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.

The Data

In order to generate my Patent Office decision dataset, I manually reviewed the headnotes, abstracts, and/or opening paragraphs of every APO decision published on AustLII under the 1990 Act, keeping a count of the number falling within each one of the following categories:

1. opposition/standard – substantive decisions on oppositions to standard patents under section 59 of the Patents Act;
2. opposition/amendment – substantive decisions on oppositions to amendments under section 104(4) of the Patents Act;
3. opposition/innovation – substantive decisions on oppositions to innovation patents under section 101M of the Patents Act;
4. opposition/petty – substantive decisions on ‘oppositions’ (or, more precisely, notifications under the former section 28 to extension requests under the former section 69) to petty patents;
5. opposition/other – substantive decisions on other types of opposition, e.g. oppositions to the grant of an extension to the term of a pharmaceutical patent under section 75 of the Patents Act;
6. opposition/EoT – decisions on requests for extensions of time in oppositions, e.g. to serve/file evidence, under Chapter 5 of the Patents Regulations 1991;
7. opposition/procedure – decisions on other procedural matters arising in the course of oppositions, including final decisions following applicant amendments, decisions on costs, decisions on requests for dismissal of oppositions, decisions relating to requests to serve/file further evidence, decisions relating to requests for production of documents, summonsing of witnesses, and so forth;
8. EoT/section 223 – decisions on requests for extensions of time under section 223 of the Patents Act;
9. exam/subject matter – decisions resulting from examinations in which the sole or primary objection considered in the decision was that the claimed invention was not a ‘manner of manufacture’ (i.e. patent-eligible subject matter);
10. exam/other – decisions resulting from examinations in which the sole or primary objection considered in the decision was something other than that the claimed invention was not a ‘manner of manufacture’ (most commonly lack of novelty and/or inventive step); and
11. other – all decisions not falling into the above categories, of which there are not many, and most relate to applications for an extension to the term of a pharmaceutical patent under section 70, or to requests for directions in relation to ownership/entitlement under section 32 and/or section 36 of the Patents Act.

Not every decision ever issued falls neatly into just one of the above categories (although the vast majority do).  However, I counted each decision only once, and where a decision addressed issues in multiple categories, I counted it against whatever I regarded as the most appropriate category given the nature of the decision.  I acknowledge that this is, to some extent, a matter of impression – and one that necessarily needed to be determined very rapidly, for obvious practical purposes given the number of decisions involved – so if somebody else were to engage in the same exercise they might, in some cases, reach a different conclusion.

Keeping all of this in mind, the chart below shows the grand total number of decisions in each category over the full period of 27 years or so.

Decisions in Opposition Proceedings

As the chart above clearly shows, the great majority of work carried out by Patent Office hearing officers relates to oppositions to the grant of standard patents.  The chart below shows the number of substantive decisions issued each year in relation to the validity or otherwise of opposed patent applications.

While there has been considerable year-to-year variation in the number of opposition decisions issued, which no doubt reflects, in part, the number of oppositions actually pursued by opponents, there is a notable downturn in decisions around 2006-2012, followed by an unprecedented surge in 2014-2016.  I believe this to be a result of the introduction of stricter regulations regarding extensions of time under the Raising the Bar reforms, which commenced in April 2013.  As I have previously shown, using IPGOD data, there were many oppositions commenced in the mid-2000’s that ran for between five and ten years, with very few that resulted in a final decision in under three years.  Since commencement of the new rules, however, the typical duration of an opposition to the grant of a standard patent is between two and three years.  This implies a backlog of long-running oppositions that would have become ripe for completion once the reforms began to apply to them (the new provisions applied to any evidentiary period that commenced after 15 April 2013, even for ongoing oppositions).

The chart below shows the number of decisions relating to opposition extensions-of-time, and decisions relating to procedural matters in oppositions, on an annual basis.

Notably, there is a spike in decisions relating to extensions of time following commencement of the Raising the Bar reforms.  These decision include those cases in which the former rules still applied, as well as cases in which the parties were (perhaps) still coming to terms with the meaning and impact of the rule changes.

It is also interesting (although I have no explanation to offer at this time) that decisions in relation to procedural aspects of oppositions appear to have been more prevalent in the earlier years of the 1990 Act.

Decisions on Examination Objections

The following chart shows the number of decisions issued each year in relation to objections raised in examination, and which proceeded to a hearing after the applicant was unable to overcome one or more objections raised by the examiner.  ‘Stacked’ bars are used to indicate the division between cases involving subject-matter eligibility objections, and those based on other grounds, such as lack of novelty and/or inventive step.

It is worth keeping in mind that many thousands of examination reports are issued each year, and that around 20% of all applications that undergo examination (i.e. in excess of 4000 applications each year) are ultimately refused or abandoned.  In the scheme of things, therefore, applicants hardly ever request a hearing and written decision in relation to examination objections (although the practice of filing divisional applications in order to ‘continue’ prosecution of a rejected application is no doubt somewhat more common).  Between 1991 and 2009, there were never any more than three such decisions issued in any one year, and in seven of those years there were none.

However, since 2010 – the year in which the Patent Office signalled its ‘new’ approach (which probably commenced as early as November 2008) to patent-eligibility of computer-related inventions with the Invention Pathways decision – there have been four or more decisions issued in relation to examination objections each year.  In the past three calendar years alone, there have been 44 such decisions, 38 of which have been in respect of subject-matter objections – with four months still remaining in 2018.

This data further supports my contention that whereas applicants and the Patent Office have historically largely held a common conception of what is, and is not, patentable, this is no longer the case.  After all, when examination practice is clear and consistent, and follows guidelines that are largely in accordance with the understanding of the law held by applicants and their attorneys, there is very little point in requesting a hearing in an effort to have an examiner’s objections overturned.  The most logical explanation for a tenfold increase in the number of such requests, and corresponding decisions, is therefore that there is no longer a common understanding between applicants and the Patent Office of how the law should be applied to specific cases, particularly where computer-implemented subject matter is involved.

Conclusion – Time to Consult on Computer-Related Inventions?

Conducting hearings and preparing written decisions are some of the most costly and resource-intensive activities carried out within the Patent Office.  Hearing officers are among the most senior, experienced, and highly-paid staff, and the process of reading evidence and submissions, holding a hearing, and writing a decision doubtless represents (at least) a number of days’ work.  The fees paid by parties to such proceedings range from a few hundred dollars up to A$1000 per party, per day, for attendance at an oral hearing.  Since this is nowhere near sufficient to cover the costs involved, it is apparent that this vitally-important work of the Office is subsidised by other official fees, including patent maintenance fees.

To be clear, I am not suggesting that there is anything inappropriate in this – quite the opposite, in fact.  It is entirely appropriate that by far the largest number of decisions issued by the Patent Office relate to substantive oppositions to the grant of patents.  The policy underpinning pre-grant opposition is to support the integrity of the system by enabling third-parties to come forward with evidence and information pertinent to the validity of accepted applications that may not have been readily available to the examiner given the time and resources available.  This system is thus intended to make the overall cost lower rather than higher, for a given quality of outcome, by concentrating resources on those cases that matter most, in the sense that they are generally ‘selected’ for opposition by informed competitors in the market for the affected goods and/or services.

The same cannot, however, be so easily said of time spent on submissions, hearings and decisions relating to examination objections.  The goal here, in my view, should be to minimise the occurrence of such proceedings.  This is best achieved through clear, consistent, and transparent examination practices that are broadly aligned with the understanding of the relevant law, and its application, held by applicants and their advisers (e.g. patent attorneys).  Such clarity, consistency, transparency, and agreement does not presently exist, particularly where the law on patent-eligibility of computer-related inventions is concerned.

IP Australia has never formally consulted with stakeholders on this issue – although it did do so in relation to patentability of genetic technologies following the High Court’s decision in D'Arcy v Myriad Genetics Inc [2015] HCA 35.  Perhaps this would be a good idea.

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