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.

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