24 December 2012

Apple v Samsung—Legal Privilege and the In-House Lawyer

Apple Inc. v Samsung Electronics Co. Limited (No 2) [2012] FCA 1358 (10 December 2012)

Got privilege?According to an affidavit sworn by a senior legal counsel for Samsung, the number of potentially relevant documents collected by the company’s Australian solicitors, for possible disclosure to Apple in the ongoing litigation, is by now in excess of 500,000.  That is, there are over half a million documents produced by, or on behalf of, Samsung, which somebody has had to consider for the purposes of satisfying discovery notices issued by Apple!

So far Apple has identified 128 ‘categories’ of documents which, by agreement or court order, Samsung is required to produce.  It is generally up to Samsung and its lawyers to find all of the documents in their possession which fall into the specified categories.  Of the half million documents which have been collected for this purpose, over 3,000 have already been supplied to Apple.

As part of this process, a disagreement arose between Apple and Samsung over whether or not a particular selection of 154 documents was immune from production, on the basis that these documents are covered by the exclusion commonly known in Australia as legal professional privilege (sometimes also known as ‘client-solicitor privilege’, and in the US as attorney-client privilege).

This dispute has been adjudicated separately from the main litigation, by Justice Cowdroy in the Federal Court of Australia, who has inspected over half of the documents for himself in order to conclude that they are indeed protected by privilege.  However, there were also two documents, which have previously been tendered in redacted form by Samsung as evidence in the main proceeding, in respect of which Justice Cowdroy found that the privilege had therefore been waived.  Samsung is therefore now required to furnish these documents in full.

Quite aside from the general interest generated by any Apple/Samsung decision, Justice Cowdroy’s judgment should be essential reading for all in-house lawyers within companies operating in Australia.  Continuing a line of cases in which the assessment of privilege by in-house counsel has been treated as inherently suspect, Justice Cowdroy determined that sworn statements by a lawyer employed by Samsung could not be relied-upon for the purposes of determining whether or not they were properly the subject of privilege.  Fortunately for Samsung, however, he considered that there was sufficient reason to think that they might be privileged that it would be appropriate for him to take a look for himself before rendering judgement.

22 December 2012

‘Please Do Not Offer Equity, As Refusal Often Offends’

Offended“We can’t afford to pay a lot now, but this is going to be really big.  There will be much more work coming in the future…”

No doubt every patent attorney reading this will have heard something along these lines at some point.  Perhaps, indeed, on numerous occasions.  And we know where it is almost always leading: the prospective new client, whom we are meeting for the first time, and about whom we know nothing, is about to ask us to work for a discounted rate, or to provide a fixed quotation (no matter how much of our time they want to take up).  Then at some point they might suggest we take an equity position in their new business, in lieu of a fee.  Or work on a contingency basis, which amounts to the same thing since we would probably want to charge a premium as compensation for the fact that we will only get paid if the business does, in fact, succeed.

Here is a tip if you are a potential client thinking along these lines: we are – to paraphrase Taylor Swift – never, ever, ever going to do it.  Like… ever!

So if you want to save us both the embarrassment of refusal, the polite course is not to bring it up in the first place.

There are many good reasons for this, perhaps the most straightforward being that if we wanted to be in the business of investing in start-up companies, we would probably be working in venture capital.  Patent attorneys provide professional services, i.e. we sell our time and our expertise.  For the most part, patent attorney firms are small-to-medium enterprises (SMEs, just like many of our clients), with around 100 or fewer employees, annual revenue well within the A$20 million used by the Australian Tax Office as the definition of an SME, and for which cash flow is the lifeblood needed to pay the monthly bills (mainly salaries).  If we are not paid for the work we do, when we do it, we will not be in business in that mythical future when the work is flowing, like the Nile in flood, from your successful start-up venture!

But there is another very important reason why a patent attorney might not want to be investing in, or financing, your new business, which is that it is very likely to lead to a conflict of interest that could prevent the attorney from continuing to act for you.  How this can come about – and the fact that it is not merely some hypothetical concern of overly-conservative practitioners – is amply demonstrated by a recent case decided in the Queen’s Bench Division of the England and Wales High Court: Ford & Warren v Warring-Davies [2012] EWHC 3523 (QB) (12 December 2012).

21 December 2012

Compulsory Licensing Inquiry Draft Report—Evolution, Not Revolution

Compulsory Licensing Draft Report CoverThe Australian Government’s Productivity Commission has released its draft report on the public inquiry into the Compulsory Licensing of Patents.

The inquiry was initiated in July this year (see Australian Public Inquiry into the Compulsory Licensing of Patents), and an issues paper was released in August, seeking public input by 28 September 2012 (see Compulsory Licensing Inquiry – Issues Paper Released).

The Commission is now inviting written comment on the draft report, prior to its finalisation and delivery to the government.  The deadline for public submissions is Friday, 8 February 2013.

We must confess that we are a little surprised – though not unpleasantly so – by the draft findings and recommendations in the report.  We had foreshadowed the possibility that the Commission’s remit of identifying ‘ways of achieving a more productive economy’ might lead to some significant proposals for change.  In fact, the draft report proposes only some relatively modest evolution and fine-tuning of the existing non-voluntary access provisions (i.e. compulsory licensing and Crown use).

16 December 2012

‘Prior Use’ for Patent Attack and Defence

Image: David Lapetina, Wikimedia CommonsWe recently received a question from ‘James’ via the Ask Patentology page about the effect of ‘prior use’ of an invention on a subsequent patent obtained by somebody else.  Although James elected not to leave an email address, we consider the topic to be of sufficient interest to warrant a post of its own.

In a nutshell, the question is: how are the rights of a patent owner weighed up against those of other people or businesses, which may have been using similar technology for some time prior to the filing of the patent application, but which are then subsequently accused of infringing the patent?  And how does this relate to the concept of ‘prior art’?

James was specifically interested in the case of a software-based invention, however the Australian patent law makes no distinction between different fields of technology.  Nonetheless, it is probably fair to say that software inventions can, in some cases at least, be more easily ‘used’ without it necessarily being apparent how the software works, or what exactly it does, which has some impact on its prior art effect, so we will address this specific issue towards the end of the article.

The short answer is that under the Australian Patents Act 1990 a prior use of an invention might be used in one, or both, of two different ways to fend off an accusation of patent infringement.  Firstly, it might be possible to employ the prior use as a form of prior art in order to attack the validity of the patent claims.  Alternatively, section 119 of the Act provides that, in appropriate circumstances, the use of a patented invention before the priority date of the patent claims acts as a defence to an accusation of infringement.

There is also a ‘shortcut’ tactic, known as the ‘Gillette Defence’, which essentially says that if the accused infringer is doing nothing more than what was already done before the priority date of the patent claims, then either the patent is invalid, or the claims are not infringed.  The defence runs that it does not matter which, because either way the accused is off the hook!  This is a shortcut, because in principle it enables the court to dismiss a patent case without actually addressing the substantive questions of infringement or validity.  There is, however, considerable doubt as to whether this is a legitimate form of legal reasoning under the current Act – quite aside from anything else, it has the potential to leave an invalid patent on the Register, to be used again another day!  This issue arose in the recent Australian case of Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2012] FCA 239, which we wrote about in Australian Federal Court Blocks Generic ABILIFY (Aripiprazole), so we will not dwell on it again here.

13 December 2012

Unitary European Patent ‘A Huge Step Forward for SMEs’

EU Population Density. Image: Wikimedia Commons.On Tuesday, 11 December 2012, Members of the European Parliament (MEPs) backed plans for a 'pan-European' patent – commonly called the ‘unitary patent’ – which will cover 25 of the 27 member states of the European Union (EU). The unitary patent will be enforceable across all participating countries via a single court action.

German MEP Klaus-Heiner Lehne reportedly described the decision as ‘a huge step forward for SMEs’, on the basis that the unitary patent will make the overall process of obtaining and enforcing European patents more affordable.

Under the current system, it is possible to apply for a patent through a central examination process in the European Patent Office (EPO), however the resulting patent must be brought into force (in a process known as ‘validation’) in each individual country required by the patentee.  The European Commission has indicated that a unitary patent could cost as little as €4,725 (referring, presumably, to the official fees only, and not the attorney costs involved in obtaining a defensible patent).  Under the current system, it would cost around €36,000 in official fees to obtain patent rights validated in every member state of the European Patent Convention (EPC).

09 December 2012

Research Affiliates, RPL Central Have Their Days in Court

Federal Court Melbourne. Image: Wikimedia CommonsOver the past three weeks, two judges of the Federal Court of Australia – Justice Emmett in the Sydney Division, and Justice Middleton in Melbourne – have heard arguments in appeals from patent office decisions relating to the rejection of patent claims directed to so-called ‘business methods’.  The judgments in one or both of these cases, expected in the next three months or so, are likely to clarify the dividing line between those types of computer-implemented process that are eligible for patent protection, and those that are not.

Long-term readers of this blog will be aware that one issue on which we have been consistently critical of IP Australia is its recent handling of patent applications relating to subject matter it regards as computer-implemented business methods.  The practice of the Patent Office in relation to this controversial subject matter changed at around the time of the US Supreme Court decision in Bilski v Kappos (issued in the same month this blog began), most prominently with the Office’s published decision rejecting an application in the name of Invention Pathways (see Method for Commercialising Patentable Inventions Found Neither Patentable nor an Invention).

We were not critical of the Invention Pathways decision at the time, and to this day we would maintain that the examiner, and the Hearing Officer, were both right to reject the application in that case.  However, with the benefit of hindsight – looking at how this decision has been used to reject less-clearly unworthy claims over the past two-and-a-half years – we would perhaps be more critical of the reasoning in the decision.  While the incidental use of a computer for record-keeping purposes (as in the method claimed in Invention Pathways) may not be sufficient to make an otherwise ineligible method patentable, the Hearing Officer went beyond this, proposing that the ‘concrete effect or phenomenon or manifestation or transformation’ required by the Full Federal Court in Grant v Commissioner of Patents ([2006] FCAFC 120) ‘must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way’ ([2010] APO 10 at [38], emphasis added).

06 December 2012

Lundbeck Wins Latest Round in LEXAPRO Term Extension Bout

Aspen Pharma Pty Ltd and Ors and Commissioner of Patents and H Lundbeck (Joined Party) [2012] AATA 851 (4 December 2012)

LEXAPRO escitalopramExtension of term – appeal from grant of an application for an extension of time – whether extension available under Patents Regulations 1991 – whether misunderstanding of the law a relevant ‘error or omission’ – whether exercise of discretion justified

The Administrative Appeals Tribunal (AAT) has upheld a decision of the Australian Patent Office granting an extension of time of 121 months for pharmaceutical manufacturer H Lundbeck A/S to request an extension of term of its Australian patent no. 623,144, covering its antidepressant drug escitalopram, marketed in Australia as LEXAPRO.

In the absence of the requested extension of term, the LEXAPRO patent expired on 13 June 2009.  With an extension of term – based upon the listing of the earlier drug CIPRAMIL on the Australian Register of Therapeutic Goods (ARTG) – the expiry date of the patent becomes 9 December 2012.  Although this extended term will itself have expired before it can even be formally granted, a number of generic pharmaceutical manufacturers have been marketing their own escitalopram products throughout the intervening period, and may therefore be liable to pay damages to Lundbeck corresponding with these sales.

02 December 2012

Study Shows that Patent Examiners Make a ‘Meaningful Difference’

AU-EP-US (Images by Geoscience Australia, www.ga.gov.au) On 21 November 2012, we attended a seminar in Melbourne presented by Professor Andrew Christie of the Intellectual Property Research Institute of Australia (IPRIA) on the topic of An Empirical Comparison of the Outcome of Patent Examination in the USPTO, the EPO and IP Australia.

While the title may seem dry, Professor Christie provided, as always, an intelligent, engaging and thought provoking presentation (for an earlier example, see Why IP Professionals Must Take ‘Gene Patent’ Opponents Seriously).

IPRIA researchers studied a sample of 494 patent families, on which patents had been granted by all three of the US, European and Australian patent offices in recent years, and for which the main claim of each application was identical in all three offices when originally-filed.  They compared the granted claims with the original claims in each case, to identify whether the examination process had resulted in a ‘meaningful change’ to the scope of the claims.

What the researchers found was that in a majority of cases, across all three patent offices, examination had resulted in the applicant amending its claims in some meaningful way.  This happened most commonly in the USPTO (79% of cases), while the rate of meaningful amendment in the EPO was 68%, and in Australia 57%.  Most of the amendments were what the researchers called ‘integral’ changes, i.e. the narrowing of the main claim by incorporation of additional features or limitations.

29 November 2012

Australian Patent Attorneys Urged to Get More Ethics Training

Socrates Revised guidelines for Continuing Professional Education (CPE) issued on 28 November 2012 by the Professional Standards Board for Patent and Trade Marks Attorneys (and soon to appear on the Board's web site) require registered practitioners to undertake a minimum of one hour of ethics or professional conduct CPE in each year.  Currently, the minimum total CPE requirement is 10 hours for practitioners registered as either patent attorneys or trade marks attorneys, and 15 hours for practitioners registered as both.

While one hour per year may not seem like much, this is a significant step for the profession, both practically and symbolically.

Part of the background to the new guideline is a recent decision of the Disciplinary Tribunal, which found a senior Australian patent practitioner (now retired) guilty of unsatisfactory professional conduct, for failing to resolve a conflict of interest between two clients of his Adelaide firm, both of which had developed directly competing inventions.  We reported on this decision back in April this year (see Senior Patent Attorney Found Guilty of ‘Unsatisfactory Conduct’).

One consequence of the Tribunal's decision was to turn a spotlight on the lack of agreement amongst patent and trade marks attorneys in Australia as to exactly how and when conflicts arise, and how they should be identified and resolved.  The Professional Standards Board provided evidence of one senior member of the profession who testified to his opinion that the practitioner's firm was clearly in a conflict situation at least from the time that one of the clients discovered, and complained about, the firm’s acting for the other client in August 2007.  However, two other senior members of the profession provided completely contrary evidence on behalf of the practitioner!

25 November 2012

Pharma Patents Review Releases Issues Paper, Launches Blog

Copyright (c) 123RF Stock PhotosOn 21 November 2012 the Australian Government’s Pharmaceutical Patents Review panel released a ‘Background and Suggested Issues Paper’ [PDF, 609kB], which outlines the panel’s initial impressions of the key issues for the review.  This review was originally announced by the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus QC, on 15 October 2012 (see Yet Another Patent System Review – Pharmaceutical Patents).

According to the panel’s announcement, the paper seeks to ‘begin engaging with anyone who has an interest in this area [i.e. pharmaceutical patents] and to provide a stimulus for written submissions.’

The paper includes a number of specific questions, however it is said said that these are intended only to provide ideas for developing submissions.  The panel is seeking a broad spectrum of views, and does not want anyone to feel constrained by its suggested questions!

There are two aspects of the announcement which we find quite interesting, at least from our own personal perspective.  Firstly, the review does not merely have a web page – as is now absolutely standard – but has set it up as a blog at pharmapatentsreview.govspace.gov.au.  The panel intends to use the blog to explore the relevant issues with stakeholders, and interested parties will be able to interact directly with the panel throughout the review process by commenting on individual posts (including the announcement of the issues paper itself).

Secondly, Patentology’s article Pharmaceutical Extensions of Term: Is It Time for a Fix? is cited in the issues paper (footnote 20), which came as a pleasant surprise!

Written submissions are due by 5pm on 21 January 2013.  This is actually quite a tight deadline, considering that the month between Christmas and the end of January is the main summer vacation period for many Australian stakeholders.

17 November 2012

The Australian Apple/Samsung 2013 Year Planner is Here!

2013 Apple-Samsung ThumbnailWith 2012 drawing to a close, Patentology is pleased to announce the availability of the Australian Apple/Samsung 2013 year planner.

This handy reference is an absolute must-have for the wall or desktop of numerous Australian IP lawyers, patent attorneys, Federal Court employees, tech journalists, patent litigation enthusiasts and – of course – Federal Court Justice Annabelle Bennett.

Justice Bennett recently timetabled a number of new hearing dates in the second half of 2013, bringing the total number of court days set down next year in the Australian Apple v Samsung case to 123.  Yes, you did read that correctly – one hundred and twenty-three.  This is in addition to the 46 days of hearings which will have taken place by the end of this year, not including last year’s interlocutory proceedings, and various dates that have been set down for administrative purposes (e.g. management conferences and directions).

Our 2013 year planner – a larger version of which is available by clicking on the thumbnail above – should therefore prove invaluable to to the many individuals involved in this gargantuan case.  It will help senior counsel to organise the expenditure of their substantial fees on European sojourns during the northern summer, while less-experienced articled clerks and junior associates will be able to plan when they might be able to grab a few hours of sleep, or invest a little time in any surviving relationships they may have outside of work!

It does not appear that any of the dates that have been reserved by Justice Bennett are speculative, or merely for contingency.  By all accounts, she has been meticulous in time-tabling the trial, and every set of dates is scheduled for hearing of a specific aspect of the case.

15 November 2012

SMEs – You and IP Australia Need to Talk!

Round TableA contingent of key staff from IP Australia, led by Director General Philip Noonan, is currently engaged in a tour of mainland capital cities, where they have been consulting with members of the IP professions on the draft amendments to the Australian Patents Regulations 1991, which are open for comment until 21 November 2012 (see Draft Regulations Reveal Applicants to be Slugged with Search Fee and Timeframes Slashed in Second Stage of Proposed Regulations).  We were fortunate to have the opportunity to attend the Melbourne discussion on Wednesday, 14 November 2012.

A small but highly-engaged contingent of about 20 patent attorneys, trade marks attorneys and lawyers attended either one, or both, of the two 90 minute sessions.  The format was basically a ‘round table’ discussion (though the actual table was rectangular), which ranged across a number of the issues raised by the draft regulations.  The IP Australia representatives generally seemed receptive to the various views expressed by the participants, and equally willing to explain and defend their position on the proposed regulations.  It is fair to say that there was fairly robust discussion on a small number of the more contentious issues!

The Australian IP law reforms, and the accompanying amendments to the regulatory regimes, encompass trade marks, designs and copyright matters, as well as changes to the regulations governing the patent and trade marks attorney professions.  However our interest, as always, is primarily in relation to the patent reforms.

In this article, we cover a few of the topics discussed.  However, we wish to highlight particularly the potential impact of the proposed search and examination fee regime on Australian small-to-medium enterprises (SMEs).  While there are certainly people within the patent profession who will be advocating a rethink of this regime, on behalf of our local SME clients, it is equally important that SMEs ensure that their own voices are heard directly.  Otherwise, there is a real risk that some Australian SMEs will be effectively priced-out of their own patent system!

11 November 2012

Patent Pools – Some Not-So-Frequently Answered Questions

Pool rulesIn our previous article, Fragmented Patent Pools Will Not End Smartphone ‘Wars’, we wrote about two separate initiatives intended to make patent licences more easily available, and affordable, for companies wishing to implement standard mobile communications technology.

These initiatives are known as ‘patent pools’.  This is not a new concept, and the notion of companies ‘banding together’ to share access to patented technologies, sometimes with anticompetitive effects, has existed for well over a century.

However, the contemporary structure of patent pools, generally intended to facilitate access to patents required to implement an industry standard or some other widely-desired technology, is a relatively recent development.  Modern pool operators are mindful of the anticompetitive potential of patent pools, and are careful to establish legal structures and agreements which do not fall foul of competition or antitrust laws and regulators.

Patent pool arrangements began to gain official sanction from competition regulators back in the 1990s.  In 1995, the US Department of Justice (DoJ) and the Federal Trade Commission (FTC) issued the Antitrust Guidelines for the Licensing of Intellectual Property (PDF, 230 kB), which highlighted the potential pro-competitive benefits of pools.  On 26 June 1997, the DoJ Antitrust Division issued a Business Review Letter in response to a request by the MPEG LA group, which was proposing to establish a pool to license patents essential to the implementation of the MPEG-2 digital video coding standards, which were in the process of being widely adopted for a range of commercial applications, including DVD-video, digital video transmission and broadcast, and digital video recording and storage.

The DoJ gave its stamp of approval to the proposed MPEG LA pool arrangements, and these have become a template for subsequent patent pools seeking to avoid violating antitrust and unfair competition laws.

While the idea of pooling patents seems simple, there are a number of subtleties that are perhaps not so readily appreciated.  With this in mind, we ask and answer a few basic questions about modern patent pooling arrangements.

08 November 2012

Fragmented Patent Pools Will Not End Smartphone ‘Wars’

Photograph © Mark Summerfield 2008Depending on where you are in the (developed) world, the next generation of mobile communications networks is either already with you, or on its way.  Colloquially known as ‘4G’, it is more accurately termed ‘LTE-Advanced’, an upgrade from the Long Term Evolution (LTE), or ‘3G’ technology which is now widespread.  LTE-A is an improvement in every respect over 3G – higher peak data rates, greater spectral efficiency, reduced latency and increased throughput.

And, of course, there are more patents than ever before covering networks and devices capable of communicating using the full range of available standards.

Considering that the holders of patents covering the previous generation technologies seem unable, or unwilling, to resolve their existing disputes over access and licensing terms for access to standards-essential patents (SEPs), it may be difficult to imagine how there could ever be peace as the number of such patents – and associated patent holders – only seems to be increasing.

The creation of ‘patent pools’ – collections of SEPs owned by multiple proprietors, and made available as a block via a single licence agreement – may therefore be seen as an encouraging sign.  Two such pools have recently been established covering subsets of the LTE SEPs.  And while we would like to think that this is the beginning of a more peaceful coexistence among competitors in the mobile communications space, a closer look at the LTE patent landscape suggests that there is a long way to go before these pools will represent a realistic option for achieving a truce in the industry.

06 November 2012

South Korea is Not a ‘FRAND Rogue State’!

KoreasOn 24 August 2012, the Seoul Central District Court issued its decision in one of the many ongoing patent cases between rivals Apple and Samsung.  We did not report on the ruling at the time because, frankly, there was very little information available in English, and we therefore did not feel that there was anything much we could add to the news reports (such as this one, from Bloomberg).

Overall, while the decision produced a rare win for Samsung, things certainly did not all go the way of the Korean company.  Of four patents which it asserted against Apple, two were found invalid, and one was found not to be infringed.  Furthermore, Apple was successful in a counterclaim, which resulted in injunctions against various Samsung products, and an award of 25 million Korean won (about US$23,000) in damages.

Samsung’s single valid and infringed patent also earned it an injunction against a number of Apple’s 3G-capable devices, and a damages award of 40 million won (about US$35,000).

One widely-read commentator, however, was willing to infer a great deal from very little.  Florian Mueller, in a FOSS Patents blog post entitled ‘Apple-Samsung ruling suggests South Korea is a FRAND rogue state’, wrote:

A couple of court decisions announced in Seoul, South Korea, this morning indicate that South Korea has decided to become a rogue state in connection with standard-essential patents, essentially telling foreign companies that in order to sell their technology products to the country's 50-million population, they must bow to extortion by Samsung and LG.

This is highly problematic and will have diplomatic repercussions. The victims of such abuse will be companies from the United States, Europe and Japan, and increasingly also Chinese companies. I don't know what Apple is going to do, but it would make sense to talk to both U.S. presidential candidates at the earliest opportunity.

So far, we are unaware of any credible allegations of ‘extortion’ having been made against any Korean companies, or of any diplomatic repercussions, or indeed of any impact on the US presidential race now drawing to a conclusion!

However, this week we have come into possession of a full English translation of the Media Report issued by the Seoul Court on 24 August in relation to its ruling on the Samsung patents, and we have to say it makes very interesting reading, with none of the hallmarks you might expect of a document issued by a ‘rogue state’.

The translation was prepared by Korean IP law firm Lee & Ko (which acted as cousel for Samsung in the case), and was circulated to delegates who had attended the AIPPI Congress in Seoul on 20-23 October 2012.  Lee & Ko have kindly provided their permission for Patentology to make the translation available in full, and it can now be viewed and/or downloaded from Google Drive.  The following is a summary of the Court's main points and reasons.

03 November 2012

Is IP Australia Ready to ‘Raise the Bar’?

Raise the BarIP Australia has temporarily suspended its practice of case management of divisional applications, which was introduced in October 2010 (see IP Australia Gets Tougher on Patent Applicants and IP Australia’s ‘Case Management’ of Divisional Applications).

The purpose of this practice has been to limit abuses of the system by expediting examination of divisional applications, and providing only a limited (two month) response period if any objection is raised which is substantially the same as an objection raised in the parent case (or other ancestor).  This prevents applicants from using divisional applications to achieve a form of ‘continued prosecution’, whereby an application is kept pending without making any meaningful progress towards acceptance.

According to a directive published in Section 2.10.11 of the Australian Patent Manual of Practice & Procedure, examiners are now to:
  1. discontinue the practice of reducing the response time frame for divisional applications on which an objection is raised in the first report for the same or substantially the same reason as an objection was raised in the report on the parent or other ancestor, … . Where a first report has already been issued with a reduced response time frame, examination should proceed in accordance with the case management approach and reduced response time frames can continue to be used at further report stage where appropriate; and
  2. discontinue the expediting of divisional applications as a matter of routine and accord them the same priority as other examination work.
We have no official (or unofficial) information regarding the reasons for this abrupt change of practice, however we suspect that it may be due to an actual, or anticipated, rise in the number of examination requests generally being received by the Patent Office.  And the reason the rate of examination requests can be expected to rise – perhaps dramatically – is because any pending application for which a request for examination has not been made by 15 April 2013 will be subject to the more stringent standards of patentability established by the Raising the Bar Act 2012.

We wonder… is IP Australia ready for this?

02 November 2012

Ecuador Goes It Alone With Massive Fee Hikes

RIP Lonesome George. Photograph © Mark Summerfield 2007Possibly not too many people will care about this, but Ecuador appears determined to assure itself of a place at the bottom of the heap when it comes to innovation, if upcoming changes to official fees are anything to go by.

First, a hat-tip – we are grateful to fellow patent attorney Eddie Walker, of FB Rice, for bringing the Ecuadorian fee changes to our attention.  Ecuador is not a country that would normally capture the attention of this blog, however these fee hikes are so outrageously disproportionate to… well… anything, really, that we cannot resist sharing them!  But on a more serious note, there are also some observations that may be worth making about the role of IP in developing nations, and why Ecuador’s approach is potentially antithetical to the country’s interests.

In a nutshell, any day now the official fees payable to the Ecuadorian Patent and Trademark Office (PTO) in respect of various patent services will rise by up to 3629%!  No, that is not a typo, and a decimal point has not been inadvertently omitted.  The final year patent maintenance fee is indeed slated to rise by a factor of over 36 times, from US$572 to US$20,760.07.  By comparison, the basic application fee will increase by a mere 697%, from US$404 to US$2,816.13.

On the positive side, discounts of up to 90% will be available for certain classes of applicants, namely small and medium-sized companies, universities acknowledged in Ecuador, independent inventors, public institutions, small and medium-sized farmers, and cooperative companies.  In other words, everybody but the foreign companies, multinational corporations and large local companies that are most able to afford to conduct R&D, introduce new products and service, and drive innovation in a developing country such as Ecuador.

Developing nations are inevitably net importers of new technology, innovation, skills and enterprise.  There is no value in reinventing the wheel – or anything else, for that matter – and it is far better to provide incentives for foreign investment, including robust patent protections, R&D tax benefits and so forth.  With good management, the country can then build its own domestic capabilities and industries off the back of this initial bootstrapping.

Ecuador, however, seems determined to give foreign investors every reason to look elsewhere for development opportunities.

01 November 2012

A Tour of IP Australia’s Latest Online Service Offerings

Photo © Andrew Dunn, http://www.andrewdunnphoto.com/, via Wikimedia CommonsAs of 29 October 2012, IP Australia has launched the second release of its eServices online portal.  The initial release, back at the end of April, enabled users to renew all IP rights (patents, trade marks, designs and plant breeder’s rights), to submit trademark registrations electronically, and to pay online by credit card (VISA or MasterCard).  The eServices portal also enables users to save requests, access a transaction history and update personal/contact details.  We reported the initial release in IP Australia Launches eServices Portal.

For patent applicants/owners, the second release of eServices adds the following transactions:
  1. patent applications (including examination requests, postponement of acceptance and selected amendment types);
  2. PCT National Phase Entry requests;
  3. multi-year patent renewals; and
  4. patent examination requests.
Non-patent transactions included in this release are:
  1. trade mark applications;
  2. TM Headstart (including Part 1, Amendments and Part 2);
  3. design applications (including requests for registration, examination and publication); and
  4. Plant Breeder's Rights Applications (Part 1).
Aside from expanding and simplifying IP Australia’s online services, there are two significant consequences which will flow from this eServices release, at least for patent applicants:
  1. it is now highly likely that online filing will become the ‘approved means’ for transactions from 1 December 2012, meaning that higher fees will be payable if applications are filed by any other means (such as fax or mail); and
  2. filing of standard patents online, in order to ensure payment of the lower fee, requires that entitlement details be available at filing.
This second point may catch some applicants unawares, particularly foreign applicants (or their agents), who are accustomed to being able to provide details of the basis for ownership of the invention and related rights much later in the examination process.

This article provides a quick tour of the new online services, and further explanation of the two issues noted above.

28 October 2012

Secret Use – Australia’s ‘On-Sale’ Bar

Darwin shhhAs readers will be aware, the publication or public use of an invention prior to the filing of a suitable patent application to establish a priority date, constitutes prior art which may invalidate the subsequent patent claims, unless excused by some form of grace period (see ‘Grace Periods’ – Consequences of Disclosure Before Filing).

But what about use of an invention which is not public?  For example, a new manufacturing process may be patentable, and it may be possible to make use of such a process within a secure facility such that it is not disclosed to the public.  As another example, it may sometimes be possible to manufacture a new patentable product, such as in the form of a prototype, which might even be demonstrated to prospective customers under conditions of confidentiality before any patent application is filed.

The question that then arises is whether, and in what circumstances, such use may invalidate a subsequently-filed patent application?

It is timely to look at this question now, because the Raising the Bar reforms in Australia, and the America Invents reforms in the US, will both result in changes to the treatment of non-public prior use in the early part of 2013.

Under the current US law, 35 USC 102(b) provides that if an invention is ‘in public use or on sale in this country [i.e. the US], more than one year prior to the date of the application for patent in the United States’ then the inventor will lose the right to obtain a patent.  This is generally known as the ‘on-sale bar’, since it bars a person from obtaining a valid patent if they have been making commercial use of the invention any earlier than one year before the filing of a US patent application.

As we shall see, the Australian law relating to ‘secret use’ focuses similarly on commercial benefit (although this is to be found in the case law, rather than in the words of the Patents Act 1990), however there is currently no grace period available in relation to such use.  But, as we shall also explain, there will be key changes next year to the working of the grace period in relation to prior commercial use in both Australia and the US.

25 October 2012

Innovation Patent Consultation Closes

Consultation RoomToday was the due date for submissions on a proposal to amend the Patents Act 1990, to raise the patentability threshold for innovation patents to the same level of inventiveness as required for standard patents.  The proposal was announced on 24 September 2012, and you can read our initial reaction in IP Australia Gazumps ACIP, and Revives the Petty Patent!  We also published the contents of a notice circulated by the Institute of Patent and Trade Mark Attorneys of Australia (IPTA), in IP Australia Proposal Renders Innovation Patents ‘Obsolete’ – IPTA.

It would be fair to say that we have not heard much in the way of positive responses to the proposal.  While many of those we have spoken with concur that the innovative step threshold has proven to be too low, few seem to agree with the proposition that it should be eliminated altogether, particularly not without a proper review to consider a range of options for improving the innovation patent system.

The most common sentiment seems to be that it would be premature to make changes to the law governing innovation patents at this time, without waiting for the outcomes of the ongoing ACIP review of the system.

Patentology made a submission to IP Australia in response to the innovation patents Consultation Paper.  It is likely that all submissions will be published in due course.  In the meantime, we are publishing the content of our own submission below.  This version has been edited only slightly, to remove background information that is unnecessary in the context of this blog, and to be more ‘web friendly’, e.g. format changes and the inclusion of additional live links.

20 October 2012

Surplus Stupidity Puts Australia’s Future at Risk

LEGO Mr FreezeAustralian politicians would gouge out their own eyes, and cut off their own arms, if they thought it would get them re-elected.  Of course it will not – that would just be stupid.  Almost as stupid as, say, jeopardising Australian research and innovation activities in pursuit of a symbolic budget surplus.  So, of course, that would never happen either, would it?

Except that it did happen, and it is still happening.

Last month there were a few, relatively low key, reports that the Australian government had frozen payouts of a broad range of research and commercialisation grants.  The unannounced freeze apparently commenced on 30 August 2012, with the affected programs including those operated by the Australian Research Council (ARC), the National Health and Medical Research Council (NHMRC), Commercialisation Australia and the Clean Technology Investment Program.

Australian Life Scientist reported the halt in payments, quoting a spokesperson for the Industry and Innovation Minister Greg Combet who stated that the freeze was a ‘normal part of the Budget process’.  However, such freezes have not occurred regularly in previous years.

It appears that the freeze may have been Mr Combet’s immediate response to a directive issued to all cabinet ministers at the end of August that they must review all grants not yet made or contracted in order to curb expenditure.  Obviously such reviews take time, so a halt in payments – at least temporarily – would be an inevitable consequence of such a directive.

Having not announced that there is a freeze on innovation funding, the government has also, not surprisingly, failed to given any indication of when it might end.  However, there were some signs of a thaw the in the past week, with A$652 million in long-awaited funding for medical research finally being allocated by the NHMRC.  While this is clearly good news for those in the medical research sector, the declaration by Australian Life Scientist that ‘the freeze is over’ may yet prove premature.

18 October 2012

Yet Another Patent System Review – Pharmaceutical Patents

Keep MovingOn Monday this week (15 October 2012), the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus QC, announced a new review of pharmaceutical patents in Australia.

Our initial reaction?  A great sigh… because surely what the Australian patent system needs right now is yet another review, enquiry or proposal for reform!  Frankly, stakeholders in the system – including innovators (small and large) and their professional advisors – are already reeling from the pace of evaluation and change being imposed upon the patent system in Australia.

In the first decade of the 21st century, a number of reviews of the patent system were initiated under the Howard conservative government – including the Australian Law Reform Commission (ALRC) enquiry into Gene Patenting and Human Health, and the Advisory Council on Intellectual Property (ACIP) review of Patentable Subject Matter (see ACIP Reports on ‘Patentable Subject Matter’) – without any action being taken to implement any of the resulting recommendations.

That inaction was wrong.  It was wrong firstly because it failed to address the real concerns of the Australian public, and users of the patent system, that were identified in the enquiries.  Secondly, it was wrong because for a government to commission a review, receive a report, and then take no real action on the recommendations made, is nothing more than a waste of valuable resources and taxpayers’ money.

However, in the past few years there appears to have been an over-correction, as our elected representatives and taxpayer-funded bureaucrats have engaged in a seemingly continuous series of new enquiries and real reforms. 

15 October 2012

Timeframes Slashed in Second Stage of Proposed Regulations

White rabbit checking watchThe primary objective of Schedule 3 of the Raising the Bar reforms to Australia’s intellectual property laws is to improve efficiency in procedures relating to approving and challenging patent and trade mark applications, so as to reduce delays in the system (see, e.g., Major Australian Patent Reform Passes in Senate).  It therefore comes as no surprise that in the second (and final) stage of draft amendments to the Patents Regulations 1991, released by IP Australia on Thursday, 11 October 2012, a number of allowed time periods for completing various actions in relation to patents and applications have been substantially cut.  These changes were clearly foreshadowed in the original consultation process, prior to release of the proposed legislation.

The second stage of proposals also includes regulations implementing Schedule 6 of the Raising the Bar reforms, which are directed towards simplifying and streamline various processes.

In a nutshell, the major time-related proposals are:
  1. significant reductions in the time available for examination of a patent application, and for the applicant to overcome all objections and achieve acceptance (or ‘allowance’, as it is more-commonly called in some other jurisdictions) of the application;
  2. reductions in some of the periods allowed for completing steps in opposition proceedings – particularly ‘procedural’ oppositions, such as opposing an amendment or the grant of an extension of time; and
  3. major reform to the test applied to determine whether an extension of time to file evidence in an opposition is justified – under the current Regulations it has become difficult for the Patent Office to refuse an extension request, while the proposed Regulations will place the onus of establishing the case for an extension firmly on the requestor.
We have updated our ‘redlined’ copy of the present Regulations, showing the changes that would be made by the proposed amending regulations, which can still be found at the following links:
  1. Volume 1 (Chapters 1 to 23 and Schedules 1, 1A and 2) [PDF 1.6 MB]; and
  2. Volume 2 (Schedules 2A to 8 and the Notes) [PDF 422 kB].
The due date for written submissions on the draft regulations is unchanged by the release of this additional tranche.  Any submissions must still be filed by the unextendable deadline of 5.00pm, on 21 November 2012. Submissions may be emailed (Word or RTF format preferred) to reform@ipaustralia.gov.au.

11 October 2012

IP Australia Proposal Renders Innovation Patents ‘Obsolete’ - IPTA

IPTAAs reported here last month (see IP Australia Gazumps ACIP, and Revives the Petty Patent!), IP Australia recently released a consultation paper proposing to replace the present ‘innovative step’ test for innovation patents with the ‘inventive step’ test as will apply to standard patents following implementation of the Raising the Bar Act.

If the proposals become law, innovation patents will have exactly the same patentability requirements as standard patents, but with a shorter term, limited number of claims and restricted subject matter.  As we argued in our earlier article, this would effectively represent a return to the ‘petty patent’ system, which was widely regarded as a failure – rarely used, except for tactical purposes.  This was precisely the reason the Australian Council on Intellectual Property (ACIP) recommended the introduction of the innovation patent as a new ‘second tier’ system of protection for lower-level advances.

The stated purpose of the innovation patent system was to stimulate innovation in Australian small-to-medium enterprises (SMEs) and to provide for protection of their lower level inventions.  Without a distinct ‘innovative step’ test, this purpose will not longer be satisfied.

Patentology is not alone in holding these views.  The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) has circulated a notice to members regarding IP Australia’s proposal, to which was attached a letter setting out IPTA’s position on the proposed reforms.

As many readers will be aware, Patentology is steadfastly independent.  We are not a member, or otherwise formally affiliated, with IPTA, although we are always happy to publish the sincerely-held views of people or organisations with a genuine interest in the Australian patent system, even if they do not accord with our own.

On this issue, however, we are absolutely as one mind with IPTA.  What follows is a copy of the letter setting out IPTA’s position on IP Australia’s proposal for the innovation patent system, and we encourage readers – particularly those connected with Australian SMEs – to consider making formal submissions to IP Australia, and to bring this article to the attention of like-minded associates and colleagues.

08 October 2012

Smartphone Wars, Gangnam Style!

PSYThere is an incredible video on YouTube which shows South Korean pop star PSY performing his global viral hit Gangnam Style in front of a Seoul audience of 80,000 fans.  The entire audience pulses with the waving of arms in time to the music, which is itself barely audible over the noise of the crowd which, to a man, woman and child, appears to know every single word of the song.

To find a comparable achievement by an artist in the western world, you might have to go back to Queen's performance at the Live Aid convert in 1985, which was remarkable for the fact that, while the crowd of 72,000 was slightly smaller than PSY's, Freddie Mercury had them eating out of his hand despite the fact that they were not a dedicated Queen audience.

But if the PSY phenomenon demonstrates anything more broadly, it is that Apple should be afraid… very afraid!

So what has K-Pop got to do with smartphones, we hear you cry? We think quite a lot, as we shall explain.

07 October 2012

Dangerous Opinions

Opinions AheadA couple of weeks ago I received a call from a person – let’s just call them ‘X’ – who is involved, in a professional capacity, in one of the Australian Federal Court matters about which I have written over recent months.

To be clear, X was perfectly courteous, and the conversation that we had was not at all inappropriate.  While I do not know X personally, they are well-known and highly-regarded within the Australian IP professions as a person of the highest integrity.  X did not pressure me to change anything I had written, but simply wanted to provide some additional background information so that I would have the opportunity to ensure that my reporting was as factually accurate as possible.

It seems, additionally, that some concerns had been raised about what X’s clients might infer if they were to read my articles on the case.

With all due respect to those involved in the case (and I mean that sincerely, not in the disingenuous way the phrase is sometimes used in legal argument), what I would hope anybody reading any of my articles would infer is that they are written by a patent attorney who is not – unless expressly disclosed – privy to any inside information regarding the matters under discussion, and that they provide commentary comprising a mix of facts and personal opinions.  I credit the readers of the Patentology blog with intelligence (an assumption generally supported by the quality of comments and other feedback I receive), and I would hope that X’s clients, like any other reader, would have the reading comprehension skills necessary to distinguish between fact and opinion.

However, there are undoubtedly dangers in expressing opinions online, particularly when those opinions relate to legal proceedings and might reflect on matters such as the correctness of a judge’s decision, or the effectiveness of a legal team’s strategy.  There is sometimes a fine line between writing commentary which may provide some insight into a matter for readers who are not experts in the area, and writing something which might be perceived as prejudicial or defamatory.

It might therefore be useful to set down a few of my thoughts on these issues, and suggest some of my preferred options for people who disagree with me, who think I have got something wrong, or who feel aggrieved by something I have written.

Reading Prior Art When the Times, They Are A-Changin’

Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2012] FCA 944 (31 August 2012)

Construction – consideration of how a person skilled in the art would have interpreted and understood the prior art – time at which prior art is to be construed

Monk Reading - RembrandtThere are many issues of patent law touched upon in the 369 paragraph decision of Justice McKerracher in Bradken Resources v Lynx Engineering, however in this article we will look at just one – the continuingly vexed question of the date at which a prior art document is to be interpreted (the more common terminology in patent law being ‘construed’).

As the court noted in this recent case (at [211]) there appears to be a schism in the authorities on this question.  Two different dates – possibly very different in some cases – are generally proposed as being the relevant time to assess the meaning and content of a prior art document:
  1. the date of publication of the prior art document; or
  2. the priority date of the claim which is being assessed (e.g. as to novelty or inventive step) in relation to the prior art document.
As we shall explain, there are sound reasons why either one of these dates might be chosen, although generally for different purposes.  There are (at least) three different reasons for which one might want to understand exactly how a document should be understood:
  1. to determine what is meant by various terms used in the document;
  2. to determine whether the document shows that something was fully known and/or used at some time in the past (e.g. to assess novelty of a claim); and
  3. to determine whether a skilled person would be able, after reading the document, to arrive at something which, while not fully described, could nonetheless then be derived by routine steps (e.g. to assess obviousness of a claim).
We would argue that only the third of these reasons should involve any consideration of the state of the art, or the knowledge and understanding of a relevantly skilled person, at the priority date of the claim(s) under consideration, and even then the meaning of the document at its date of publication remains a relevant consideration.

In this case, the court construed a prior art document at its date of publication (in 1936), for the second purpose above, i.e. to assess the novelty of Lynx’s patent claims, which we consider was the correct approach.

04 October 2012

Can I – and Should I – Patent My Smartphone App?

App storesOne of the most common types of enquiry we receive in our day-to-day practice is about patenting of smartphone (i.e. iOS or Android) apps.  Indeed, if we had a dollar for every prospective new client who had rung up or emailed to ask how to protect their ‘million dollar app’ idea, we would have… well… probably more money than we have made from actually preparing and filing patent applications based on these enquiries!  Because most of them end up going nowhere, once we have had a conversation about the pros and cons of patenting.

This post will explain why.  And it is not because smartphone apps cannot be patented – many of them most probably can be.  However, for most inventors the appropriate question is not ‘can I patent my smartphone app?’ but ‘should I patent my smartphone app?’  This second question is difficult to answer without having a solid business plan, which is something that has rarely been considered by people calling a patent attorney because a friend or relative told them: ‘that is a great idea, you should patent it!’

These days, the Apple iTunes App Store and Google Play (the Android equivalent) are incredibly competitive marketplaces.  According to recent data from app analytics specialists Flurry, there are over 600,000 apps now available from each of these markets.  Wikipedia entries for the two stores place these figures for September 2012 at 700,000 apps in the Apple App Store and 675,000 apps on Google Play.  Whichever figures are most accurate, this is an awfully large number of apps!

If you are going to make any money in these markets – whether by app sales, through in-app revenue and/or via advertising – you are going to have to get noticed first.  And clearly there is much more to this than just having a great idea.  (In fact, this may be the least important element, unless you are the sort of person who thinks that flinging kamikaze birds at green pigs with a slingshot is a ‘great’ idea!)

Ask not, therefore, whether your app idea can be patented.  Ask instead whether it is worth patenting.  This is as much a business question as an IP issue, and for many – perhaps the majority – of app inventors, the answer may well be ‘no’.

30 September 2012

Innovation Patents Reach Back in Time for Infringement

Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 3] [2012] FCA 1019 (18 September 2012)

Innovation patents – divisional applications – relevant dates for assessment of infringement – claim construction – omnibus claims

Time travelAccording to a recent decision of the Federal Court of Australia, innovation patents may, in some common circumstances, be infringed before they have even been filed!

In a third decision in the ongoing Britax v Infa-Secure saga (see earlier articles Federal Court Conducts Markman-Style Hearing in Hot Tub and Shocking – Judge Compels Experts Actually to Assist the Court!), Justice Middleton has considered the dates from which infringement of divisional innovation patents can be considered.  This is an important issue, because a patentee may be entitled to claim compensation for the commercial activities of an infringer going back to this date.

While it is well-established that the earliest possible date of infringement of a standard patent is the day on which it was published, Justice Middleton has found that an innovation patent may be infringed from its effective filing date.  In the case of an innovation patent which has been divided from a pending standard patent application, the relevant date is the date of filing of the original patent application, even though this may have occurred years earlier than the filing of the divisional innovation patent application itself.

For this early infringement date to apply, it does not appear to be relevant whether the claims of the innovation patent were present, or clearly foreshadowed, in the original patent specification.  According to Justice Middleton’s reasons, any valid innovation patent claims (i.e. novel claims which are adequately supported by the original disclosure, as well as satisfying the low ‘innovative step’ threshold) can potentially be enforced back to the original application date.

The court also considered the interpretation of so-called ‘omnibus claims’, i.e. claims which define an invention by reference to all or part of a specification, or by reference to examples or drawings that have been included in the specification in order to illustrate the invention.  The provisions of the Raising the Bar Act 2012, which will come into effect of 15 April 2013, will largely prohibit the use of such claims, although they will continue to exist legitimately for the lifetime of many existing patents and applications.

28 September 2012

Champagne Corks Popped as NZ Court Finds US Patent Infringed

Stewart v Franmara Inc [2012] NZHC 683 (26 March 2012)
Stewart v Franmara Inc no.2 [2012] NZHC 1771 (19 July 2012)

Breach of confidence – Patent infringement –Jurisdiction – whether New Zealand court has jurisdiction to decide infringement, in the US, of a US patent, where ownership and validity are not at issue

Champagne PopIn what might be described as a ‘courageous’ ruling, a judge of the New Zealand High Court in Auckland has found, in Stewart v Franmara Inc no.2 [2012] NZHC 1771, that New Zealand courts have jurisdiction to decide on infringement of a US patent, committed in the US by a US-based company, at least in cases where there is no dispute over ownership or validity of the patent rights.

Having reached this conclusion, the judge (Justice Toogood) further found that, in this particular case, infringement of the US patent in question had occurred, and that the New Zealand-based patentee was entitled to a remedy in the form of damages.  However, the judge declined to apply a multiplication of damages for wilful infringement, which would be permitted under 35 USC § 284 if the case had been brought in a US federal court.

In reaching this decision, the New Zealand court has shown a remarkable willingness to reach outside the national jurisdiction, and to decide a question arising under a foreign patent law which is, frankly, very different from the law in New Zealand.  It was no doubt of assistance to the local plaintiff that the foreign defendant did not appear.  Had it done so, it might have pointed out some of the relevant differences, such as the US approach to claim construction, the operation of the US doctrine of equivalents, and the need to refer to the US patent prosecution history to determine questions of construction and possible estoppel.

This particular ruling could be an anomaly.  Nonetheless, it may provide some encouragement for other New Zealand holders of foreign patents to consider using their local courts to enforce international rights.  Having received a favourable judgement, however, the next challenge for the plaintiff will be to enforce the High Court’s damages order against the Californian infringer.

25 September 2012

IP Australia Gazumps ACIP, and Revives the Petty Patent!

Illustration credit: David BamundHaving published the initial tranche of draft Regulations implementing the Raising the Bar patent reforms just last Friday, IP Australia has today sprung upon the world a new consultation paper: Innovation Patents – Raising the Step

And what a surprise it is!  If IP Australia has its way, the innovation patent system will be effectively eviscerated.  The plan is to completely eliminate the distinction in inventive threshold between standard patents and innovation patents, such that an ‘invention’ and an ‘innovation’ would be required to meet exactly the same inventive step threshold. 

Thus, if an invention is not a sufficient advance over the prior art to qualify for a standard patent, it will also not qualify for an innovation patent.  Conversely, anyone with a qualifying patentable invention will have the choice of obtaining a right which is valid for only eight years, is limited to five claims, and is subject to additional exclusions from patentability.  Or they could just apply for a standard patent.

Furthermore, the intention appears to be that the ‘raised step’ will come into effect as soon as possible, in view of the commencement of the Raising the Bar reforms in April 2013.  IP Australia is concerned that the raising of the inventive step threshold ‘will lead to an increased disparity between the threshold for Standard and Innovation Patents, if Innovation Patents continue to be judged against the current innovative step threshold.’ 

The solution, in IP Australia’s submission, is not merely to raise the innovative step threshold, but to abolish it entirely, such that in one fell swoop the entire concept of a genuine second-tier patent right in Australia will be eliminated.

IP Australia’s publication of its consultation paper – which comes complete with drafting instructions for the proposed amendments to the Patents Act 1990 – appears to pre-empt the ongoing review of the innovation patent system currently being conducted by the Australian Council on Intellectual Property (ACIP).  Despite the consultation paper recognising the ACIP review, it is difficult to see what useful purpose a review of the existing innovation patent system could serve if that system effectively no longer exists once a final report is published.

IP Australia is inviting written submissions in reply to the consultation paper, but you will need to be quick!  The deadline is 5.00pm on 25 October 2012, and you will need to find time to squeeze this in while also working your way through the draft Raising the Bar regulations and preparing your submissions in relation to that consultation also.

23 September 2012

Draft Regulations Reveal Applicants to be Slugged with Search Fee

Aussie dollarsDraft amendments to the Patents Regulations 1991, published by IP Australia on Friday 21 September 2012, reveal plans to introduce a new search fee which may see customers (as applicants are known these days) paying at least A$2,200 to the government authority for search and examination of an Australian patent application.

The primary purpose of the draft regulations is to implement the Intellectual Property laws Amendment (Raising the Bar) Act 2012 (see previous articles on Patentology, including Bar Raised, as IP Law Reforms Signed Into Law). 

IP Australia has indicated that it will publish the draft regulations in two stages, so as ‘to maximise the time for public comment’.  At this time, draft regulations implementing Schedule 1 (relating to enhanced standards of patentability), Schedule 4 (reforms to the regulatory regime for patent and trade marks attorneys) and Schedule 5 (trade mark and copyright enforcement have been made available for consultation.

We have prepared a ‘redlined’ copy of the present Regulations, showing the changes that would be made by the proposed amending regulations, which we will update when the further draft regulations become available:
  1. Volume 1 (Chapters 1 to 23 and Schedules 1, 1A and 2) [PDF 1.3 MB]; and
  2. Volume 2 (Schedules 2A to 8 and the Notes) [PDF 414 kB].
IP Australia is inviting written submissions on the draft regulations, due by an unextendable deadline of 5.00pm, on 21 November 2012.  Submissions may be emailed (Word or RTF format preferred) to reform@ipaustralia.gov.au.

Over the coming weeks we will take the opportunity to review some of the proposed regulations in more detail, just as we did with the exposure draft of the Raising the Bar Bill (see Australian Patent Reform – Wrap-Up).  Some of the amendments to the Patents Regulations are extensive, and will require careful consideration. 

However, we intend to start with one of the least extensive changes: the amendment of a single row in the table of fees in Schedule 7 of the Regulations, simultaneously eliminating the fee for ‘modified examination’ (which has been repealed by Raising the Bar) while adding a new fee of A$1,710 for a ‘search by the Commissioner in relation to a patent request and complete specification as part of an examination, if the complete application was made on or after 15 April 2013’.

In the remainder of this article we will look at this new fee, the purpose and justification for its introduction, and a comparison with similar fees in other jurisdictions.  While the search fee may be justifiable from a cost-recovery perspective, it appears to us to be problematic from an innovation policy perspective.  Indeed, we believe it is time for Australia to consider introducing US-style ‘small-entity’ fee reductions.

21 September 2012

Shocking – Judge Compels Experts Actually to Assist the Court!

Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [No 2] [2012] FCA 1018 (17 September 2012)

Infringement – expert evidence following Markman-style claim construction hearing – whether appropriate to appoint assessor or referee

ShockingEarlier this year Justice Middleton, in the Federal Court of Australia, broke new ground in this country by holding a hearing, and issuing a decision, purely on the issue of claim construction as a preliminary matter in patent infringement proceedings (see Federal Court Conducts Markman-Style Hearing in Hot Tub). 

This week, Justice Middleton has issued two further decisions in the patent infringement case brought by Britax Childcare Pty Ltd (‘Britax’) against Infa-Secure Pty Ltd (‘Infa-secure’).  In the first of these decisions, he has rejected efforts by Infa-Secure to have the court order that infringement issues be referred to an independent third party for assessment.  Instead, the two experts will be returning to the so-called ‘hot tub’ to provide joint evidence to the court, based upon a claim construction with which neither one of them wholly agrees.

If all goes to schedule with this plan, the parties will be back in court for three days in December, for a further hearing to decide whether or not Infa-Secure infringes Britax’s patents.

16 September 2012

The ABCs of Patent Publication

ABC blocksYou have probably noticed the letter/number codes which sometimes appear after patent or application numbers, and if you are not a professional patent attorney or searcher you might have wondered what – if anything – they mean, and whether you should care about them. 

The short answer is that if you care enough to be looking at published patent documents in the first place then, yes, you should care about the codes which appear at the end of the publication numbers.  For one thing, they tell you whether or not the document you are looking at represents a granted patent (i.e. a right that you might potentially infringe) or merely a pending application (which may or may not be granted, now or in the future, in the form you have in front of you). 

To give an example of what we are talking about, Australian patent no. 2007286532 (i.e. Apple’s ‘heuristics patent’, which is among those it is asserting against Samsung in Australia) has been published six times – as AU2007286532-A1, AU2007286532-A8 (twice), AU2007286532-B2, AU2007286532-B8 and AU2007286532-C1.

Since we are sometimes asked by clients what all these added letters and numbers mean, and it is sometimes helpful to know, here is a brief explanation.

13 September 2012

NZ Patents Bill Second Reading Debate

NZ Parliament On 12 September 2012, the New Zealand parliament debated the new Patents Bill, in its ‘second reading’ speeches.  For readers unfamiliar with the British-style parliamentary system, a ‘first reading’ is when a bill is introduced into parliament, the ‘second reading’ is generally when it is substantively debated and amendments proposed, and a ‘third reading’ is when it is either passed, or rejected (with or without various amendments).

As we have reported recently, the big issue regarding this legislation – which will replace the horrendously outdated Patents Act 1953 – is whether, and/or to what extent, computer programs will be patentable.  Unsurprisingly, therefore, the heated debate which has surrounded this issue in recent days was reflected in the New Zealand parliament.

New Zealand is a politically interesting country.  It has been quite some time since it has had a true majority government.  The conservative National Party currently governs, but holds only 59 of the 121 seats in the parliament.  The main opposition parties are the Labour Party (which holds 34 seats) and the Green Party (with 14 seats).  The remaining seats are held by five minor parties, three of which are currently supporting the Nationals’ government.  However, none of the minor parties are bound to vote with the government on issues not directly affecting its ability to retain power.

So while the Nationals only need to find two votes in order to push legislation through, there can never be absolute certainty that this will happen.

As we explain in greater detail below, as of this moment it appears likely that the Nationals will succeed with their proposed ‘European-style’ software patent exclusion (see NZ Government Backtracks – to Europe – on Software Patents).  However, the Labour opposition has introduced its own more radical exclusion, which would ban all software patents with the sole caveat that this does not prevent ‘an invention that makes use of an embedded computer program from being patentable’, i.e. the same provision championed by the No Software Patents in NZ lobby group (see ‘My Software, My Choice’).

Additionally, the Green Party has gene patents in its sights, although this does not appear to be the same hot-button issue it has been in Australia (see, most recently, ‘Gene Patents’: Lies, Damn Lies, and Statistics).

09 September 2012

‘My Software, My Choice’

Choice[Note: This article has been translated into the Serbo-Croatian language by Anja Skrba from Webhostinggeeks.com.  My thanks to Anja for making the effort to share this information with the people of the Former Yugoslav Republics: Serbia, Montenegro, Croatia, Slovenia, Macedonia, Bosnia and Herzegovina. - MS]

Last week we reported the last minute backtrack by the New Zealand government, deleting a controversial provision in its new Patents Bill stating that ‘a computer program is not a patentable invention’, and replacing it with a controversial provision which still says that ‘a computer program is not an invention’, but only to the extent that it is ‘a computer program as such’.  (See NZ Government Backtracks – to Europe – on Software Patents.)

The basic idea behind this change is to import about 30 years of European and UK jurisprudence on what it means for something to be a computer program ‘as such’, in the expectation that this will allow – amongst other things – inventions implemented using embedded software systems to be patented.

Not unexpectedly, some people are unhappy with this ‘watering down’ of the proposed computer program exclusion.  In particular, a group calling itself No Software Patents in NZ has set up a site no.softwarepatents.org.nz with an online petition requesting that the ‘as such’ caveat be replaced with a clause specifying that the computer program exclusion ‘does not prevent an invention that makes use of an embedded computer program from being patentable.’

In our view, this would be a bad idea for at least two reasons.  Firstly, there is no agreed definition of an ‘embedded computer program’, leaving huge scope for uncertainty, and for any patent applicant whose application is rejected on this basis to go running to court armed with arguments and expert evidence in support of an assertion that their particular invention does (or perhaps merely ‘can’) relate to an embedded computer program.  And even if there were a clear definition today, it is unlikely – based on past experience – that it will survive the test of time.

Secondly, while the NZ debate appears to have become strangely fixated on embedded software controllers for home appliances such as washing machines, these are not the only types of software for which there is a clear benefit in allowing patent protection to be granted.

It has been our observation, over time, that those who are opposed to software patents have a very limited view of the role that software plays across a whole range of scientific and engineering applications.  Objections to patents on common web technologies, widespread operating system features, and components of extensively deployed consumer and developer applications such as word processors, web browsers and compilers, are actually quite understandable.  But the typical response to these objections – to call for the banning of all software patents, or all except for some narrowly-defined exceptions – makes no sense at all.

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The Patentology Blog by Dr Mark A Summerfield is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Australia License.