17 April 2018

Australian Appeals Court Upholds Patent ‘Promise Doctrine’, but it’s a Question of What the Inventor ‘Intended to Do’

ESCO locking mechanismThe Australian Patents Act 1990 requires, in section 18(1)(c) and 18(1A)(c), that an invention must be ‘useful’ in order to be patentable.  This is also commonly known as the requirement for ‘utility’.  Failure to meet this requirement, i.e. inutility, is therefore a ground upon which a patent application may be rejected, or a patent revoked.  One of of the ‘rules’ that has been developed by the courts over the years for assessing utility is an obligation upon an applicant or patentee to satisfy any ‘promise’ that might be made for an invention in the patent specification.  This is sometimes known as the ‘promise doctrine’ – e.g. in Canada, where it was abolished last year by the Supreme Court.  I had been hoping that a Full Bench of the Federal Court of Australia might decide to do likewise, given that the opportunity had arisen.  In a recently-issued decision, however, it has unfortunately declined to do so: ESCO Corporation v Ronneby Road Pty Ltd [2018] FCAFC 46.

On the face of it, a requirement that an invention fulfil any stated promises does not seem unreasonable.  If, for example, an applicant falsely asserts that an invention is worthy of a patent, at least in part because it achieves some valuable improvement over its predecessors, and receives a patent on that basis, then the Patent Office has arguably been misled in its decision to grant the patent.  However, I do not see what this has to do with utility.  The Australian Patents Act 1990 provides a perfectly good mechanism for revoking patents that have been obtained by ‘fraud, false suggestion or misrepresentation’ in section 138(3)(d).  But if an invention is, in fact, useful for some purpose, and the patent specification otherwise meets all of the requirements for a valid patent, then it is difficult to see why the applicant’s choice to include – or not – some ‘promise’ in the specification should make any difference.

The position becomes even more fraught when a specification includes more than one promise.  This aspect of the utility requirement has not previously been conclusively addressed by the Australian courts – i.e. if a patent applicant makes multiple promises for an invention, it is necessary that all of those promises be met by the claims, individually and/or collectively?  The Full Court’s decision in ESCO Corporation has, at least, clarified this situation, with the court deciding that a claimed invention must indeed meet whatever promise(s) have been made for it in the specification.

However, this does not mean that resolving the question of utility is simple in any given case.  The court has explained that whether or not a relevant promise has been made and met must be addressed, by determining whether the invention as claimed does what it is intended by the patentee to do.  This necessarily involves an enquiry into the patentee’s intentions, through consideration of the specification as a whole, including the claims.  It is therefore not simply a matter of identifying some explicit, straightforward, statement in the specification that appears to make one or more ‘promises’ – as the court did (wrongly) at first instance in the ESCO case – and asking whether the claimed invention satisfies all of the stated ‘promises’. 

As a result of conducting the required enquiry, it can become apparent that the invention, as defined in a specific claim, or group of claims, was not intended to satisfy all of the ‘promises’ made in the specification.  In ESCO’s case this was necessarily so, because its application included two groups of claims defining different aspects of the invention (a component, and an assembly including the component, respectively) that might encompass different subsets of the advantages asserted for the invention as a whole.

So while I would have liked to see Australia follow Canada in cutting ties with old UK law and abandoning the ‘promise doctrine’, the Full Court in ESCO Corporation has at least brought some much-needed sense to the Australian law.  Determining whether or not an invention is ‘useful’ is not some formulaic exercise involving the mere comparison of statements in the specification with the subject matter of the claims.  Rather, it is a matter of substance, whereby the intentions of the applicant or patentee are to be determined, at least insofar as they are expressed in the specification as a whole, in relation to each claim, or group of claims.  On the other hand, the decision may not go far enough, in that it is not clear that it necessarily applies to cases in which there are not two or more distinct groups of claims relating to different aspects of an invention.

10 April 2018

With Second-Tier Patent Rights in Retreat in Australia, Are They Making an ‘Advancement’ in New Zealand?

Dr Parmjeet ParmarWhile the second-tier innovation patent may be out-of-favour with the Australian government (a late stay of execution notwithstanding), there is at least one New Zealand parliamentarian who is bold enough to stand up for the rights of incremental innovators.  Dr Parmjeet Parmar is a list member for the opposition National Party in New Zealand, who has drafted and submitted a private member’s bill titled the Patents (Advancement Patents) Amendment Bill.  The bill proposes the introduction of a new second-tier patent right which has many similarities with – and a few differences from – the Australian innovation patent, and Dr Parmar suggests that it would fill a gap in the availability of intellectual property rights in New Zealand that was widened by the enactment of the Patents Act 2013.

Generally speaking, the proposed ‘advancement patent’ would – like the innovation patent – provide for a shorter-term patent right, permit fewer claims, and feature a bifurcated system of registration and optional examination and enforceability.  Some of the major differences from the innovation patent would be:
  1. terminology, i.e. ‘advancement’ rather than ‘innovation’, and ‘advancement step’ rather than ‘innovative step’;
  2. maximum term, i.e. up to ten years, rather than eight years; and
  3. lifecycle, i.e. an ‘advancement patent’ would be considered ‘provisional’ initially, and only have the status of ‘granted’ following examination/certification.
Reading Dr Parmar’s maiden speech in the New Zealand parliament, it is not hard to see where she finds her enthusiasm for innovators and innovation.  Born, raised and originally educated in India, she moved to be with her husband in New Zealand where she completed a PhD in biological sciences at the University of Auckland.  She subsequently worked in both academic and commercial science and research, before establishing a business manufacturing natural health products.  Clearly this is a level of hands-on experience with research, innovation, business and entrepreneurialism to which few – if any – of the politicians, bureaucrats and economists currently gunning for the Australian innovation patent can lay claim.

Many people will be surprised to see this new bill introduced in New Zealand at the same time that Australia is looking to abolish the innovation patent.  A common theme in the long gestation of the New Zealand Patents Act 2013 and the recent review of Australia’s IP arrangements by the Productivity Commission was the view, held particularly by certain economists, that for net importers of intellectual property and technology, such as Australia and New Zealand, intellectual property rights tend to be owned predominantly by foreign entities, and that it is therefore not in our interests to grant such rights improvidently, or too easily.

My own analysis of innovation patent data over a nine-year period showed that while the target community of Australian small and medium enterprises (SMEs) were indeed, by filing numbers alone, the dominant users of the system, too many of these were ‘self-filers’, who generally gain no value from their patents, while many of the largest individual users of the system are foreign entities that filed innovation patents for strategic reasons (e.g. Apple, Inc), or merely to take advantage of economic incentives in their own home countries (e.g. many Chinese companies).  While probably not enough to justify abolition – rather than improvement – of the innovation patent, this is not a great look, and is hardly a glowing endorsement of the domestic benefits of a second-tier patent system.

Considering these current concerns with the innovation patent, I decided to take the opportunity to reach out to Dr Parmar and ask her about her motivations for drafting her bill, and why she believes that a New Zealand ‘advancement patent’ would fare better than the Australian innovation patent.  She was kind enough to take the time out of her busy schedule to answer my emailed questions, and I am pleased to be able to present her views in her own words.

30 March 2018

A ‘Death Row Reprieve’ for Innovation Patents as IP Laws Amendment Legislation Reaches Parliament

5 minutes to midnightOn 28 March 2018, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 was introduced to the Australian House of Representatives.  Schedule 1 of the Bill, along with associated regulations, will implement various recommendations arising from the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, namely: clarifying the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark; expanding the scope of ‘essentially derived variety’ declarations in the Plant Breeder’s Rights Act; reducing the grace period for filing non-use applications under the Trade Marks Act; and eliminating requirements for patentees to provide certain data relating to pharmaceutical patents with an extended term.

Notably absent from the bill as introduced to parliament, however, are provisions for phasing out Australia’s second tier patent system, the innovation patent.  As recently as early March, IP Australia published its response to submissions on the proposed phase-out, rejecting continuing calls for the innovation patent system to be retained in some form, and indicating its intention to proceed with the transition process set out in the exposure draft of the legislation.  But if a week is a long time in politics, three weeks is a veritable eternity, and IP Australia has now announced that ‘the Government has decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs.’

19 March 2018

Is Australia Headed for a ‘Technology’ Test for Patent-Eligibility?

Which wayLast week I reported on IP Australia’s response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  Now, hot on the heels of that development, IP Australia has also published the submissions it received in its other ongoing consultation process, commenced in September 2017, along with its corresponding further response.  This consultation also relates largely to implementing recommendations made by the Productivity Commission, and accepted by the Australian Government, including: amending inventive step requirements; introducing an objects clause into the Patents Act 1990; amending the provisions for Crown use of patents (and designs); and amending the provisions for compulsory licensing of patents.  In this case, however, proposed legislation has yet to be drafted, and the initial consultation has been directed to obtaining feedback from stakeholders on a number of potential implementation options for each recommendation.

A total of 18 non-confidential submissions were received in response to IP Australia’s consultation papers.  Once again, a number of these submissions argued against changes in the law, notwithstanding that the Government has already decided to implement the various Productivity Commission recommendations, and doing nothing is therefore not an option that is open to IP Australia.  Fifteen non-confidential submissions provided comments on the options for amending the inventive step requirements, of which 14 did not support making any changes.  Fourteen non-confidential submissions were received in relation to introducing an objects clause, of which just six submissions were in favour, and eight did not support the change.

There was less stakeholder interest in Crown use and compulsory licensing, however among those that did make submissions on these issues there was somewhat greater support for change.  Of seven non-confidential submissions relating to Crown use, five supported amending the law.  In relation to compulsory licensing provisions, three out of eight non-confidential submissions supported change.

Crown use and compulsory licensing provisions have rarely been invoked in Australia (and no compulsory licence has ever been granted).  Furthermore, the proposed amendments are unlikely to result in any increase in the use of these provisions.  The relative lack of interest in these areas is therefore not very surprising.

However, the proposed changes to the inventive step requirements, and the preferred wording of the objects clause, could have the more profound effect of introducing a ‘technology’ requirement into Australian patent law, creating tension with previous statements of the Full Bench of the Federal Court of Australia rejecting the proposition that patentable inventions be required to fall within an ‘area of science and technology’.

12 March 2018

Continuing Opposition to Abolition of the Innovation Patent Falls On Deaf Ears at IP Australia

Hard of hearingIP Australia has published its response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  The period for comment on the proposed legislation closed on 4 December 2017.  The draft legislation contains measures to implement aspects of the Government’s response to the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, along with amendments to strengthen plant breeder’s rights (PBR) enforcement, streamline official processes, and make technical improvements to the legislation.

While the majority of Productivity Commission recommendations addressed by the draft legislation relate to PBRs and trade marks, the most significant patent-related provisions are those implementing the abolition of the innovation patent system.  The proposed approach would see a fairly gentle transition, with applicants given a year’s notice within which innovation patents would still be granted under the current system, followed by eight years during which all existing innovation patents would gradually cease or expire, and restrictions would be imposed on new applications and the certification of innovation patent claims.

When the draft legislation was published, I argued that the proposed transition could be viewed as too gentle, considering the Productivity Commission’s relatively strong objections to the strategic use of divisional innovation patents, and the uncertainty caused by uncertified claims.  This was, however, very much a contingent view – i.e. given that the innovation patent system is to be abolished based upon the Productivity Commission’s recommendation, the abolition should be implemented in a way that most-effectively addresses the Commission’s reasons for making that recommendation. 

In fact, I would prefer to see the innovation patent system given a second chance, in an improved form.  However, since the Government has accepted the Productivity Commission’s recommendation, and the consultation was directed to its implementation, rather than being a further opportunity to canvas objections to this decision, I did not make a submission.  This did not, however, prevent a number of others from taking the opportunity to once again express their opposition to abolishing the innovation patent system.

Unsurprisingly, these repeated objections fell on deaf ears, with IP Australia focussing in its response on the few submissions that actually addressed the merits of the proposed legislation.  On this basis, it appears at this stage that – absent a last-minute reprieve at the parliamentary level – the process of abolishing the innovation patent system is likely to proceed in substantially the manner set out in the draft legislation.

04 March 2018

The Need to Perform ‘Complex, Time-Consuming and Expensive’ Clinical Trials Does Not Make a Patent Invalid

ChemistryPatents play an important role in the development of new pharmaceutical compounds, and therapies based upon the use of such compounds.  The primary global model for drug development is based upon private enterprise and competition.  Within this model, the carrot of a potential patent ‘monopoly’ provides an incentive for companies to deploy the considerable resources – with costs commonly estimated in the billions of dollars – necessary to discover, research, trial, and market new drugs and therapies.  Although not everyone agrees that this is the best approach, it is difficult to dispute that it has, nonetheless, contributed to the delivery of great benefits to humanity over the past century or so.

Within the realm of conventional ‘small molecule’ drugs (i.e. setting aside, for present purposes, recent developments in biotechnology and biologics) four broad categories of patent protection can be identified.
  1. New compounds.  When an innovator discovers or synthesises a compound that was not previously known to exist and/or to have any useful therapeutic effect, a patent may be obtained for the compound itself.
  2. Formulations.  While it is one thing to identify a biologically-active compound, it is often another altogether to find a safe and effective way of delivering it to a patient.  When an innovator develops a new and/or more effective formulation (e.g. a particular tablet or other oral dosage form), a patent may be obtained for that formulation, even if the active ingredient is well-known and no longer patentable.
  3. New therapeutic effects.  When an innovator discovers that a compound already known to have one or more therapeutic effects has a further, and unforeseen, therapeutic use (e.g. in the treatment of a different disease or condition), a patent may be obtained for a method of using or making the compound specifically for the new therapeutic purpose.
  4. Improved methods of treatment.  When an innovator discovers that a known compound with a known therapeutic use can be made even more effective, e.g. by combining it with other compounds or therapies, or using a different dosing regime, a patent may be obtained for the new method of treatment.
Of course, a patent will only be validly granted in any of these cases if all of the legal requirements for patentability – novelty, inventive step, sufficiency of description, and so forth – are all satisfied.  These requirements are intended to balance the rewards available to innovators against the rights of the broader community to access knowledge and to engage in free competition.

From a policy perspective, getting the balance right is particularly important in the case of pharmaceutical products.  If it is too difficult to obtain a valid patent, there may be insufficient incentive for companies to invest billions of dollars in new drug development.  On the other hand, it is important to keep in mind that, one way or another, it is the wider community – either individually, or through taxes in countries where healthcare is substantially subsidised by government – that ultimately pays for that development, through the higher prices charged for patented drugs.  Allowing patents to be granted too easily therefore may therefore represent a significant social cost.

A major component of the cost of bringing a drug to market is the need to conduct extensive clinical trials in order to prove the effectiveness and safety of the drug, and thus to obtain regulatory and marketing approval.  Such trials typically take years to complete, following the initial discovery of a new compound, or of a new use for an existing compound.  However, a patent application must be filed as early as possible to ensure that any available protection is secured in the event that the trials are successful.

A recent appeal decision of a Full Bench of the Federal Court of Australia sheds light on how the balance between an innovator’s need to file early, and the community’s right to receive a full disclosure of the invention, is struck in the case of a patent for a new therapeutic use of a known compound: Warner-Lambert Company LLC v Apotex Pty Limited (No 2) [2018] FCAFC 26.  The court has confirmed that the fact that the clinical trials required to establish an effective and safe dosage of a drug for a new therapeutic use may be ‘complex, time-consuming and expensive’ will not render invalid a patent that was filed prior to conducting this essential research.

25 February 2018

Venerable Brands Snuffed Out as IPH Group Merges Firms Into Flagship Spruson & Ferguson

Merger AheadOn 6 February 2018, Australian Securities Exchange (ASX) listed company IPH Limited (ASX:IPH) announced [PDF, 156kB] that two of its smaller group businesses – Fisher Adams Kelly Callinans (FAKC) and Cullens – are to be merged into its original and largest firm, Spruson & Ferguson (S&F).  Operation under the single S&F brand is expected to commence in April 2018, with full integration to be completed by July 2018.  The merger announcement comes on the heels of IPH’s settlement of its acquisition of New Zealand IP firm AJ Park on 31 October 2017 [PDF, 189kB].

The merger will erase two of Australia’s oldest IP brands – Callinans and Cullens – from the marketplace, once and for all.  Notwithstanding the preservation of its name within FAKC, however, the Melbourne firm of Callinans – which had over 100 years of history at the time of its merger with Fisher Adams Kelly in 2015 – is already effectively defunct given that, to my knowledge, not one of the firm’s attorneys at the time of that merger remains with FAKC.  For its part, Cullens was the first patent firm in Brisbane, having been founded by George Cullen in 1936.

The new merger is significant in terms of its impact on clients’ choice of patent attorneys in Queensland.  According to the Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB), FAKC and Cullens collectively employ 26 patent attorneys (and one trade marks attorney) registered at Queensland addresses, out of a total of 93 patent attorneys registered in Queensland.  Following the merger, the largest patent attorney practice in Queensland will be Davies Collison Cave (five attorneys registered in the state), followed by Eagar & Martin, IP Gateway and Pizzeys (all with four Queensland patent attorneys, although Pizzeys also has six patent attorneys based in Canberra).  Of these, Pizzeys is itself a member of the IPH group (though not – yet – merging with S&F) while Davies Collison Cave is Australia’s largest IP firm and a member of the QANTM IP Limited (ASX:QIP) group.  Thus any client in Queensland wanting to work with a mid-tier patent attorney firm will most likely need to look interstate.

I predict that this will not be the last merger of firms within the three publicly-listed ownership groups (the third being Xenith IP Group Limited, ASX:XIP).  While it is commonly believed that the scope for mergers may be limited by the need to avoid conflicts of interest between the clients of the separate firms, my own conversations with people within the groups suggest that this is not necessarily viewed as a major obstacle. 

Furthermore, the updated Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018, which came into effect on Friday 23 February 2018, creates a presumption of non-independence of firms within an ownership group.  The Code also imposes new obligations on the firms within a group to inform clients of the arrangements, and to obtain informed consent, in writing, from clients on both sides of any contentious matter (e.g. a patent opposition) represented by different firms within the same group.  It is my view that, in some cases at least, these more-onerous obligations may tip the balance in favour of merging firms, rather than maintaining separate operations.

The real question, then, is not if there will be further mergers, but who will be next?

How Much Should a Patent Application Cost?

Juggling DollarsI recently wrote about IP Australia’s new Engaging an Attorney Toolkit, which is an online ‘guide on how, why, what and when to engage your patent attorney’ that is intended primarily to assist people and businesses with minimal knowledge and experience of the patent system in preparing to engage with an attorney.  The toolkit includes a section entitled ‘6 Myths about getting a patent’, the first of which is that ‘a patent will cost me hundreds of thousands of dollars’.  The myth-busting reality, according to the toolkit, is that ‘prices vary, but the cost of drafting and filing an initial patent application (known as a provisional application) for your invention typically costs somewhere between $3000 and $6000.’

Is this information correct?  Or – as one commenter suggested – is a price range of $3000-$6000 liable to create unrealistic expectations, particularly for those prospective clients looking to engage with a major attorney firm?

The toolkit’s estimate is not, in fact, unreasonable, in the sense that the median cost to have a patent specification drafted by an Australian patent attorney is almost certainly somewhere in the range given.  But it is also true that costs for a substantial proportion of all specifications drafted in Australia would fall outside this range.  There are individual attorneys and small firms that might be willing to draft a patent specification for a technically simple invention for as little as $2000.  At the other extreme, an experienced attorney at a top-tier firm might end up charging $12,000 or more for a specification for a complex invention in a sophisticated and challenging field of technology.  Since many attorneys charge by time, and hourly rates vary significantly with experience and across different firms, there are no hard-and-fast rules about what a patent application may cost.

There are, however, hard-and-fast rules about what a patent attorney must tell a client up-front about who they are, how they work, and how much they will charge.  It is timely to mention this, because the new Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018 just came into effect, on Friday 23 February 2018.  All registered patent attorneys in Australia and New Zealand are subject to the Code, which requires (among other things) that they inform each new client, in writing:
  1. that they are, in fact, registered as a patent attorney, and are bound by the Code;
  2. that they have appropriate competency to perform the work required by the client, including suitable expertise in the technology of the invention;
  3. whether the attorney works for an incorporated firm and, if so, whether it is privately or publicly owned;
  4. whether the firm for which the attorney works is part of a group of commonly-owned firms and, if so, the identity of the other members of the group; and
  5. the procedures, timing and estimated cost of doing the work required by the client.
(With regard to registration, prospective clients should also be aware that Australian law effectively prohibits anybody who is not a registered patent attorney from drafting patent specifications on behalf of others.  In particular, under subsection 201(1) of the Australian Patents Act 1990 only a registered patent attorney or legal practitioner may act as a patent attorney in Australia, and section 202 further provides that, other than in very specific circumstances, ‘a legal practitioner must not prepare a specification, or a document relating to an amendment of a specification’.)

So any prospective client can be assured of being made aware of anticipated costs before any work commences, and can, if they wish, shop around for the best deal.  But how is a newcomer to the patent system to determine what is reasonable, given the very wide range of cost estimates that may be provided?

18 February 2018

Latest Annual US Patent Litigation Data From Lex Machina Provides Insights Into the ‘Troll Narrative’

Data PresentationAlthough there are various accounts of the story – particularly as people’s memories start to fade – there is little doubt that the term ‘patent troll’, as currently employed, has its origins at Intel at around the turn of the 21st century.  As Brenda Sandburg reported at the time (in 2001), Intel’s Peter Detkin defined a ‘patent troll’ as ‘somebody who tries to make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced.’  Ironically, Detkin subsequently went on to become a founder of Intellectual Ventures (IV), a company that has made a great deal of money from patents that it is not practicing, has no intention of practicing, and has never practiced.

Sorry – it seems I have that wrong.  According to IV’s profile of co-founder Nathan Myhvold, the company is actually ‘building a market for invention’ to enable inventors to ‘realize the value of their ideas’. It ‘manages one of the largest and fastest growing intellectual property (IP) portfolios in the world, with more than 40,000 assets and more than $6 billion in total committed capital’ and its investors include ‘many of the world’s most innovative companies and renowned academic and research institutions.’  All of which actually sounds kind of like a good thing, and not at all troll-y.  It is also notable that Detkin’s original definition would encompass most universities and research institutes.

So, where does the truth lie?  Somewhere between the two extremes, no doubt, as technology analyst Roger Kay has eloquently explained in an article on Medium this week, Where did the Patent Troll Narrative Come From?  At one end of the spectrum, there are certainly genuinely predatory ‘trolls’ using the patent system to extort payments from companies that lack the resources to fight back.  At the other end, however, are big tech companies, like Intel, Google, Facebook, and Apple, which have adopted a strategy of ‘efficient infringement’ – the practice of using a technology that infringes on someone’s patent, ignoring the patent holder entirely, and when (or if) the patentee decides to sue, tying them up in court by challenging the patent’s validity.  As I have argued in the past, slapping the positive word ‘efficient’ on the front does not alter the reality that this is also an abuse of the system, and of the infringers’ superior economic power.

In other words, it’s complicated.  As Kay notes:

Among combatants in the patent wars, entities are divided along multidimensional lines: practicing vs. non-practicing, dominant vs. upstart, technological vs. financial, inventing vs. acquiring, licensing vs. using internally, R&D-oriented vs. manufacturing-oriented, invention-focused vs. product-focused. While some of these creatures are truly odious, using the word “patent troll” to describe any of them would be to allow Intel and its allies ownership of the narrative. There are no hard and fast rules to separate them into good and bad buckets.

The latest Patent Litigation Year in Review report, from legal analytics company Lex Machina, provides some insights pertinent to the troll narrative, and in particular the impact of changes in US patent law driven, in large part, by lobbying from the ‘efficient infringer’ constituency which, as noted in this IAM Media article, ‘invested large sums in spreading a narrative around the problems posed by “patent trolls” that has been used to justify the need for a re-engineering of the US system to make it less friendly to all rights owners.’

Lex Machina’s analysis shows that since the commencement of the US patent law reforms introduced by the America Invents Act (AIA), rates of patent litigation have been in steady decline in real terms.  Furthermore, while the list of top plaintiffs remains dominated by non-practising entities (NPEs), in 2017 two pharmaceutical companies entered the top ten, with two more filling out the top 15.  And while headlines tend to be captured by a small number of very high awards of damages against big infringers, the reality for most plaintiffs is sobering.  Just 11% of all cases terminated since 2000 reached a final judgment, with around three-quarters settling.  While patentees are victorious slightly more often than defendants (around 60/40), compensatory damages are awarded in less than half of the cases won by plaintiffs, and for those cases in which ‘reasonable royalty’ damages were awarded during the three years up until the end of 2017, the median amount was just US$4.4 million – perhaps barely enough to justify litigation in a jurisdiction where the usual rule is that each party must bear its own costs of the proceedings.

While this might be bad news for the genuine trolls in the system, it is at least as bad – if not worse – for individual inventors, research groups, universities, and other innovators who are better-placed to invent than they are to commercialise their inventions, and therefore rely on licensing to secure a return from their efforts.

11 February 2018

Looking for a Patent Attorney? Check Out IP Australia’s ‘Engaging an Attorney Toolkit’

Writing ToolsIP Australia – the government authority responsible for (among other things) examining and granting Australian patents – has just published its Engaging an Attorney Toolkit, an online ‘guide on how, why, what and when to engage your patent attorney.’  The toolkit is the result of a project undertaken in the second half of 2017, with the assistance of external branding and communications consultants, having the aim of dispelling myths and closing knowledge gaps around patent protection.  It is intended primarily to assist people and businesses with minimal knowledge and experience of the patent system in preparing to engage with an attorney.

In the course of the project, online surveys and interviews were conducted with various stakeholders, including patent attorneys (full disclosure: I was one of the patent attorneys interviewed), to identify what new prospective patent applicants know, do not know, and should know, about the process of obtaining a patent.  Naturally, IP Australia is primarily concerned with assisting the public, and is hoping that the toolkit will help to reduce costs and make it easier and more attractive for innovators with limited understanding of the patent system to engage with an attorney.  If it is successful, however, the toolkit will also benefit attorneys by creating better-prepared and more knowledgeable clients, reducing the time and effort often required to educate them about what to expect from their attorney, and from the patent system.

It is no secret that I have been a critic of some of IP Australia’s educational resources in the past.  Almost exactly one year ago I wrote about its information on ‘what to include in your application’, calling its downplaying of the importance of obtaining professional assistance ‘rubbish’, and suggesting that:

…for the overwhelming majority of prospective applicants, ‘seeking assistance from a patent attorney’ is not something that they ‘may consider’.  It is an essential step without which they might as well flush their application fees, and whatever their own time and effort is worth, straight down the toilet!

This might seem harsh, but it was backed by an analysis, based on IP Australia’s own data, of extremely poor outcomes for self-represented applicants when compared with those employing the services of patent attorneys.  IP Australia, to its credit, engaged positively with this criticism, and within two months had updated a number of pages on its website with stronger recommendations on the value of obtaining professional assistance and advice.

Compared to this short-term fix, however, the Engaging an Attorney Toolkit is a huge leap forward.  Not only does it contain valuable information, in an accessible format, but the very fact that it now exists sends a clear message to prospective applicants about the importance of seeking professional assistance.  For the first time, ‘Engaging an attorney’ is now a headline topic on the main page on applying for a patent, along with a link to the toolkit.  With just one small caveat (of which, more later) I would have no hesitation, if I were still working as a private-practice attorney, in referring prospective clients to the toolkit in the expectation that it would make the early stages of our engagement run more smoothly.

04 February 2018

The Impact of Machine Learning on Patent Law, Part 3: Who is the Inventor of a Machine-Assisted Invention?

Machine-AssistedIn the first part of this series of articles, I argued that invention is inherently a creative act, and that since machine learning systems – however impressive or surprising their achievements – are incapable of human-like intelligence, reasoning, agency, or creativity, they therefore cannot ‘invent’.  I acknowledged, however, that machines are certainly increasingly involved as ‘assistants’ in the process of invention.  In the second part of the series I argued that where the result is a patentable invention there must always be at least one human inventor.  In this final part, I want to look at how we should go about identifying the inventor(s) in any given case of machine-assisted invention. 

There are, in fact, three main aspects of machine learning technology in relation to which inventions may arise.  The most rarefied of these is in the underlying machine learning algorithms and architectures themselves.  Comparatively speaking, very few people work in this area, and for the most part they are to be found in universities and research centres. 

Secondly, inventions may arise through the application of machine learning technology to solving problems and/or producing new results, products, and services.  I expect that this is currently the most common type of machine-learning-related invention, particularly given the wide range of software tools now available to assist programmers in implementing the underlying algorithms. 

Thirdly, there are ‘machine-assisted’ inventions, which are generated wholly or in-part by machine learning systems.  Currently, such inventions are relatively rare, considering that few applications of machine learning are actually directed to the generation of new technologies.  However, as machine learning increasingly finds its way into computer-aided design and engineering applications, this may change.

In all cases, however, I would argue that it is possible – and, indeed, necessary – to identify one or more human inventors (and no machine inventors).  To suggest otherwise is, in my view, to misunderstand the true nature, and limitations, of machine learning systems.  In a letter to shareholders, published in 12 April 2017, Amazon CEO Jeff Bezos wrote what is possibly the most succinct and jargon-free summary of what distinguishes machine learning systems from ‘traditional’ programming:

Over the past decades computers have broadly automated tasks that programmers could describe with clear rules and algorithms. Modern machine learning techniques now allow us to do the same for tasks where describing the precise rules is much harder.

The evolution from ‘traditional’ programming to machine learning is not as dramatic as some of the hype might lead us to believe.  Instead of coding the ‘rules’, machine learning developers now build systems that are able to capture and generalise from patterns that exist in their input data.  These systems still operate using rules and algorithms – but now these algorithms determine how they go about doing the capturing and the generalisation, rather than how they produce the final result.  Viewed at an appropriate level of abstraction, then, little has changed, except for the power and scale of our machines.

In view of this, I argue that when it comes to machine-assisted inventions, inventorship will generally arise from successfully designing and applying a machine learning system on the path to achieving an inventive result, even in cases where the underlying software and/or hardware employed may have been developed or supplied by someone else.

28 January 2018

Loss of CRISPR Priority in Europe is a Warning to All Patent Applicants

Dark and stormyOn 17 January 2018, a panel of the European Patent Office (EPO) opposition division wholly revoked a patent co-owned by the Broad Institute (‘Broad’) relating to CRISPR/Cas9 ‘gene editing’ technology.  The European patent in question, number EP2771468, is entitled ‘Engineering of systems, methods and optimized guide compositions for sequence manipulation’, and is a European equivalent to US patent no. 8,906,616, which is one of the key Broad patents involved in the US patent interference dispute with the University of California (UC) – which is currently on appeal to the US Court of Appeals for the Federal Circuit.  As is usual with European opposition proceedings, the ruling was issued immediately at the hearing (which had originally been scheduled to continue for two further days).  A full written decision providing detailed reasons is likely to be a few weeks away.

Technically, the basis for revocation in the final decision is likely to be lack of novelty and/or inventive step of all claims of the Broad patent.  However, the underlying reason for Broad’s failure to defend its patent is a loss of priority.  In particular, the EPO panel determined that Broad was not entitled to claim priority from four of its earlier US provisional applications, including the earliest filing, US provisional application no. 61/736,527, which was filed on 12 December 2012.  This loss of priority was fatal to the patent, as a result of a number of publications – including Broad’s own – that occurred subsequently, but prior to the full application’s filing date of 12 December 2013.

While this decision is obviously pivotal in the ongoing disputes between Broad and UC over ownership of foundational patent rights relating to CRISPR/Cas9 technology, it also provides an object lesson and a timely reminder of essential requirements for valid priority claims for patent applicants around the world, in all fields of technology.  While the circumstances of Broad’s case are somewhat more complex than most patent filings, what has happened to it here is not at all specific to the particular invention at issue.  In a nutshell, the problem was that, at the time of filing international application no. PCT/US2013/074819 (from which the European patent is derived), the named applicants – Broad, MIT and Harvard – did not collectively own all of the rights necessary to claim priority from the earlier provisional applications.  More particularly, the provisional applications named a researcher from Rockefeller University as a co-inventor/applicant, yet neither the researcher nor Rockefeller was named as an applicant on the international application.  Nor had the named applicants received any assignment from Rockefeller of the right to claim priority in the international application.

In fairness to Broad, the US national law relating to ‘internal’ priority (i.e. claiming the benefit of a US provisional application in a subsequent non-provisional application) is less strict, and focusses on the substance of the invention actually claimed in the later application rather than on a distinct right of priority.  But this can hardly be an excuse for ignorance of the international position, especially when the stakes are so high.  Broad has issued a statement, arguing that the EPO decision is based on a technicality, and asserting that it is ‘inconsistent with treaties designed to harmonize the international patent process, including that of the United States and Europe’.  I disagree.  Not only is this not the first time that the EPO has applied these rules in relation to priority claims, but it is not the only adjudicating body to have determined that they are, in fact, required by the international treaties in question.

Broad has vowed to appeal.  In the meantime – and in anticipation of the likelihood that any appeal will fail – all international applicants would be well-advised to ensure that they are clear on the ownership of the right to priority at the time of filing.  At the end of this article, I set out some guidelines for avoiding the troubles that Broad has encountered, not only at the EPO but at any international patent office.

21 January 2018

The Impact of Machine Learning on Patent Law, Part 2: ‘Machine-Assisted Inventing’

Software AssistedIn my previous article, I argued that existing (and foreseeable) artificial intelligence (AI) or machine learning (ML) systems do not exhibit creativity or inventiveness, and are incapable of anything that could reasonably be described as ‘invention’.  I acknowledged, however, that some such systems have generated results that may qualify as patentable inventions.  I therefore concluded with a question: if computers cannot invent, and yet the outcome of running a computer program can be an invention, then who – if anyone – is the inventor?

In addressing this question, it is important to understand that ML systems do not autonomously or independently generate novel outputs.  In my view, this is a fundamental error of understanding in Professor Ryan Abbott’s paper ‘I Think, Therefore I Invent: Creative Computers and the Future of Patent Law’, Boston College Law Review, Vol. 57, No. 4, 2016 (also available at SSRN), which I discussed in the first article of this series.  Abbott contends, in particular, that ‘machines have been autonomously generating patentable results for at least twenty years and that the pace of such invention is likely increasing.’ 

This, I have argued, is simply wrong.  The difference between a computer that is programmed to play the board game Go, and one that is programmed to learn to play Go is, of course, significant.  The former can only make moves that are determined in accordance with its explicit programming, whereas the latter may appear to ‘invent’ new strategies in response to patterns occurring in its training data that have not previously been recognised by human players.  But the appearance of invention is not the same thing as actual invention.  The ML player is still doing nothing more than following the instructions devised by its programmers.  The Google DeepMind AlphaGo system has become the world’s best Go player as a result of years of development, trial, experiment, and experience on the part of its designers.  AlphaGo plays as well as it does simply, and only, because that is what it was designed to do.  In this sense it is no more ‘autonomous’ than any other computer program.

In this second article I will explain why I believe that in the case of all existing (and currently foreseeable) ML systems which may generate inventions as output, there is always a human inventor.  This is consistent with the history and current state of patent law, as well as with the practical and technical reality of ML systems.

13 January 2018

The Impact of Machine Learning on Patent Law, Part 1: Can a Computer ‘Invent’?

BrainAs a product of millions of years of evolution, the human brain is a remarkable organ.  Recent research indicates that a typical brain comprises somewhere in the vicinity of 80 to 100 billion neurons, and a roughly equal number of non-neuronal cells.  This mass of biological matter is capable of astonishing feats – many of them simultaneously – from enabling us, consciously and unconsciously, to control the behaviour and movement of our bodies, to sensing, comprehending and interacting with the environment around us, to communicating with one another using a variety of languages and symbols, to creating, composing and inventing brand new works of science, technology, and art.  In performing all of these tasks, the brain consumes just 20 watts of power.  By way of comparison, microprocessors at the high end of Intel’s latest Core i7 range consume up to 140 watts.

One relatively recent product of the amazing human brain is the range of technologies often collectively called ‘artificial intelligence’ (AI).  That is the last time I will use this particular phrase without irony in this series of articles – in my view, it is too vague a term, and tends to create an impression that computers are somehow approaching the capacity to operate on-par with human intelligence, which is simply not true.  Nonetheless, such luminaries as Stephen Hawking and Elon Musk have piped up over the past year or so with their concerns that our machines may soon rise up and render us obsolete or, worse still, destroy us!

In a similar vein, there are some people in the field of intellectual property who are starting to ask questions about whether computers can be ‘creative’ or ‘inventive’ and, if so, whether it should be possible for a computer to be named as an inventor on a patent application – or, conversely, whether some humans should be disentitled from inventorship on the basis that their computers, rather than themselves, were the true inventors.  One academic who has been making a name for himself in this emerging field of study is Professor of Law and Health Sciences at the University of Surrey, Ryan Abbott.  Professor Abbott is the author of, among other works on the topic, ‘I Think, Therefore I Invent: Creative Computers and the Future of Patent Law’, Boston College Law Review, Vol. 57, No. 4, 2016 (also available at SSRN), in which he argues that the law should embrace treating non-humans as inventors because this ‘would incentivize the creation of intellectual property by encouraging the development of creative computers.’

As I shall explain, however, I do not agree with Professor Abbott that computers can, or should, be regarded as inventors for the purpose of granting patents.  Furthermore, while Abbott accepts claims that patents have already been granted on what he calls ‘computational inventions’, I firmly believe that a computer is yet to ‘invent’ anything.  In my view, the researchers and technologists who claim otherwise have an interest in promoting a particular perspective, and in doing so they are subtly extending the definitions of ‘creation’ and ‘invention’ to encompass the contribution of their machines, to the detriment of the human operators who are responsible for providing the true creative input in the process.

I am further concerned that, should this view of ‘machine as (co)inventor’ prevail, it will in fact be to the detriment of the patent system.  I think it highly unlikely that lawmakers – whether they be legislators or common-law judges – will embrace the idea of granting patents on machine inventions.  On the contrary, it seems far more probable that if the notion takes hold that computers are actually doing the ‘inventing’ in many cases, it will simply become even more difficult for humans to secure patent protection for computer-implemented, or computer-assisted, inventions.

This is a complex topic that I intend to cover in a series of three articles.  In this first part, I will introduce the field of machine learning, give some examples, and then attempt to dispel some of the hype that has developed around this technology – including in Abbott’s work.  My aim here is primarily to refute the argument that existing machines are capable of engaging in ‘creative’ or ‘inventive’ activity.  In part 2, I will delve into the role of machine learning in assisting with the generation of new inventions.  Finally, I will look at how to go about identifying the (human) inventors in such cases.

07 January 2018

A Profile of Australian and New Zealand Patent Attorneys

Different StrokesAs of 24 February 2017, Australian and New Zealand patent attorneys (collectively ‘Trans-Tasman Patent Attorneys’) have been subject to a single joint regulatory and disciplinary regime administered by the Trans-Tasman IP Attorneys Board (‘the Board’).  Among other things, the Board is responsible for maintaining a register of patent attorneys, a searchable version of which is available on its website.  The register records details of each attorney including, in most cases, a contact address and the name of any attorney firm or company that employs or is operated by the attorney.  This information provides an opportunity to ‘profile’ the trans-Tasman patent attorney profession.

While there may be no such thing as an ‘average’ patent attorney, an analysis of the register permits a few statistical observations to be made.  For example, if you were to pick a trans-Tasman patent attorney at random, there is nearly a two-thirds probability that they are also registered as a trade marks attorney, around 80% chance that they work as an attorney in private practice, a 95% chance that they live in either Australia or New Zealand, just under 25% probability that they work for a firm with 24 or more other patent attorneys, and about a 30% probability that they are employed by a firm within one of Australia’s publicly-listed ownership groups.  There is also around 70% chance (if that is the right word) that they are a man.

There is one registered patent attorney in Australia for every 32,000 population, which compares to one for every 7,000 people in the United States.  You would think, therefore, that If the demand for patent attorney services in Australia matched that of the US then Australia’s attorneys would be drowning in work, and the profession would be experiencing explosive growth!  Of course that is not the case.  On the contrary, the Australian and New Zealand patent attorney professions have been undergoing significant structural changes in response to market challenges.  The numbers bear out just how substantial these changes have been in relation to the size of the trans-Tasman profession.

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