Australia holds a true monopoly – no other government or private sector service provider can grant, or otherwise administer, enforceable IP rights in Australia.  IP Australia operates these services on a cost-recovery basis, i.e. it aims to fully recover the costs of service-provision through the official fees that it charges to its ‘customers’.

The scare quotes around the business-oriented terminology in the opening paragraph reflect my scepticism of the fashion for modelling government service provision as a form of business enterprise.  I am not alone in this scepticism.  Writing in the Harvard Business Review last year, Canadian business and management expert Henry Mintzberg noted that ‘[r]unning government like a business has been tried again and again, only to fail again and again’.  He also called the portrayal of citizens as customers a ‘misguided, overworked metaphor’, going on to observe:

Business is essential – in its place. So is government, in its place. The place of business is in the competitive marketplace, to supply us with goods and services. The place of government, aside from protecting us from threats, is to help keep that marketplace competitive and responsible.

Consistently with Mintzberg’s view on the appropriate role of government, IP Australia has a single Outcome under the Australian Government’s budget and accountability framework, which is:

Increased innovation, investment and trade in Australia, and by Australians overseas, through the administration of the registrable intellectual property rights system, promoting public awareness and industry engagement, and advising government.

Recently, however, we have seen IP Australia extending its services into areas that are, arguably, beyond this core mission, and engaging in activities in which it – again, arguably – positions itself in competition with private enterprise.  Examples include:
  1. the TM Headstart service and Trade Mark Assist tool which, despite disclaimers that they are not substitutes for legal advice, compete directly with services provided by trade marks practitioners; and
  2. the Patent Analytics Hub, which provides analysis, visualisation and interpretation of patent data, and competes directly with various patent search and analytics service providers, albeit ‘only’ for clients in the government and public research sectors – which actually includes some of the largest potential customers for these services in Australia.
Additionally, as I noted just last week, IP Australia is now engaged in its own internal IT development projects, applying machine learning techniques to patent classification and assessment of trade mark applications.  Its Chief Data Officer was also quoted last week by the online IT news outlet ZDNet, speaking on IP Australia’s efforts in relation to improving its business intelligence and analytics capabilities through internal ‘agile’ software development projects.

Just to be clear, I am not saying that all – or any – of this is necessarily a ‘bad’ thing.  IP Australia may, indeed, be the best-placed agency to be delivering these projects.  And, as I also pointed out in my article last week, it has by any standards – public or private sector – demonstrated over the past few years an impressive capability to deliver IT projects in a timely and cost-effective manner.  Certainly, IP Australia is not the only IP authority in the world to be engaging in such activities, with materials from the World Intellectual Property Organization (WIPO) May 2018 Meeting of Intellectual Property Offices (IPOs) on ICT Strategies and Artificial Intelligence (AI) for IP Administration revealing various projects ongoing at WIPO, the European Patent Office, the Russian Patent Office (Rospatent), the German Patent and Trade Mark Office, and others.

Even so, there is an argument to be made that IP Australia, as the agency responsible for regulation of registered IP practitioners (i.e. Australian patent and trade marks attorneys) is, at the same time, competing with those practitioners, albeit in a very limited capacity.  Furthermore, as the agency responsible for examining and registering (or refusing) IP rights in relation to new inventions – including software-based and machine learning technologies – IP Australia is also now itself engaged in developing such technologies.  This raises the question of whether any conflicts of interest arise as a result?  And, if so, what is the nature of those conflicts, and how should they be managed?

11 September 2018

Computerised Decision-Making – Coming Soon to an IP Office Near You?

Malevolent robotThe Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018 (the ‘PC Part 1 Act’) received Royal Assent, and thus passed into law, on 24 August 2018.  Following an initial consultation, which confirmed (in case any confirmation was required) that the proposal to abolish the innovation patent system remained controversial, it had an easy passage through the two houses of the Australian Parliament after the corresponding provisions were dropped from the Bill at the eleventh hour.  (These same provisions have since been incorporated into the draft of the Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018.) 

The PC Part 1 Act implements a number of less-contentious recommendations made by the Productivity Commission in its 2016 Report into its inquiry into Australia’s intellectual property arrangements, including clarifications on the legality of parallel imports, reducing the initial period before a registered trade mark may be challenged on grounds of ‘non-use’, and reducing reporting obligations relating to pharmaceutical patents with an extended term.  The Act also implements a number of measures that have been on IP Australia’s policy agenda for a while, most of which are intended to streamline and align the administration of the Australian IP system and make ‘technical amendments’ to correct or clarify IP legislation.

Included among the ‘streamlining’ measures are provisions to enable the Commissioner of Patents, and the Registrars of Trade Marks, Designs, and Plant Breeder’s Rights ‘to arrange for a computer program under their control to make decisions, exercise powers, and comply with obligations under the legislation’, i.e. to permit computerised decision-making.  When this idea was originally proposed in a public consultation process conducted in June-July of 2015, it was described as the ‘expanded use of automated systems’, and would have required the Regulations to prescribe specific decisions that may be automated.  The small number (three) of submissions received on this proposal were generally positive, but all noted the important role of the Regulations in controlling, and/or keeping the public informed, of the types of decisions that might be computerised.

However, three years is an eternity when it comes to progress of digital technologies, and with advances in machine learning and other techniques, the range of decisions that might presently, or in the near future, be wholly or partly automated has expanded greatly since the initial consultation in 2015.  The provisions that have actually been enacted (and which came into effect immediately upon receiving Royal Assent, i.e. on 24 August 2018) include no requirement for Regulations to be made permitting the automation of particular decisions.  Going forward, therefore, any decision, or related action, under the Patents, Trade Marks, Designs, or Plant Breeder’s Rights Acts may be automated using a computer program, if/when the relevant Commissioner or Registrar considers it appropriate.  The legislation has been drafted such that this may include both procedural actions (e.g. allowing an extension of time when no objections have been raised) and substantive actions (e.g. preparing an issuing examination reports).

While it might seem unlikely that computers will be examining patent applications any time soon, a submission made by IP Australia to the World Intellectual Property Organization (WIPO) prior to a meeting of international IP Offices held in May 2018 indicates that fully or partially automated trade mark examination – at least at the stage of an initial report – may be much closer to reality.

In any event, the necessary legislative permission is now in-place to enable any part of IP Australia’s decision-making processes to be automated, and an increase in the removal of human beings from the day-to-day execution of routine tasks that perhaps do not require high levels of adaptability and/or creativity is most likely now inevitable.  Fortunately, the legislation includes provisions that will make it easy for a computerised decision to be ‘overruled’ by a human decision-maker.  Furthermore, both computer and human decisions may be appealed to the Administrative Appeals Tribunal.

To find out more about how this will all work – and what IP Australia is up to in automating trade mark examination – please read on.

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