Federal Court Offers Little Insight on How Far the Bar Has Been Raised on the Standard of Disclosure in Patent Specifications

Last week I wrote about a recent Australian Federal Court decision on patent-eligibility of a computer-implemented invention, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421.  There is, however, a further aspect to this decision that may turn out to be of greater significance because, in addition to attacking Encompass’ patents on subject matter and novelty grounds, InfoTrack also sought to have the patents invalidated on the basis that the disclosure in the specification was deficient under the requirements of section 40 of the Patents Act 1990.  I believe that this is the first time that the current provisions, since commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, have received substantive judicial consideration.  Furthermore, given that the decision has been appealed by Encompass (case no. NSD734/2018), and a Notice of Contention filed by InfoTrack, it seems highly likely that the post-Raising the Bar provisions of section 40 will soon be reviewed by a Full Bench of the Federal Court of Australia.  If so, then we may find out just how far the bar has actually been raised on the disclosure requirements.

The former version of section 40 required, among other things, that a patent specification ‘describe the invention fully’, and that the patent claims defining the invention must be ‘fairly based on the matter described in the specification’.  Over time, the courts interpreted these provisions as, in most cases, requiring only that the description should enable a person of ordinary skill in the relevant field to implement something falling within the scope of the claims without further invention, and should provide a ‘real and reasonably clear disclosure’ of the invention that is broadly consistent (or, at least, not inconsistent) with what is claimed.  In practice, this was a pretty low bar that generally allowed applicants to make relatively broad claims despite possibly having disclosed only a single, specific, implementation of an invention.

By comparison, the current version of section 40 requires that a patent specification ‘disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art’, and that the claims must be ‘supported by matter disclosed in the specification’.  The intended effect of these changes is, firstly, to require that the description provide sufficient information to enable the skilled person to perform the invention across the full scope of the claims and, secondly, that the scope of the claims should not be broader than is justified by the extent of the disclosure and the contribution made by the invention.  While these intentions are not necessarily apparent from the wording of the provisions, the idea is that they are implied through the use of similar terminology to that used in other jurisdictions (particularly Europe and the UK), as indicated in the Explanatory Memorandum that accompanied the Raising the Bar legislation.

If the changes to the law achieve their intended effects, then the standard of disclosure required, and the concurrence of the relationship between the description and claims, should be substantially enhanced.  I would have to say, however, that there is little in the first instance decision in Encompass v InfoTrack to indicate just how far the bar has been raised.  This appears, at least in part, to be a result of the way the case was argued, which led the court to give greater attention to what the new provisions are not, rather than to what they are.  In any event, it is to be hoped that consideration by the Full Court will be more enlightening.

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Tags: Australia, Enablement, Law reform, Raising the Bar, Support

Computer-Implemented Inventions and the ‘Ball Point Pen Principle’ – Why the Australian Law on Patent-Eligibility is a Mess

The law – and Patent Office practice – relating to the assessment and examination of patents and applications for computer-implemented inventions in Australia is currently a complete mess.  I challenge anyone – whether an inventor, applicant, patent attorney, patent examiner, Patent Office hearing officer, IP lawyer, barrister or judge – to provide a coherent explanation of how to go about deciding whether an invention involving the use of a computer is eligible for patent protection.  I myself cannot do it, so I would genuinely love to have someone explain it to me.

In this article, I will show you where a unanimous Full Court panel of three judges of the Federal Court of Australia – the highest legal authority to have considered patent-eligibility of computer-implemented inventions in this country – clearly stated that it is impermissible to consider the state of the prior art in assessing whether or not the subject matter of an invention is patent-eligible, i.e. a ‘manner of manufacture’ in the terminology used in the Australian law.  Notably, subsequent Full Court panels have thrice accepted the correctness of this decision without criticism.  Then I will show you where a single judge of the Federal Court recently found an invention to comprise ineligible subject matter on the basis that various components of the claims are known from the prior art. 

I will also show you where a Patent Office hearing officer, in upholding the rejection of a patent application by an examiner, expressly stated that it is legitimate to consider the prior art when assessing patent-eligibility of computer-related subject matter.  I will point you to a recent opposition decision in which the hearing officer found that the claimed invention was not patent-eligible, despite an examiner having accepted the application, and the applicant being successful in establishing that the claims involved an inventive step over prior art raised by the opponent.  And I will identify a further four Patent Office decisions – in addition to 13 published since the beginning of 2017 that I listed last November – in which applications for computer-implemented inventions have been refused, including one relating to an application by Google which cites the aforementioned decision to justify considering prior art when deciding subject-matter eligibility.  In these decisions, the Patent Office is continuing to apply its adaptation of the England and Wales Court of Appeals’ four-step test for patentable subject matter, as set out in Aerotel Ltd v Telco Holdings Ltd; Macrossan’s Application, [2006] EWCA Civ 1371 (Aerotel/Macrossan), despite a lack of any clear authority for this approach in Australia.

Meanwhile, one of two Federal Court appeals of Patent Office decisions has been terminated following unsuccessful mediation, while the other has been delayed after the parties decided that expert evidence is required.  Yes – expert evidence to address whether or not an invention is a ‘manner of manufacture’, which is supposed to be a question of law, on which technical experts have no authority.

This is all, frankly, terrible for the state of patent law, and for high-tech innovation, in Australia.  Literally nobody really knows what the law is.  It is not just that patent applicants, and their attorneys, do not agree with the Patent Office about what is, and is not, patentable.  The Patent Office does not agree with itself!  Inventions that are receiving approval in examination are being rejected in opposition.  Attorneys, examiners, hearing officers and judges are finding it all but impossible to extract coherent principles from the relevant Full Court decisions, without exposing inconsistencies in those decisions.  In Federal Court, technical experts are being called in to shed light on something that is supposed to be a legal issue.  As I recently reported, the examination section that deals with inventions related to computing has the lowest acceptance rates in the Australian Patent Office.  All of this speaks to the uncertainty that currently surrounds what is, and is not, patentable when it comes to computer-implemented invention.

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Tags: Australia, Business processes, Computer programs, Innovation policy, Patent Office, Patentable subject matter

Evidence Shows that 2013 Australian Patent Law Reforms Have Had No Long-Term Effect on Application Acceptance Rates

On 15 April 2013, the majority of provisions in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 came into effect.  Among other things, these reforms were designed to lift the inventive step standard, and to impose more-stringent requirements on the disclosure in a patent specification.  As a consequence of this, you would think that some inventions that would have been patentable prior to commencement of the reforms would be unpatentable under the new standard, and that some patent specifications that would have passed muster previously could fail to meet the higher standards for disclosure.  And, if so, then it might logically follow that the proportion of applications that successfully pass examination (i.e. are accepted for grant) would be lower under the new law than under the old.

Yet, as logical as that reasoning may seem, just recently I published an analysis indicating that acceptance rates across almost all examination technology sections at the Australian Patent Office were, in fact, consistently increasing on an annual basis between 2014 and 2016.  That result is surely worthy of a closer look!

A more-detailed analysis of Australian patent examination data covering a period of over three years either side of the Raising the Bar reforms, from 2010 up until the end of 2017, indeed confirms that a naïve assumption that lifting standards should reduce acceptance rates is incorrect.  In fact, acceptance rates had been rising for a number of years prior to commencement of the reforms, and initially this trend continued under the supposedly higher standards.  And although there was subsequently a brief decline in acceptance rates, this has been followed by a period during which acceptances have once again been on the rise.  Indeed, right now it appears as though the proportion of applications that are accepted for grant following examination is around 80%, which is almost exactly where it stood immediately prior to commencement of Raising the Bar.

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Tags: Australia, Examination, IPGOD, Law reform, Patent analytics, Patent law

The Australian Government is Asking SMEs How They Manage and Exploit Their Intellectual Capital (Mostly, They Don’t)

The Australian Government’s Department of Industry, Innovation and Science (DIIS) has launched a consultation ‘to better understand the needs of innovative Small and Medium Enterprises (SMEs) in managing and exploiting their intellectual capital’.  If my experience is anything to go by, the first challenge will be finding Australian SMEs with an understanding of what intellectual capital is, let alone how to manage and exploit it in any systematic way.  Fortunately, DIIS has provided its own definition of the term: ‘by intellectual capital we mean things like ideas, know-how, branding, data, trade secrets and copyright and also registered intellectual property (IP) rights such as patents, trade marks, designs and plant breeder’s rights.’

While potentially patentable inventions may form only a small part of a company’s intellectual capital – and there are, of course, many businesses that are not at all involved in the generation of new technology – patent filings are nonetheless widely seen as one indication of innovative activity within the national economy.  Additionally, applying for IP protection is a clear signal that a business has some awareness of its intellectual capital, even if only informally.  In the case of a patent filing, someone has at least identified the existence of an invention, and made a conscious decision that it is of sufficient value to warrant protection.  I recently wrote about Australia’s poor performance in patent filings, which I attribute to a generally negative mind-set, arising from a combination of ignorance, aversion, and lack of appreciation of the value of patents (and other forms of IP).  Relatively low rates of patent filing might therefore be a reflection of an absence of awareness, processes, and strategies for actively managing and exploiting intellectual capital within the vast majority of Australian businesses.

According to a 2016 report published by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), there were over 2.1 million businesses operating in Australia in 2015.  Just 0.2% of these (around 3,700) were classified as large businesses, employing over 200 people.  A further 2.4% (just under 51,000) were medium-sized enterprises, employing between 20 and 199 people.  The majority of businesses smaller than this – 60.6%, or just over two million – are non-employing sole traders (like me).  As I demonstrate in this article, however, even on the most generous interpretation of the available data, less than 0.3% of SMEs and sole traders filed any kind of Australian patent application in 2015.  On average, SMEs filed around 1.5 applications each (if they filed at all), while the typical individual applicant filed only a single application.  By comparison, just over 5% of large firms filed patent applications in Australia, and on average these firms filed over five applications each.

I fear, therefore, that DIIS will not receive too many responses to its consultation, and those businesses that do respond are unlikely to represent a broad cross-section of Australian SMEs.  Businesses for which intellectual capital is barely on the radar are unlikely to become aware of the consultation, or take the time to respond to questions set out in the Submission Guide, such as: ‘What does “intellectual capital” mean to you?’; ‘What role does it play in your business strategy?’; ‘How does your business exploit its intellectual capital?’; ‘Can you tell us about any successes or failures?’; ‘Do you seek advice on how to manage and exploit your intellectual capital?’; and ‘If not, why not?’.

For those SMEs, and other stakeholders, with an interest in the fate of Australia’s innovation patent system, this consultation provides a further opportunity to make their views known.  When provisions to abolish the innovation patent were recently dropped from legislation introduced to Parliament, IP Australia announced that the Government had ‘decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs’.  The Submission Guide does not expressly mention the innovation patent, however the consultation is explicitly linked to the Productivity Commission’s inquiry into Australia’s IP arrangements, noting that the Government is ‘committed to continue to further explore the overall needs of Australian SMEs in relation to exploiting their intellectual capital, and securing, utilising and enforcing their IP rights.’  Filing numbers presented in this article show that, for whatever reasons, SMEs have made increasing use of the innovation patent system over time.

While the consultation is primarily directed to SMEs, the Submission Guide also appears to envisage that submissions may be received from ‘professional organisations providing service or advice to SMEs.’

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Tags: Australia, Intellectual capital, IPGOD, Public consultation