31 December 2014

2014 in Review, and How My Predictions Panned Out

Looking backAnother year over and (although I know everyone says it) this one really has just flown by!

On 1 January 2014 I posted a review of 2013, and a look ahead to what was then the upcoming year.  In doing so, I made a number of predictions, so it is now interesting to look back and see how I went, as well as reviewing the major events of 2014 that I may not have foreseen.

Overall, I think that I did pretty well, considering how unpredictable courts, governments and litigants can sometimes be!  The biggest disappointment for me in 2014 was the Research Affiliates case – not so much because Research Affiliates was unsuccessful, which was always a reasonably probable outcome, but because the judgment itself took so long, and still failed to provide much meaningful clarification of the law relating to patent-eligibility of software and business methods.  Unfortunately, there will be no further appeal, and no prospect of the High Court reviewing the work of the Full Federal Court.

Read on for a full rundown of how my predictions for 2014 panned out.

21 December 2014

Greens Move to ‘Simplify’ Government Compulsory Licensing

CrownThe Australian Patents Act 1990 includes somewhat quaintly-titled ‘Crown Use’ provisions.  These essentially provide the government with the power to compulsorily acquire a licence to use a patented invention in the course of providing services to the public.

People in some parts of the world regard such compulsory acquisition provisions as an unconscionable imposition on the rights of a patent holder.  Yet Crown Use provisions have always been a part of the Australian patent laws.  Patent monopolies exist only as a result of legislation enacted by the Commonwealth, and it is understandable that the government might not want to place that kind of power in private hands without including some mechanism to avoid being held to ransom by a patentee.

Ultimately, this is about balancing the private interests of the patent owner with the public interest in ensuring that the government is not locked out from affordable access to new technologies in appropriate cases.

In practice, however, the Crown Use provisions have rarely been invoked and, when they have, it has generally been in the context of asserting a defence to infringement rather than in a pre-emptive effort to acquire a licence prior to exploiting a patented invention (see, e.g., Stack & GS Technology Pty Ltd v Brisbane City Council [1995] FCA 1427).

Changes to the Australian Crown Use provisions were recommended in the Productivity Commission Inquiry Report into the Compulsory Licensing of Patents.  The recommended changes were included in the Intellectual Property Laws Amendment Bill 2013, which passed in the House of Representatives despite a lack of support by the then-opposition Liberal-National Party coalition, but which failed to make it through the Senate before a general election was called (see Election Stalls Further Patent Law Reform in Australia).

When the amendments were reintroduced to parliament this year, as the Intellectual Property Laws Amendment Bill 2014, the changes to Crown Use that previously lacked opposition support had been excised.  Given this lack of support, I was surprised to see that when the Bill was debated in the House of Representatives (on 24 November 2014) the Greens’ Adam Bandt presented a proposed amendment which would have reintroduced the amendments to the Crown Use provisions, albeit in a slightly watered-down form.  So far, these proposed amendments have been rejected, but they may take on new life when the Bill is considered by the Senate.

14 December 2014

The EPO – Dysfunctional or Just a Misunderstanding?

Locking HornsIn recent times, strange and disturbing things appear to have been afoot within the European Patent Organization.  While the goings-on within the EPO have been reported by other IP blogs, by some specialist IP media outlets and (to a much lesser degree) in the general media, I have so far chosen quite deliberately not to comment.

The primary reason for my silence on the issue has been the very great difficulty in getting at anything even vaguely resembling the ‘truth’ about what is actually causing the ructions at the EPO.  One thing that people have often said to me about this blog (and of which I am quite proud) is how well-researched the articles often are, and how much time it must take me to write them.  I can safely say that the ongoing disputes at the EPO would constitute the most heavily researched article I have never written!  This article does not even try to account for all of the material I have read in trying (and failing) to get a handle on what is going on at the EPO.

Which is not to say that I do not care.  I care very much.  And the reason I care very much is simple – if the EPO becomes dysfunctional and ineffective, it is the applicants for European patents who ultimately suffer.  Those applicants include some of my clients, the clients of dozens of other Australian patent attorneys and, perhaps, numerous other Australian applicants who are more directly represented before the EPO.  And, of course, applicants from all around the world.

So what is going on at the EPO?  Is it dysfunctional?  Is there, as some are alleging, ‘corruption’ at the top?  Or, as I am coming to suspect, is all of the recent negative publicity largely the result of a messy and increasingly vitriolic labour dispute?  (Which is, of course, not to say that all of the above are mutually exclusive.)

07 December 2014

Are Subject Matter Rejections Hurting the Patent System?

BandaidsThe primary requirements for an (alleged) invention to be patentable are that it must relate to eligible subject matter (e.g. not be a law of nature, mathematical equation or abstract idea), it must be new (i.e. possess novelty) and it must not be obvious (i.e. must involve an inventive step).

Subject matter eligibility is currently highly contentious in many jurisdictions.  As recent decisions of the US Supreme Court (in the Alice and Myriad cases) and the Australian Federal Court (in the Research Affiliates and Myriad cases) demonstrate, the most strongly contested subject matter relates to the areas of business processes, computer software and biotechnology. 

But even so, qualification as patent-eligible subject matter remains a threshold test, and should not be a substitute for the proper evaluation of an invention for novelty and inventiveness.

The problem with evaluating novelty and inventive step is that it often involves hard work.  To show that something is not new, or that it is obvious, requires evidence of prior art, which in turn may require diligent searching, extensive reading, and careful construction of legal and technical reasoning to explain why the requirements for patentability are not satisfied.

It is, therefore, so much easier if an invention can be knocked out at the first hurdle, and be deemed fundamentally ineligible for patent protection, without having to go to all the trouble of conducting a comprehensive prior art search.

Recent developments in various jurisdictions (e.g. the US, Australia and the UK) suggest that, in ‘difficult’ fields of technology, the cart is getting put before the horse.  Subjective evaluations of the ‘merit’ of an invention, i.e. that it perhaps seems unworthy of patent protection, may be leading decision-makers at all levels to turn too quickly to subject matter grounds as a basis for rejecting claims.  Legal reasoning may therefore be developed in order to arrive at the desired outcome, without sufficient regard to consistency across different cases. 

Subject matter is becoming a form of ‘obviousness by stealth’ as courts start looking for the ‘inventive contribution’ made by a claimed invention as a basis for assessing eligibility.  The case law is becoming increasingly incoherent, as decision-makers try to rationalise their own findings in light of prior decisions that are themselves inconsistent.  Certainty is eroded as a result, and applicants, patentees and other stakeholders are losing faith in a system that appears increasingly capricious.  I also suspect that the quality of prior art searching may be suffering, with examiners now relying on subject matter rejections in cases that appear ‘too hard’ to search effectively.

30 November 2014

‘Pro Bono’ Patent Assistance Program Makes No Sense

Asking for HandoutIn September 2011, the America Invents Act (‘AIA’) was signed into law in the United States.  The most significant legal reform implemented by this legislation was the switch from the long-standing US ‘first to invent’ priority system to a ‘first (inventor) to file’ system similar to that which exists throughout the rest of the world.  The AIA also introduced other legal and procedural changes, such as new mechanisms for third parties to challenge patents and applications, and the provision of a ‘fast track’ process enabling applicants to accelerate examination for a fee.

Aside from these changes to the patent laws and procedures themselves, the AIA package included further measures aimed at enhancing US innovation and competitiveness.  One such measure, set out in section 32 of the AIA, requires the USPTO to ‘work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.’

The USPTO duly established its Patent Pro Bono Program, to provide free legal assistance to under-resourced inventors and small businesses interested in securing patent protection for their inventions.  As USPTO Deputy Director (and current Acting Director) Michelle K Lee explained in a recent blog post, the program also supports a White House executive action aiming to expand pro bono patent assistance to all 50 states.  Currently, patent pro bono assistance is available in Alaska, Arizona, California, Colorado, the District of Columbia, Hawaii, Idaho, Louisiana, Maryland, Massachusetts, Minnesota, Montana, Nevada, New York, North Carolina, Ohio, Oregon, South Carolina, Texas, Virginia, and Washington.

This all seems very admirable.  However, a recent article on waybetterpatents.com questions the effectiveness of the program, suggesting that the requirements that must be satisfied in order to qualify for pro bono patent assistance are set too high, and that those who might benefit most from the program are unlikely to qualify.

To my mind, however, the flaw in the Patent Pro Bono Program is far more fundamental than overly-restrictive qualifying requirements.  With all due respect to the efforts of the USPTO, and the well-meaning attorneys who are offering their services for free, I do not believe that providing free assistance to secure patent protection makes any sense at all.  In fact, it could even be harmful – to the patent system, and to small business and innovators more generally.

23 November 2014

Research Affiliates: A ‘Hard’ Case Making Bad Law

Chaos and OrderIt is sometimes said that ‘hard cases make bad law’.  This is not actually generally true, and good and bad law emerges from a wide variety of different cases.  Perhaps, in fact, the quality of judges, or the quality of argument presented at trial, are more important factors than the difficulty of the case.

That being said, ‘hard’ cases do present judges with special challenges.  In this context, a hard case is one in which the most literal or straightforward application of the law – i.e. the binding precedents and relevant statutory provisions – is liable to produce a result that may strike the judge as illogical, unfair, absurd, unjust, or just plain wrong.

The temptation in such cases must be very great to try to find a ‘creative’ approach to applying the law in order to make the legal outcome match the subjectively ‘right’ decision.

Patent law is not immune from such ‘hard’ decisions.  Sometimes, for example, an alleged infringer’s efforts to ‘work around’ a patent, and escape infringement on a technicality, are so flagrant that judges are inclined to find ways to broaden the interpretation of patent claims in order to capture the infringer’s variation.

So what would happen if a judge (or, indeed, three judges) were to look at an invention and think ‘surely that cannot be eligible for a patent?’  And what if they then looked at the current state of law and found that, in fact, a literal and straightforward application of the law could well lead to the conclusion that the suspect invention is patent-eligible?  The answer might be that you end up with a decision like that of the Full Court of the Federal Court of Australia in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150.

16 November 2014

‘Patent Box’ Tax Break Prospects Plummet at G20 Meeting

Box and figureThe Australian Government looks set to abandon the sole IP-related initiative it took into last year’s federal election, with treasurer Joe Hockey reportedly all but ruling out the prospect of a ‘patent box’ tax concession being introduced in this country.

Indeed, according to coverage of this weekend’s G20 Summit taking place in Brisbane, Hockey is also pushing for other countries that currently have patent box schemes to amend their own rules to ‘ensure that they are not inappropriately used for tax avoidance’.

I think this is all very unfortunate, particularly because much of the anti-patent-box sentiment appears to be based upon gross misunderstandings (or, possibly, wilful disingenuousness) about what patent box schemes are about, and how they work.  Even the economics editor at The Age newspaper, Peter Martin, seems to be spreading the misinformation, writing that ‘patent boxes allow companies that have developed new technology overseas to register the patent in the host country in order to avoid tax in the country in which the technology was developed.’ 

However, as I explained in an earlier article, patent box schemes are designed to encourage investment in R&D within the jurisdiction where patented technology is developed, by offering a reduced tax rate on profits that can be specifically attributed to that technology.  This is not tax ‘avoidance’.  It is a tax concession that is offered on income that might not have been generated at all – or that might have been generated in another country – were it not for the incentive provided by the scheme.  Pharmaceuticals giant GlaxoSmithKline credited the introduction of a patent box concession in the UK for its decision to build its first new factory there in 40 years, and to follow up with a further 200 million pound investment in 2013.

10 November 2014

Australia’s ‘Alice’: Appeals Court Denies Business Method Patent

No computerIn a unanimous decision, a Full Bench of the Federal Court of Australia has ruled that the ‘substance’ of an invention trumps the form in which it is claimed, dismissing Research Affiliates’ appeal against a decision of a single judge of the court, which found its invention, relating to the construction and use of passive portfolios and indexes for securities trading, ineligible for patent protection: Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150.

The decision canvasses many of the same issues tackled by the US Supreme Court in its recent Alice Corporation v CLS Bank ruling.

In essence, the Australian court addressed the question of whether an invention that would otherwise be ineligible for patent protection – in this case, a scheme for generating a financial index which can be used, for example, to measure the rise and fall in value of an investment portfolio – becomes patentable when implemented in software.  This has been an open question in Australia since the court’s 2006 decision in Grant v Commissioner of Patents [2006] FCAFC 120, in which it found that an asset protection method was ineligible for patenting.  In that case, however, the court was not required to consider whether the outcome may have been different had all or part of the method been performed using a computer.

In the Grant case the court stated that, for a claimed invention to be patent-eligible, a ‘physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required’.  Where a computer is involved there is always, of necessity, some physical effect or change of state, at least within the electronics of the machine.  The question that the court has not previously addressed is whether or not this is sufficient to confer patent-eligibility? 

In Research Affiliates, the court has answered this question in the negative, finding that describing a scheme – no matter how ingenious it may be – that is not itself eligible for patenting, and merely giving directions to implement it on a standard computer is not sufficiently transformative.

However, while – subject to any appeal to the High Court – this decision would seem to spell an end to ‘do it on a computer’ patent claims in Australia, the Full Court has been cautious (certainly more so that the US Supreme Court in its recent Alice v CLS Bank decision) to ensure that most computer-implemented inventions remain patent-eligible in Australia.

08 November 2014

High Court Majority Upholds LEXAPRO Patent Time Extension

On 5 November 2014, the High Court of Australia handed down its decision confirming (by a three-to-two majority) that it is possible to obtain an extension of time within which to apply for an extension of the term of a patent relating to a pharmaceutical substance, so long as the extension application is filed prior to expiry of the patent: Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42.

This decision is an important milestone in a long-running saga relating to the antidepressant drug escitalopram, originally marketed in Australia as LEXAPRO, and covered (at least until 13 June 2009) by Australian patent no. 623,144.  The patent is owned by H Lundbeck A/S, which had applied to extend the term of the patent to 9 December 2012, as compensation for delays in obtaining regulatory approval to market LEXAPRO in Australia.  But, for reasons that I explained in an earlier article on the case, Lundbeck required an extension of time to allow its application for an extension of term to be considered, because it was filed about ten years too late!

The issue before the High Court was whether, under the relevant provisions of the Patents Act 1990 and the Patents Regulations 1991, the Commissioner of Patents has the power to extend the time for filing an application for an extension of term in any circumstances.  The Court’s answer to this is, in essence, ‘yes’ – if the application to extend the term of the patent, and the associated request for an extension of time, are filed prior to the patent’s expiry.

This does not, however, bring an end to the matter.  There is a separate question of whether it was appropriate, in the particular circumstances of this case, for the extension of term to be granted, which is still making its way through the appeals process.  Hot on the heels of the High Court’s ruling, a single judge of the Federal Court of Australia has handed the latest round in this part of the dispute to Lundbeck, dismissing an appeal from the Commissioner’s decision to allow the extension:
Alphapharm Pty Ltd v H Lundbeck A/S [2014] FCA 1185.

A great deal of money is at stake in all of this.  A number of generic pharmaceutical companies released their own escitalopram products following the original expiry date of the Lundbeck patent (a risky strategy, given that they were certainly aware of Lundbeck’s extension application by that time).  The patent itself has already been found valid and infringed by a Full Bench of the Federal Court of Australia (in H Lundbeck A/S v Alphapharm Pty Ltd [2009] FCAFC 70), and all avenues of appeal from that decision have been exhausted.  Thus if the term extension is ultimately upheld (as it has been at every turn so far), damages will be due to Lundbeck for infringement of the patent between 13 June 2009 and 9 December 2012.

02 November 2014

WIPO Director General Under Official Investigation for Misconduct

Francis GurryWorld Intellectual Property Review (WIPR) reported last week that the World Intellectual Property Organisation (WIPO) is now under formal investigation over allegations dating back to 2008 that Director General, Francis Gurry, ‘ordered a series of burglaries of workers’ offices in order to obtain samples of their DNA.’

I have written about these allegations on two previous occasions.  The first was back in December 2013, in response to articles written by Gene Quinn, on his estimable IP Watchdog blog (which is currently celebrating an incredible – in Internet terms – 15 years of continuous operation).  The second was in April of this year, following revelations that then Deputy Director General James Pooley had filed a ‘Report of Misconduct’ with WIPO, and with the US Mission in Geneva. 

On both occasions I expressed my suspicion that the resurfacing of the accusations against Gurry was at least partly motivated by US anger at WIPO’s involvement, under his direction, in UN assistance programs to North Korea and Iran, and building of closer ties with China and Russia.  At the time, Gurry was seeking reappointment as Director General for a second six-year term.  His reappointment was confirmed by the General Assembly on 8 May 2014.

Not that this was the first time Gurry had been the target of an effort to undermine his candidacy for the top job at WIPO.  His first term began controversially, with Brazil threatening at one stage to challenge his election on the basis that it was not legitimate.  What was allegedly behind this challenge was a concern that Gurry would be too ‘pro-developed-world’ – a fear that turned out to be unfounded – though the fact that it was Brazil’s own candidate who lost out by a single vote was no doubt a factor!  Ironically, it is Gurry’s pro-developing-world agenda that appears to have made him so unpopular with US politicians.

12 October 2014

A Short Sabbatical…

PauseThis is just a quick post to let all of my regular readers know that I will be taking a short break from blogging.  I have a lot going on at the moment, and have therefore decided to free myself from the imperative to write regularly in order to make time for other things.

Most likely I will be back in a couple of weeks – unless I am dragged back sooner by some important event, such as the long-awaited decision in the Research Affiliates appeal (although I am not holding my breath for that one).

I expect I shall still be on Twitter from time to time, so while there is nothing happening here, feel free to follow @patentology (if you are not already doing so).

05 October 2014

Patent Oppositions and Amendments: Law Reform Fixes Flaws

Garford Pty Ltd v Dywidag-Systems International Pty Ltd [2014] FCA 1039 (18 September 2014)

HandymanAs many readers will be aware, Australia’s patent laws include a pre-grant opposition system – once an application has been evaluated by an examiner, and approved for grant, an opportunity exists for third parties to step in and challenge that decision.

The purpose of such opposition proceedings (from a policy perspective, at least) is to reduce the probability of invalid patent claims being granted.  Even if prior art searching and examination were perfect, participants in the specific technology area to which an invention relates will always have access to additional information, not readily accessible to a patent examiner, that may be pertinent to the patentability of the invention.

The system thus recognises that the examination process is necessarily imperfect in practice, particularly given that examination resources are finite.

Furthermore, if either party to an opposition (i.e. the applicant or the opponent) is dissatisfied with a Patent Office decision in an opposition, there is an avenue for appeal to the Federal Court of Australia.  Prior to commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 on 15 April 2013, however, there was a problem with the available procedure for appealing a decision in a partially-successful opposition.

Specifically, the Federal Court on appeal was confined to considering the very same subject matter that had been reviewed by the Patent Office in the original opposition proceedings.  Thus, if the opposition had been partially successful, in the sense that the opponent had established that at least some of the accepted claims were invalid, but the patent applicant was given the opportunity to propose amendments to address the successful grounds of opposition, the court could not take into account those proposed amendments.

This was unhelpful to both the patent applicant and the opponent.  From the applicant’s point of view, it would be best that the proceedings before the court be based upon a set of claims that it considers to be defensible.  From the opponent’s perspective, an appeal that may simply have the same outcome as the Patent Office decision, with the applicant still having an opportunity to amend, is potentially a complete waste of time and money.

A judge of the Federal Court has now confirmed that a ‘fix’ for this problem, implemented in the Raising the Bar Act, has been effective.

28 September 2014

Gene Patent Questions Answered, As High Court Asked to Weigh In

Green Question MarkAs expected, lawyers representing Yvonne D’Arcy in her fight to have Myriad Genetics’ BRCA ‘cancer gene’ patent claims declared invalid have filed an application with the High Court of Australia for special leave to appeal the decision of a Full Bench of the Federal Court upholding the claims.  At some time in the coming months, therefore, the High Court will decide whether or not it will review the Federal Court’s decision.  My prediction remains that it will not, although the policy implications are certainly significant enough that Australia’s top court may feel that there is value in having its say.

In the meantime, unfortunately, the patent itself, the technical and legal issues, and the decision of the Full Federal Court remain poorly-understood by most people.

Helpfully, Fairfax Media has published an ‘explainer’, to get people up-to-speed on some of the issues in the case, and the differences dividing the two sides of the debate over gene patents.

However, missing from the Fairfax article are questions and answers about the underlying legal issues, which is (unsurprisingly) where many of the misunderstandings and misconceptions arise.

Do private corporations own your genes?  What rights does Myriad’s patent actually give it?  What is the effect on the cost of healthcare?  What is the impact on research?  Will a positive outcome for Myriad lead to more companies seeking gene patents?  And is all this just a sign that, as a society, we have lost our moral compass?

Read on for my answers to these questions, and more.

22 September 2014

New Zealand’s New Patent Laws

New ZealandThe New Zealand Patents Act 2013 commenced operation on 13 September 2014. 

As I wrote last year, when the New Zealand parliament passed the legislation, the new law replaces the 1953 Act, and brings New Zealand’s patent laws into line with the majority of developed nations.  Among numerous other changes, examiners at the Intellectual Property Office of New Zealand (IPONZ), are now able to reject claims for lack of inventive step, and to base objections on prior disclosures that took place anywhere in the world, and not just in New Zealand.

Other key features of the Patents Act 2013 include:
  1. introduction of a new requirement to request examination, either voluntarily or when directed to do so by the Commissioner of Patents (under the 1953 Act examination was automatic);
  2. a utility requirement that the claimed inventions have a specific, credible, and substantial use that meets the promise set out in the specification;
  3. claims must be supported across their full scope by matter disclosed in specification (in place of the old ‘fair basis’ test);
  4. applications opened to public inspection (i.e. published) at 18 months from the earliest priority date (previously, applications were not published until acceptance);
  5. introduction of annual maintenance fees payable from the fourth anniversary of filing, whether before or after grant (previously renewal fees were due only after grant, in the 4th, 7th, 10th and 13th years);
  6. patentability is now determined according to the ‘balance of probabilities’ standard (previously, applicants were accorded the benefit of any doubt); and
  7. a new exclusion from patent-eligibility in respect of computer programs ‘as such’.

13 September 2014

Why Science Is Not An Industry (and Our Petals Are Precious)

Science and despairAustralia currently has no minister (or department) for science.  One of the first acts of Prime Minister Tony Abbott when his government was elected last year was to name a cabinet in which, for the first time since 1931, there was no minister with the word ‘science’ anywhere in his title (I use the masculine pronoun intentionally, because one of the other characteristics of the current cabinet is that it includes only one woman in a total of 19 members).

In October 2013, Abbott defended this decision in front of an audience of scientists, saying:

It’s been remarked upon, ladies and gentlemen, that we don’t have a minister for science as such in the new government. I know there are some in this room who might have been momentarily dismayed by that, but let me tell you, neither does the United States have a Secretary for Science, and no nation on earth has been as successful at innovating as the United States and I’d say to all of you, please, judge us by our performance, not by our titles; judge us by our performance, not by our titles.

The difference, in case it is not obvious enough, is that the US has never had a Secretary for Science, whereas Abbott made a conscious decision, after 82 years of there having been a science portfolio in every Australian government, to erase the word from his ministry.  Where the previous government had a Department of Innovation, Industry, Science and Research, the current government has a Department of Industry, headed by Minister Ian Macfarlane

Supposedly, responsibility for science continues to lie with the Minister for Industry.  However, it seems that Macfarlane is starting to get a bit tetchy with people who think, just because he does not have the word ‘science’ in his title, that he is not, in all but name, the Minister for Science.  And when I say ‘people’, I mean ‘scientists’.  And when  I say ‘scientists’, I mean (according to Macfarlane) ‘precious petals’.  Because last week Australia’s Minister for Industry, the Honourable Ian Macfarlane, MP, said:

I’m just not going to accept that crap [criticism of the lack of a science minister].  It really does annoy me, because there is no one, no one, more passionate about science than I am. I am the grandson and son of a scientist, and I give science more than their share of my time, and just because I’m not the minister for energy, do I hear the whinge from [the energy sector]? No.

But I hear it constantly from some of the precious petals, can I say, some of the precious petals in the science fraternity, and if you can’t guess, I won’t accept it.

Of course, this angered a few scientists, although I think they should wear the label with pride, because they are precious, in the nicest sense of the word!  And responding to name-calling is a distraction from the real issue, which is this government’s rather poor record, to date, on Australian science.

06 September 2014

So What’s the Real Reason Twitpic is Shutting Up Shop?

TwitpicAs regular readers will be aware, I do not usually write about trade mark matters on this blog.  However, I am completely mystified by Twitpic’s announcement this week that it will be closing down on 25 September 2014, allegedly because it lacks the resources to take on Twitter in a trade mark dispute, and so I want to put the question out there: what is really going on at Twitpic?

Twitpic, if you are unfamiliar with the company, launched in February 2008, providing a service to enable users easily to ‘attach’ photos or other images to their tweets on Twitter.  A tweet cannot actually contain an image, but it can include a link to an image which is stored anywhere on the internet.  Services like Twitpic (there are now many others, including Instagram, and Twitter’s own image-hosting platform) upload users’ images to their own servers, and post tweets on behalf of the users which contain links to the images.

The implication seems to be that Twitter is trying to deprive Twitpic of the right to use its name, and that this is why the service is shutting down.

The problem I have with this is that it is not true.

Twitter has no problem with Twitpic continuing to use the Twitpic name.  What Twitter will not do, however, is to allow Twitpic to register its name as a trade mark.

Australian Court Backs Patents on Isolated Genes

D'Arcy v Myriad Genetics Inc [2014] FCAFC 115 (5 September 2014)

Isolated jeansA special expanded bench of five judges of the Federal Court of Australia has thumbed its collective nose at the US Supreme Court, finding that isolated genetic material is patent-eligible in Australia, and that (‘with respect’, of course) the emphasis of the US’ top court (in Association for Molecular Pathology v Myriad Genetics, Inc. 569 U.S. ___) ‘on the similarity of “the location and order of the nucleotides” existing within the nucleic acid in nature … is misplaced.’  The decision upholds the ruling of a single judge of the court, handed down in February 2013.

The unanimous judgment of the Australian court expresses a preference for the approach taken by Judges Lourie and Moore in the US Court of Appeal for the Federal Circuit (CAFC), who focussed on the differences between the isolated and naturally occurring DNAs.  Under Australian law, the court has stated, ‘the analysis should focus on differences in structure and function [of the isolated molecule] effected by the intervention of man and not on the similarities’ (at [155]).

Furthermore, the Australian court noted that, contrary to the dissenting position adopted by Judge Bryson in the CAFC, and by the US Supreme Court, the subject matter of the claims in the Myriad patent is ‘a compound; a nucleic acid. It is not a claim to information’ (at [210]).  Thus, even if the ‘information content’ of the isolated genetic material is, in some sense, unchanged, this does not determine patent-eligibility:

What is being claimed is not the nucleic acid as it exists in the human body, but the nucleic acid as isolated from the cell. The claimed product is not the same as the naturally occurring product. There are structural differences but, more importantly, there are functional differences because of isolation. (At [212])

In short, Australian law differs from US law – in Australia, claims directed to isolated genetic materials are patent-eligible.

31 August 2014

‘Software Patents’ – Time to End the Uncertainty!

STOPNobody – other than the most deluded fantasists among the anti-software-patents brigade – actually believes that all computer-implemented inventions are, or should be, unpatentable.  To deny patent protection to an invention merely on the basis that it involves the use of a programmed computer leads to absurd outcomes, such as an improved control system for an industrial process being patentable when implemented using gears and pulleys, or using resistors, capacitors and transistors, but not if it is implemented by way of a microprocessor programmed to provide precisely the same functions.

This is a result of the kind of muddled thinking that treats ‘digital’ as a magical incantation rather than what it actually is – another (admittedly powerful) tool in the engineer’s toolkit.

Having said that, it is also apparent that only the most deluded pro-patent fantasist would believe that absolutely anything created on a computer is, or should be, patentable.  In Europe, and many other jurisdictions with similar provisions (including, very soon, New Zealand), patents are expressly prohibited on computer programs ‘as such’.  The recent Alice decision by the US Supreme Court clearly establishes that there are at least some forms of computer-implemented financial processes that are nothing more than ‘abstract ideas’ accompanied by directions to ‘do it on a computer’, and thus unpatentable.

So, we can conclude with some certainty that some computer-implemented inventions are patentable, and some are not.  The problem is that nobody – not the courts, not the national patent offices, not the law-makers – seems to wish to take any responsibility for deciding exactly where to draw the line.  I have no idea where the line is, despite the fact that I read and write about this subject all the time, and practice in this area on behalf of clients every day.  I do not know anyone, inside or outside the profession, in Australia or anywhere else, who knows where the line is – and I would not trust or choose to work with anyone who claims that they do!

24 August 2014

Australia’s Patent Application Backlog Revealed

2013 IPAU BacklogEarlier this month, IP Australia released a ‘report on patent backlogs, inventories and pendency’.  The cover page states that it is ‘an independent report commissioned by IP Australia’, and that ‘[f]indings and opinions are those of the researchers, not necessarily the views of the IP Australia or the Government.’  My understanding is that the author, Ahmer Iqbal Siddiqui, worked on the report as an intern within IP Australia for around three months during 2013.

The research is based upon historical data of pendency for applications disposed of (i.e. either granted or abandoned) between January 2000 and January 2013, i.e. prior to the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.  During this period IP Australia’s inventory (i.e. number of pending applications at any stage between filing and grant or abandonment) rose from just under 45,000 to a peak of almost 100,000 in October of 2009, before falling back to hover around 90,000.

This represents an inventory of around 278 applications per examiner, as compared with the UK Intellectual Property Office with 198, and the USPTO with just 169.  Patents granted in January 2013 had been pending for an average of about three-and-a-half years, up from just two years in 2000, but down from a peak of four years in 2010.

Rainbow Loom Patent Claims Rejected … For Now

LoomI recently noted a potential patent battle brewing in Australia over the popular loom band products originally developed by Malaysian-born and US-based inventor, Cheong Choon Ng, and sold under the RAINBOW LOOM brand. 

Specifically, Ng has recently filed a series of five innovation patents, while local RAINBOW LOOM distributor Funtastic Limited sent letters placing Headstart International Pty Ltd and Moose Enterprise Pty Ltd, distributors of the competing CRA-Z-LOOM and FUNLOOM products in Australia, on notice of the prospective patent rights.  Headstart and Moose fired back by filing notices at the Australian Patent Office, along with numerous prior art documents and other information, contending that Ng’s innovation patent claims are invalid.

First examination reports have now issued in relation to all five innovation patents.  In four cases, all of the claims have been found to lack novelty (and innovative step) in view of various prior art documents, most of which were raised in the submissions made by Headstart and Moose.  All four of these patents include claims directed to the loom device itself, and the difficulty faced by Ng is that there is little structural difference between a loom suitable for use in weaving together rubber bands, and many older looms that have been used for weaving yarn.

For example, one of the documents cited against all of the innovation patents is US patent application publication no. 2008/0156043, entitled ‘Knitting Loom and Method of Use’.

17 August 2014

What is the Starting Point for Inventive Step?

AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99 (12 August 2014)

Running raceAn expanded panel of five judges of the Federal Court of Australia has held that two patents owned by AstraZeneca relating to the cholesterol-lowering drug marketed as CRESTOR (active ingredient rosuvastatin) are invalid.  Subject to the possibility of a High Court appeal, the decision opens the way for generic competition to CRESTOR in Australia, which has been prevented by interlocutory injunctions since 2011.

A particular point of interest in this case lies in the reason for the rare expansion of the Full Court panel from the usual three judges to five.  The judge at first instance (in Apotex Pty Ltd v AstraZeneca AB (No 4) [2013] FCA 162) had found that the AstraZeneca inventions claimed in the patents at issue lacked an inventive step based, in part, on the reasoning of an earlier Full Court panel in Apotex Pty Ltd v Sanofi-Aventis [2009] FCAFC 134.  AstraZeneca contended that the approach taken by the primary judge was wrong, and requested a panel of five judges to enable the earlier Full Court decision to be overruled, if necessary.

So, five judges is better than three, and this decision is inherently important because anything it stands for has precedence over any ‘normal’ judgment issued by a three-judge Full Court panel.  In the event, the appeal court did overrule the reasoning of the primary judge on the approach to the inventive step question at issue.  However, it also found a way to avoid actually overruling the earlier Full Court decision in Sanofi-Aventis.

The key question addressed by the court in this regard is: what is the appropriate ‘starting point’ for assessing whether or not a claimed invention involves an inventive step or, conversely, is obvious? 

The answer to this question is that inventiveness must be assessed by reference to the relevant prior art information, in light of the ‘common general knowledge’ of the person skilled in the art.  The assessment should not be influenced by the description of the invention provided in the patent specification, or by consideration of any problem that the invention is explicitly or implicitly directed at solving, except to the extent that these are, in fact, part of the prior art or common knowledge in the field.

10 August 2014

Rainbow Loom Patents Under Attack in Australia

Rainbow LoomUnless you have been living under a rock, or you literally know no tween-age children (or their parents), you have probably encountered the loom band craze in some form or another.  The brightly coloured rubber bands, which are woven into wearable items such as bracelets using a small plastic loom, have reportedly become one of the top ten toys of all time, and earned their Malaysian-born and US-based inventor, Cheong Choon Ng, well in excess of $100 million.

The original loom band products are marketed by Ng's company under the brand name RAINBOW LOOM.  However, there is no shortage of imitators hoping to cash in on the loom band craze.  Late last year Ng sued Zenacon LLC, makers of FUNLOOM, LaRose Industries LLC, makers of CRA-Z-LOOM and Toys 'R' Us, distributors of CRA-Z-LOOM, alleging (among other things) that the rival products infringe his US Patent No. 8,485,565, which was granted on 16 July 2013.

In Australia, however, it appears that Ng may have a battle on his hands even to secure enforceable patent rights.  Ng's primary patent application is no. 2011324026, which is derived from international PCT application no. PCT/US2011/041553 originally filed on 23 June 2011.  And while this application is encountering some resistance from the Australian patent examiner, Ng has (so far) filed no fewer than five associated divisional innovation patents!

However, all of the innovation patents are currently under attack by various parties who have filed prior art information and corresponding submissions under the provisions of section 28 of the Patents Act 1990.  One of the five (no. 2014100245) has already even been the subject of an application to the Federal Court of Australia, following what appears to have been a rather unfortunate error on the part of the Patent Office (more on that later).

Certainly, there is big money in small coloured rubber bands, and it is unlikely that either Ng, or any of the copycat competitors, are going to give in without a fight.

07 August 2014

Apple v Samsung Ends, Not With a Bang But a Whimper

Duelling TabletsAs is being widely reported this morning, Apple and Samsung have agreed to settle all of their ongoing patent disputes outside of the US. This means that the Australian proceedings, which have occupied, by my estimate, over 150 days of court time, and the attention of two Federal Court judges, will now be terminated, presumably without judgment.

The only thing that is surprising about this is just how freakin' long it took!

I hate to say I told you so (actually, I don't), but I kind of did tell you so, way back at the beginning of August 2011, when Apple first commenced its Australian litigation against Samsung. I made four predictions on day one, and was more right than wrong in everything but the time frame. In my defence, the duration and scope of the case was completely unprecedented, and the assumption that Apple and Samsung would reach a rational commercial resolution failed to take into account the intransigence and emotional investment of the late Steve Jobs.

Here, briefly, are those four predictions, and an assessment of how they stack up against the outcome.

03 August 2014

CSIRO Scores US$16m Wi-Fi Win Over Cisco

CSIRO Wi-FiIn the most recent decision relating to the CSIRO Wi-Fi patent, a US Federal Court Judge in the Eastern District of Texas has ordered networking equipment manufacturer Cisco Systems, Inc, to pay the Australian research organisation US$16,243,069 (plus interest) in damages for infringements dating back to 2005. 

The bulk of the award relates to 18,073,797 consumer-grade products sold under the Linksys brand (Cisco acquired Linksys in 2003), with the remainder being for 1,471,319 Cisco enterprise products.

The case, Commonwealth Scientific and Industrial Research Organisation v Cisco Systems, Inc, Case No. 6:11-cv-343 [PDF, 303kB], is interesting for a number of reasons. 

The judgment is entirely devoted to a determination of damages, based on an assessment of a ‘reasonable royalty rate’, since the parties agreed that liability for infringement, and validity of the patent, were not in dispute.  And although both CSIRO and Cisco had originally demanded a jury trial, in the end they consented to a bench trial (i.e. where the case is heard and decided by a single judge).

Additionally, the dispute has a historical context lacking in CSIRO’s other Wi-Fi litigation.  In 2001, Cisco acquired the Australian start-up, Radiata Communications Pty Ltd, originally established in 1997 by Macquarie University Professor David Skellern and his colleague Neil Weste.  Radiata took a nonexclusive licence to the CSIRO wireless LAN patent with the intention of developing chips implementing the technology (see ‘The Story behind CSIRO’s Wi-Fi Patent “Windfall”’.)

The judgment also addresses issues around CSIRO’s obligations (or not) to licence the patent on ‘reasonable and non-discriminatory’ (RAND) terms, the basis for calculation of royalties (i.e. final product prices, or the value of individual lower-cost components) as well as the usefulness of expert evidence in these kinds of cases.

In the end, CSIRO was largely successful.  Although the final damages award is around half of what it had asked for, it is about fifteen times the amount Cisco argued it should have to pay.  And the court found in favour of CSIRO on almost every other issue that was in dispute.

31 July 2014

Cutting Red Tape in the Patent System

Cutting Red TapeThe Australian government is on a crusade to eliminate as much red tape as it can.  Or, at least, to be seen to be doing so.  It even has a web site dedicated to the goal of generating ‘deregulatory savings’ of A$1 billion every year, complete with a bold, red progress bar, currently hovering around the $700,000,000 mark.

Aside from taking feedback directly from the public, one way in which the government is pursuing its goal is to task various departments with finding ways to cut their own red tape (thus creating an additional administrative burden on those staff to whom this responsibility falls).  Hence the recent announcement by IP Australia that it ‘is looking for ways to reduce regulatory burden within the intellectual property (IP) system.’

IP Australia explains that it:

…is reviewing its regulations to find areas where we can cut red tape without compromising the integrity of the IP system. We will consult on our ideas as they are developed. However, we need your help to find more ways to cut red tape.

Businesses and individuals deal with IP regulation every day. IP Australia wants to hear from you on ways to help reduce red tape in the IP system.

This is everybody's big opportunity to tell IP Australia what it can do to save its clients time and/or money in dealing with the agency, and with the Australian IP system generally!  We are assured that '[s]uggestions for cutting IP red tape don't need to be long and detailed. Just identify the regulation or rule, tell us what it costs you (Time? Money?), and why you think we don't need it.'

27 July 2014

Podcasting Patents and Tesla’s ‘Open Source’ Strategy

Studio 3CROn Friday, 18 July 2014, I appeared on the Beyond Zero – Science and Solutions program on Melbourne community radio station 3CR, to talk about the role of patents in innovation, and more particularly about the recent announcement by Tesla Motors of its intention to ‘open source’ its considerable patent portfolio.

The broadcast interview, which runs for about 27 minutes, in now available as a podcast, or as streaming audio, from both the Beyond Zero Emissions web site, and the 3CR web site.

The discussion, with hosts Matt Grantham and Anthony Danielle, was fairly wide ranging, taking in the origins and objectives of patent law, the rise of patent trolls, the role of patents in the setting and implementation of technology standards, Google’s IP strategy around the Android operating system and, of course, the meaning and implications of Tesla’s announcement.

About Beyond Zero Emissions (BZE)
Beyond Zero Emissions Inc. is a not-for-profit research and education organisation known for its work designing and implementing a zero emissions economy for Australia. It's goal is to transform Australia from a 19th century fossil fuel based, emissions intensive, economy to a 21st-century renewable-energy-powered clean-tech economy.
About Radio 3CR
Radio 3CR was established in 1976.  Broadcasters on the station present over 120 radio programs every week and listeners can tune in on 855AM, stream live through the web or download podcasts of the shows.

The station was created to provide a voice for those denied access to the mass media, particularly the working class, women, indigenous people and the many community groups and community issues that the mass media tends to ignore.  Sadly, this is an all-too-apt description of the place of climate science and action in the Australian media, particularly in view of the government’s recent abolition of the country’s carbon pricing scheme.
I realise this post could attract comments relating to climate science, rather than patents and innovation.  Although such comments would arguably be off-topic, polite and thoughtful comments on the subject are welcome.  But please note that inflammatory comments will be summarily removed.

Is Australian Court Looking to Uncle Sam on Patent-Eligibility?

Uncle SamThe question of what kinds of things should be eligible for patent protection is one that has been running in parallel in Australia and the US in recent years. 

Methods of medical treatment came under scrutiny of the US Supreme Court in Mayo Collaborative Services v Prometheus Laboratories, Inc and the Australian High Court in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (see High Court Rules Methods of Medical Treatment Patent-Eligible). 

The Supreme Court considered gene patents in Association for Molecular Pathology v. Myriad Genetics, Inc, while a corresponding Australian patent came before the Australian Federal Court in Cancer Voices Australia v Myriad Genetics Inc (see Australian Federal Court Declares Isolated Human Genes Patentable). 

And the recent Supreme Court decision on computer-implemented business processes, in Alice Corporation Pty Ltd v CLS Bank International addresses similar issues to those tackled by the Australian Federal Court in Research Affiliates, LLC v Commissioner of Patents (see Research Affiliates Loses Appeal Against Business Method Rejection).

The Australian Myriad and Research Affiliates cases are currently both on appeal to full benches of the Federal Court.  The Myriad appeal was heard on 8 August 2013, less than two months after the US Supreme Court handed down its corresponding decision.  The Research Affiliates case was heard on 18 November 2013, and in the intervening period the Supreme Court has managed to hear and decide the Alice case.  We continue to await decisions from the Australian court in both the Myriad and the Research Affiliates cases.

While the delays in deciding these cases are not inconsiderable, they do not appear to be particularly unusual by current standards of the Full Court – another recently-decided patents appeal, Generic Health Pty Ltd v Bayer Pharma Aktiengesellschaft [2014] FCAFC 73, was heard on 26-27 August 2013, with judgment handed down on 19 May 2014.

20 July 2014

Do You Have a Licence to Sue?

Patent PoliceIt is very common to establish a corporate structure including two or more entities, in which one entity holds the assets of the business, while another entity acts as the operating or trading company.  I am not a corporate lawyer or a financial advisor, so I do not propose to go into the pros and cons of such arrangements in general.  The only important point to make for the purpose of this article is that ‘assets’ generally include intangible assets, and that intangible assets include patents.

This raises the issue of authorisation: if one entity owns a patent, and a different entity exploits the patented technology, then the operating entity must be licensed by the holding entity.  It may be that the two entities are companies with common ownership and/or directorship, in which case the terms of the licence may not be set out fully (or perhaps even at all) in writing.  It is not uncommon for an operating company to carry on business without any formal written licence agreement with its related holding company, with the effect that an ongoing royalty-free licence to exploit the patent rights would usually be implied from the circumstances.

There are all sorts of reasons why this is an undesirable situation.  For example, a formal licence agreement can set out in detail what happens to the licence in the event that the operating company is sold or becomes insolvent.  An implied licence, or verbal agreement, will never be sufficiently clear to address such situations without ambiguity.

However, I am concerned here with one very specific issue that arises under the Australian Patents Act 1990Section 120 of the Act provides that ‘infringement proceedings may be started … by the patentee or an exclusive licensee.’  Thus, if the operating company is not an exclusive licensee it will not have standing to sue for infringement.  An exclusive licence is one which grants to the licensee a right to exploit the patented invention to the exclusion of all others, including the patentee.  By comparison, a licence limited to a single licensee where at least some rights are retained by the patentee is known as a sole licence, while a non-exclusive licence leaves the patentee free to grant further licences to other parties.

In the case of the holding/operating company structure, the operating company is likely to be the entity suffering damage as a result of infringing activities, and with the funds to take action.  Thus an inability to do so on its own behalf may place it at a disadvantage.

This issue arose recently in a series of decisions issued by Justice Middleton in the Federal Court of Australia, Damorgold Pty Ltd v JAI Products Pty Ltd [2014] FCA 150, Damorgold Pty Ltd v JAI Products Pty Ltd (No 2) [2014] FCA 377 and Damorgold Pty Ltd v JAI Products Pty Ltd (No 3) [2014] FCA 651.  It is the third of these judgments that relates specifically to the issue of standing.  Despite what might be described as some degree of informality in past licensing arrangements, Justice Middleton was prepared to find that Damorgold’s operating company, Vertilux Corporation Pty Ltd, had been, at all relevant times, an exclusive licensee of the patent at issue.

10 July 2014

Nominations Open for the 2014 ABA Journal Blawg 100

MedalIt is that time of year again, when the ABA Journal (‘Law News Now’) sets about building its annual list of the 100 best legal blogs (or ‘blawgs’).  This will be the eighth time the 'Blawg 100' has been compiled.

The final list is determined by ABA Journal staff and, while it is not a ‘popularity contest’, nominations are accepted in the form of ‘friend-of-the-blawg briefs’, a.k.a. the Blawg 100 Amici.

Nominations are open now, and close at 5pm US Eastern Time on 8 August 2014.

The decision to nominate a blawg is, of course, entirely personal.  But if you are a regular Patentology reader, and you find the blog interesting and useful, then I would really appreciate you putting in a good word!  Nominations can be made via the Blawg 100 Amici submission page.

Of course, if you do not want to nominate Patentology, there are many other worthy legal blogs out there.  You might, for example, want to check out last year's finalists in the IP law category:
  1. Gene Quinn's IP Watchdog (Twitter: @IPWatchdog);
  2. Kevin Noonan and Donald Zuhn's Patent Docs (Twitter: @PatentDocs);
  3. Rebecca Tushnet's 43(B)log (Twitter: @rtushnet);
  4. The Hollywood Reporter's Hollywood, Esq (Twitter: @thresq); and
  5. The Biederman Blog, written by Students at Southwestern Law School's Biederman Entertainment and Media Law Institute (Twitter: @Biedermanblog)
In 2013 IP Watchdog was inducted into the Blawg 100 Hall Of Fame while, in a shock development (to me, at least), Dennis Crouch's enormously popular and well-regarded Patently-O blog failed to make the list altogether!

You can read about all of the successful candidates in the 2013 Blawg 100 on the ABA Journal web site.

06 July 2014

Will US Alice Decision Influence the Australian Federal Court?

Alice in Oz - A Musical Comedy in Two ActsA Full Bench of the Australian Federal Court heard oral arguments in the Research Affiliates appeal (on patent-eligibility of a computer-implemented business method) all the way back on 18 November 2013.  More than seven months later, we are still waiting for a decision.

It is possible that the court was waiting for the US Supreme Court to rule in Alice v CLS Bank before finalising its opinion(s) in Research Affiliates.  Whether or not that is the reason for this long delay, the fact is that Alice has been decided, and it is therefore almost inconceivable that the judges in the Australian case would not review the US decision and assess whether there is any aspect of the reasoning that may be applicable in Australia.

So, is there?

I am sure that some will disagree with me, but I think that maybe there is – despite significant differences between the US law on patent-eligibility (based on 35 USC §101) and that of Australia (based upon the venerable test of ‘manner of manufacture’).  While the legal criteria may be different, you would have to postulate that the purpose of the patent systems in the two countries was manifestly dissimilar for the actual outcomes of applying the criteria to produce significantly different results.

The Full Court has itself said as much, in Grant v Commissioner of Patents [2006] FCAFC 120, at [24]:

While the development of US patent law is derived from the Constitution of the United States rather than the Statute of Monopolies … the policy behind the two provisions is the same. In both jurisdictions, the courts have confirmed that a broad approach to subject matter should be taken in order to adapt to new technologies and inventions but that does not mean that there are no restrictions on what is properly patentable.

So what might the Full Court take from Alice, and how might it apply the US reasoning under the Australian ‘manner of manufacture’ test?

29 June 2014

Have Your Say on Australian Innovation Policy!

Innovative ThoughtsThe Australian Science and Innovation Forum (ASIF), with the support of the Australian Academy of Technological Sciences and Engineering, is conducting the Big Innovation Survey to inform a submission to the recently announced Senate Inquiry into Australia’s Innovation System.

Terms of Reference for the Senate Inquiry include: the need to attract new investment in innovation to secure high skill, high wage jobs and industries in Australia, as well as the role of public policy in nurturing a culture of innovation and a healthy innovation ecosystem; the Australian Government’s approach to innovation, especially with respect to the funding of education and research, the allocation of investment in industries, and the maintenance of capabilities across the economy; the importance of translating research output into social and economic benefits for Australians, and mechanisms by which it can be promoted; and current policies, funding and procedures of Australia’s publicly-funded research agencies, universities, and other actors in the innovation system.

ASIF is particularly seeking responses to the Big Innovation Survey from young professionals working in the innovation economy, including:
  1. researchers in academia, Government agencies, and institutes;
  2. scientists and engineers working in private industry;
  3. science and technology entrepreneurs;
  4. legal, financial and other professionals in the scientific and high-tech industry sectors (including patent attorneys); and
  5. those aspiring to create a start-up company, or those who have already done so.
If you fall into any of the above categories and/or have an interest in contributing to the development of innovation policy in Australia, your participation in the 10-minute on-line survey will help to build a picture of both the frustrations and the successes of working in Australia’s innovation sector.  ASIF is particularly interested in your experiences at traditional institutional boundaries, and examples of best-practice, whether from Australia or overseas.  This is a chance to get voice heard and make your opinions on innovation count.

Submissions to the Senate Inquiry close on 31 July 2014.  ASIF therefore asks that you please respond by Friday 11 July 2014, to ensure your comments are included in the response to the Senate Inquiry.

Image Copyright (c) 123RF Stock Photos

ACIP’s Unworkable Innovation Patent Recommendations

ACIP Review of the Innovation Patent SystemOn 16 June 2014, the Australian Government’s Advisory Council on Intellectual Property (ACIP) released its final report following a review of Australia’s Innovation Patent System.  For any readers who do not know, the innovation patent provides a second tier protection for inventions, having a lower threshold for validity (a test of ‘innovative step’ rather than ‘inventive step’) and a shorter maximum term of protection (eight years rather than 20 years).

The report makes six recommendations, of which only three would have any substantive effect on the actual operation of the innovation patent system.  In my opinion, all three of these are unworkable, and would actually make the system worse, rather than better.  They are:
  1. to replace the current test of innovative step with a ‘higher’ standard based on the High Court’s decision in the ‘3M case’ (Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd [1980] HCA 9;
  2. to require that innovation patent owners request examination/certification before the third anniversary of lodgement of their innovation patent; and
  3. to exclude from protection by an innovation patent all ‘methods’, ‘processes’ and ‘systems’.
The three non-substantive recommendations are:
  1. the non-recommendation of whether to abolish or retain the innovation patent system in its current form, due to a lack of adequate empirical evidence;
  2. that a term other than ‘patent’ should be used to denote an uncertified (and thus unexamined and unenforceable) innovation… umm… thingy (ACIP suggests ‘application’, but this would leave us with no name for the period between filing and registration); and
  3. that, subject to implementing the other recommendations, there be no change to the remedies available to a innovation patent owner in the event of infringement.
It perhaps matters little what the report says, or what recommendations it makes.  The present Australian government is wholly consumed by its conservative economic and social reform agenda, and most likely has no appetite for patent reform.  It has already attempted to bury one patents review commissioned by the previous government, and is therefore unlikely to take up the issues raised by ACIP’s report.

27 June 2014

Samsung Can Enforce FRAND-Committed Patents in Japan

Tokyo High Court BuildingIn a dispute between Apple and Samsung, the Japanese Intellectual Property High Court has ruled that damages may be awarded for infringement of a standard-essential patent (SEP) which is subject to a commitment to licence on fair, reasonable and non-discriminatory (FRAND) terms, and that this is not an abuse of the patent if the amount claimed is within the licence fee.

The following report of this recent Japanese ruling in the long-running global dispute between Apple and Samsung has been provided by Daisuke Miyamura of the Ohtsuki Patent and Trademark Law Firm, which is based in Osaka. 


A series of lawsuits regarding smart phones are being fought between Apple and Samsung all over the world.  In Japan, Apple has filed suits against Samsung four times, and Samsung has filed suits against Apple three times.  On 16 May 2014, the Grand Bench of the Intellectual Property High Court handed down its decision in one of these cases, on an appeal by Samsung against the decision of the lower court granting declaratory judgment in favour of Apple. 

Apple had originally argued that its acts, such as production, transfer and import of products did not constitute infringement of Samsung’s Japanese patent no. 4642898, and demanded declaratory judgment ruling that Samsung had no right to an award of damages based on infringement of the patent right.

The original court decision concluded that some of Apple’s products were included in the scope of the present patent.  However the original court also determined that enforcement of an award of damages based on the Samsung patent was the abuse of the right, and granted all of Apple’s requests for declaratory judgment.

Samsung appealed against the original court decision.

The Grand Bench of the Intellectual Property High Court has now ruled that enforcement of the right to damages based on the Samsung patent is an abuse of the right if the compensation exceeds the licence fee based on the FRAND obligation, but is not an abuse of the right if the compensation is within the license fee based on the FRAND obligation.

22 June 2014

Most Software Patents Will Survive US Supreme Court Ruling

Alice meets the DodoOn 19 June 2014 the US Supreme Court handed down its keenly-awaited decision in Alice Corporation Pty Ltd v CLS Bank International, ruling that Alice’s claims directed to a computer-implemented scheme for mitigating settlement risk in financial transactions are ineligible for patent protection.

The case was widely regarded as being about the patentability of software, perhaps because the question presented to the Court by Alice was ‘whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter…’.

In the final reckoning, however, the Supreme Court’s unanimous opinion (authored by Justice Thomas) avoids addressing this broad question, establishing only that Alice’s claims do no more than ‘simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer’, which is insufficient to render the ineligible abstract idea patentable.

Based on the reasoning of the Court in Alice, claims directed to computer-implemented inventions (i.e. ‘software patent’ claims) which do more than simply apply an abstract idea, such as a financial scheme, using conventional computer hardware, are still eligible for patent protection.  The Court gave the example of claims directed ‘to improv[ing] the functioning of the computer itself or effect[ing] an improvement in any other technology or technical field’ as being distinguishable from the situation in Alice.  However, there is no suggestion that this is intended as an exhaustive category of patent-eligible software-based inventions.

Most software that performs some new and useful function, over and above the mere application of some abstract idea, therefore remains patentable in the US.

Interestingly, the Supreme Court’s decision appears to draw the US law on patent-eligibility of computer-implemented inventions closer to the approach taken in Europe, where excluded subject matter, such as business methods, are disregarded when assessing whether a claim is directed to a patentable ‘invention’.  A similar tendency can be observed in last year’s Research Affiliates decision of the Australian Federal Court (though a ruling in an appeal of that decision is currently pending), while the new New Zealand patent law, due to commence in September 2014, contains a European-style exclusion for computer programs ‘as such’.  It may well be that we are seeing a degree of international consensus emerging in relation to the patent-eligibility of computer-implemented ‘business methods’, which would be welcome.

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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.