Time to Abandon Concerns About the ‘Scintilla of Invention’ and Focus on What Really Matters

Inventive step is hard.  It really is.  I have worked with and around patents for nearly 20 years, the majority as a practising patent attorney.  I have been an inventor, I have studied, practised and taught patent law, and I have thought and written about patents and patent law for many years.  And I still think that inventive step is genuinely hard.  If anyone tells you otherwise they are either a liar or a fool.

Just stop and think for a moment about the job that the law of inventive step (or obviousness, nonobviousness – whatever your preferred formulation, the problem is substantially the same) is required to achieve.  Firstly, it is supposed to be technology-neutral, since inventions can be made using electronics, software, chemicals, biological molecules, natural and man-made materials, mechanical components, and more, individually and in combination, across all industries.  A better mousetrap, an improved mechanical lock, a new cancer medication, a stronger cryptographic security system and an advanced process for genetic manipulation must all be assessable under the one law to determine whether they are ‘inventive’ or ‘obvious’.

Secondly, the law of inventive step is expected to be objective.  Ideally, the answer to the question ‘is it obvious?’ is independent of the decision-maker and free from any subjective or value-based judgment.

Thirdly, inventive step is expected to satisfy policy objectives.  Whether it is the US Constitutional purpose of ‘promot[ing] the progress of ... the useful arts’, or the (generally less-explicitly stated) economic rationale in Australia and other jurisdictions, inventive step is the ultimate gatekeeper of the patent system.  After it has been established that an alleged invention lies in a field of patent-eligible subject matter, and is novel (i.e. not already known in the same form) determining whether it constitutes a sufficient advance to be worthy of a state-sanctioned exclusive property right is wholly the work of the law of inventive step.

This is important work.  If the bar to be cleared by the inventor is set too low, then we may make the mistake of granting patents on trivial developments that are not worthy of protection, thereby preventing others from making use of technology that should be freely available.  Conversely, if the bar is set too high we may fail to provide the necessary incentives for inventors, investors and industries to take risks in bringing new or improved products and services to market, building businesses, creating employment, and generating new economic activity and productivity improvements through technology.

And because it is so hard to satisfy all of these complex and challenging requirements, the law of inventive step has become very complex over the years, through the combined efforts of courts and legislators.  One particular creation of the courts that has received much critical attention over the years is the notion that all that is needed to support the grant of a valid patent is a ‘scintilla of invention’.  This sounds like it sets the bar pretty low.  However, although the Australian courts seem determined to hang on to the ‘scintilla’, my view is that under the current law it actually has no bearing on what is required to establish an inventive step.

In a sense, then, the persistence of the anachronistic ‘scintilla of invention’ in the case law should be (mostly) harmless.  However, so long as it continues to be cited by the courts, and raised by critics of the patent system as a significant issue, it is a distraction that gives rise to the risk that we will fail to recognise and address the real problems plaguing the law of inventive step in Australia. 

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Tags: Australia, Innovation policy, Law reform, Obviousness, Patent law

The Productivity Commission on Patents – It’s All About ‘Value’ and ‘Quality’

The final report of the Australian Productivity Commission (PC) on its Inquiry into Australia’s Intellectual Property Arrangements (‘IP Report’) has now been released.  It is quite a tome, coming in at over 750 pages!  I wrote on previous occasions about the recommendation in Chapter 8 of the earlier draft report that computer software be excluded from patentability, and about appearing before the Commission to make submissions opposing this recommendation.

In view of this, the first point I want to note about the IP Report is that the PC heard what I, and a number of other contributors, had to say on this subject.  The draft Chapter 8 has been completely reworked in the final Chapter 9, and the proposed recommendation has been discarded.  In its place. the Commission proposes the more cautious course of action to allow the full impact of recent court decisions and other changes in the law to be assessed, and additional data gathered, to inform future studies and policy-making with regard to the role of patents in relation to computer-implemented innovations.

Other conclusions and recommendations of the IP Report relating to patents include:

1. the addition of an ‘objects clause’ to the Patents Act 1990 (Chapter 7);
2. a further raising of the inventive step standard, to equal or above the highest level in the world today (which, it is suggested, is that of the European patent system) (Chapter 7);
3. requiring inventiveness to be reflected in ‘technical features’ of an invention and not, for example, in features ‘that seem trivial or aesthetic in nature, and thus are likely to do little to advance human knowledge or create knowledge spillovers’ (Chapter 7);
4. raising and restructuring selected fees to discourage maintenance of ‘low-value’ patents (Chapter 7);
5. abolishing the innovation patent (Chapter 8); and
6. reforming the regime for granting extensions of patent term for pharmaceutical products (Chapter 10).

Chapter 10, dealing specifically with pharmaceuticals, is quite lengthy, and covers a range of issue that are not purely patent-related, such as data protection for biologics (there is no case, the Report concludes, for any extension to existing periods of protection) and ‘pay-for-delay’ arrangements (where it is recommended that the Government introduce a formal system for transparent reporting of settlement agreements between originating and generic manufacturers).

All of these recommendations, it should be noted, will ‘weaken’ the patent system, when viewed from the perspective of patent owners.  That is, they will make patents more difficult and costly to obtain, enforce and maintain.  Conversely, the PC would regard such reforms as ‘strengthening’ the patent system, in terms of its wider social and economic ‘value’.

I expect that some practitioners and users of the patent system (i.e. attorneys, inventors and applicants) will be bemused by many of the IP Report’s conclusions and recommendations, and perhaps attribute them to the rarefied approaches that we have come to expect from economists.  If so, then to some extent, at least, they may be correct.  But that is no reason to avoid trying to understand where the PC is coming from.

And where the PC is coming from is its perspective on ‘value’ and ‘quality’.  But that may not be ‘value’ and ‘quality’ as you know them.  When an economist uses these words, they usually mean something quite different from what a patent owner or patent attorney would probably understand them to mean, as I shall explain.

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Tags: Australia, Innovation policy, Law reform, Patent law, Public policy, Reviews

CRISPR Patent Interference Hearing – How to Define an ‘Invention’ and Why It Matters

On 6 December 2016, and for the first time since the University of California (‘UC’) first sought to provoke interference proceedings over CRISPR/Cas9 gene editing technology in April 2015, the parties in dispute over just who has the rightful claim to inventorship appeared at an oral hearing before three judges of the US Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB).  Remarkably, considering the complexity of the scientific, technical and legal issues involved, UC and opposing claimant the Broad Institute of MIT and Harvard (‘Broad’) each had just 20 minutes to present its arguments, plus an optional five minutes for rebuttal of the other side’s submissions.  According to a journalist present at the hearing, it was all over in 45 minutes total.

It is important to understand, however, that while the judges’ decision here (which is expected within about two-to-three months) could put an end to the interference proceedings at the PTAB, the hearing was not actually about the ultimate question of who was first to invent the CRISPR technology at issue.  It was more about what each party may, or may not, have actually ‘invented’, and whether there is even any interference to be decided.

For any readers coming across this story for the first time, you could go back and read all of my articles on the topic (and the many good sources of information linked therein).  However, the key points may be briefly summarised as follows:

1. UC Berkeley Professor of Chemistry Jennifer Doudna and her collaborator Emmanuelle Charpentier were the lead researchers on a team that, in around 2012, developed CRISPR/Cas9 – a biotechnology system consisting of an engineered RNA and a ‘cutting’ protein that can be used for highly-targeted gene editing;
2. a US patent application is pending (serial no. 13/842,859), which is based on the UC team’s work and a series of filings beginning in May 2012;
3. the UC team’s original work related to the discovery of the CRISPR system in relatively simple bacterial cells (examples of ‘prokaryotes’, or simple cells without distinct nuclei), but in January 2013 they were successful in applying the technology to human cells (examples of ‘eukaryotes’, or more complex cells with, among other characteristics, distinct nuclei);
4. roughly in parallel, a team led by Feng Zhang at the Broad reported similar success using CRISPR to edit human genes;
5. a number of US patent applications were filed, beginning in December 2012, based upon the Broad team’s work (i.e. more than six months later than Doudna’s earliest filing);
6. the Broad requested prioritised examination under the USPTO’s Track One program and, as a result, was awarded the first patent on the basic CRISPR technology – US Patent No. 8,697,359, ‘CRISPR-Cas systems and methods for altering expression of gene products’, issued on 15 April 2015.

The UC applications, and the earliest Broad applications, were filed under the ‘old’ US system, according to which the applicant entitled to receive a patent is the first one to invent the claimed subject matter.  This differs from the ‘first-to-file’ priority system that has long existed throughout the rest of the world, and in the US since 16 March 2013.  Under the first-to-invent system, the administrative procedure used to determine who should receive a patent when there are competing claims is called an ‘interference’.

Therefore, the UC parties suggested that the USPTO should institute interference proceedings, in order to determine who is really entitled to own the patent rights to the CRISPR/Cas9 technology, which it did on 11 January 2016.  However, the purpose of the recent hearing was not to determine who was the first inventor, but rather to decide exactly what is the invention at issue, and whether the interference should proceed any further at all.

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Tags: Biotechnology, CRISPR, Genetic technology, Interference, US

Proposed IP Laws Amendments 2017: IP Australia Exposes Its Drafts

IP Australia has published ‘exposure drafts’ of proposed new legislation and regulations, identified as the Intellectual Property Laws Amendment Bill 2017 and the Intellectual Property Laws Amendment Regulation 2017.  Written submissions with final comments on the exposure drafts are invited by 22 January 2017.  Late submissions will not be accepted!

Amendments are being proposed to the legislation covering all of the registered IP rights, i.e. the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003, and the Plant Breeder’s Rights Act 1994 (a.k.a. the PBR Act), as well as associated regulations and related IP legislation in the Olympic Insignia Protection Act 1987 and the Copyright Act 1968. The main objectives of the amendments are to align procedures and terminology, as far as possible, among the different laws, and to streamline certain cumbersome, inefficient and/or outdated processes.  Draft Explanatory Memoranda (EM) have also been published, explaining the proposed amendments in detail.

Although many people (myself included) will doubtless have forgotten by now, IP Australia conducted a consultation on a number of proposals now reflected in this draft legislation back in early 2015.  Only 15 non-confidential submissions were received (it is not clear whether any confidential submissions were made, although the nature of the proposals was such that confidentiality is unlikely to have been a major issue for most people).

While the proposed changes are largely technical or administrative in nature, and it is therefore unsurprising that interest levels were low, there are nonetheless some fairly significant amendments in the draft legislation.  These include a major revamp of the general extension of time provisions in the Patents Act, changes to re-examination and third party examination processes, the replacement of a licensing regime with a new infringement defence to cover ‘intervening rights’ arising when a patent or application is restored, the introduction of enhanced damages for flagrant examples of unjustified threats of patent infringement action, and provision for computerised decision-making.

More excitingly, it may soon be possible to submit colour drawings with patent applications!

If you have read this far without switching off, then this is stuff you probably need to know about, and maybe even make a submission.  In all, the draft amendment bill includes 596 items, while the draft amendment regulation includes 481 items.  Obviously I am not going to try to cover all of these in detail (that is the purpose of the EMs, after all).  My aim is to provide a reasonably concise summary of the major proposals as they specifically relate to patents, in the hope that this may be of assistance to readers with interests in this specific area.

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Tags: Australia, Law reform, Legislation, Patent Office

Appeals Court Throws NPE Upaid a Lifeline in Patent Claims Against Telstra

Back in March this year I wrote about an interlocutory (i.e. provisional, or interim) decision of Justice Yates in the Federal Court of Australia, in which he described claims of patent infringement made by Upaid Systems Ltd against Australia’s largest telecommunications carrier, Telstra Corporation Ltd, as being everything from ‘untenable’ to ‘confusing and embarrassing’.  (As a quick recap, Upaid is a ‘non-practising entity’ (NPE) – or, less flatteringly, a ‘patent troll’ – which sued Telstra 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.)

Specifically, Justice Yates found, in relation to Australian patent no. 2008203853, that Upaid failed to particularise, or argue, any tenable case for infringement at any time, while in relation to Australian patent no. 770646, it had failed to particularise a tenable case for infringement, but that its submissions at the hearing departed from the particulars in ways that left unclear whether or not it might be in a position to present an arguable case.  His Honour thus proposed to strike out Upaid’s case on infringement of claim 1 of the ‘853 patent, but generously offered it a further opportunity to amend its particulars of infringement in relation to the ‘646 patent.

Had the court proceeded with these orders, it would, in all likelihood, have eviscerated Upaid’s case against Telstra.  In reporting an earlier ruling in this dispute, I suggested that the reason for Upaid’s extremely poor performance may be that, as an NPE, not itself mired in the business and technology of providing services competing with Telstra’s, it may well have a reduced understanding of the technical operations of a major national telecommunications carrier, and may therefore be reliant upon inference and observation of end results as a basis for its allegations.

Unwilling, it seems, to accept almost certain defeat, Upaid applied for leave to appeal to a Full Bench of three judges of the Federal Court.  The matter was heard before Justices Perram, Jagot and Beach on 14 and 15 November 2016, and judgment handed down on 22 November 2016: Upaid Systems Ltd v Telstra Corporation Limited [2016] FCAFC 158.

The Full Court has delivered a glimmer of hope to Upaid, partially granting leave to appeal, and allowing the appeal in relation to the primary judge’s order in relation to the ‘853 patent.  Instead, the court has ordered that Telstra’s application for summary dismissal of Upaid’s infringement claims against it be dismissed, and that Upaid be given an opportunity to file and serve further and better particulars of its infringement case in relation to the ‘853 patent (albeit that the scope of this opportunity remains to be determined by Justice Yates).

This ruling is undoubtedly a lifeline to Upaid, for which all hope had appeared to be lost.  Indeed, it now seems quite likely that the case will proceed to a full trial, unless it is settled in the meantime.

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Tags: Australia, Infringement, Litigation, NPEs, Summary judgment, Trolls