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

On 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?

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Tags: Australia, Patent attorney profession

How Much Should a Patent Application Cost?

I 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?

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Tags: Patent attorney profession, Patent drafting, Patent filing, Professional conduct

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

Although 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 21^st 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.

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Tags: Economics, Patent litigation, Trolls, US

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

IP 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.

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Tags: Australia, Innovation policy, Patent attorney profession, Patent Office

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

In 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.

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Tags: Artificial intelligence, Innovation, Inventorship, Machine learning, Patent law