DABUS Down Under – Can an AI ‘Communicate’ an Invention to a Human Applicant?

Back in September I reported that an application naming an ‘artificial intelligence’ going by the name DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) as inventor had been filed in Australia.  The application – no. 2019363177 – was derived from an international application filed under the Patent Cooperation Treaty (PCT), and names Dr Stephen Thaler, the developer of DABUS, as applicant.  The Australian Patent Office issued a formalities report, objecting that the application does not comply with the Patents Regulations 1991, because ‘it is the Commissioner’s understanding that inventors for the purposes of the Patents Act 1990 must be natural persons.  As DABUS is not a natural person the Commissioner is of the view that no inventor has been supplied for the purposes of Regulation 3.2C(2)(aa).’  There has since been further correspondence between Dr Thaler’s Australian patent attorneys and the Patent Office.  Thus far, however, the initial objections have not been overcome, and it seems likely that the matter is headed for a hearing, which will result in a formal decision being issued.

On 19 November 2020, the applicant responded to the initial formalities report.  For some reason, this response is not currently available in the public ‘eDossier’ for the application, however the Patent Office’s reply of 25 November 2020 sets out the substance of the response:

You have indicated that there is no explicit definition of an inventor, which by implication means that an artificial intelligence machine can be an inventor. You have also stated that it is sufficient for the purposes of the Patents Act 1990 if the applicant derives title to the invention from the inventor under section 15(1)(c). In the present case this would require DABUS to transfer title to Stephen Thaler. It is not apparent that DABUS is capable of executing an assignment, or has a contract of employment (for instance).

Interestingly, however, the Patent Office reply goes further, by suggesting an alternative theory (not, it seems, put forward in the applicant’s response) under which the Dr Thaler might assert the right to be granted a patent:

It may be that you are suggesting that Dr Thaler should be regarded as the communicatee of DABUS (a category of applicants recognised under section 34(1)(e) of the 1952 Act, and amalgamated into the present section 15(1)(c) - JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2006] FCAFC 141). According to traditional principles the communication should be for the purpose of obtaining a patent (H's Application (1955) 73 RPC 197).

The significance of identifying a mechanism for Dr Thaler to derive rights to DABUS’ inventions is that, in the Office’s view, if DABUS ‘is not capable of transferring or communicating an invention to a person, it would appear to be inconsistent with the structure of the Act for the machine to be treated as an inventor for the purposes of the Act.’  However, quite why the Office should wish to make its own suggestions in this regard is something of a mystery.

The applicant, for his part, appears to want no part of this novel theory proposed by the Patent Office.  In a further reply dated 9 December 2020, his attorneys have argued simply that:

The common law confers ownership of anything produced by DABUS to its owner, the applicant. There is a general rule that the owner of a thing is the owner of the fruits of that thing, much like the owner of a fruit tree is entitled to the fruit produced by that tree. The principle of accession or first possession can apply.

I think that this is the right approach (even though it is unlikely to succeed).  A UK court has already ruled that DABUS is incapable of transferring intellectual property rights to Dr Thaler (or anybody else), and there is no reason to expect a different outcome in Australia.  Furthermore, an analysis of the historical basis for the category of ‘communicatee’ suggests that it may no longer exist under Australia’s current patent laws and that, in any event, it would not provide for Dr Thaler to obtain a patent on DABUS’ inventions.  His best bet is therefore to continue to push the ‘ownership’ line, even though it has so far failed in the UK, the US, and at the European Patent Office.  I believe that it will fail in Australia, also, under the existing law.  But my understanding is that the larger objective of the Artificial Inventor Project, which is backing Dr Thaler’s applications, is to lobby for changes in the law, to recognise AI inventors, and entitlement by way of ownership.

In any event, the Patent Office’s unusual proposition provides an opportunity to delve into this strange historical category of ‘communicatee’.  What is it?  Why did it exist?  Does it still exist somewhere in the modern patent law?  (Readers interested only in Dr Thaler’s prospects of success, and not the historical context, can skip ahead to the section entitled ‘Can Title to an Invention be Derived from an AI?’)

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Tags: Artificial intelligence, Australia, DABUS, Inventorship, Patent law

How the Australian High Court Found that Refurbished Ink Cartridges do not Infringe Seiko Patents

Recently, I wrote about the decision of the High Court in Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41, with particular focus on the Court’s finding, by a 4-3 majority, that the first sale of a patented product exhausts the patentee’s exclusive rights in that product.  In this article, I will look at the other aspect of the Court’s decision, namely its finding (again by 4-3 majority) that Epson printer ink cartridges that had been refurbished, refilled, and resold in Australia, did not infringe patents relating to aspects of the cartridges, which are owned by Seiko.

As we shall see, the decision of the High Court majority on infringement depended upon a distinction between use of a patented product following sale, and making of a new embodiment of the patented product.  It did not depend upon whether the (old) ‘implied licence’ doctrine, or the (new) ‘exhaustion’ doctrine applies under Australian law.  In this sense, it was not necessary for the Court to overturn over a century of law to replace the doctrine of implied licence with one of exhaustion, although it did so nonetheless, and it is that aspect of the case that has attracted most attention.

The reasoning of the majority on infringement is important, however, in giving guidance to lower courts, patentees, and providers of refurbished goods, on the circumstances in which modifying, repairing, or reconstituting of depleted or otherwise ‘expired’ goods may result in patent infringement.

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Tags: Australia, Exhaustion, Implied licence, Infringement, Right of repair

COVID Update – October Filings Down, as Pandemic Pain not Shared Equally Among Attorney Firms

Last month I reported that, against the trend of 2020, September was a busy month for Australian patent filings, with standard applications up by 8.1% on the same month in 2019.  (In fact, following more recent additions and corrections in IP Australia’s records, the increase is even higher, at 9.2%.)  But, sadly, any optimism this might have generated was short-lived, with October filings down by 7.9% on last year.  Numbers of new filings originating in Australia, the US, Japan, and Europe were all substantially lower than in October 2019, although applications from China once again bucked the trend.  Filings from all other countries were comparable to 2019, down by just 0.7%.

Counted at the end of October, Chinese applicants have filed 1822 Australian standard patent applications during 2020, just 6% behind Australian applicants at 1937.  This compares with 1410 applications filed by Chinese applicants at the same time in 2019.  Most of these gains have come in the second half of the year, with monthly filings from China being substantially higher than during 2019 in every month since June.  If this trend continues for the final two months of the year, Chinese residents will surpass Australians for the first time as the second largest users of the Australian patent system after the US.

Chinese applicants also continued to make ridiculously high use of the innovation patent system, reflecting the effect of subsidies back in China, rather than any inherent value of the innovation patents themselves.  By the end of October, Chinese residents had filed 1719 innovation patent applications, compared with just 332 at the same point in 2019.  Meanwhile, Australian residents filed 801 innovation patent applications, with a further 618 coming from the rest of the world combined.  With just nine months remaining until its abolition, the innovation patent system is now looking very much like the laughing stock that it has long been regarded as by some critics.

For the ‘coronavirus-affected’ period from March to October, the number of standard patent applications filed in Australia is 2.4% below the same period last year while provisional filings are down by 3.0% overall.  However, a relatively large number of provisional applications are filed by self-represented applicants, and the decline in professionally prepared and filed provisionals is slightly higher, at 4.4%.

While all of this means fewer standard and provisional filings for the patent attorney profession generally, the pain has not been shared equally.  Indeed, some sectors of the market, and individual firms, have seen growth in their filings compared with 2019, while others have experienced more significant declines.  Very broadly speaking, the best place to be, in terms of 2020 patent filings, is a medium-sized or large privately-held firm, although micro-practices and medium-sized firms within the listed groups have also collectively increased their share of standard patent filings during the pandemic.

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Tags: Australia, COVID-19, Patent analytics, Patent attorney profession

Australian High Court Finds that Sale of a Patented Product Exhausts Patentee’s Rights

In a significant judgment, the High Court of Australia has changed an aspect of patent law in Australia, ruling by a 4-3 majority that the first sale of a patented product exhausts the patentee’s exclusive rights in that product: Calidad Pty Ltd v Seiko Epson Corporation [2020] HCA 41.  For over a century, an alternative approach, based on an ‘implied licence’ theory, has applied.  While the distinction between these two approaches may not necessarily produce a different outcome in most practical circumstances, the implied licence approach has generated complications, and left Australian law out-of-step with some of our major trading partners, most notably the US and the European Union.  For reasons of simplification and harmonisation, therefore, the High Court’s ruling will be welcomed by many – myself included.

The decision of the High Court majority is also notable for the fact that the court has wasted no time in recognising the ‘objects clause’ in section 2A of the Patents Act 1990.  This clause, which sets out underlying purposes of the Act (in economic and social terms) was only enacted in February 2020, and this is literally the very first patent case that the High Court has decided since then.

The case involves printer ink cartridges, and in particular the refurbishment, refilling, and resale of cartridges, which are generally available at a lower price than cartridges sold by the original manufacturer.  Australian consumers will therefore be pleased to learn that the High Court has determined – in addition to the esoteric legal question of ‘exhaustion’ – that, in this case at least, the refilled cartridges do not infringe patent rights held by the original manufacturer, and can therefore be imported and sold in Australia.  I will discuss the ‘exhaustion’ aspect in this article, and save a review of the infringement decision for a separate post.

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Tags: Australia, Exhaustion, Implied licence, Patent law

Games — Now Less Patentable than Ever in Australia

In a recent decision, a Hearing Officer within the Australian Patent Office rejected Australian patent application no. 2018219972, in the name of casino operator Crown Melbourne Ltd, relating to a modified roulette table layout.  In particular, the claimed invention was designed to provide a ‘double zero’ roulette game having similar visual appearance and betting options to a ‘single zero’ game, while also offering additional betting options over the traditional ‘double zero’ game.  In essence, the modified layout ‘stacks’ the single and double zero boxes at one end of the number grid, instead of placing them side-by-side in the previously-established manner.  The application was rejected on the ground that the subject matter of the claimed invention is ineligible for patenting, i.e. is not for a ‘manner of manufacture’ under Australian law.  Specifically, the Hearing Officer found that ‘merely presenting a different wagering space layout that does nothing otherwise to the functioning of the apparatus cannot be considered as a physical phenomenon or transformation’, which would have been required for the invention to be patent-eligible.

You might not be surprised by this outcome.  Surely – you might think – simply providing a different layout of the numbered boxes on a roulette table cannot be the kind of thing for which a patent may be granted?  Traditionally, however, the situation would not have been considered so clear-cut.  Changing the layout also changes the wagering options available to players of the game.  The layout thus interacts with the rules of the game to change the game itself, arguably producing a ‘new’ game.  Throughout most of the history of the Australian patent system, this would have been considered patentable.

But you do not have to take my word for this.  The very same claims were previously found to be patentable by the Australian Patent Office!  The rejected application is a divisional, the ultimate ancestor of which was application no. 2008203384 (‘the original application’).  That application was itself filed in parallel with innovation patent no. 2008100694 (‘the innovation patent’).  The innovation patent was examined in 2008, and successfully certified on 5 February 2009.  The original application was also eventually examined, and received a clear examination report on 3 November 2014.  The only reason the original application did not proceed to acceptance and grant was because the innovation patent remained in force, and section 64 of the Australian Patents Act 1990 prohibits a single owner from being granted two patents simultaneously for the same invention.  After the innovation patent expired on 25 July 2016, Crown submitted that the original application should then proceed to acceptance.  But, instead, the Patent Office issued an adverse examination report, including the objection that the claimed invention was not a patentable ‘manner of manufacture’.

So, what changed?  The law?  Patent Office practice?  Or something less easily identified?

In this article, I discuss developments over the past 20 years in the patentability of games in Australia.  In summary, it seems that as recently as 2003 it was relatively straightforward to obtain a patent for a game, with the overwhelming majority of examined applications being successful.  Over time it has become substantially more difficult, although there are numerous examples of a relatively liberal approach by the Australian Patent Office up until at least the early 2010’s.  But since 2015 the tide has definitely turned, and patent applications relating to games now fail more often than they succeed.  The recent Aristocrat decision provides a glimmer of hope for game innovators, suggesting the possibility of a return to the principle that a working inter-relationship between game apparatus and associated rules of play may be sufficient to support a valid patent.  However, with this decision currently under appeal, and the Patent Office applying it narrowly only to certain types of analogous computer-implemented casino gaming systems, the prospects of any significant new liberalisation of examination practice in this area seem limited.

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Tags: Australia, Games, IPGOD, Patentable subject matter

COVID Update – Surprise Surge in September Patent Filings

Defying the trend of almost every prior month this year, Australian standard patent filings in September were up by 8.1% on the same period in 2019.  This is the largest positive change for any month in 2020, beating pre-COVID January during which standard applications bested the previous year by 7.7%.  The September surge was driven by filings from all of Australia’s top sources of new applications – i.e. the US, Europe, China, and Japan, along with domestic applicants.  Applications originating elsewhere in the world were down, however, as has been the case throughout much of the year.

The boost in filings for September was dominated by PCT national phase entries, which are now higher by nearly 1% over the seven month period from March to September when compared with the same period in 2019.  At the same time, however, direct standard patent applications – including Convention applications, complete-after-provisional filings, and divisional applications – have fallen by just over 10%.  Most of this decline is in ‘original’ filings (down by over 23%), while the number of divisional applications has fallen only slightly in comparison (down by 1.4%).

Unfortunately, the news for September is not all good.  Australian provisional filings were down by over 11% for the second month in a row, and the third time this year.  Overall, provisional filings have declined by 3% for the seven month period from March to September, when compared with 2019.  The decline is entirely in applications that have been professionally prepared and filed by patent attorneys, which have fallen by 4.4%. The number of self-filed provisional applications is up by 0.6% on the same period last year.

Over in New Zealand, September was an even better month than in Australia, with complete applications up by 13.5%, and provisionals up by 35.6% over the same month last year.

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Tags: Australia, COVID-19, New Zealand, Patent analytics

What Can Patent Data Tell Us About the Australian Government’s Plan for Local Manufacturing?

This is a guest contribution from Mike Lloyd of Patent-Insights.  Mike previously contributed an article on the impact, from an Australian perspective, of COVID-19 on international patent, trade mark, and registered designs filings.  Further details about the author can be found at the end of the article.

The Australian Federal Government on 1 October 2020 announced a renewed focus and A$1.5 billion investment in manufacturing, in particular in the following six target areas of technology:

1. resources technology and critical minerals;
2. food and beverages;
3. medical products;
4. recycling and clean energy;
5. defence; and
6. space.

The arguments put forward by the Government include wanting to ‘focus on areas of strength’ and wanting to avoid the lesson of ‘don't try to do everything’.

There are merits in these arguments, and there are also arguments for letting market forces rather than governments select our area of strengths.

But because this is a patent blog, I want to ask whether patent data can help to find Australia’s areas of technology strength.

There are many ways we could ask this question, and the most obvious of these might be to look at overall patent filings.  However, this is an imperfect method, as this data risks being corrupted by low quality patents, and there are many low quality patents out there.

Another approach is to look for highly-cited patents. The citing of a patent by another is generally a recognition that the cited patent has made a contribution to the patent literature, and therefore technology in general.  The number of citations for a granted patent can range from zero to over a thousand, but as a simple rule, we could say that any granted patent with 50 or more forward citations is ‘highly-cited’.  To put this into context, the commercial patent search database Patseer lists 8.4 million active and granted patent families (a family with one or more currently granted patents), but only 163,000 (1.9%) of these have 50 or more forward citations.  In contrast, 5.1 million (61%) of granted patents have no forward citations at all.

These ‘highly-cited’ patents could be regarded as the most important patents, and the filers of these patents as leading applicants, i.e. strong in their area of technology.  We could also argue that the more of these highly cited patents that companies have, the more they can be regarded as technology leaders in their space.

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Tags: Guest article, Manufacturing, Patent analytics, Public policy

DABUS Denied – Machines Cannot be Inventors, and the English High Court Agrees

In Thaler v The Comptroller-General of Patents, Designs And Trade Marks [2020] EWHC 2412 (Pat), the England and Wales High Court has dismissed an appeal by Dr Stephen Thaler from a decision of the UK Intellectual Property Office (IPO), which determined that one or more natural persons must be named as inventor(s) on a patent application and, therefore, that two UK applications naming an ‘artificial intelligence’ called DABUS as inventor were deemed to be withdrawn for failing to satisfy this requirement.  Thaler had refused to identify a human inventor on the basis that no natural person had made an inventive contribution to the inventions disclosed in the applications.  Furthermore, he had identified himself as the applicant, claiming ownership of the inventions on the basis of ownership and control of DABUS.  The court also rejected this theory, finding no legal basis for a machine either to own the intellectual property, or for rights in machine-generated inventions to be transferred to a human owner.

Attempts to name DABUS as inventor on corresponding applications have also been rejected by the European Patent Office (EPO), and the US Patent & Trademark Office (USPTO) [PDF 5.27MB].

Readers who have been following developments in this case will be aware that while Thaler is named as the applicant and developer of DABUS, the real driving force behind efforts to recognise machine inventors is Professor of Law and Health Sciences at the University of Surrey, Ryan Abbott, through his Artificial Inventor Project.  In addition to the patent applications filed at the UK IPO, the EPO, and the USPTO, there is also a single international patent application filed under the Patent Cooperation Treaty (PCT) encompassing both inventions, published as WO2020079499.  Abbott not only heads up the Artificial Inventor Project, he is also named as agent for the PCT application, he represented Thaler in the English High Court appeal, and it has been reported that he is also representing Thaler in a parallel Federal District Court appeal in the US.

The PCT application recently entered the national phase in Australia, as application no. 2019363177.  A formalities report has been issued, objecting that the application does not comply with the Patents Regulations 1991, because ‘it is the Commissioner’s understanding that inventors for the purposes of the Patents Act 1990 must be natural persons.  As DABUS is not a natural person the Commissioner is of the view that no inventor has been supplied for the purposes of Regulation 3.2C(2)(aa).’  Thaler has until 21 November 2020 to either: provide the name or names of natural persons who are the actual inventors; or provide submissions to the Commissioner explaining why DABUS, despite being an artificial intelligence, can be legitimately recorded as an inventor.  I anticipate that Thaler will take the latter option, and that his submissions will be rejected on similar grounds to the UK case, given that the scheme for establishing inventorship and entitlement to the grant of a patent under the Australian Patents Act 1990 is similar to the corresponding UK provisions.

In my opinion, Abbott’s Artificial Inventor Project is misconceived.  His arguments as to why we should recognise non-human inventors are unsupported by any evidence, and amount to little more than a personal opinion.  His methods of pushing the issue through patent offices and into the courts may be successful in generating attention, but they are doomed to fail, and wasteful of administrative and judicial resources.  Furthermore, the very idea that machines might be granted the ‘right’ to be recognised as inventors lacks credibility, and is unlikely to secure widespread public support.

In this article, I shall explain my position in more detail, while also taking the opportunity to discuss the English High Court decision, which is likely to be influential in the Australian case.

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Tags: Artificial intelligence, DABUS, Inventorship, Patent law, Public policy

Has COVID-19 Affected Patent, Trade Mark or Design Filing Activity – an Australian Perspective

This is a guest contribution from Mike Lloyd of Patent-Insights.  Further details about the author can be found at the end of the article.

COVID-19 has had many devastating impacts all around the world, both in terms of fatalities and other health impacts, and also in economic terms.  While the economic impact is yet to be fully understood, it has led to significant drops in GDP activity in many countries. In Australia, the drop in GDP due to COVID-19 has been estimated to be 7%.

But how has this affected IP activity – particularly in relation to intellectual property rights (IPR) filed in Australia, and filed globally by Australian IP owners?

Mark Summerfield has considered this in relation to patents being filed in Australia in recent blogs, and found a 5% decline, which is in line with the drop in GDP, and the largest fall over a comparable time period since the GFC .  This study is intended to consider more international aspects, if from an Australian perspective, and also to consider registered designs and trade marks.

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Tags: COVID-19, Guest article, Patent analytics

COVID Update–Australian Patent Filings Down by Five Per Cent Since March

Most of the developed world has been in the grip of the medical, social, and economic effects of the COVID-19 pandemic since around March this year.  I published my first monthly review of the impact on patent filings in early April, at which time it was really far too soon to discern any trends.  But with data now available for the month of August it is becoming clear that – a surge in innovation patent applications by Chinese applicants aside – 2020 is likely to be a low year for patent filings in Australia.  I reported last month that the number of standard patent applications filed in July had been virtually identical to the same month in 2019, following on from a similar result in June.  However, August has marked a return to the negative trends of April and May. 

Overall, for the six months from the beginning of March to the end of August, the number of standard patent applications filed is down by just over 5% compared to the same period in 2019.  Hardest hit are new ‘original’ filings, i.e. applications filed directly in Australia that are not derived from an existing international application under the Patent Cooperation Treaty (PCT) or divided from an existing Australian standard patent application.  PCT national phase entries are down by around 2%, while divisional applications have declined by just under 3%.  However, new direct national filings between March and August fell by 28% compared with the same period last year, following two years of growth in this category of applications.

The number of provisional applications filed in Australia between March and August is also down, by 1.5% over 2019.  While this may not seem like much, patent attorneys are bearing the brunt of this decline – attorney-assisted filings fell by almost 4%, while the number of applications filed by applicants not represented by an attorney actually increased.

Chinese applicants continued to drive growth in innovation patent applications in August, with filings up by an astonishing 230% compared with 2019.  Over the period from March to August, innovation patent filings increased by nearly 130%.

Meanwhile, New Zealand continues to shrug its shoulders in the face of COVID-19.  Despite an overall decline in filings in August, PCT national phase entries have actually increased compared with 2019 during the six months since the start of March.  And while direct filings were down, this may simply continue a longer-term trend that seems to have been occurring anyway.

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Tags: Australia, COVID-19, New Zealand, Patent analytics, Patent attorney profession

Beware Unregistered Patent Practitioners!

The title of this article is intentionally ambiguous.  Does it mean that prospective clients should beware of unregistered practitioners?  Or does it mean that unregistered practitioners should beware of getting caught out?  Ideally, it would mean both.  In practice, as things currently stand in Australia, it mostly means neither.  Unregistered practitioners are not a problem that most innovators genuinely seeking professional representation are presently at great risk of encountering.  By the same token, the number of people carrying on business, practising, or acting as patent attorneys while unregistered is so small, and the circumstances in which they are doing so are so limited, that the prospects of any enforcement action being taken against them are essentially nil.

But unregistered practise does happen, and the extent of it is worth keeping an eye on, if only to ensure that it does not become a larger problem in the future.

In this article I will discuss the legal framework around the provision if patent attorney services in Australia, including the information that clients are entitled to receive from registered attorneys.  I will provide some numbers demonstrating the relatively small scale of the problem of unregistered practitioners.  And I will explain the enforcement regime, and potential penalties that can be imposed upon people found to be acting as patent attorneys without being appropriately qualified and registered.  Additionally, I will report on some feedback I obtained from IP Australia on their current approach to unregistered practitioners, and the prospects of any change in the foreseeable future.

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Tags: Australia, Patent attorney profession, Professional conduct

A Recurrent Neural Network for Classifying Patent Application Technology based on Titles

In a companion article, I presented the results of using a machine learning model to classify Australian provisional applications into 35 fields of technology based upon nothing but their titles.  In this article, I provide additional technical detail of the model, along with results of its performance in testing and validation.  I also make some observations on the costs of machine learning, in terms of hardware, computation, and energy consumption.  Even for a relatively modest model, these costs may become non-negligible, while recent reports indicate that large-scale state-of-the-art machine learning systems are most likely costing millions of dollars in compute resources and energy to develop.

It is not obvious that a neural network model could be trained to predict the technical field of a patent application given nothing but the title as input.  Human specialists (i.e. patent searchers and examiners) classify applications into very specific technical categories defined by various patent classification systems, such as the International Patent Classification (IPC), or the Cooperative Patent Classification (CPC) which has been jointly developed by the US and European patent offices.  In doing so, the specialists have access to the full patent specification and claims to enable them to determine the subject matter of the invention.

However, while accurate classification at the specificity of systems such as the IPC and CPC based only upon a title would doubtless be impossible – even for a human expert – a less challenging task, such as predicting a field of technology selected from a relatively small number of choices, may be feasible.

Here, I report results of training a neural network model on the task of classifying patent applications according to 35 technical fields grouped into five technology sectors.  The model achieves 67% accuracy, averaged across all technical fields, and nearly 80% accuracy in the best case (‘organic fine chemistry’), if forced to classify each title into a single field of technology.  However, not all misclassifications are necessarily ‘wrong’, given that the subject matter of a single patent application may cross multiple fields of technology.  At the higher level of ‘technology sector’, the model’s accuracy varies between 73% and 91%.  Furthermore, when the model output is used to identify multiple potential fields, the ‘correct’ classification appears in the top four predictions in over 89% of cases.

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Tags: Machine learning, Patent analytics

Australian Provisional Filings Have Declined in 2020 in Almost Every Field of Technology… Except ‘Pharmaceuticals’

In my previous article, I observed that while the numbers of Australian provisional applications filed in 2020 up until May had been down on 2019, filings in June and July were higher than during the same period last year, and that overall numbers have thus far shown greater resilience than in the last major economic downturn, i.e. the global financial crisis (GFC) of 2007-2009.  I also noted back in May that many self-represented applicants, of both provisional and innovation patent applications, appeared to be directing their innovative attentions to problems arising out of the COVID-19 pandemic.  I have been wondering, therefore, whether there may be a similar trend in provisional filing activity more generally that is helping to prop up the numbers, despite economic pressures associated with the pandemic.

I have now conducted some analysis, and it appears that there may be evidence to support this hypothesis.  For the months of January to July, it appears that provisional filings associated with every industrial sector except chemistry are down compared with 2019 numbers, and that most of the growth within the chemistry sector can be attributed to pharmaceuticals.  This is certainly consistent with an enhanced focus on healthcare, quite likely prompted by the global pandemic.

If you are familiar with the Australian patent system, you may already be wondering how I managed to analyse the sectors and fields of technology associated with provisional filings.  Provisional applications are not published in full, and only limited bibliographic information is available, including the identity of the applicant, and the title of the application.  Only a small fraction of these applications are filed by applicants whose industry sector and/or technology interests may be readily identified, most being filed by small private companies and individuals.  That really leaves only the title as a means for ‘guessing’ the technology to which an application relates.  Fortunately, thanks to machine learning technology, and the availability of a large amount of data relating to the classification of prior patent applications, we can do quite a bit better than just guessing!

On the assumption that many readers will not be as interested in the technical details of the machine learning approach, this article includes:

1. a brief introduction to the machine learning model, sufficient to explain the classification system used, and generally how the model ‘learned’ to classify applications by title; and
2. some results of analysing provisional filings over the past few years, which show a general decline in application numbers in most fields of technology, with the exceptions of those relating to ‘instruments’, which have been fairly flat, and ‘chemistry’, which has experienced a boost so far this year.

For those interested, in a separate article I provide additional technical detail of the machine learning model, and how it performed in testing and validation, as well as discussing how accurate we might expect it to be on the provisional application data.

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Tags: Australia, Machine learning, Patent analytics, Provisional applications

COVID Update – July Filings Surprisingly Resilient, but Self-Filers & Chinese Applicants Remain Major Contributors to Small Gains

I live in the Victorian capital city of Melbourne, where we have been in ‘Stage 4’ lockdown since 2 August 2020.  With just a few permitted exceptions, the wearing of masks is mandatory, we must stay home except for essential activities – which must be carried out within a 5km radius, and may include no more than one hour of exercise per day – and we are subject to a curfew between 8pm and 5am each day.  The reason we are allowing ourselves to be subjected to such draconian restrictions is simple.  COVID-19 is a highly contagious disease with (as yet) no known cure or vaccine (unless you believe the Russians, which nobody reputable does).  The virus kills a significant number of people who contract it, particularly those who are older and/or have existing medical conditions, and there is increasing evidence that it may cause a range of long-term health problems even in those who are relatively young and physically fit.  Given this, I have little patience for the opinions of ‘rationalists’ (most of whom, oddly, seem to be privileged middle-aged white men) who argue that the damage caused to the economy by restrictions is too high a price to pay in order to save the lives of a few old folk.  Quite aside from the fact that those ‘old folk’ have a lifetime of contributions to society behind them, and are other people’s beloved parents, grandparents, partners, friends, and carers, without a crystal ball we just don’t know what the counterfactual looks like.  What we do know, for an absolute fact, is that we can save people from COVID-19.  And, while we are making sacrifices to (hopefully) keep deaths in our country down to a few hundred, the world’s (supposedly) most advanced economy is providing us with an object lesson in the consequences of failing to make those sacrifices.  If we had the same per capita mortality rate as the US, there would be over 13,000 Australians dead today who are, instead, still alive.

Of course we are paying, and will continue to pay, a high economic price for those lives.  Within this cost, it is to be expected that an economic downturn, and the uncertainty created by the COVID pandemic, will have an impact on levels of research, development, and commercialisation, which will, in turn, affect the numbers of patent applications filed.  By way of comparison with another recent downturn, the charts below show the numbers of standard and provisional applications filed in Australia over periods encompassing the global financial crisis (GFC), which largely played out between mid 2007 and early 2009.  The data indicates that the effect of the GFC on provisional filings – predominantly made by domestic applicants as a first step into the patenting process – was almost immediate.  A notable decline in standard application filings lagged the GFC by a couple of years, due to the delays built-in to the patent system through international agreements such as the Paris Convention and the Patent Cooperation Treaty (PCT).

One aspect of the above numbers that may be concerning to those patent attorneys reliant on a domestic client base is that the 20% of new provisional filings that ‘disappeared’ in the wake of the GFC have never returned, whereas standard application filings (of which 90% originate with foreign applicants) recovered to pre-GFC levels (though not, it must be said, to pre-GFC growth rates) within about five years.  We would hope not to see a similar permanent reduction in new domestic filings as a result of the COVID-19 pandemic, for the sake of Australian innovation and the economy more generally, if not for the livelihoods of a few patent attorneys.

This is why I have been following patent filing numbers since March (see reports also on filings through April, May and June).  I now have numbers for July, which show filings to have been surprisingly resilient, despite the economic challenges created by restrictions and uncertainty.  Standard patent applications during the month were almost identical to the same period last year, while provisional application filings were significantly up on 2019.  While self-represented applicants once again made a substantial contribution to the strong showing of provisional filings, applications filed with professional advice and assistance were also higher in July.  Meanwhile, innovation patent filings continue to boom, up by an astonishing 189% compared to July 2019, once again almost entirely driven by Chinese applicants.

Over in New Zealand, monthly filings continued to fluctuate around the same levels as in 2019.  The relatively low application numbers, and associated volatility resulting from normal month-to-month variations, makes it difficult to discern whether there is, at this stage, any underlying trend in filing activity.

Read on for this month’s updated charts.

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Tags: Australia, COVID-19, New Zealand, Patent analytics

Commissioner of Patents Applies to Appeal Aristocrat Ruling

In a development that should surprise nobody – least of all readers of this blog, where I have foreshadowed it twice – on 20 July 2020 the Commissioner of Patents filed an application for leave to appeal the decision in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 to a Full Bench of the Federal Court of Australia.  I wrote about the original decision back in June, and a further decision relating to costs earlier in July.  While the Commissioner does require the Full Court to agree to hear the appeal, I anticipate that the Court will adopt the same practice as in earlier similar cases, and hear the application for leave, and the substantive appeal, concurrently.

This should be an important appeal. The Aristocrat case presents the Full Court with an opportunity to draw a clear distinction between patent-eligible and ineligible computer-implemented inventions.  The case concerns electronic gaming machines (EGMs).  On the one hand – as the primary judge found – an EGM is very much a material product, and not an ephemeral scheme or abstract idea.  It is thus arguably just as eligible for patent protection as a traditional mechanical gaming machine.  On the other hand, in a number of recent cases the Full Court has found that taking an unpatentable method, scheme or idea, and ‘merely’ implementing it through generic programming of conventional hardware does not transform it into a patentable invention.

An argument may be made that the claims in Aristocrat differ from those in other cases, where computer-implemented processes were found to be patent-ineligible, only inasmuch as a number of the recited hardware elements are specific to EGMs.  These elements were not, however, novel or inventive, either individually or in combination, at the priority date.  They were, in fact, well-known and conventional within the specific context of the regulated gaming industry in Australia.  It was this context, as much as anything else, that led the primary judge to conclude that…

…to the person skilled in the art, the invention may be characterised as a machine of a particular construction which implements a gaming function. It yields a practical and useful result. Simply put, the machine that is the subject of the claims is built to allow people to play games on it. That is its only purpose. In this regard, the physical and virtual features of the display, reels, credit input mechanism, gameplay mechanism and game controller combine to produce the invention. It is a device of a specific character.

I would note also that, in contrast to something of an abstract nature, an EGM is ‘a device of a specific character’ upon which one could painfully stub one’s toe, if one were not careful!  The question is whether the primary judge was therefore correct to conclude, as he did, that such a device is inherently patent-eligible, without proceeding to consider – as the Full Court has done in previous cases relating to computer-implemented methods – whether there is any invention in the computerisation of the method itself.

The case number for the appeal in the NSW Division of the Federal Court of Australia is NSD787/2020.

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Tags: Appeal, Australia, Computer programs, Games, Patentable subject matter

COVID Update – Apparent June ‘Surge’ in Provisional & Innovation Patent Filings Driven by Self-Filers and Chinese Applicants

At first glance, Australian patent filing numbers for June look surprisingly like good news for the pandemic-ravaged economy.  Australian provisional filings were up 4.5% on the same period in 2019, while innovation patent filings were up by an astonishing 141%.  Overall ‘original’ filing work (i.e. new applications not claiming priority from any earlier filing) by patent attorneys was up by just over 15%.  On closer inspection, however, these headline figures present an overly rosy view of the underlying reality.  The boost in provisional filings was driven entirely by self-represented applicants, while the surge in innovation patent filings – which was also responsible for the gains in original filings – was the result of another month of heavy use of the Australian innovation patent system by Chinese applicants.  As a result, the only real beneficiary of the stronger filing numbers in June is IP Australia, which saw patent application fees increase by nearly A$37,000 when compared against the same month in 2019.

One small sliver of more positive news is that Australian standard patent applications were very slightly (0.3%) higher in June 2020 than in June 2019.  This is the first month since March to show any year-on-year gain, following very significant declines in April and May.  It was assisted, however, by the fact that the month of June began on a Monday this year, giving it the maximum possible number of business days – two more than in 2019.  Without this, we may just as easily have seen a further decline in filings in June.

Over in New Zealand – where the total application numbers are significantly smaller than in Australia, and thus subject to larger relative fluctuations – filings have continued to hold surprisingly steady, with complete (standard) applications up by 1.7% and provisional filings up by 8.5% year-on-year for June.

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Tags: Australia, COVID-19, New Zealand, Patent analytics

Actions Trump Intentions in Determining Infringement of ‘Swiss’ Claims in Australia

In what might well be the final word on the scope and effect of so-called ‘Swiss type’ claims in Australia – at least for the foreseeable future – an enlarged panel of five judges of the Federal Court has clarified what is required for infringement of this form of claim: Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116.  A Swiss type claim (the terminology used by the Court in this case, although they are also known as ‘Swiss-style’ or simply ‘Swiss’ claims) is generally of the form: ‘Use of [compound X] for the manufacture of a medicament for treatment of [condition Y].’  Such claims invoke a kind of legal fiction, in that according to the normal rules of interpretation the scope of the claim encompasses any and every method of making a medicament of any kind that includes the compound X as an active ingredient, subject only to this being suitable for treating the new condition.  Interpreted in this way, a Swiss type claim would never be valid in the usual case that medicines containing compound X already exist for the purpose of treating one or more different conditions.  We have collectively agreed, however, that as a matter of law a Swiss type claim is to be construed as if reciting the new therapeutic purpose (i.e. ‘treatment of condition Y’) imposes a distinct limitation on the scope of the claim sufficient to impart novelty to the invention.

In the Mylan case, a representative Swiss type claim – namely claim 1 of Australian patent no. 2006313711 – was:

Use of fenofibrate or a derivative thereof for the manufacture of a medicament for the prevention and/or treatment of retinopathy, in particular diabetic retinopathy.

A corresponding claim for a method of treatment is claim 7 of the same patent:

A method for the prevention and/or treatment of retinopathy, the method comprising administration of fenofibrate or a derivative thereof to a patient in need thereof.

While both types of claims are allowable in Australia (as discussed further below), a key distinction between them is the identity of a direct infringer.  A Swiss type claim is directed to the manufacture of a product, and thus may be directly infringed by the manufacturer – normally the party that a patentee would want to restrain.  Method of treatment claims, on the other hand, are directly infringed in the course of treatment, i.e. by a physician and/or patient, who are typically not the desired targets of infringement action.  A patentee must therefore generally rely on indirect or contributory infringement provisions in order to pursue a manufacturer or supplier on the basis of a method of treatment claim.

In this case, the Court found that both the Swiss type claims and the method of treatment claims were invalid for lack of novelty and/or inventive step in view of various prior art disclosures.  Thus there could be no infringement in any event.  However, the Court nonetheless considered important questions of the interpretation and requirements for infringement of Swiss type claims.  In particular, the Court determined that ‘infringement of a Swiss type claim is concerned with what the allegedly infringing manufacturer has done, not what it intended to do.’

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Tags: Claim construction, Infringement, Patent law, Pharmaceuticals

Costs Award Discounted for ‘Over-Egged’ Evidence in Aristocrat Case

In a postscript to last month’s decision in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 (see Federal Court Finds Computer-Implemented Gaming Machine Patent-Eligible in Australia), the court has now ruled that the Commissioner of Patents should pay only 50% of Aristocrat’s costs associated with its expert evidence: Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 2) [2020] FCA 974.  Under the usual practice in Australia (i.e. the so-called English Rule) a losing party can expect to be ordered to pay the reasonable costs (including attorney’s fees) of the successful party.  In this instance, however, Justice Burley was partially persuaded by the Commissioner’s argument that much of Aristocrat’s evidence ‘was irrelevant or of very limited utility’, and consequently applied a discount in respect of the costs associate with expert evidence (but not the lay evidence that was also adduced by Aristocrat).

As I reported last month, the expert witnesses in the case fell into two categories: four (two on each side) were gaming experts, and two (one on each side) were Human Computer Interaction (HCI) experts.  The six expert witnesses were cross-examined, and also combined to prepare two joint expert reports.  However, in light of the decision of the Full Court in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 – which was decided after the hearing in Aristocrat, but prior to the judgment being handed down – it is now clear that the role of expert evidence in determining whether or not a claimed invention is for a patent-eligible ‘manner of manufacture’ is limited (see Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal).  Aristocrat’s position was, essentially, that its approach to the expert evidence had been reasonable, in view of the way in which the approach to patent-eligibility seemed to have been developing in Australia prior to Rokt – particularly within the Patent Office, including the decision appealed in this case by Aristocrat.

Perhaps influenced by the Judgment of Solomon, Justice Burley determined that the costs (though fortunately not – unlike the biblical baby – the experts themselves) should be split in two, finding (at [12]):

There is merit in the Commissioner’s submissions, in the sense that the expert evidence adduced by Aristocrat somewhat over-egged the pudding. Even making allowances for the uncertainties arising from the development of the law in relation to the patentability of inventions involving computerisation, there was really no justification for calling three experts in separate fields to attempt to establish that there was a “technical effect” in Aristocrat’s secondary argument. Aristocrat was perhaps entitled to be creative in attempting to justify the patentability of its invention, but that should not be funded by the Commissioner, even on an ordinary basis. I agree that the Commissioner should bear 50% of the costs of Aristocrat’s experts.

Additionally, the judge rejected Aristocrat’s contention that it should also receive its costs associated with the original Patent Office decision made by a delegate of the Commissioner, finding (at [8]) that ‘[t]he delegate acted as a neutral arbiter performing a statutory function’ and that the Commissioner had not ‘engaged in any conduct that would remotely warrant an order of costs against her in relation to the decision from which the appeal was brought.’

The court’s orders also grant the Commissioner a stay of the orders requiring Aristocrat's innovation patents to be certified (but not the costs orders) for a period of 14 days (until 24 July 2020), within which she may apply for leave to appeal to a Full Bench of the Federal Court of Australia.  I anticipate that an application for leave will be filed.

[Correction: An earlier version of this article incorrectly stated that the costs orders had been stayed pending any appeal by the Commissioner.]

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Tags: Australia, Computer programs, Costs, Games, Patentable subject matter

How Many Patents Are There?

A question that I see asked from time-to-time is: ‘how many granted, enforceable patents actually exist?’  The answer obviously changes almost every day, as old patents cease or expire, and new patents are granted.  That being said, as of 6 July 2020 there were, according to IP Australia’s records, 160,822 standard patents in force in Australia, along with 1,254 certified innovation patents.  Of these, the enforceable standard patents were most likely to be around seven years old (in the sense that the mode of the distribution of patents by effective filing year was 2013), while certified innovation patents were most likely to be around five years old.

There were, additionally, 76,634 pending standard patent applications, of which 6,260 were already accepted, i.e. almost certain to become granted patents within the next few months.  There were also 6,974 innovation patents registered, but not certified.  However, based on past performance it is likely that somewhat less than 10% of all of innovation patents that are not yet certified will ever be certified.

In this article I present annualised charts of all the Australian patents and applications that had a ‘live’ status on 6 July 2020.

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Tags: Australia, Patent analytics

COVID Update – Likely Hit to Australian and NZ Patent Filings Now Evident

For the past two months I have been tracking Australian and New Zealand patent filings to see whether there is evidence of any impact of the COVID-19 pandemic on new applications in either country (see here for my April report, and here for my May report).  Given the relatively short period between lockdown and the end of April, I had been looking at weekly variations, which might give an early indication of any downturn, but at the same time are more susceptible to short-term fluctuations that may obscure an underlying trend.  Now that the economic impact of the pandemic has spanned more than three months, I have switched to looking at monthly filing numbers.  On this time scale, figures for May show clear signs of a decline in patent filings in both Australia and New Zealand, compared to 2019, and it seems possible that there was a COVID-related drop in filings in Australia in April also.

The recent falls in Australian standard patent applications, and New Zealand complete applications – which make up the majority of filings in each country – are substantial.  In Australia, standard patents filings in May were down by over 14%, year on year, while the corresponding drop in New Zealand filings was over 20%.  There was an even larger decline in provisional application filings in New Zealand, at around 43% year on year for May, although the number of provisional filings is so low that this figure is subject to large fluctuations even at the best of times.  (Fun facts: the greatest number of provisional applications filed in New Zealand in a single month over the past 20 years was 141, which occurred in August of 2006; and the last time the number exceeded 100 was in July of 2013.)

Interestingly, filings in Australia of provisional and innovation patent applications show somewhat different behaviour.  As it happens, Australian provisional filings have been below 2019 levels every month, but they have been less below in more recent months than back towards the start of the year.  However, improvements up until April appear to have stalled, and possibly reversed, particularly for new applications filed during May using the services of patent attorneys.

Innovation patent filings have completely bucked the trend.  Every month, the number of innovation patents filed this year has been significantly higher than for the same time in 2019, with total filings year-to-date up by about 50%.  Last month (i.e. May 2020) there were 221 new innovation patent applications filed, which is the tenth highest monthly total since the system commenced in 2001!  (Fun fact: the greatest number of innovation patent applications filed in a single month was 369, in July of 2016.)  However, this innovation patent boom has been driven primarily by Chinese applicants, which may serve to mask any decline in filings by applicants from Australia and other countries.

A decline in filings is obviously not good for patent attorneys, but we should not forget that it is not great for IP Australia, either, which operates on a cost recovery basis such that the overwhelming majority of its operating expenses are covered by the fees paid by users of the patents, trade marks, registered designs, and plant breeder’s rights systems.  Over April and May, I calculate that patent filing fees received by IP Australia were down by nearly A$200,000 on the same period in 2019.  While this is not particularly significant in comparison to its annual budget of just over A$210 million, my guess is that the drop in patent filings is only the tip of the iceberg as IP rights owners make tough cost-cutting decisions.  Furthermore, reduced filings today will have follow-on effects in reduced future revenue from examination, acceptance, and maintenance fees.

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Tags: Australia, COVID-19, New Zealand, Patent analytics

IPH Juggernaut Rolls On in NZ – AJ Park to Acquire Baldwins in NZ$7.9m Deal

Australian Securities Exchange (ASX) listed company IPH Limited (ASX:IPH) has announced that its New Zealand based subsidiary AJ Park has reached an agreement to acquire fellow NZ IP firm Baldwins.  The NZ$7.9 million (A$7.4 million) purchase price includes a deferred consideration of NZ$400,000, with the initial amount paid 65% in cash and 35% in new IPH shares.  The deferred part of the settlement will be paid in cash.  (Read the full ASX announcement here [PDF 247kB].)

The acquisition of Baldwins by AJ Park will see the Baldwins patent attorney practice merged into AJ Park IP, and Baldwins’ legal business into AJ Park’s allied law firm, AJ Park Law.  As a result, the Baldwins brand will become the latest casualty of the transformation that has been ongoing in the Australian and NZ IP profession in recent years.

The official line, as provided in the IPH announcement by AJ Park’s Managing Director, Dr Andrea Dickens, is that:

Baldwins is a highly regarded firm in the New Zealand market and we believe this acquisition will give our merged businesses greater depth and provide our clients with access to a complementary team of experienced IP professionals. We look forward to welcoming the Baldwins partners and staff to AJ Park.

The reality, based on my analysis, appears to be somewhat less rosy.  Both AJ Park and Baldwins have experienced reductions in professional staff numbers and patent filings in recent years, and in these respects the acquisition of Baldwins will do little more than put AJ Park back in substantially the position it was in about a decade ago.  Baldwins, for its part, appears to have been sold to AJ Park on a valuation that looks relatively low compared to past acquisitions in the profession – and particularly so alongside the recent acquisition of Sydney firm Cotters by QANTM IP Limited – suggesting that the firm may not hold a particularly optimistic view of its own future as an independent entity.

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Tags: New Zealand, Patent attorney profession

Federal Court Finds Computer-Implemented Gaming Machine Patent-Eligible in Australia

On appeal from a decision of a delegate of the Commissioner of Patents, a single judge (Justice Burley) of the Federal Court of Australia has found that the claims of a number of innovation patents owned by Aristocrat Technologies Australia Pty Ltd, directed to electronic gaming machines (EGMs), are directed to patent-eligible subject matter: Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778.  As the judge put it in the first paragraph of the judgment, the central question in the case was ‘whether a claim to an [EGM], which includes a combination of physical parts and computer software to produce a particular outcome in the form of gameplay, is a manner of manufacture’ (referring to the test for patentable subject matter under the Australian Patents Act 1990).

In a series of five decisions relating to computer-implemented inventions issued by Full Benches of the court since 2014 – including one from an expanded bench of five judges – a ‘two step’ approach to assessing patent-eligibility of such inventions has emerged.  The first step is to construe the patent specification, from the perspective of the person skilled in the relevant art, to identify the claimed invention.  This is to be determined as a matter of substance, and not merely based on the particular form of the claims.  If the invention, in substance, comprises patent-ineligible subject matter, such as a mere scheme, idea, or business method, then the second step involves an enquiry into whether the claimed computerisation involves some further contribution sufficient to render the invention patent-eligible.  It is not enough, as the Full Court has made clear, simply to ‘put’ an otherwise unpatentable scheme, idea, or business method ‘into’ a computer.

In the present case, however, the judge effectively short-circuited this enquiry, finding at the first step that Aristocrat’s claims were, in substance, for ‘a machine of a particular construction which implements a gaming function’.  As a result, the question of patent-eligibility was resolved immediately – an EGM is not a mere scheme or a business method, and is thus a ‘manner of manufacture’.  There was, the judge concluded, no need to proceed with step two.

This finding seems straightforward enough, and accords with common sense.  As the judge also observed, there is no dispute that an old-style mechanical gaming machine would be patent-eligible, so why should the outcome be any different if the same functionality is implemented using modern technology?  On the other hand, however, the form of the claims in the present case is not necessarily so different from those in a number of the earlier decisions where the inventions were found not to be patent-eligible.  I therefore suspect that this decision may not yet be the last word on the patentability of EGMs under the ‘manner of manufacture’ test.

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Tags: Australia, Computer programs, Games, Patentable subject matter

Ten Years of Patentology

On 6 June 2010, I clicked ‘publish’ on the very first article here at the Patentology blog.  Back then I did not even have my own domain name.  The URL was patentology.blogspot.com (which still works, incidentally).  As with any new web site, and particularly a new blog in a world with millions of blogs competing for attention, I do not imagine anyone much noticed the new kid on the block.  And, frankly, that is probably just as well.  That first post was a fairly esoteric piece about how the Venetians in 1474 managed to pack all of the core features of modern patent law into a single paragraph, whereas the Australian Patents Act and Regulations (in 2010) occupied a total of 376 pages (not including the nearly 300 pages of Schedules to the Regulations).

While I do not know how many times that first article was viewed (I did not get started with website analytics until a few months later), I do know that the most popular post I ever wrote is Can I – and Should I – Patent My Smartphone App?  This article was published on 4 October 2012, and has since received nearly 65,000 unique pageviews.  It still features regularly in search performance reports from Google, and typically sees a few tens of visits each month.  It was most popular in 2014-2015, when it was viewed over 1,000 times every month.

The second most viewed article is The Story Behind CSIRO’s Wi-Fi Patent ‘Windfall’, published on 5 April 2012, with just over 13,000 unique pageviews.  This article gained popularity as a result of contentious claims that CSIRO was a ‘patent troll’, principally as a result of a hatchet-job published by technology news site Ars Technica (How the Aussie government “invented WiFi” and sued its way to $430 million).  I debunked the Ars Technica piece in a post entitled Five Reasons Why Ars Technica’s Savaging of CSIRO is Appalling, which itself received over 2,000 unique pageviews in under 48 hours after a link was tweeted by celebrity science presenter Dr Karl Kruszelnicki, and gave a boost to views of the ‘windfall’ article itself.  (I recently updated the ‘windfall’ article – which I consider a valuable summary of the history of CSIRO’s Wi-Fi commercialisation efforts, and which still receives a few visitors each month – to repair all of the broken links with references to archived copies of all the now-defunct pages and documents.)

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Tags: Patentology admin

Case Transfers Show No Preference for Privately Held vs Publicly Listed Firms

Patent attorney clients are notoriously ‘sticky’ – it is well-known that they rarely change service providers.  Indeed, out of a sample of 279,035 live applications and patents managed by Australian and New Zealand patent attorneys as of early 2019, only 3,854 (1.4%) were transferred away from those attorneys over the past 16 months or so.  Of these. the overwhelming majority (3,813) were transferred to a different attorney/firm, with responsibility for the remainder (230) being taken over by non-attorneys – mostly the owners of the patents/applications.  (In the remainder of this article I am going to use the term ‘cases’ to refer collectively to both pending applications and granted patents.)

Within my sample of active cases, 62% are handled by firms in listed groups, 34% by privately-held practices, and 4% by non-attorneys.  Taking into account the fact that listed group firms have nearly twice as many cases to ‘lose’, I found no evidence that clients are any more likely to transfer work from firms in listed groups to privately-held firms than they are to transfer in the other direction.  The flow in both directions was approximately 0.6% of the size of the respective available pools of cases.  Looking at domestic (i.e. Australian and New Zealand owned) cases in isolation, there was a net flow from listed group firms to privately held firms.  At the same time, however, clients of listed group firms were less likely to transfer their cases away than clients of privately held firms.

Overall, privately-held firms appear to be the most likely to lose clients, collectively seeing around one in 50 cases transferred away during the period that I have analysed.  In comparison, publicly-listed firms saw just under one in 100 cases transferred away over the same time.  However, the largest source of ‘churn’ was transfers between firms within the privately-held sector, with 1,344 cases in this category.  This resulted in privately-held firms also being the most likely to win clients away from their competitors, collectively acquiring nearly one in 40 active cases from other firms.  Publicly-listed firms acquired just one in every 140 of the active cases in their care from competitors over the period analysed.

Patent attorneys generally seem to have a fractious relationship with the kinds of applicants that are inclined to ‘go it alone’.  This is perhaps not surprising, given that a major reason for applicants to choose self-representation is to save on costs, and that fees are a leading cause of disputes between patent attorneys and clients.  Frankly, most of these clients are best avoided, since they are often more trouble than they are worth (the clients might well say the same of the patent attorneys to whose fees they object).  Privately-held firms (which include all the smaller practices) are the most likely to acquire cases from self-represented applicants (220 over the period analysed), and they are also the most likely to part ways with clients in favour of self-representation (185 cases).  Listed-group firms (which include many of the largest practices) appear to have far less contact with these types of clients, collectively gaining and losing just 67 and 45 cases, respectively, over the same period.

Looking at individual firms, big ‘winners’ from transfers of cases include RnB IP, Wrays, and FPA Patent Attorneys, while the greatest net losses were experienced by firms including Cotters Patent & Trade Mark Attorneys, Pizzeys, FB Rice, Griffith Hack.  For the major firms, however, gains and losses due to transfers of existing cases represent a very small proportion of overall business.

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Tags: Australia, New Zealand, Patent attorney profession

Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal

Following an appeal by the Commissioner of Patents, a Full Bench of the Federal Court of Australia has overturned a decision of a single judge of the Court relating to the patent-eligibility of a computer-implemented invention.  The Full Court has ruled that a claimed method and system, developed by Singapore-based Rokt Pte Ltd, for providing ‘a dynamic, context-based advertising system, introducing a distinction between an engagement offer, without a direct advertising benefit, and an advertisement designed to lead directly to the sale of the product’ is not patent-eligible subject matter under the Australian ‘manner of manufacture’ test: Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86.

Broadly speaking, the claimed invention provides a mechanism whereby a user has an opportunity to engage with an offer (characterised by the Full Court as ‘click bait’) while accessing a web site before being presented with targeted advertising.  In this way, advertisements are presented only to those users that are most likely to interact with them, and make a purchase.  Since advertisers must often pay for placement of their advertisements within web pages, the invention provides an improvement in that the costs associated with placing advertisements in front of consumers who do not interact with them may be reduced.

In an earlier Patent Office decision, a Hearing Officer had found that ‘the substance of the invention in this case amounts to business innovation’, which was not patentable, and therefore refused Rokt’s patent application: Rokt Pte Ltd [2017] APO 34.  (A previous decision, relating to an alternative set of claims proposed by Rokt, had reached a similar conclusion: Rokt Pte Ltd [2016] APO 66.)

Rokt appealed to the Federal Court, where the primary judge (Justice Alan Robertson) reversed the Patent Office decision, finding that ‘[t]he invention solved not only a business problem but also a technical problem’, ‘… there was a business problem of attracting the attention of the user and having the user choose to interact with the advertiser, but this problem was translated into the technical problem of how to utilise computer technology to address the business problem’, such that ‘use of computers was integral, rather than incidental, to the invention in the sense that there is an invention in the way in which the computer carries out the business scheme’: Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988 at [205]-[208].

The Commissioner, in turn, appealed to a Full Bench of the Federal Court (composed of Justices Rares, Nicholas and Burley), which has now allowed the appeal, finding that ‘the invention is a scheme or, more accurately, a marketing scheme’, that ‘nothing about the way that the specification describes the computer hardware or software indicates that either is any more than a vehicle for implementing the scheme, using computers for their ordinary purposes’, and that ‘the claim amounts to an instruction to carry out the marketing scheme’ expressed at a ‘level of abstraction [which] demonstrates that it does no more than provide a list of steps to be implemented using computer technology for its well-known and understood functions’: Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 at [108], [109], [115].  As such, the Full Court concluded that Rokt’s claimed invention is not a patent-eligible manner of manufacture, and that ‘the learned primary judge erred in finding otherwise.’

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

IPH Shutters ‘Intellectual Asset Advisory’ Business Glasshouse, with R&D Tax Specialists Picked Up by Grant Thornton

As reported on 20 May 2020 by the Australian Financial Review, and announced via a media release from business advisory firm Grant Thornton, around 10 staff specialising in R&D tax advice from IPH Limited (ASX:IPH) business Glasshouse Advisory are to transition to Grant Thornton by Monday, 25 May 2020.  I understand that the Glasshouse business itself is to close, with other staff made redundant.  Glasshouse is one of the businesses that IPH acquired – along with IP firms Shelston IP, Griffith Hack, and Watermark – in its takeover of Xenith IP Group Limited (formerly ASX:XIP) back in August 2019.  This is the second significant restructuring of the former Xenith businesses carried out by IPH, following the integration of Watermark into Griffith Hack.

While the AFR headline indicates that Grant Thornton bought the R&D tax division of Glasshouse, my interpretation is that no money has changed hands.  IPH has not issued any announcement to the Australian Securities Exchange (ASX), as would be required if the event were relevantly ‘material’ to the business.  And the Grant Thornton media release appears to be quite carefully worded, referring to the arrangement as a ‘transition’, and quoting IPH COO and acting Glasshouse Advisory EGM, John O’Shea, as saying:

We are delighted to have reached agreement for transfer of the Glasshouse Advisory R&D tax incentive practices to Grant Thornton and we see this as a positive next stage for Glasshouse’s R&D tax incentive business. Since our acquisition of Glasshouse Advisory as part of the Xenith Group in August 2019 we have undertaken a detailed review of the Glasshouse Advisory business and concluded that these aspects of the business would be better placed within a specialist business, more closely aligned to their service offering.

Nowhere is there any mention of a ‘purchase’, or any suggestion of a price paid by Grant Thornton to acquire the Glasshouse R&D tax practice.  Indeed, it is unclear what Grant Thornton would be getting for any money they might pay out – certainly not the Glasshouse brand (which would be of no interest to them), nor any ‘rights’ in relation to the ‘transitioned’ staff (who are not indentured servants, and are of course free to vote with their feet if they are not in favour of the change in employer).  The Glasshouse client list might be worth something (the R&D tax advisory business is reported by the AFR as being worth around A$2.5 million annually), but I suspect that repeat business in this area is patchy, and that only a relatively small proportion of clients might be regarded as a reliable source of future income beyond the short term.

I understand that new roles have not been found for staff in other Glasshouse divisions, and that the business effectively ceases operation after 22 May 2020.

My take on this is that IPH most likely determined that Glasshouse was neither a sufficiently good fit with the other entities in the group, nor a large enough source of revenue, to justify its retention.  No doubt some efforts were made to find a buyer for the business, but in the end the best that could be done was to provide a new home for some of the staff, at Grant Thornton.

It is a dog-eat-dog world out there, especially in the publicly-listed segment of the IP profession.  Another significant stream of the Glasshouse business was patent research, including novelty and freedom-to-operate (FTO) searching.  Commonly an in-house function at many medium-to-large IP services firms, under Xenith’s ownership the patent searching capability was moved out of Griffith Hack into Glasshouse to form part of a broader IP strategy, valuation, and monetisation service offering.  While I feel for all of the people whose roles have been made redundant by the closure of Glasshouse – particularly in these challenging times – my sympathies are especially with the search and analytics specialists who might now be feeling – with some justification – that they would have been more secure had they remained within the traditional patent attorney firm environment.

From the outset, I have argued that the ‘bold experiment’ of public listings and formation of ‘ownership groups’ of firms is, as much as anything else, a response to the demands of achieving growth and improving efficiency and profitability in a challenging, low-growth, market.  In this sense, restructuring and associated redundancies are perhaps inevitable within the IP professions, regardless of ownership arrangements.  Even so, I cannot help feeling that Glasshouse Advisory, and a number of its people, have ended up as casualties of a failed experiment.

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Tags: Australia, Patent attorney profession

Free Online Seminar – Machine Inventors, Fact or Science Fiction?

In August 2019 the ‘Artificial Inventor Project’ team led by Ryan Abbott, Professor of Law and Health Sciences at University of Surrey UK, announced that it had filed a number of patent applications naming an artificial intelligence (AI) as inventor.  The AI, called ‘DABUS’, was developed by Missouri-based physicist Dr Stephen Thaler.  The filings – which garnered significant publicity – were a deliberate provocation, calculated to test patent laws and challenge the conventional notion that only a natural person can be an inventor.  The EPO, the UKIPO, and the USPTO have since rejected the applications for failing to meet requirements that an inventor designated in a patent application be a human being.  Even so, various IP organisations, including WIPO, the USPTO, and the EPO, have been actively exploring the implications of machine learning (ML) and AI for patent law and practice, including the question of whether a machine can invent.

So, have we really reached the point at which machines can challenge humans in the realm of creativity and ingenuity?  And, if so, why are we hearing about it from a law professor and a lone developer, rather than in peer-reviewed publications by leading AI research teams, or in media releases from well-known mega-corporations that have invested billions in this technology?  Furthermore, are we really expected to take seriously claims made by Dr Thaler that his AIs exhibit enhanced creativity as a result of infusing symptoms of ‘mental illness’ into their neural networks? 

Personally, I have been astonished at the lack of scepticism towards claims of machine inventorship, not only in the media, but also among many patent professionals, and within reputable IP offices.  Even the World Intellectual Property Organization (WIPO), in a recent draft issues paper on ‘Artificial Intelligence and Intellectual Property Policy’, went so far as to accept that ‘it would now seem clear that inventions can be autonomously generated by AI’, noting that ‘there are several reported cases of applications for patent protection in which the applicant has named an AI application as the inventor.’

Nonetheless, whatever I might think of DABUS as a specific example, major national and international IP organisations are responding to broader challenges presented by emerging ML technologies that, inventorship aside, raise genuine questions in relation to subject matter eligibility, obviousness, and sufficiency of disclosure. And since ML technologies can be applied in almost any field of endeavour, from engineering design through to drug discovery, these issues are not confined to inventions in the IT space.

Last month, I presented a webinar on this topic to members of the Institute of Patent and Trade Mark Attorneys of Australia (IPTA).  I have now recorded a version of that presentation, and am making it available as a free online seminar.  It can be viewed on YouTube, or via the embedded player below.  A PDF copy of the presentation slides [1.12MB] is also available for download.

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

The 2020 Australian IP Report: Revisited

Last month, I wrote about IP Australia’s release of the Australian Intellectual Property Report 2020 (‘IP Report’).  I focused in particular on data included in the ‘Patents’ section of the report, and raised some questions about the methodology and the accuracy of some of the results presented.  I am pleased to say that IP Australia (more specifically, Benjamin Mitra-Kahn, who is the General Manager & Chief Economist in the Policy & Governance Group) reached out to me regarding the issues raised in my article, and we have spent the past couple of weeks working through our respective data sets to identify the origins of the discrepancies between our numbers.  IP Australia will be updating the online version of the IP Report to incorporate a number of corrections.  In this article, I will run briefly through the issues that we identified, and present some updated numbers of my own.

Users of the 2019 release of the IP Government Open Data (IPGOD) will want to take note of a problem with the ‘related patent information’ table (a.k.a. ‘ipgod128’), which records data relating to divisional and additional applications, whereby a number of entries are missing corresponding with applications filed during the final weeks of 2018.  This error resulted in my undercounting of divisional applications in 2018, such that I found an increase in 2019 where the IP Report identified a decline. 

Australian organisations, including a number of universities, that might have felt short-changed by the ‘top-five’ list of applicants presented in the IP Report, should be pleased by corrections that will reflect the true numbers of filings they made during 2019.

To some extent, IP Australia and I have agreed to disagree regarding the merits of distinguishing between ‘original’ and divisional applications, and of ranking applicants on the basis of ‘original’ filings rather than total filings (i.e. including divisional applications).  We do agree, however, that not all divisional applications are created equal, and that a more nuanced approach is necessary to develop a better understanding of how applicants use divisional applications, and what implications this may have for the operation of the patent system, as reflected in this tweet from IP Australia’s Office of the Chief Economist:

Hi Mark, thanks for the collaboration offline, and the ongoing conversation. As discussed, divs aren’t 2nd class filings, or perceived as such, but an important part of the current patent application story. Keen to explore how to better categorise them.

— IPAustraliaEconomist (@IPAustralia_OCE) May 8, 2020

While there may still be some minor differences between my numbers and those of IP Australia, due to changes in the live data between the times that we respectively extracted our information, the numbers in this article should be in substantial agreement with those in the revised version of the 2020 IP Report.

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Tags: Australia, IPGOD, Patent analytics, Patent Office