14 May 2019

Chinese Applicants Are Bypassing Local Patent Attorneys to Obtain Australian Standard Patents

Somewhere in Canberra... According to IP Australia records, somewhere in this unprepossessing block of apartments in suburban Canberra is the Australian ‘office’ of not one, but at least 47 Chinese companies, which collectively filed 164 standard patent applications between the beginning of January and the end of April, 2019 (link to Google Sheet with full listing).  In each case, it further appears that expedited examination of the application was requested at filing.  A number of the applications have already been accepted.  In some cases, examination reports have been issued, and responses filed.  These have generally been of high quality and, but for formalities in a couple of instances, have resulted in acceptance of the applications concerned.  In no case, however, has any registered trans-Tasman patent attorney been involved.  Purportedly, each response letter has been signed by an inventor on behalf of the applicant company, i.e. presumably their employer.  The actual occupant of the Canberra address is a mystery – unnamed on any application, and seemingly uninvolved other than to assist the applicants in meeting the requirement, under regulation 22.10 of the Patents Regulations 1991 to provide an ‘address for service’ in Australia or New Zealand.

Unusual Australian patent filing behaviour by Chinese companies is nothing new.  I first wrote about the phenomenon of Chinese companies obtaining relatively large numbers of Australian innovation patents back in February 2013, a practice that – notwithstanding some limited efforts by the Patent Office to curb abuse of the system – continues largely unabated to this day.  I recently estimated that around a quarter of all innovation patent applications filed in 2018 were made by Chinese applicants (upon further analysis, I would probably now revise that number upwards, closer to one third).  It is widely believed that this behaviour is motivated by direct financial incentives provided by Chinese authorities to companies that obtain foreign patents.  In this context, the Australian innovation patent has the advantages of being cheap to apply for, fast to issue, and providing an official ‘patent certificate’ upon grant that can, presumably, be used for the purposes of claiming the Chinese government hand-outs.

These latest applications are something different, however.  First and foremost, they are for standard patents, for which no certificate will issue until and unless the applications pass substantive examination (and the opposition period).  They all claim priority from earlier Chinese national patent applications which were, in most cases, filed only shortly before the corresponding Australian applications (and certainly well within the 12-month period allowed under the Paris Convention).  And, as I have already noted, it appears that expedited examination has been requested in each case, with the applicants having a genuine intention of securing a granted Australian patent, even where objections have been raised by the examiner.

In short, these Chinese applicants are not looking merely to obtain an official patent certificate by any means available, at the lowest possible cost.  Rather, they are seeking enforceable patent rights, and in doing so they are willing to incur the additional costs of examination fees, acceptance fees, and dealing with any examination objections that may arise.

Even so, these companies do not appear to be willing to incur the costs associated with engaging Australian patent attorneys to assist them in applying for or obtaining patents.  This naturally raises the question of whether this is a problem for the applicants, for the occupant of that Canberra apartment, or for anybody else who might be involved in these filings?

Applicants Are Not Obliged to Engage a Patent Attorney

Patent attorneys who have met the required qualification standards, and been registered by the Trans-Tasman IP Attorneys Board have certain exclusive rights of practice.  In particular, non-registered persons are not permitted to carry on business as a patent attorney, meaning that they cannot undertake for gain, on behalf of any other person or company, to: apply for or obtain patents in Australia, New Zealand or elsewhere; prepare specifications or other documents for the purpose of the patent laws of Australia, New Zealand or elsewhere; or give advice (other than advice of a scientific or technical nature) about the validity or infringement of patents.  (These rights of practice are set out in sections 201 and 201A of the Patents Act 1990.  Legal practitioners may also carry out some patents work, but are restricted by section 202 in their authority to prepare patent specifications, and amendments to specifications.)

Notably, however, there are no restrictions on doing any of these things if it is not for gain, so helping people to obtain patents at no charge is presumably fine.  Furthermore, there is no restriction on merely acting as a ‘post box’ for a patent applicant, whether for gain or otherwise.  So if this is all that the Canberra resident is doing, then they are not committing any offence under the Patents Act.

There is, furthermore, no restriction in Australia on people, or companies, applying for their own patents, without the assistance of a registered patent attorney.  In the case of a company, there are exceptions to the practice restrictions in section 201 of the Patents Act, in subsections (8) to (10), which allow for employees to perform patents work on behalf of their employers (and related companies) without being registered.  (This is, of course, necessary, because a company might have ‘legal personality’, but it does not have actual personality, and is incapable of performing patents work without human assistance!)

As I noted in the opening paragraph, correspondence with IP Australia, relating to examination of applications, has been signed-off by inventors on behalf of the applicant companies that are presumably their employers.  So, again, on the face of it there is nobody who is committing any offence under the Patents Act.

Self-Represented Applicants? Or a Sham?

While these Chinese applications give the appearance of avoiding the prohibitions against unauthorised patents work, appearances can, of course, be deceiving.  A closer look at the submissions filed in response to examination objections strongly suggests that there are one or more persons involved with these applications who have significant expertise in patent law and practice, and some knowledge of Australian Patent Office procedures.

For example, application no. 2019200139 received a first examination report including objections relating to clarity and lack of novelty/inventive step.  The response that was subsequently filed consists of amendments and just over three pages of written submissions.  These arguments in support of the amended application are presented in excellent English, and have been wholly successful in overcoming the objections in the first report.  The submissions in relation to inventive step, in particular, demonstrate a sound knowledge of the applicable legal principles, and of typical approaches employed by patent professionals for setting out such arguments.  (I note that they are somewhat ‘generic’ in the sense that they do not make reference to any of the specific provisions and peculiarities of the Australian law in relation to inventive step, as set out in section 7 of the Patents Act, however this is not at all uncommon, even from Australian practitioners.)

Furthermore, the amendments were presented in the form of a ‘statement of proposed amendments’, as required under regulation 10.1, demonstrating some familiarity with Australian practice in particular.

Somewhat surprisingly, considering the competence of the response in all other respects, the amended first claim consisted, unconventionally, of multiple sentences. While this is not impermissible, it is highly unusual, and is generally considered to render the claim ambiguous, on the basis that it is unclear whether the distinct sentences should be read in combination, or as disjunctive alternatives.  As a result, a second examination report issued raising a further clarity objection, which was readily overcome by amending the punctuation such that the claim consisted of a single sentence.  The application has since been accepted.

Based on this history, I am inclined to conclude that the person who actually prepared the response documents is someone with experience in patent law and prosecution, and most likely a qualified patent practitioner in some country.  They are, however, probably not an Australian practitioner, and possibly not someone who is accustomed to prosecuting patent applications directly in English.  The detail and fluidity of the presented arguments suggest an author with strong skills in (at least) written English.  I doubt very much that the person whose name appears on the submissions, i.e. the inventor, is the author.  It is even more unlikely that each of the inventors, in all cases in which an examination report has issued, shares this same level of skill and experience in patent prosecution!

While there is no firm evidence, if I were pressed for an opinion I would guess that the submissions in response to the various examination reports issued in these cases were ghost-written by one or more Chinese patent attorneys, and attributed to the inventors on behalf of their employers. No actual Australian presence is required for any aspect of the application process (other than a person willing to provide an address for service), since all documents and fees can be filed electronically, from China, through IP Australia’s eServices platform.

Conclusion – Should Action Be Taken Against Likely Offences?

In my opinion, the ghost-writing of submissions with the objective of procuring patent rights in Australia – assuming that it is done for gain – is an offence under the Patents Act.  The fact that the name of the person providing these services does not appear on the submissions, or that they may subsequently be filed directly by the applicant, does not alter the fact that the ghost-writer has prepared documents for the purposes of the Australian Patents Act.  This is the exclusive province of registered trans-Tasman patent attorneys and appropriate legal practitioners, under section 201 and 201A of the Act.  Furthermore, while it is not at all my area of expertise, it seems plausible to me that anyone involved in hiding the true identity of the person who prepared the documents, for the purposes of concealing an offence against section 201, is a party to some form of fraudulent or deceptive conduct.

More generally, I would suggest that this recent behaviour by these Chinese applicants represents a coordinated and deliberate effort to bypass the Australian patent profession, and the specific provisions of section 201 and 201A of the Patents Act that exist to protect clients, as well as the transparency and integrity of the profession and of the Australian patent system.

Whether there is anything that IP Australia – or anybody else – can do about this is another matter.  The parties involved in any offences under the Act are most likely located overseas, and may be impossible, in practice, to identify.  To the extent that there is fraudulent or deceptive activity taking place, the Patents Act contains no specific provisions addressing this.  However, the Commissioner of Patents has, on more than one previous occasion, invoked principles of administrative law to nullify decisions that may have been ‘infected’ by fraud.  (See, for example, this comment from the then-Commissioner, Fatima Beattie, in relation to nullification of acceptance in the H Bion case, as well as the nullification of grant of a number of innovation patents.)

The concern is, of course, that unless some action is taken to nip this practice in the bud, it may simply become more common in the future, thereby making a mockery of the supposed protections in the Patents Act.  This kind of behaviour is not tolerated in other countries with comparable protections.  For example, in response to similar activities in relation to trade mark registration, the USPTO has recently proposed officially requiring that foreign-resident trade mark applicants use the services of licensed US legal practitioners.  I imagine that many Australian patent attorneys would love to see similar rules instituted here, although if anything we have been moving in the opposite direction over the past few decades, so it is difficult to imagine that we would go so far in this country. 

Even so, staff at IP Australia are at least as capable as I am of identifying behaviours indicative of possible offences under sections 201 and 201A of the Act.  I therefore hope that the Commissioner will consider whether there is any action that can be taken to restrain these behaviours.


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