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.

14 June 2014

Tesla ‘Open Sources’ a Wall of Patents

Tesla Model SIn a blog post yesterday, Tesla Motors’ founder and CEO Elon Musk announced that the company had taken down a ‘wall of patents’ in the lobby of its Palo Alto headquarters, and ‘will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.’

I have mixed feelings about this manoeuvre.  On the one hand, I am sure it is absolutely the right move for Tesla.  Elon Musk is nobody’s fool, so if he has decided that a wall of patents is delivering no value to the company as a barrier to competition, then who am I to argue?

On the other hand, I am troubled by Musk’s claiming of the ‘high ground’ in making this grand symbolic gesture (and yes, I will explain why I think it is ‘symbolic’).  His claim that Tesla is freeing its patents ‘in the spirit of the open source movement’ has had predictable results in the usual anti-patent circles: amongst others, a piece at Ars Technica asserts that ‘Tesla will use patents to subvert patent system’, while the Electronic Frontier Foundation opines that this is ‘a welcome alternative to current trends’.

What a lot of idealistic rot this is!  Tesla is a business.  It wants to succeed and make money.  More specifically, it wants to succeed in making the world’s first true mass-market electric vehicle over the next three years or so.  And to make this a reality, it also proposes to build a lithium-ion power cell ‘Gigafactory’ in order to take advantage of massive economies of scale to bring costs down.  The site for this $5bn construction project has reportedly become a political football, with Texas, Arizona, New Mexico and Nevada all vying to host the factory.

07 June 2014

Competition Law, Globalisation, Standards and Patent Pools

GlobeThe Australian government is currently conducting a review of competition policy, which was announced on 4 December 2014.  The Terms of Reference describe it as ‘an independent “root and branch” review of Australia's competition laws and policy in recognition of the fact that the Australian economy has changed markedly since the last major review of competition policy in 1993’, and are broad in scope.

An ‘Issues Paper’ was released on 14 April 2014, which states that the ‘overarching objective of this Review is to identify competition-enhancing microeconomic reforms to drive ongoing productivity growth and improvements in the living standards of all Australians’, and which poses a number of questions for public comment.  Written submissions in response to the Issues Paper are due by 10 June 2014.

Under the heading ‘Intellectual Property’, the Issues Paper states:

The underlying rationale for governments to grant intellectual property (IP) rights (such as patents, trademarks and copyrights) is that creations and ideas, once known, may otherwise be copied at little cost, leading to under-investment in intellectual goods and services.  However, providing too much protection for IP can deter competition and limit choice for consumers.

It goes on to ask the questions:

Are there restrictions arising from IP laws that have an unduly adverse impact on competition? Can the objectives of these IP laws be achieved in a manner more conducive to competition?

I am not sure that I agree completely with the characterisation of, and rationale for, IP rights as expressed in the Issues Paper, but it is certainly true that there is an inherent tension between competition law and IP laws.  This is no more true than in the case of patents, the purpose of which is to provide an exclusive right to practice a commercially valuable invention for up to 20 years.

I would argue that, for the most part, patent law and competition law have coexisted in relative harmony in Australia.  I am concerned, however, that this harmonious relationship is under threat from the globalisation of technology – and particularly technology standards – along with the associated IP.   I refer particularly to patents protecting essential aspects of standards, such as those governing widespread consumer electronics and international wireless communications networks, and the global “patent pool” arrangements that have emerged to facilitate access to those patents.  However, similar concerns are likely to arise in relation to other emerging business models involving the aggregation and licensing of patent and other IP rights.

What Materials Can I File With My Patent Application?

Burning CDIt is widely understood that the kinds of materials that may make up a patent application are quite strictly limited.  However, comments by the judge in a recent decision of the Federal Court of Australia suggest that IP Australia may be obliged to make reasonable efforts to access, review and take into account any materials filed by an applicant is support of a patent application or, at the very least, expressly advise the applicant if unable to do so.

When applying for a patent in Australia, it is necessary to file a specification comprising a description, claims and (where necessary or helpful to explain the invention) accompanying drawings.  Regulation 3.1(1) also requires that an abstract be filed.  Schedule 3 of the Patents Regulations 1991 sets out the general requirements for the format of these documents.

Beyond the basic application documents, the Patents Act 1990, the Regulations, and IP Australia’s Electronic Business Rules, appear to leave little scope for filing of additional materials to support a patent application.  It is possible to include such things as engineering designs, example program code for software-based systems, and other implementation details of prototypes or fully-functional implementations of an invention.  However, these are generally provided simply as annexures to the patent specification, in the form of text and/or drawings which are subject to the usual format rules as set out in Schedule 3 of the Regulations.

Gene sequence listings, which may be required to provide full disclosure of certain inventions in the field of biotechnology, are a special case, because of their sheer size.  They may therefore be filed electronically, as separate files structured in accordance with the standards specified in Annex C of the Administrative Instructions of the PCT.

Finally, microbiological materials that are not otherwise available, and which are necessary to put the invention disclosed in the specification into effect, must be deposited with an approved depository institution (see section 6 and section 41 of the Patents Act).

01 June 2014

Will the Federal Court Resolve Patent-Eligibility of Business Methods?

Questioning stick figureIt has now been over six months since a Full Bench of the Federal Court of Australia heard Research Affiliates’ appeal against the rejection of its patent applications relating to the construction and use of passive portfolios and indexes for securities trading.  The rejections were made on the basis that the claims of the applications were not directed to a ‘manner of manufacture’ – the test under the Australian law for whether a claimed invention comprises patent-eligible subject matter.

While we await a decision in the appeal – as well as a decision from the US Supreme Court in Alice Corporation v CLS Bank, heard back in March – I thought it might be a good opportunity to review the current unsatisfactory state of affairs in relation to so-called ‘business method’ patents.

The patent-eligibility of ‘business methods’ – including, but not limited to, processes implemented with the aid of computer software – is a contentious issue in many jurisdictions.

There is arguably an emerging consensus that methods of organising human affairs which involve only the manipulation of legal or financial instruments, without technological assistance, are not generally eligible for patent protection, even in those countries with a liberal approach to patentable subject matter.

However, when technical means are employed – typically in the form of a programmed computer – in the implementation of an otherwise unpatentable process, the position remains unresolved.  In the US, for example, the Court of Appeals for the Federal Circuit (CAFC) seems irreconcilably split over the issue of whether technical implementation of a method is sufficient, in itself, to satisfy the patent-eligibility requirements of 35 USC § 101.  In the Research Affiliates  case, the Full Federal Court in Australia is grappling with the same issue.

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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.