Will an Expanded Full Bench of the Federal Court Bring Sense to Australian Law on Computer-Implemented Inventions?

The law relating to patent-eligibility of computer-implemented inventions – and its practical application by the Australian Patent Office – is currently a mess.  As I have noted recently, over the past few years disproportionate resources have been devoted by both applicants and the Patent Office to disagreements over whether or not particular inventions are patentable according to the ‘manner of manufacture’ test required by the Australian law.  In just the past three years, there have been over 10 times as many hearings held, and decisions issued (42 in total), in relation to this particular aspect of the law than in the entire first decade following commencement of the current Patents Act 1990. 

Anybody who believes that this is not indicative of a serious problem is fooling themselves.  The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) flagged its frustration with the current situation in a submission [PDF, 123kB] in response to the recent consultation on the exposure draft of the Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018, noting that:

IPTA is particularly concerned by the current approach being adopted by IP Australia, and lower courts, in relation to the assessment of patentability of inventions based on software. Many inventions which satisfy novelty and inventive step requirements are being rejected outright by IP Australia, even when such inventions are considered patentable in Europe. IPTA is so concerned about this current trend within IP Australia that it has recently set up a working group to study this area to see what can be done to head off this disturbing trend.

While this is a valuable initiative, there is a real prospect that the issue will be resolved in the courts over the coming months.  In the past year or so there have been four appeals filed with the Federal Court of Australia against Patent Office decisions refusing applications for computer-implemented inventions: Todd Martin v The Commissioner of Patents, QUD374/2017; Rokt Pte Limited v The Commissioner of Patents, NSD1292/2017; Repipe Pty Ltd v The Commissioner of Patents, WAD323/2018; and Aristocrat Technologies Australia Pty Ltd v The Commissioner of Patents, NSD1343/2018.  Of these, the Todd Martin case was discontinued following an (unsurprisingly) unsuccessful mediation.  The Rokt case was heard on 18-20 July 2018, and is currently awaiting judgment.  The Repipe and Aristocrat cases are currently in preliminary stages, and are yet to be set down for a hearing.

However, the case that will trump them all is one that does not involve the Commissioner of Patents.  Back in June I wrote about the decision of a single judge of the Federal Court of Australia in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421.  In that case, a pair of innovation patents owned by Encompass survived attacks based on alleged lack of novelty and innovative step, only to be found invalid on the basis that they did not relate to patent-eligible ‘manners of manufacture’.  In reaching this conclusion, the judge appeared to be strongly influenced by the state of the prior art, as represented by the evidence upon which InfoTrack relied for its novelty and innovative step cases.

Encompass has appealed that decision (Encompass Corporation Pty Ltd v InfoTrack Pty Ltd, NSD734/2018) to a Full Bench of the Federal Court of Australia.  Notably, the Court has empanelled an expanded bench of five judges – Chief Justice Allsop, and Justices Kenny, Besanko, Nicholas, and Yates.  This is a rare event, that usually only occurs when a case is of particular importance, and/or where there is some prospect that the Court may be called upon to overrule an earlier decision of a three-judge panel.  In this case, however, there is reason to suppose that the prospects of the Full Court overruling either of its two most recent decisions on patent-eligibility of computer-implemented inventions, Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, are fairly slim, given that the expanded panel includes two of the three judges – Justices Kenny and Nicholas – responsible for those decisions.  The third judge, Justice Annabelle Bennett (as she then was), retired from the Federal Court in 2016.

The Encompass appeal is scheduled to be heard on 8-9 November 2018, and a decision is therefore likely in the first half of 2019.  A five-judge ruling can override not only all of the ongoing appeals currently before single judges of the court, but also any or all of the existing first instance and Full Court decisions on patent-eligibility of computer-implemented inventions.  In my view, the Patent Office has good reason to be concerned that the Encompass decision, when it comes, will invalidate the approach that it is currently taking to the examination of computer-implemented technologies. 

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Tags: Appeal, Australia, Computer programs, Patent Office, Patentable subject matter

How Can an Innovative National IP Office Balance Its Roles as Technology Examiner and Technology Developer?

IP Australia incorporates the Australian Patent, Trade Marks, Designs, and Plant Breeder’s Rights (PBR) Offices, the core ‘business’ of which is to provide services to their ‘customers’ in respect of the administration and registration of Australian IP rights.  Indeed, IP Australia may be seen as a significant ‘exporter’ of such services considering that, for example, over 90% of applicants for Australian patent rights are foreign residents, as are over 50% of applicants for design registrations and PBRs.  In respect of its core services, IP Australia holds a true monopoly – no other government or private sector service provider can grant, or otherwise administer, enforceable IP rights in Australia.  IP Australia operates these services on a cost-recovery basis, i.e. it aims to fully recover the costs of service-provision through the official fees that it charges to its ‘customers’.

The scare quotes around the business-oriented terminology in the opening paragraph reflect my scepticism of the fashion for modelling government service provision as a form of business enterprise.  I am not alone in this scepticism.  Writing in the Harvard Business Review last year, Canadian business and management expert Henry Mintzberg noted that ‘[r]unning government like a business has been tried again and again, only to fail again and again’.  He also called the portrayal of citizens as customers a ‘misguided, overworked metaphor’, going on to observe:

Business is essential – in its place. So is government, in its place. The place of business is in the competitive marketplace, to supply us with goods and services. The place of government, aside from protecting us from threats, is to help keep that marketplace competitive and responsible.

Consistently with Mintzberg’s view on the appropriate role of government, IP Australia has a single Outcome under the Australian Government’s budget and accountability framework, which is:

Increased innovation, investment and trade in Australia, and by Australians overseas, through the administration of the registrable intellectual property rights system, promoting public awareness and industry engagement, and advising government.

Recently, however, we have seen IP Australia extending its services into areas that are, arguably, beyond this core mission, and engaging in activities in which it – again, arguably – positions itself in competition with private enterprise.  Examples include:

1. the TM Headstart service and Trade Mark Assist tool which, despite disclaimers that they are not substitutes for legal advice, compete directly with services provided by trade marks practitioners; and
2. the Patent Analytics Hub, which provides analysis, visualisation and interpretation of patent data, and competes directly with various patent search and analytics service providers, albeit ‘only’ for clients in the government and public research sectors – which actually includes some of the largest potential customers for these services in Australia.

Additionally, as I noted just last week, IP Australia is now engaged in its own internal IT development projects, applying machine learning techniques to patent classification and assessment of trade mark applications.  Its Chief Data Officer was also quoted last week by the online IT news outlet ZDNet, speaking on IP Australia’s efforts in relation to improving its business intelligence and analytics capabilities through internal ‘agile’ software development projects.

Just to be clear, I am not saying that all – or any – of this is necessarily a ‘bad’ thing.  IP Australia may, indeed, be the best-placed agency to be delivering these projects.  And, as I also pointed out in my article last week, it has by any standards – public or private sector – demonstrated over the past few years an impressive capability to deliver IT projects in a timely and cost-effective manner.  Certainly, IP Australia is not the only IP authority in the world to be engaging in such activities, with materials from the World Intellectual Property Organization (WIPO) May 2018 Meeting of Intellectual Property Offices (IPOs) on ICT Strategies and Artificial Intelligence (AI) for IP Administration revealing various projects ongoing at WIPO, the European Patent Office, the Russian Patent Office (Rospatent), the German Patent and Trade Mark Office, and others.

Even so, there is an argument to be made that IP Australia, as the agency responsible for regulation of registered IP practitioners (i.e. Australian patent and trade marks attorneys) is, at the same time, competing with those practitioners, albeit in a very limited capacity.  Furthermore, as the agency responsible for examining and registering (or refusing) IP rights in relation to new inventions – including software-based and machine learning technologies – IP Australia is also now itself engaged in developing such technologies.  This raises the question of whether any conflicts of interest arise as a result?  And, if so, what is the nature of those conflicts, and how should they be managed?

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Tags: Australia, Machine learning, Patent Office, Patentable subject matter, Public policy

Computerised Decision-Making – Coming Soon to an IP Office Near You?

The Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018 (the ‘PC Part 1 Act’) received Royal Assent, and thus passed into law, on 24 August 2018.  Following an initial consultation, which confirmed (in case any confirmation was required) that the proposal to abolish the innovation patent system remained controversial, it had an easy passage through the two houses of the Australian Parliament after the corresponding provisions were dropped from the Bill at the eleventh hour.  (These same provisions have since been incorporated into the draft of the Intellectual Property Laws Amendment Bill (Productivity Commission Response Part 2 and Other Measures) Bill 2018.) 

The PC Part 1 Act implements a number of less-contentious recommendations made by the Productivity Commission in its 2016 Report into its inquiry into Australia’s intellectual property arrangements, including clarifications on the legality of parallel imports, reducing the initial period before a registered trade mark may be challenged on grounds of ‘non-use’, and reducing reporting obligations relating to pharmaceutical patents with an extended term.  The Act also implements a number of measures that have been on IP Australia’s policy agenda for a while, most of which are intended to streamline and align the administration of the Australian IP system and make ‘technical amendments’ to correct or clarify IP legislation.

Included among the ‘streamlining’ measures are provisions to enable the Commissioner of Patents, and the Registrars of Trade Marks, Designs, and Plant Breeder’s Rights ‘to arrange for a computer program under their control to make decisions, exercise powers, and comply with obligations under the legislation’, i.e. to permit computerised decision-making.  When this idea was originally proposed in a public consultation process conducted in June-July of 2015, it was described as the ‘expanded use of automated systems’, and would have required the Regulations to prescribe specific decisions that may be automated.  The small number (three) of submissions received on this proposal were generally positive, but all noted the important role of the Regulations in controlling, and/or keeping the public informed, of the types of decisions that might be computerised.

However, three years is an eternity when it comes to progress of digital technologies, and with advances in machine learning and other techniques, the range of decisions that might presently, or in the near future, be wholly or partly automated has expanded greatly since the initial consultation in 2015.  The provisions that have actually been enacted (and which came into effect immediately upon receiving Royal Assent, i.e. on 24 August 2018) include no requirement for Regulations to be made permitting the automation of particular decisions.  Going forward, therefore, any decision, or related action, under the Patents, Trade Marks, Designs, or Plant Breeder’s Rights Acts may be automated using a computer program, if/when the relevant Commissioner or Registrar considers it appropriate.  The legislation has been drafted such that this may include both procedural actions (e.g. allowing an extension of time when no objections have been raised) and substantive actions (e.g. preparing an issuing examination reports).

While it might seem unlikely that computers will be examining patent applications any time soon, a submission made by IP Australia to the World Intellectual Property Organization (WIPO) prior to a meeting of international IP Offices held in May 2018 indicates that fully or partially automated trade mark examination – at least at the stage of an initial report – may be much closer to reality.

In any event, the necessary legislative permission is now in-place to enable any part of IP Australia’s decision-making processes to be automated, and an increase in the removal of human beings from the day-to-day execution of routine tasks that perhaps do not require high levels of adaptability and/or creativity is most likely now inevitable.  Fortunately, the legislation includes provisions that will make it easy for a computerised decision to be ‘overruled’ by a human decision-maker.  Furthermore, both computer and human decisions may be appealed to the Administrative Appeals Tribunal.

To find out more about how this will all work – and what IP Australia is up to in automating trade mark examination – please read on.

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Tags: Australia, Examination, Law reform, Machine learning, Patent Office, Trademarks

Data on Patent Office Decisions Highlights Impact of Law Reforms, and Continuing Problems with Law on Patent-Eligibility

Since commencement of the Patents Act 1990 in 1991, up until the end of August 2018, the Australian Patent Office has issued 1,851 published decisions (including, in earlier years, decisions relating to applications filed under the 1952 Act but issued under the transitional provisions of the 1990 Act).  Of these, decisions on substantive oppositions to the grant of standard patents have been by far the most common (666 in total).  Indeed, the vast majority of Patent Office decisions relate in one way or another to opposition proceedings, with the next most-frequent being procedural matters associated with oppositions (including decisions on costs, and final decisions following applicant amendments), and decisions on extensions of time to serve/file evidence.

Analysis of decisions issued by the Patent Office over time also highlights the impact of changes in law and practice, including the effect of amendments to the rules governing the grant of extensions of time in patent oppositions which came into effect with the Raising the Bar reforms in 2013.  The rate at which substantive opposition decisions, and decisions on extensions of time to file evidence, have issued since this time are consistent with other data indicating that the reforms have been effective in improving the efficiency of patent opposition proceedings.

Even more remarkable, however, is what the data reveals about the effect of recent changes in practice and case law relating to patent-eligibility of ‘contentious’ subject matter, and in particular of computer-implemented inventions.  Since 21 July 2010, when the Patent Office issued its decision in Invention Pathways Pty Ltd [2010] APO 10, there has been a total of 53 published decisions relating to examination objections asserting that the claimed inventions were not for patent-eligible subject matter (i.e. a ‘manner of manufacture’ under Australian law).  As I have noted on a number of occasions (most recently in Continuing Hostility to Computer Implemented Inventions Lands the Commissioner of Patents in Court. Again. Twice. and Computer-Implemented Inventions and the ‘Ball Point Pen Principle’ – Why the Australian Law on Patent-Eligibility is a Mess), the vast majority of these decisions have upheld the examiners’ objections, resulting in the applications being refused. 

What is even more remarkable about this, however, is that the number of such decisions over just the past eight years is more than double the grand total of just 21 decisions issued over the entirety of the preceding 19 years in relation to all available grounds of examination objection.  Furthermore, 38 of those 53 decisions have been handed down just within the past three calendar years.

As I have said before (e.g. in …Why the Australian Law on Patent-Eligibility is a Mess, linked above), this recent high incidence of applicants taking examination objections to hearings is a bad sign for the state of Australian patent law in relation to subject-matter eligibility.  The large number of decisions is bringing less, rather than more, clarity to the law, reflecting a high level of uncertainty, and a widespread lack of agreement among patent applicants, attorneys, examiners, hearing officers, and judges as to exactly what the law is – or should be – in this area.  And this uncertainty is not good for innovation and investment in digital technologies, because where there is uncertainty around the availability of IP protection, investors can have no confidence in either the ability to defend their own IP position, or of having freedom-to-operate in the relevant technical space.  Uncertainty thus discourages investment, and in this sense works directly against the incentive that the patent system is intended to provide.

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Tags: Australia, Examination, Opposition, Patent analytics, Patent Office, Patentable subject matter, Raising the Bar