Upaid v Telstra – Here’s How We Deal With NPEs in Australia!

Upaid Systems Ltd is a ‘non-practising entity’ (NPE) – sometimes referred to as a ‘patent troll’ – which sued Australia’s largest telecommunications carrier, Telstra Corporation Ltd, back in August 2013 for the alleged infringement of two Australian patents relating to making online purchases of goods and/or services from mobile devices.  More specifically, Upaid alleges that various subscription operations performed in relation to Telstra’s MOG online music streaming service (formerly Bigpond Music) infringe its patents when conducted using a mobile device.

Some two-and-a-half years later, Justice Yates in the Federal Court of Australia has issued an interlocutory, i.e. provisional, decision comprising more than 500 paragraphs (Upaid Systems Ltd v Telstra Corporation Limited (No 3) [2016] FCA 227) in which Upaid’s various allegations of infringement are largely described in unflattering terms along a spectrum from ‘untenable’ to ‘confusing and embarrassing’!

Furthermore, even where the court has determined that Upaid may have some prospect of overcoming Telstra’s objections, it has found that Upaid’s corresponding case, even after all this time, still does not correctly or adequately identify details of Telstra’s alleged infringements.

It is not that Upaid has not been given ample opportunity to develop its case.  It has had multiple opportunities to address deficiencies identified by Telstra.  It has been granted access to internal documentation of how Telstra’s relevant operational and billing systems work.  It has even been given the opportunity to question Telstra employees on these factual matters.  Yet still the NPE is struggling even to outline an arguable case for infringement.

While the court has not yet completely killed-off Upaid’s case, in my view it certainly seems likely to have been mortally wounded.  While there remains a possibility of appeal (the time for either party to apply for leave has been extended until 12 April 2016), the recent judgment leaves Upaid with very little scope to make out a case with any reasonable prospects of success.  The court has all but struck out Upaid’s entire case in relation to one of the two Upaid patents at issue, and has offered only a limited opportunity for Upaid to try to rectify the deficiencies in its case in relation to the other.

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Tags: Australia, Federal Court practice, Infringement, Litigation, NPEs, Trolls

New Patent Office Guidelines for Computer-Implemented Inventions: Would the CSIRO Wi-Fi Invention be Patentable?

On 1 February 2016, IP Australia updated the Australian Patent Office Manual of Practice and Procedure to clarify (their word, not mine) ‘examination practice regarding patentable subject matter in view of the Full Federal Court decision Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177.’

Had the Full Court been clearer, perhaps IP Australia would have been in a better position to establish some form of coherent and objective approach to examination.  As it is, however, the ‘guidance’, which is principally to be found in Section 2.9.2.7 of the Manual, is little more than a laundry list of ‘principles’ to be considered when examining computer-implemented subject matter.  I do not think that this is very helpful, either for applicants and their representatives, or for the patent examiners who are supposed to follow the published practice.

The guidelines open with:

Under Australian law, there are no specific exclusions for software or methods that are implemented as computer software or a related product. However, they are only patentable if what is claimed “as a matter of substance” meets the requirements for a manner of manufacture and in particular is not a mere scheme, abstract idea or mere information.

This is an accurate statement of the approach taken by the courts in both the Research Affiliates (Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150) and RPL Central cases.  In neither case, however, did the court provide clear guidance as to how to determine, in any given case, the ‘substance’ of the invention.  This is extremely problematic, and can result in essentially arbitrary and subjective decision-making.  As the first point in the laundry list of principles correctly states:

Each case must be considered on its merits.

The next point goes on to explain – again, quite reasonably – that an ineligible invention cannot be made eligible for a patent merely because some clever patent attorney might have dressed up the claims to look superficially like the invention is not a mere scheme, or some other class of excluded subject matter:

In considering whether the substance of the claimed invention is a scheme, abstract idea or mere information, it is necessary to go beyond the form of words used. The alleged invention is to be understood in the context of the specification as a whole and the relevant common general knowledge.  For example, the substance of an alleged invention may be a scheme even if the claims literally define a physical product, e.g. a system or computer when programmed to carry out a scheme.

From here, however, the guidance becomes decidedly more difficult to apply consistently and objectively.

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Tags: Australia, Claim construction, Computer programs, Patent Office, Patentable subject matter

Overcoming Examination Objections – Advocacy vs Evidence

At a high level, the patent application process in Australia is not unduly complex.  First, an application is prepared and filed.  Then – either at filing, or at some later point in time – examination of the application is requested.  A patent examiner subsequently reviews the application, searches the prior art, and either approves the application for acceptance, or issues an examination report setting out any legal deficiencies or obstacles preventing this.  Once the application has been accepted, it is open for opposition by third parties for a period of three months.  The vast majority of accepted applications are not opposed, and so acceptance mostly leads directly to the grant of a patent.

Dealing with examination objections is therefore a critical part of the application process in many cases.  The primary decision to be made is whether to continue with the application, or to give up.  In my experience, some applicants are reluctant to take the second option, even when it would be wise to do so.  When the examiner’s objections have merit, and overcoming them would be unduly costly and/or could not be achieved without limiting the scope of the patent to something of little or no commercial value, the best thing to do might be to let the application die a natural death, and get on with doing something more productive with your time and money.  But this article is not going to be about how to abandon an application.

This article is about dealing with objections, in the many cases in which it is worthwhile to proceed with an application.  Sometimes – horrifying as it may seem – an examiner is simply wrong, in which case a reply to the examination report may consist of written submissions, such as reasoned explanation or argument, seeking to persuade the examiner of his or her error, such that the objections will be withdrawn.  Not uncommonly, there is some merit to the examiner’s objections, but the issues can be addressed by some form of permissible amendment to the application, usually accompanied by supporting written submissions.

What I intend to look at, in particular, is the nature of the written submissions made in response to an examination report.  How much weight do these have, what can be done to limit the examiner’s ability to ‘argue back’, and are there risks in testing the boundaries of ‘fair’ argument?

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Tags: Australia, Evidence, Examination, False suggestion, Patent Office

Government Backs Australian FinTech Innovation – It’s Just a Pity It’s Not Patentable!

On 26 February 2016 the Australian Treasurer, Scott Morrison, announced (in Shanghai) that the Australian Government ‘is delivering support to further back Australia's financial services technology – FinTech – in the burgeoning Asian market’.  Morrison further said that ‘FinTech will have an important role to play in Australia's innovation future, that's why the Turnbull Government is backing it in with real support in the world's fastest growing economic region’.  Two days earlier, the Treasurer had made a joint announcement with the Prime Minister, Malcolm Turnbull, about the establishment of a new FinTech expert advisory group chaired by Craig Dunn, Chairman of not-for-profit FinTech hub Stone & Chalk and Director of Westpac Bank. 

None of this is especially new, or a huge surprise.  FInTech has been on the PM’s radar since he toppled Tony Abbott for the top job last September.  In early December 2015, Turnbull (flanked by Morrison, Assistant Treasurer Kelly O'Dwyer and Assistant Innovation Minister Wyatt Roy) fronted an audience of 150 start-up entrepreneurs at Stone & Chalk, saying ‘There has never been a more exciting time to be in FinTech’ and spruiking his government's ‘absolute commitment to innovation and supporting all of your imagination and creativity’.  In his recent statement, the Treasurer confirmed that ‘backing innovation in financial services is a priority for the Government.’

This is all well and good, perhaps, if you are in the Department of Prime Minister and Cabinet, or in Treasury handing out relatively small sums of money to FinTech hubs (Morrison’s special announcement of support in Shanghai included a promise of a somewhat miserly $150,000 for the Stone & Chalk FinTech Asia program).  But I have to wonder whether the Department of Industry, Innovation and Science (DIIS) is on the same page.  Indeed, the apparent inability of government bureaucracy’s left hand to keep track of what its right hand is doing makes me wonder whether the DIIS is even aware that it might not be in lockstep with the PM and Treasurer.  The smiling, supportive presence of Wyatt Roy at last December’s Stone & Chalk love-in suggests perhaps not.

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Tags: Business processes, Computer programs, Patentable subject matter, Public policy