21 December 2022

Will AI Chatbots Make Patent Attorneys Obsolete? (No, They Won’t)

AI guy If you have any interest at all in technology, and possibly even if you do not, it is very likely that over the past few weeks you have read or heard something about OpenAI’s ChatGPT chatbot, which was released for public testing on 30 November 2022.  OpenAI describes itself as ‘an AI research and deployment company’ with a mission ‘to ensure that artificial general intelligence benefits all of humanity.’  It counts Microsoft as a major sponsor, to the tune of a US$1 billion investment that gives OpenAI access to enormous computing resources, in exchange for which Microsoft gains privileged access to OpenAI’s breakthroughs.  ChatGPT’s conversational and question-answering skills are – superficially, at least – impressive.  Naturally, this has led some breathless commentators to suggest that we are on the verge of seeing various professional jobs, including those of lawyers, being replaced by AI machines.  But is ChatGPT really that good, or are people merely being blinded to its limitations by the fact that it is undeniably much better than anything they have seen before?

If language models like ChatGPT are going to replace professional advisors, such as lawyers and patent attorneys, then they will need to demonstrate the standards of competence and reliability (not to mention ethical conduct and responsibility) that the public expects from such advisors.  As we shall see, my experiments with ChatGPT demonstrate that it is nowhere near achieving these standards.  Indeed, there is a serious question as to whether it even represents a viable approach to developing AI with such capabilities.  In any event, there are no signs that machines will be replacing professional advisors in the foreseeable future.

05 December 2022

Why Would IP Australia Encourage Software Innovators to File for Patents?

Bemused IP Australia – the government agency responsible for administration of Australia’s patent, trade mark and design registration systems – has an important role to play in educating the public about the value of intellectual property and the requirements and processes for securing IP rights.  Generally speaking, I think it does a good job of this.  In particular, the News and Community section of IP Australia’s website includes links to many useful webinars and case studies that explain how the various types of IP rights work, and how they may be used to add resilience and value to a business.  This is (presumably) the work of the Communications, Public Awareness & Education team within the Customer Experience Group at IP Australia (see here for information on the organisational structure).  However, a recently-added case study suggests that this team may not be as familiar as it could be with the work of the Policy & Stakeholders Group or the Patents Examination Group.

I am referring to the case study Longtail UX: Patented Digital Products, which was published on 29 September 2022.  The case study discusses the experience of the Australian company Longtail UX (LUX), which describes itself as ‘the world’s first Customer Acquisition Platform’, in deciding to pursue patent protection for its technology.  Put very simply, LUX has developed a software platform that automatically generates additional pages – particularly for e-commerce sites – that are highly relevant to specific search terms by aggregating information (e.g. product descriptions) extracted from existing pages.  The advantage of this is that when someone searches for the specific term, e.g. using Google, the corresponding automatically-generated page will appear far higher in the search results than any of the original pages which were only partly relevant to the search.  Personally, I think that is a pretty clever idea.  And it must work fairly well, because LUX has been around since 2013 and counts many well-known online businesses (both in Australia and overseas) among its clients.

The case study tells the story of a business that started out with no IP protection strategy, and which first considered patents primarily as a marketing tool.  Later on, however, LUX came to realise that patents could add real value that could be important when raising capital or looking at a potential sale of the business.  Now – a number of years and two families of patent applications further down the road – LUX is on the verge of expanding into Europe, and extolling the virtues of engaging patent professionals to guide the company through the complicated process of obtaining patents in Australia and overseas.

Regular readers of this blog will already know what is missing from this encouraging story about patents adding value to an innovative business.  LUX’s inventions are computer-implemented.  And they are applied to the field of search engine marketing.  This does not necessarily mean that they cannot be patented, in Australia or elsewhere.  But it does mean that even if they can be patented, the process these days is very likely to be more complex, drawn out and expensive than would be expected in less contentious fields of technology.  Yet there is no mention of this in the case study, despite the fact that IP Australia has become a world-leader in pushing the limits of patent-(in)eligibility of computer implemented inventions through the courts, and is now one of the more challenging IP offices around the world for obtaining patents on such inventions.

So how is LUX actually faring with its patent acquisition strategy?  I have taken a look at the progress of its applications in Australia, the United States and Europe, and found that its fortunes have been more mixed than the case study reveals.

30 November 2022

High Court’s Aristocrat Debacle Leaves Patent Office Practice Unchanged

Batter up Back in August, the High Court of Australia handed down a ‘decision’ on the patent-eligibility, under the ‘manner of manufacture’ test in Australian law, of claims directed to computer-implemented electronic gaming machine (EGM) technology developed by Aristocrat Technologies Australia Pty Ltd: Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29.  Unfortunately, the Court was evenly split, 3:3, on whether or not Aristocrat’s claims were patentable, resulting in the adverse decision of the Full Federal Court being affirmed on a technicality, despite all six High Court judges having criticised the approach taken by the lower court.  (See High Court’s Failure Exposes the Festering Eligibility Sore in Australia’s Patent Laws for my analysis of the case.)  This left many people scratching their heads trying to work out what effect, if any, the decisions of either the High Court, or the Full Federal Court, might have on the treatment of computer-implemented inventions by lower courts and – more immediately – the Patent Office.

While we are still waiting for a decision in which a single judge of the Federal Court is required to consider whether she or he is bound by anything said by the higher courts in the Aristocrat case, the reaction from IP Australia – following an initial statement that ‘the Commissioner will carefully review the decision and consider its implications’ – has been… silence.  There have been no further statements or other communications.  There have been no updates to the Patent Manual of Practice and Procedure (a.k.a. the Examiners’ Manual).  All indications are that the High Court’s decision has changed nothing.

As further evidence of this, there have now been three hearing decisions on patentable subject matter issued by the Patent Office since the High Court handed down its opinions in Aristocrat.  In all three cases, the inventions described and claimed in the patent applications at issue were struck down as not being patent-eligible, for reasons that would have applied equally prior to the High Court decision.

17 November 2022

Dear Twitter – It’s Not Me, It’s You!

Vomiting blue bird that is definitely not the Twitter logo I joined Twitter in June 2010.  I did not really know what Twitter was, or how it worked, but there was a lot of ‘buzz’ around it, and I wondered if it might be a useful channel to share and promote the blog that I had just created.  That turned out to be a good call, especially when the Apple v Samsung patent litigation kicked off in Australia about a year later.  Journalists were among the most active and enthusiastic early users of Twitter, and I would not be surprised if they are among the last to leave if and when the lights finally go out.  It was easy to become one of the most visible IP professionals talking about Apple and Samsung on Twitter.  Journalists contacted me for comments on the case, and quoted me online and in print which, in turn, led to appearances on Australian radio, and even to a couple of international online video interviews.  Monthly visitors to Patentology doubled between July and August 2011, and by mid-2013 the blog was regularly welcoming over 5,000 unique users each month.  My level of activity, and the size of my readership, have scaled back somewhat since those heady days.  At the time, however, I was still building a client base, and all of that media exposure was the kind of publicity that money simply could not buy.

So I credit Twitter with helping me to make a name for myself in the Australian IP profession.  But it was not only about self-promotion.  Back then, I also found Twitter to be home to a friendly and collegiate community.  I connected with other patent attorneys, lawyers, bloggers, technology enthusiasts, and people with all sorts of different interests.  It was fun, and it was (mostly) fairly pleasant.  It was also a bit ‘rough and ready’.  As a recent opinion piece reminded me, in those days Twitter did not natively support hash-tags, @-mentions or retweets – these all started out as conventions devised by users, long before they were implemented as features of the platform.  Links used up as many characters as were in the web address, making URL shortening services such as bit.ly essential tools.  And tweets were limited to 140 characters, before being doubled to the current 280 characters in 2017.  It was all quite arcane and mysterious to outsiders, which no doubt contributed to a general feeling of camaraderie among we self-anointed Twitter cognoscenti!

These days Twitter is a much easier, but much less pleasant, place to be.  You might say that it has become more ‘user-friendly’ while simultaneously becoming much less friendly to its users.  And, to be clear, this has nothing – or not much – to do with the recent takeover of the platform by Elon Musk.  As another recent opinion piece put it, ‘…long before Musk’s ownership, [Twitter] was frequently an unpleasant place to be.  People on the right are targeted by the left, people on the left by the right.  Women and minorities receive more hate than most.’  Prior to the acquisition, Musk sought to smooth the waters by promising not to let Twitter become a ‘free-for-all hellscape’.  But, let’s be honest, this sets a pretty low bar for success.  If, or when, the day comes that Twitter’s best selling point is that it’s not an actual hellscape, then I imagine our choice of social media platforms will be the least of our troubles as a civilisation!

I recently requested an archive of my Twitter data which made it easy for me to go back and review my tweeting history.  Clicking through the links on some of my earlier tweets I discovered that many of the people with whom I engaged back then seem to have abandoned the platform.  Many have not tweeted for years, while a few have even deleted their accounts.  Some of the journalists who are still there (because they have to be, in order to do their jobs) have deleted many years’ worth of old tweets, perhaps to avoid the possibility of being embarrassed or compromised by something that their less mature selves may have written on a less mature, and more free-spirited, Twitter.

But the final nail in Twitter’s coffin, for me, is simply this.  A couple of weeks ago I wrote about starting my new PhD.  Although I have 2,480 followers on Twitter, a tweet linking to that article received only 177 impressions, four ‘likes’ and one direct reply.  On LinkedIn, where I have 1,052 followers, a post linking to the article has so far received 5,823 impressions, 79 reactions (i.e. ‘likes’ and similar), and six comments.  The most common roles of people reached by the post include patent attorneys, lawyers, academics, patent examiners and CEOs.  Many of these are not the people I would have most wanted to reach when I was seeking exposure to potential clients as a patent attorney, but they are exactly the people I am hoping will be interested in following my latest professional endeavours.

I am not going to petulantly quit Twitter and delete my account – unlike Stephen Fry, who last week tweeted an image of Scrabble letters spelling out ‘goodbye’, and abandoned his 12.5 million followers!  I am just going to ‘quiet quit’, and stop using my account.  It can sit there for posterity, but it is doing nothing for me professionally, and I do not need the aggro that comes with too much personal engagement on the platform.  You will see that the box in the sidebar to the right that showed my latest tweets is gone, and has been replaced with one displaying my recent activity on LinkedIn.  And if you wish, you can come and follow me or connect on LinkedIn.  I will look forward to seeing you there!

15 November 2022

DABUS Down – High Court Dashes Hopes of ‘AI Inventor’ Advocates

Gavels have never been used in Australian courtsOn Friday 11 November 2022, three judges of the High Court of Australia (Gordon, Edelman and Gleeson JJ) refused – with costs – Stephen Thaler’s application for special leave to appeal a decision of the Full Court of the Federal Court of Australia determining that the (alleged) ‘AI inventor’ DABUS cannot be named as an inventor for the purposes of applying for a patent in Australia.  This brings to an end the efforts of Dr Thaler – and his ‘sponsor’, Artificial Inventor Project leader Professor Ryan Abbott – to achieve recognition for machine inventors under Australian law via the courts.  I have long argued that even if machines are capable of autonomous invention without human involvement (which remains, for the present, a dubious claim), it is far from obvious that granting patents for machine-generated inventions is economically or socially desirable.  The High Court’s refusal to weigh-in at this time places the issue back in the hands of the legislature to determine whether any change to the law is required.  However, any reforms should be preceded by a proper enquiry into the pros and cons, including consultation with experts, interested stakeholders, and the wider public.

To be fair, the High Court did not appear to completely shut the door on patents being granted for machine-generated inventions under the existing law.  The judges who heard Thaler’s application seemed open to the possibility that a human inventor might be identified in such cases, or perhaps that there might be no inventor but that someone might nonetheless be entitled to obtain a patent on the invention.  However, this particular case provides the Court with no factual basis to consider such alternative options, and the judges therefore did not consider it a suitable case in which to grant special leave to appeal.

31 October 2022

So I started a (Second) PhD. Here’s Why.

Melbourne University (South Lawn)As long-time readers will be aware, it was almost exactly six years ago that I announced that I was leaving my job as a patent attorney with Watermark (which has since disappeared after being ‘integrated’ into Griffith Hack) to pursue other, vaguely articulated, interests.  Since then I have operated as an independent IP consultant.  I have undertaken some ‘traditional’ patent attorney tasks, including patent drafting and prosecution, continuing to work with some of my colleagues and clients from the Watermark days, as well as a few new ones along the way.  But I have also had the opportunity to engage in a range of projects that simply would not have been open to me within an attorney firm environment, including working with IP Australia on the IP Government Open Data (IPGOD) releases in 2018 and 2019, assisting a university research group with patent mapping and developing/documenting an IP strategy for a major grant application, and consulting to investment analysts on the Australian market for IP services. 

Some of the most interesting work I have been involved in over the past few years has come about as a result of the software tools that I have developed for processing and analysing Australian (and New Zealand) patent data, and the many articles I have published here making use of those tools.  I have also dabbled in machine learning (ML) and natural language processing (NLP) technology, using techniques from these fields for ‘fuzzy’ matching of entity names in patent data and for distinguishing between individual and corporate names in unstructured data (both of which were employed in my work on IPGOD, and are in use every day in my automated patent data updates), as well as in more speculative applications such as classifying provisional applications into technology fields based only on published titles.

A couple of years ago I started thinking about some important, but difficult, problems in patent law and policy that might be addressed using some of these kinds of technology.  For example, what if we want to measure the effect of different patent laws and examination processes in different jurisdictions?  The Australian government’s Productivity Commission thought this was a relevant consideration in its 2016 report on the nation’s intellectual property arrangements, recommending (among other things) that the legal test for inventive step should be modified (yet again – after it had only been adjusted in 2013) to bring Australia more closely into line with Europe.  IP Australia’s initial efforts to implement this recommendation have been abortive, and with the recent change in government seem likely to fall by the wayside altogether.

Have PCT Filings from Australia Been Affected by the Pandemic?

Analysing data In 2021, at the height of the COVID-19 pandemic during which Australia’s two most populous cities spent long weeks under conditions of strict lockdown, the number of Australian standard patent applications filed by Australian resident applicants jumped by over 25%, to levels unseen since a rush on filings prompted by the Raising the Bar patent law reforms in 2013.  While there may have been a number of contributing factors, including the phase-out of the second tier innovation patent system in August 2021, it is nonetheless fair to say that there was no indication of any downturn in Australian filings as a result of the pandemic.

So what about international applications under the Patent Cooperation Treaty (PCT)?  Filing a PCT application is generally a more costly exercise than filing a domestic application, and usually signals the applicant’s intent to proceed with national applications in multiple countries.  Therefore the number of PCT applications filed might be a better indicator of the economic impact of the pandemic on innovative Australian businesses and institutions.  Unfortunately, information about a PCT application does not usually become publicly available until 18 months after the initial priority date which, in turn, is anywhere between six and 18 months after the PCT application itself was filed.  As a result, it is only recently that it has become possible to observe any impact of the pandemic on PCT filings.

In this article, I present data on PCT filings by Australian resident applicants that have been published up until the end of August 2022, with numbers extrapolated for the full 2022 calendar year.  What the data shows is that there has been no substantial effect, either positive or negative, on the total number of PCT applications filed annually by Australian residents since the start of the pandemic.  Drilling down to the fields of technology covered by the applications filed, there are a number of ongoing trends that predate the pandemic.  For example, applications relating to IT methods for management and civil engineering have continued pre-existing declines, while pharmaceuticals appear to be experiencing a period of growth.  The one field in which there may be a specific pandemic-related effect is medical technology (e.g. devices and instruments), in which the number of published PCT applications has notably increased since 2020.

28 September 2022

US Copyright Office Director Shira Perlmutter to Present 2022 Francis Gurry Lecture on IP (18 October 2022)

Shira Perlmutter (source: Wikimedia Commons) Since its establishment in 2009, by the Melbourne Law School in conjunction with the Institute of Patent and Trade Mark Attorneys of Australia (IPTA), the annual Francis Gurry Lecture on Intellectual Property has rightly become a highlight on the Australian IP calendar.  Past presenters include former Chief Justice of the High Court of Australia Robert French AC, judge of of the Court of Appeal of England and Wales the Right Honourable Lord Justice Colin Birss, Director General of the World Intellectual Property Organization (WIPO) Daren Tang, renowned UK legal academic and founder of the IPKat blog Dr Jeremy Phillips and, of course, the eponymous former Director General of WIPO Francis Gurry himself.

This year, circumstances have resulted in a rather late finalisation of arrangements for the Francis Gurry Lecture, and registration and other details are still to come.  However, the speaker has been confirmed as Shira Perlmutter, Register of Copyrights and Director of the US Copyright Office (pictured, source: Wikimedia Commons), and the date and time of the lecture as Tuesday 18 October 2022 at 6.15pm AEST.  The lecture will take place at the Melbourne Law School, and will also be streamed online.

Save the date for now.  I will update this page with further details as they become available.

UPDATE: The title of Register Perlmutter's presentation has been announced as Art and Authorship: From Warhol to the Creativity Machine.  Registration is now available via Eventbrite.  The venue for in-person attendees will be the Woodward Conference Centre, Level 10, Melbourne Law School.

The outline of the lecture is as follows:

Pending copyright cases in the United States highlight complex issues of how art is created and adapted.

The U.S. Supreme Court is examining the application of the fair use doctrine to Andy Warhol’s silkscreen prints based on another artist’s photograph.

And the development of artificial intelligence capable of producing appealing works of music, visual art, and poetry is challenging traditional concepts of authorship, with test cases being brought in the United States and other jurisdictions around the world.

Register Perlmutter will discuss what is at stake in these cases, and their implications for copyright more broadly.

I am planning to attend, and look forward to the event, and to catching up in person with friends, colleagues and associates from the IP community.

Click here to register

27 September 2022

Recent Trends in the Trans-Tasman Patent Attorney Profession

People trendsAs regular readers of this blog – and watchers of the Australasian patent attorney profession in general – are well-aware, we have witnessed over recent years a significant upheaval in the profession, including three public listings of attorney firm groups and a series of acquisitions and mergers.  The result of this (so far) is that there are now two publicly-listed holding companies – IPH Limited (ASX:IPH) and QANTM IP Limited (ASX:QIP) – which between them own six mid-to-large-sized firms across Australia and New Zealand, collectively employing (as of the beginning of September 2022) just over 20 per cent of all registered trans-Tasman patent attorneys.  The consolidation of this many attorneys under just two ownership groups has naturally led to some concerns about a reduction in competition.  However, as I reported earlier this year, patent filing data in fact shows that a greater proportion of Australian patent applications are now being filed by a larger number of smaller firms than was the case a decade ago, prior to the establishment and rise of the listed group ownership model.

Since January 2018 I have been keeping records of the employment of registered trans-Tasman patent attorneys, as reflected in the public Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB).  (For readers who have not checked lately, the TTIPAB recently revamped its website, and the new and improved version of the searchable Register can be found here.)  In this article I use this data to present some updated trends in the profession over the past four years and nine months.

Key takeaway points from the analysis are that, since the beginning of 2018:

  1. the total number of registered patent attorneys has grown by just 4.2%, from 1023 to 1066;
  2. the number of attorneys providing for-fee services to clients through identifiable firms or solo practices (regardless of ownership structure) has barely changed, and now sits at 753, compared with 768 in January 2018;
  3. the number of attorneys employed in corporate roles (e.g. in-house counsel) has grown, but so too has the number that are unemployed, not employed in traditional patent attorney roles in Australia or New Zealand, or whose current employment status cannot be determined from information on the Register;
  4. the proportion of attorneys employed by listed group firms – mostly within the IPH group – has declined significantly to reach the current figure of 20%, down from 27% in January 2018;
  5. nearly 60 new practices have emerged – more than half of them prior to July 2019 – with over 90 attorneys now working within firms or solo practices that did not exist prior to 2018; and
  6. the overall number of identifiable firms/practices offering for-fee patent attorney services – which is one possible measure of the level of competition in the market – has increased by around 7%.

So let’s dive into the details, and some charts.

31 August 2022

High Court’s Failure Exposes the Festering Eligibility Sore in Australia’s Patent Laws

DisappointmentIn a keenly-awaited – and thus hugely disappointing – ‘decision’, the High Court of Australia has failed to satisfactorily resolve the question of whether patent claims directed to electronic gaming machine (EGM) technology developed by Aristocrat Technologies Australia Pty Ltd are directed to patent-eligible subject matter: Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29.  With Justice Gleeson calling in sick on the crucial days, arguments in Aristocrat’s appeal from the adverse decision of the Full Federal Court of Australia were heard by just six judges of the High Court, which astute readers will notice is an even number.  The diminished bench split 3:3, with Kiefel CJ, Gageler and Keane JJ finding Aristocrat’s claims unpatentable, while Gordon, Edelman and Steward JJ would have allowed the appeal, concluding that the claimed invention was patent-eligible.  In this situation, section 23(2)(a) of the Judiciary Act 1903 provides that ‘the decision appealed from shall be affirmed’.  It does not, however, provide that the reasons of the court appealed from are affirmed.  On the contrary, one thing on which all six High Court judges appear to be in agreement is that the two-step approach taken by the Full Federal Court majority was not correct.  We were hoping for some clarity on the patent-eligibility of computer-implemented inventions.  Instead, we have been delivered two opposing, but equally authoritative, outcomes in the High Court, along with a Full Federal Court decision that stands affirmed, but which has been disapproved.

To say that this is an unsatisfactory situation would be one of the great understatements in the history of Australian patent law.  Oh, how the mighty have fallen!  In its famous and rightly-lauded 1959 decision in the NRDC case ([1959] HCA 67) the High Court delivered a judgment on patent-eligibility of such wisdom and prescience that the Australian government chose to retain the archaic language of ‘manner of manufacture’ as the touchstone of eligibility in the Patents Act 1990, placing its trust in the courts to continue development of the law to flexibly embrace the emergence of new and unpredictable technologies.  Yet here we are in 2022, and the High Court has tripped over the now relatively mature technology of computer software and tumbled flat on its face.

What follows is, I concede, a lengthy article, even by my usual standards.  But I am attempting to take up some important issues, and to suggest a different way forward on the treatment of computer-implemented inventions in Australia.  Following a relatively brief review of what actually happened at the High Court, I attempt to determine what, exactly, the split decision means for the lower courts, and other decision-makers such as patent office examiners and hearing officers that are bound by the authority of the courts.  I then look at how we arrived at the unsatisfactory position in which we now find ourselves, and argue that division among judges is not a new feature in this area of the law, and has in fact been evident in the Federal Court for some years. 

This leads me to the view that judicial development of the ‘manner of manufacture’ test has failed us in relation to computer-implemented inventions.  I think that a new approach is required to bring some certainty and clarity to the law and its application.  Firstly, I suggest that it would be productive for IP Australia to consult more widely with stakeholders in developing its examination practice in the wake of the Aristocrat case.  Beyond this, I think the Australian government needs to clarify its policy in relation to the protection of digital innovation, and to reach a principled position on the appropriate balance between competition and the patent incentive in the case of computer-implemented inventions.  And if the current law is not working for us, then the parliament may need to consider a legislative solution.

03 August 2022

Eligibility of Computer-Implemented Inventions Behind Unprecedented Numbers of Patent Office Rulings

image Once upon a time – not so very long ago, in fact – it was rare for the Australian Patent Office to issue a formal published ruling on the patent-eligibility of claims submitted for examination.  Indeed, ex parte decisions (i.e. those involving only the applicant and the Office) were generally in the minority, and most of those related to pharmaceutical extensions of patent term, allowability of amendments, and extensions of time to meet various deadlines.  Historically, the overwhelming majority of decisions have related to inter partes proceedings, such as patent oppositions.  That is, however, no longer true.  Following a peak in 2015, inter partes decisions have been falling, while ex parte decisions have been generally on the rise since 2011.  In 2021, ex parte decisions outnumbered inter partes decisions for the first time.  And in 2022 more ex parte decisions have been issued so far (i.e. up until the end of July) than in any past full year, with inter partes decisions once again lagging behind.

The sole driver of the growth in ex parte decisions has been patent-eligibility according to the ‘manner of manufacture’ test under Australian patent law.  The number of published Patent Office decisions relating to subject-matter eligibility of patent claims has risen from fewer than one per year in the 2000-2009 decade to 19 decisions in 2021 and 21 decisions in just the first seven months of 2022.  Since 2010 there have been 115 published decisions on eligibility, with the claims at issue being found ineligible in 100 of those cases.  Almost all of these have related to computer-implemented inventions.

The issue here is not that some subject matter is ineligible for patent protection.  That has always been, and will always be, true.  But the massive increase in published decisions is indicative of a more insidious problem.  Applicants rarely request hearings to appeal rejections by a patent examiner, and when they do it is usually because they genuinely believe that the examiner has got it wrong, and that the additional effort and expense is justified by good prospects of a better outcome when the matter is considered by an experienced hearing officer.  The unprecedented rise in applicants requesting hearings on patent-eligibility is due to a lack of clarity and coherence in the law.  And the fact that those applicants are so frequently wasting their time and money reflects the fact that the Patent Office has been championing an interpretation of the law that is at odds with the way in which it is being interpreted by the applicants and the patent attorneys advising them.

To be clear, the Patent Office on the one hand, and applicants and their attorneys on the other, are looking at exactly the same case law, and arriving at completely different conclusions as to how that law applies to particular claims.  Over the period during which this situation has arisen, there have been five Full Bench decisions of the Federal Court of Australia that should have served to clarify the law, but which appear to have had the opposite effect.  (For the record, those decisions are Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150, Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161, Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, and Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202.)

The Aristocrat decision is currently before the High Court, where it was heard on 9 and 10 June 2022 (transcripts at Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCATrans 103 and [2022] HCATrans 104).  While it might be hoped that the High Court will provide the clarity that has been lacking in the Federal Court decisions, I am not so optimistic.  Looking at what has been happening at the Patent Office over the past few years, I fear that whatever the High Court may have to say about the specific claims at issue in Aristocrat will be equally open to different interpretations when applied to different claims in other cases.

27 July 2022

SMEs, Universities and Research Organisations Most Disadvantaged by Lack of a Patent Filing Grace Period, says EPO Study

Seeking graceOver the past two decades or so, the number of major jurisdictions offering some form of general ‘grace period’ for filing of patent applications has grown significantly.  This has largely been driven by bilateral agreements (e.g. free trade agreements involving the United States), and regional agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), including provisions requiring the parties to provide a 12-month grace period.  With former hold-outs such as New Zealand, Japan and South Korea now having implemented grace periods in their national patent laws, Europe and China are currently the only two major jurisdictions in the world without a full-fledged grace period.  To my mind, it is an anomaly in this day and age of instantaneous global communication and publication that there are still countries that impose a strict novelty requirement, with the result that any public disclosure of an invention – accidental or deliberate – prior to filing remains fatal to the prospects of securing patent protection.

A new study recently published by the European Patent Office (EPO), The European patent system and the grace period: an impact analysis, is therefore a welcome contribution to ongoing debate as to whether, and how, the European patent system should harmonise with other major jurisdictions by introducing a general grace period.  Through surveys of users of the system between 2018 and 2020, the study seeks to:

  1. evaluate the impact that the lack of a general grace period in Europe has on applicants in various categories, including European companies, universities and research organisations, and foreign applicants from the US, Japan and South Korea;
  2. estimate the extent to which applicants would take advantage of any European grace period, and how this would depend upon the design of a grace period system; and
  3. compare the perceived level of legal uncertainty that would be generated by the introduction of a grace period under different design options.

The survey sample is not unbiased.  For example, it does not include, by definition, entities that did not file applications during the selected three year period due to prior disclosures that precluded obtaining European patent rights in the absence of a grace period.  Even so, it appears that many participants have experience with grace periods across different jurisdictions, and have been affected in various ways by the lack of a grace period in Europe.  The results are therefore interesting, and appear likely to be indicative of wider experience, although they may underestimate the demand for the introduction of a European grace period.

The study found that the absence of a grace period has forced many applicants to postpone disclosures, with the most heavily affected being European small and medium enterprises (SMEs) at 10.4% and European universities at 12.1%.  For these entities, around two-thirds of these postponements had adverse consequences.  Universities reported a negative impact mostly on reputation or other aspects of their operations (such as delayed research publications).  For SMEs, the negative impact was roughly equally split across development/commercialisation and reputational factors.

Nonetheless, European businesses (small and large) are generally successful in avoiding pre-filing disclosures, reporting less than 1% of cases in which an application was prevented by a disclosure.  European universities, on the other hand, reported 7.8% of European applications being prevented due to a pre-filing disclosure, presumably reflecting the difficulty of enforcing disclosure restraints in an academic environment.  US companies also reported being heavily hit by the lack of a European grace period, with 7.2% of applications prevented by a pre-filing disclosure.

The study further found that the extent to which applicants would take advantage of a grace period, should one be introduced in Europe would be substantially affected by its design.  An unrestricted (i.e. ‘US-style’) design – with no declaration requirements, or preservation of prior user rights – was estimated to result in just over 25% of all European patent applications relying on the grace period (which seems like a very high proportion to me).  On the other hand, an ‘Australian-style’ system – which preserves rights for third parties that commence use of an invention following a disclosure, but before filing of a patent application – was estimated to result in under 10% of applications relying on the grace period.

While grace periods obviously benefit applicants, they create additional uncertainty in that the maximum delay between disclosure of an invention and publication of any patent application revealing the extent to which the invention may receive legal protection is extended from 18 months to as much as 30 months.  The study found that the perception of legal uncertainty among surveyed users of the European patent system was relatively high, driven primarily by European companies which harbour the greatest concerns by a significant margin.  ‘Perception’ is a nebulous concept, however, and there are good reasons to suspect that fear of the unknown is a major driver of survey responses here.

Overall, I would suggest that this EPO study bolsters the case for the introduction of a general grace period in Europe.  The leading argument in favour remains that of international harmonisation, with most other major jurisdictions now providing some form of grace period.  Adding to this, the study indicates that the lack of any similar provision in Europe has an adverse impact on a small, but not insignificant, number of applicants and prospective applicants.  The major counter-argument is that grace periods create legal uncertainty.  However, it is mainly European businesses that – when asked – perceive this as a significant consideration.  European universities and research organisations, along with applicants of all kinds from other jurisdictions which already provide grace periods (the US, Japan and South Korea), have far fewer concerns.

06 June 2022

Aristocrat’s EGM Inventions Set for Showdown in the High Court

Arm WrestleOn 10 March 2022, the High Court of Australia granted Aristocrat’s application for special leave to appeal the decision of a Full Bench of the Federal Court, which found its claims directed to an Electronic Gaming Machine (EGM) implementing a new ‘feature game’ to be ineligible for patenting under Australia’s ‘manner of manufacture’ test of subject matter.  The case – which is Case No. S40/2022 – has since been making rapid progress.  Aristocrat filed its written submissions [PDF, 711kB] on 20 April 2022.  Two parties have applied for leave to appear as amici curiae: the Institute of Patent and Trade Mark Attorneys of Australia (IPTA), which filed its written submissions [PDF, 483kB] on 5 May 2022; and Fédération Internationale des Conseils en Propriété Intellectuelle (FICPI), which filed its written submissions [PDF, 382kB] on 4 May 2022.  The Commissioner of Patents filed her written submissions in response [PDF, 718kB] on 11 May 2022.  Finally Aristocrat filed its reply [PDF, 310kB] on 20 May 2022.  The scene is now set for a hearing, which is set down to take place on 9 and 10 June 2022 before a Full Court of seven judges, which is somewhat unusual (a panel of five judges is more common) and suggests that the High Court may have decided that it is finally time to settle the question of patent-eligibility of computer-implemented inventions in Australia.

The Aristocrat case raises interesting questions.  The claims of the patents at issue recite various hardware elements, some of which are common to all computers and some of which are specific to EGMs, along with software-implemented processes comprising the ‘feature game’.  (A ‘feature game’ is a secondary, or bonus, game triggered by the occurrence of a defined event in the ‘base’ game of spinning reels.)  It is common ground that the hardware elements are well-known in the field of electronic casino gaming, and that the new and inventive contribution resides wholly in the feature game implementation. 

At first instance, the primary judge (Justice Burley) considered that the appropriate approach to such a case involves a ‘two step’ analysis.  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 thus identified 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.  Applying this approach to Aristocrat’s claims, Burley J found at the first step that Aristocrat’s claims were 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.

On appeal, a Full Bench of the Federal Court rejected the test proposed by the primary judge.  The majority (Middleton and Perram JJ) proposed an alternative two step test which asks firstly whether the claimed invention is ‘a computer-implemented invention’ and then – if so – ‘can the invention claimed broadly be described as an advance in computer technology’.  They determined that Aristocrat’s EGM was in substance a computer-implemented invention, and that the asserted contribution of the claimed invention ‘pertains only to the use of a computer’ and not to ‘the development or advance of computer technology’, such that the claims were not directed to patent-eligible subject matter.  In a separate judgment (which Aristocrat characterises as a ‘dissent’), Nicholas J arrived at the same ultimate conclusion, but disagreed with the majority that ‘an advance in computer technology’ is necessary for a computer-implemented invention to be patent-eligible.  In his view, such an invention may be patent-eligible if it results in innovation in ‘different fields of technology’ where technical problems that lie ‘outside the computer’ may be solved using ‘generic computing technology.  He proposed that the proceeding therefore be remitted to the primary judge to consider whether the inventions may be patentable as an advance in the field of gaming technology.

With all of these different lines of reasoning present in the judgments of the lower courts, the stage is surely set for a showdown before the High Court.  So what are the main arguments that each of the parties will be relying upon?

31 May 2022

Privately-Held Attorney Firms Have Built Filing Share Over the Past Decade, Thanks Largely to IPH!

Building While some doomsayers predicted that the rise of publicly listed groups of patent attorney firms would lead to terrible problems, including a reduction of competition, in the Australasian market for IP services, the sky has yet to actually fall.  After a few years of upheaval in the profession, two listed holding companies – IPH Limited (ASX:IPH) and QANTM IP Limited (ASX:QIP) – have established themselves, while the number of mid-sized firms has fallen slightly, as a result of acquisitions and mergers within the listed groups. 

Despite this, however, there is no evidence of any lessening of competition.  On the contrary, patent filing data shows that IPH’s strategies, in particular, have resulted in an increase in the share of new applications being handled by non-IPH, independent, firms.  Indeed, in the present financial year, a greater proportion of Australian patent applications have been filed by smaller independent firms than was the case a decade ago.

How has this happened?  Based on the data, I speculate that IPH’s strategies of acquisitions and mergers have resulted in its stable of firms becoming generally smaller – in the sense that they now collectively employ fewer attorneys than before acquisition – but also more efficient.  They can therefore be more profitable, despite attracting a smaller share of new filings.  Meanwhile, many of the attorneys who have left the IPH group firms have rejoined the independent sector, either as employees of established firms, or in a number of cases by establishing their own new firms.  The net effect is that IPH’s overall share of filings has risen – although by less than would have been the case if the firms it acquired had maintained their own individual shares – while the share of filings going to new and established firms in the independent sector has also risen.

As a result, rather than lessening competition, the rise of the listed groups may have strengthened the viability of many existing independent firms, while also contributing to the successful formation of a number of new independent firms.  It seems counter-intuitive, but that is what the data tells us is happening.  Of course, these gains have not come from nowhere, and it is probably fair to say that the ‘losers’ have been the firms, such as Fisher Adams Kelly, Callinans, Cullens, Watermark, Baldwins, and Shelston IP, that have been acquired and ‘integrated’ out of existence.

In this article, I will present the data that underlies my speculation.  In particular, I have analysed the share of Australian standard patent application filings by firms over the past decade (i.e. since before the public listings), to evaluate the relative performance of firms that are now incorporated into the listed groups, before and after acquisition, as against that of independent firms and attorneys.  You can decide for yourself whether you agree with my conclusions.  I would welcome any thoughts, in agreement or otherwise, in the comments.

26 May 2022

Division and Conversion – the Continuing Life of the Australian Innovation Patent

It's a convertible - geddit?!In the Patents chapter of its recently-published 2022 IP Report, IP Australia provides the usual annual filing statistics for 2021.  According to the report, there were 23,371 Australian standard patent applications filed as National Phase Entries (NPEs) from international applications under the Patent Cooperation Treaty (PCT), 9,026 standard applications filed directly in Australia, making up a record total of 32,397 new standard applications.  There were also 4,297 provisional applications filed, and 7,844 innovation patent applications ‘including … standard patents converted to innovation patents’.  On IP Australia’s figures, the top five applicants in 2021 were LG Electronics (259 applications), Huawei (255), OPPO (197), Nestle (157) and Apple (151).

All patent data is a moving target.  The patent office database is a living entity which is updated daily with new applications, and changes to existing applications, including status updates, completion of missing information, and even occasional backdating of records for reasons such as correcting errors or actioning successful applications for extensions of time to complete various actions.  It is not surprising, then, that there are some minor discrepancies between figures in the IP Report and numbers that I published back in January, when the dust was still settling on 2021.  The most notable difference is probably that I awarded the top filing spot to Huawei because, at that time, LG had only 251 filings officially recorded – an additional eight LG applications filed in December 2021 were yet to be fully processed.

A more substantial discrepancy is that I counted only 7,657 innovation patent filings in 2021.  A difference of 187 applications is hard to explain as a consequence ‘late year’ filings, given that most new innovation patent applications were filed prior to 26 August 2021, when the phase-out of the innovation patent system commenced.  The key to this difference is in the words I quoted from the Report above in italics – IP Australia’s numbers include applications that were converted from existing applications of other types, as well as newly-filed applications.

Whether conversions should be included with new filings or not really depends upon what you are trying to count.  On the one hand, converting an existing application to an innovation patent application does not add to the total number of applications in progress, because the original application is effectively replaced by the conversion.  On the other hand, the converted application is assigned a new number and a record of the original application remains in IP Australia’s database, and can be found via the AusPat online search system.  And, from IP Australia’s perspective, the ‘new’ innovation patent application has to be processed through the formalities examination, and granted as a patent, in exactly the same way as a ‘fresh’ filing.

A better approach may be to look more deeply at the circumstances in which conversions are occurring, and to try to account for the applicant behaviour in detail.  It is then possible to make an informed decision on how to account for all applications, depending upon your purposes.  Conversion of other application types to innovation patents remains relevant because, despite the phase-out of the system, it remains possible to convert any pending application filed prior to 26 August 2021.  It also continues to be possible to file new innovation patent applications as divisionals of any standard patent application with a filing date prior to 26 August 2021.

In this article I will therefore look at both division and conversion to innovation patents, and the circumstances in which these strategies have been used, as an insight into the continuing life of the Australian innovation patent during the phase-out period.  I will also endeavour to provide a ‘definitive’ count of new applications filed in 2021.

03 May 2022

Attorney Code of Conduct Passes ‘Health Check’ with Flying Colours

Health Check The Trans-Tasman IP Attorneys Board (TTIPAB) has published a report, and its response, on a Health Check of the Code of Conduct for Trans-Tasman Patent and Trade Marks Attorneys 2018 [PDF, 2.05MB].  The Report was prepared by Professor Andrew Christie, who was commissioned by the Board to conduct the review, commencing in July 2021.  The ‘health check’ covers not only the Code of Conduct, which is a statutory instrument by which all registered patent and trade marks attorneys are bound, but also the Guidelines to the Code of Conduct [PDF, 95kB].  The Guidelines are non-binding and are intended to assist people to understand the Code and the conduct it covers.  The purpose  of the review was to confirm whether the Code was working as intended, and to identify any improvements or clarification to the Code and Guidelines.  The review process included conducting structured interviews with 26 stakeholders (attorneys, general counsel of listed groups, representatives of attorney professional associations, and clients).  The interview questions were based on an analysis of issues raised by complaints made to the Board over the past few years.

The headline outcome of the ‘health check’ is that no amendments to the Code of Conduct were found to be necessary.  More particularly, Professor Christie concluded that the Code ‘has no major deficiencies, and there are no major problems with its provisions’.  He found, however, that ‘there is significant scope to provide more guidance on the application of the Code’s provisions by enhancement of the Guidelines.’  The Board has accepted a number of recommendations for specific improvements to the Guidelines.

Other key observations of the Report include:

  1. most stakeholders have a satisfactory awareness and understanding of the Code, and of the Board, but there is scope for improvement among junior attorneys and clients that do not have a registered attorney on staff;
  2. firms within the two publicly listed ownership groups provide appropriate disclosure to clients of their group membership, however individual firms (as opposed to the holding companies) need to improve the clarity with which they disclose the identities of other firms within their group;
  3. the evidence is that firms within ownership groups act independently from other members of their group in the provision of attorney professional services, as required under the Code;
  4. there is no basis to believe that attorneys in ownership group firms are in breach of their core obligations under the Code (i.e. to place following the law, and the interests of clients, the public and the profession, ahead of other considerations, including the interests of shareholders);
  5. clients of firms in ownership groups are being appropriately informed when their consent is required for firms within the same ownership group to act on opposing sides in adversarial matters; and
  6. some dissatisfaction with the Board’s complaint handling process has been identified within the profession.

The Board has identified and responded to 34 recommendations in the Report.  Ten of these are recommendations for no action to be taken, which the Board has merely ‘noted’ (there being nothing for it to do).  Of the remainder, the Board has ‘accepted’ 17 recommendations for enhancements to the Guidelines.  The Board has also ‘noted’ six substantive recommendations, where it recognises that a relevant issues has been raised, but proposes to pursue a different course from that which has been recommended.  Finally, there is one recommendation, relating to specific circumstances around potential conflicts of interest, that the Board has ‘not accepted’ because of concerns that it ‘would introduce unnecessary complexity and ambiguity’ to the Code.

I do not intend to go through every recommendation in detail – anybody who is that interested (which should include all registered attorneys) can read the Report and Response!  However, I would like to highlight the points that caught my attention, and add a little of my own commentary.

27 April 2022

Upcoming Online Conference on ‘Inventorship in Patent Law’

EPO LogoOn Monday 16 May 2022 the European Patent Office (EPO) is running an online conference on ‘Inventorship in Patent Law’.  It commences at 1.30pm Central European Summer Time (CEST), which is 9.30pm on the east coast of Australia (AEST), 9.00pm in South Australia, and a positively civilised 7.30pm in Western Australia.  It is, unfortunately, a little less accessible to people in New Zealand, where it will be 11.30pm.  The total running time is two hours and forty minutes, so the event will finish a little after midnight here in Melbourne.

I am promoting the conference because I will be participating on a panel discussing the DABUS ‘AI inventor’ decisions in various jurisdictions.  It is not in doubt that I will be the least illustrious of the panellists.  The other participants are:

  1. Wolfgang Sekretaruk, who is Chairman of the Legal Board of Appeal of the EPO, Deputy of the President of the Boards of Appeal and Head of the Legal Services of the Boards of Appeal, and will be discussing the EPO decisions on the DABUS applications;
  2. Professor Duncan Matthews, of the Queen Mary, University of London School of Law, who will be discussing the UK decisions;
  3. Professor Dr jur. Ansgar Ohly, of the Ludwig Maximilian University of Munich, and the University of Oxford Faculty of Law, who will be discussing the German case; and
  4. Professor Dan L Burk of the University of California, Irvine, who will be discussing the US case.

I will, of course, be talking about the position in Australia – which is arguably the most interesting, given that we were the only country to (briefly) recognise DABUS as a legitimate inventor.

Our session of the conference will comprise a series of brief (10 minute) presentations on the position in each jurisdiction, followed by a 30 minute panel discussion.

Prior to the panel session, there will be a 20 minute presentation from Axel Voss, Member of the European Parliament, on the European approach to AI.  This will be followed by an introduction to the DABUS applications by the EPO’s Heli Pihlajamaa as a lead-in to the panel.

The panel session will be followed by a presentation on ‘the right to a patent, its origins and the consequences of the fundamental principle that the right to the patent is originally vested with the inventor’ from Martin Stierle, Associate Professor in Intellectual Property Law at the Faculty of Law, Economics and Finance at the University of Luxembourg.

The conference is free of charge, however registration is required in order to obtain the link to the online session (via Zoom).  Registered trans-Tasman patent attorneys should be able to claim 2.5 CPE hours for attendance at the full event.

DABUS Exited with Fatal Exception: Human Agency Required in Development of an Invention

System ErrorIn a decision handed down on 13 April 2022, a panel of five judges of the Federal Court of Australia (‘Full Court’) overturned last year’s controversial ruling by Justice Jonathan Beach, determining that the (alleged) ‘AI inventor’ DABUS cannot be named as an inventor for the purposes of applying for a patent in Australia, and that the law requires the inventor to be a natural person or persons: Commissioner of Patents v Thaler [2022] FCAFC 62 (‘Thaler FC’).  Regular readers of this blog will recall that I tentatively predicted this outcome after observing the Full Court hearing earlier this year.  As it turns out, I need not have been so tentative in my prediction.  The decision of the appeals court was fast, unanimous and unequivocal.

The Full Court has taken a conventional approach to determining the meaning of the term ‘inventor’ in the Patents Act 1990, observing (at [83]) that ‘[t]he duty to resolve an issue of statutory construction is a text-based activity’ and that while it is ‘appropriate to consider policy considerations … the surest guide to ascertaining the legislative intention is the language of the text of the legislation itself’.  In the absence of an express definition of ‘inventor’ in the Patents Act, the Court turned its attention to the legislative history, and the overall statutory context, with particular (though not exclusive) reference to the provisions regarding entitlement to the grant of a patent set out in section 15(1) of the Act. 

The Court found (at [105]) that:

…the law relating to the entitlement of a person to the grant of a patent is premised upon an invention for the purposes of the Patents Act arising from the mind of a natural person or persons. Those who contribute to, or supply, the inventive concept are entitled to the grant. The grant of a patent for an invention rewards their ingenuity.

As to whether Dr Thaler, as the owner of DABUS and the person responsible for its creation and operation, could be entitled to the grant of a patent naming the AI machine as inventor, the Full Court found (at [113]) that:

It is not to the point that Dr Thaler may have rights to the output of DABUS. Only a natural person can be an inventor for the purposes of the Patents Act and Regulations. Such an inventor must be identified for any person to be entitled to a grant of a patent under ss 15(1)(b)-(d).

The Court also observed (at [115]) that while ‘the development of patent law since 1624 has not until now been confronted with the question of whether or not an inventor may be other than a natural person’, the law has ‘proceeded on the assumption that only a natural person could be an inventor’.  This includes the key High Court decisions in National Resource Development Corporation v Commissioner of Patents [1959] HCA 67 (‘NRDC’) and D’Arcy v Myriad Genetics Inc [2015] HCA 35 (‘Myriad’), in which the Court proceeded on the basis – as the Full Court put it at [116] – that ‘human agency was required in the development of the invention in suit’.

In criticising the approach taken by the primary judge, the Full Court stated (at [120]) that ‘the Court must be cautious about approaching the task of statutory construction by reference to what it might regard as desirable policy, imputing that policy to the legislation, and then characterising that as the purpose of the legislation.’  Furthermore, the Full Court noted (at [121]) that the case was decided subject to the agreed facts that DABUS was an inventor and that Dr Thaler was not, but that ‘the characterisation of a person as an inventor is a question of law’ and ‘[t]he question of whether the application the subject of this appeal has a human inventor has not been explored in this litigation and remains undecided.’ 

The decision brings Australia back into line with other jurisdictions, including the US, the UK, Germany, the European Patent Office and Taiwan, where the naming of a machine as inventor has been found to be incompatible with patent laws.  However, Dr Thaler’s legal avenues are not yet exhausted in Australia.  In an email to Law360 (paywalled, unfortunately) Professor Ryan Abbott (whose Artificial Inventor Project is the true driving force behind the DABUS patent applications and court cases) has confirmed that they ‘plan to seek leave to appeal’ to the High Court.  I am going to be less tentative this time, and predict that the High Court will deny any application for special leave.  The Full Court’s decision is plainly correct, and any amendment of the law to permit non-human inventors is now a matter for legislators, following appropriate public consultation and consideration of the full consequences of such a development.

Read on for a more detailed analysis of the Full Court’s decision.

31 March 2022

Patent Examination Delays are Rising at IP Australia

RisingIn my previous article I presented some data on Australian standard patent application prosecution events between 2017 and 2021.  While the total number of events (examination requests, examination reports, responses and acceptances) has remained fairly consistent in recent years, the data shows that the number of examination requests filed each year has increased since 2019, but that the number of first examination reports issued remained steady in 2019 and 2020, and fell in 2021.  All else being equal, this would suggest that the number of cases awaiting examination would have grown over this period, and therefore that the response time – i.e. the delay between an examination request being filed and a first examination report being issued – would be increasing.  So I decided to check this by analysing the delays for all initial examination reports issued since 2010.

Sure enough, what I have found is that the median delay has grown from just under seven months in 2019, to just over 11 months for examination reports issued so far in 2022 (although, being early in the year, this most recent data point is preliminary and may not be reliable).  At the same time, however, the 85th percentile has remained fairly stable, rising from just under 11.5 months in 2019 to slightly over 12 months so far in 2022.  The 85th percentile is significant, because IP Australia has a service level commitment to issue first reports on applications for standard patents within 12 months of receiving the request for examination, and to meet this commitment 85% of the time.  (At least, it used to have this target, although I have been unable to find a Customer Service Charter Report any more recent than the April-June 2020 quarter that still reports against this particular target.)  It appears, therefore, that despite an overall increase in examination response time for a ‘typical’ case, IP Australia is (just about) maintaining its targeted performance overall.

Even so, with what presently appears to be a growing backlog of applications awaiting examination, and a bumper year of new filings in 2021, it could become increasingly challenging for IP Australia to keep response times under control without increasing its patent examination capacity.  Furthermore, IP Australia’s own reporting indicates that some fields of technology – particularly chemistry, pharmaceuticals, and biotechnology – are experiencing greater delays than others, and falling well short of its targets.  IP Australia is not currently hiring new examiners, and the Australian budget papers released this week show no projected increase in average staffing numbers in the 2022-23 fiscal year.  But it will at least need to replace any staff who might leave.  And the March 2022 edition of its What’s New at IP Australia email bulletin (to which you can subscribe here) invited interested readers to register their interest in examination positions, to be notified when new vacancies are advertised.  Now might be a good time to register, particularly for prospective candidates with a background in chemistry, pharmaceuticals, or biotechnology.

30 March 2022

Who Were The Leading Australian Patent Prosecution Firms in 2021?

Running raceWith significant increases in both standard and (especially) innovation patent applications, 2021 should have been a bumper year for patent attorneys operating in Australia.  And although that was true overall, the benefits were not uniformly distributed.  While some smaller firms experienced gains in filing numbers well above the overall growth rate, a number of larger firms within the publicly-listed ownership groups struggled to keep pace.  Spruson & Ferguson remained the biggest filer of new applications – particularly following integration of the Shelston IP business – but achieved virtually no overall growth in new filings.  The number of applications filed by third-placed Griffith Hack actually fell in 2021, with the firm narrowly avoiding falling behind fourth-placed FB Rice.

Having a focus on incoming work from foreign applicants, Spruson & Ferguson filed only marginally more new standard patent applications on behalf of Australian residents than its closest competitors, Davies Collison Cave and Griffith Hack.  About half of all filings handled by Spruson & Ferguson originated in the US, slightly above the overall proportion of 45% Australian standard applications by US applicants.  A handful of firms – particularly RnB IP, Pizzeys, and FPA Patent Attorneys – rely far more heavily on US-originating work, while Madderns is notable for handling a higher proportion of filings from China than from the US.

Looking beyond filings to ongoing patent prosecution work, Spruson & Ferguson was the leader in 2021, by a large margin.  Generally speaking, firms with larger numbers of filings over the previous few years had more prosecution work in 2021, which was an advantage for Spruson & Ferguson and Griffith Hack despite their failure to keep pace with their competitors in terms of growth in new filings.  The flip side of this, of course, is that relatively lower filing numbers in 2021 will result in less prosecution work over the coming years.

Read on for all the details.

24 March 2022

Federal Appeals Court Affirms the Role of ‘Balance’ in Scheme for Extending Term of Pharmaceutical Patents

Balance On 18 March 2022, the Full Court of the Federal Court of Australia issued decisions relating to term extensions of patents covering pharmaceutical products: Commissioner of Patents v Ono Pharmaceutical Co. Ltd [2022] FCAFC 39 (‘Ono’); and Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2022] FCAFC 40 (‘MSD’).  The two decisions have (at least) three things in common.  First, both were decided unanimously by a panel comprising Chief Justice Alsop and Justices Yates and Burley.  Second, both found against the patentee, with the court reversing the primary judge’s decision in Ono granting an extension of term, and confirming the primary judge’s decision in MSD nullifying a previously granted extension of term.  And, third, both referred to the principle set out in the objects clause (section 2A) of the Patents Act 1990 that ‘the patent system balances over time the interests of producers, owners and users of technology and the public’ (emphasis added).

The scheme for extending the term of pharmaceutical patents inherently involves a balancing act.  Its primary purpose is to ensure that patentees are not excessively disadvantaged by delays in securing regulatory approval to market patented products.  For example, if a drug is not approved for use until 10 years or more after a patent application is filed, the patentee may have less than half of the standard 20 year patent term remaining to compensate for its investment in discovery and development before becoming exposed to generic competition.  On the other hand, an extended period without competition necessarily exposes the wider public to higher costs of medical treatment.  In an effort to balance these competing interests, the relatively complex provisions of the Patents Act aim to ensure that a ‘typical’ pharmaceutical patentee benefits from up to 15 years of exclusivity, by granting extensions of the patent term of up to five years, i.e. to a maximum of 25 years from filing.  (A 2013 review of pharmaceuticals patents – which the government initially declined to release – found that 53% of such patents have an effective life of 15 years, while 89% have an effective life of over 10 years.)

The primary provisions of the Patents Act governing extensions of patent term are:

  1. section 70, which sets out the conditions that must be satisfied before a patentee can apply for an extension of the term of its patent;
  2. section 71, which sets time limits for filing of applications for extensions of term; and
  3. section 77, which specifies how the duration of an extension of term is to be calculated. 

In each of Ono and MSD, the patentee sought to obtain an advantage, or avoid disadvantage, by arguing for beneficial interpretations of the extension of term provisions.  In each case they failed.  And in both cases the Full Court upheld the principle that the purpose of the extension of term scheme is to balance the competing interests of the patentee of a pharmaceutical substance against the public interest in the unrestricted use of the pharmaceutical invention after expiry of the patent.  In Ono, in particular, the Full Court rejected the proposition that sections 70, 71, and 77 should be construed to achieve a commercial outcome for the patentee.  In MSD the Full Court again invoked the principle of ‘balance’ in declining to permit an extension of term based on a later Australian marketing approval, in circumstances where the patentee had already obtained the benefit of an ‘export only’ approval of a substance falling within its patent claims with an effective life of over 15 years.

The relevance of the Full Court’s focus on balancing of interests, and its references to the objects clause, could extend beyond these cases.  The three judges here are all among the five who recently heard the appeal in the Thaler ‘AI inventor’ case, in which the competing interests of developers and owners of ‘invention machines’, and of the broader public (who might not see the same benefit in granting patent monopolies on automatically-generated inventions), are potentially at stake.  It will be interesting to see whether they adopt a similar approach to weighing up the balance of interests in that case, also.

08 March 2022

Australian Appeals Court Seems Sceptical of Push to Name DABUS ‘AI’ as Inventor

I am not a robotOn 9 February 2022, the appeal by the Commissioner of Patents against the decision of Justice Beach finding that the ‘AI’ machine known as DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) could be named as inventor on a patent application filed by Dr Stephen Thaler, was heard before an expanded Full Bench of the Federal Court of Australia.  The five-judge panel comprised Chief Justice Allsop, and Justices Nicholas, Yates, Moshinsky and Burley.  The appointment of an expanded panel (three judges is usual), including the Chief Justice, is notable, and suggests that the court considers the question of whether a machine can be an inventor for the purposes of the Patents Act 1990 to be one of particular legal importance.  The case was argued for Dr Thaler by David Shavin QC (who also appeared at first instance), and for the Commissioner of Patents by Sophie Goddard SC (appearing for the first time in this matter).  Hamish Bevan (who represented the Commissioner at first instance) argued the Commissioner’s case in reply.  The proceedings were conducted via video conference, and I observed online.

I think that it is fair to say that Dr Thaler did not experience such a smooth ride on appeal as he did at first instance.  Where Justice Beach seemed positively enthusiastic about the idea of allowing patent applications to be filed, and patents granted, for inventions autonomously devised by machines, the judges on the Full Bench appeared sceptical of a number of the arguments presented on behalf of Dr Thaler, and at times subjected Mr Shavin to fairly sharp questioning and criticism.  There are some aspects of the original decision that are unlikely to survive the appeal, although Dr Thaler only requires one line of reasoning to stand in order to prevail.

Based on the arguments presented, there are a number of sub-questions that the Full Court may need to decide.  First, there is a question of whether the case is simply about determining the meaning of the word ‘inventor’ as a matter of pure statutory construction, or about deciding whether or not to develop the concept of the inventor according to a common law methodology.  Either way, the court then needs to decide whether or not a non-human, machine inventor should be included.  In doing so, it may need to consider whether non-human inventors are compatible with other provisions of the Act, and in particular with the section that deals with the entitlement to be granted a patent.  A machine cannot possess or assign intellectual property rights, so provisions that most naturally apply to transfers of title between (natural or legal) persons may not necessarily be compatible with ‘AI’ inventors.  Justice Beach found that two different mechanisms specified in the legislation could apply to enable Dr Thaler to claim ownership of patent rights on inventions made by DABUS.  He will need at least one of these to survive the appeal.

There are a number of avenues by which the Commissioner could succeed in her appeal, but by the same token there are multiple opportunities for Dr Thaler’s defence of the appeal to be successful.  It is difficult to predict which lines of reasoning the court may adopt, and indeed it is not unlikely that the judges will hand down multiple concurring and/or dissenting opinions.  On balance, my sense is that the appeal is more likely than not to succeed – perhaps by a majority rather than unanimous judgment.  If so, then Australia will rejoin the many other jurisdictions in which corresponding applications naming DABUS as inventor have been rejected.

The remainder of this article provides a summary of the major arguments presented at the hearing.  It is somewhat lengthy, but considerably less so than the full day spent at the Federal Court!

22 February 2022

Australian Medical/Biotech ‘Patent Box’ Tax Legislation Revealed

Some kind of box On 10 February 2022, the Treasury Laws Amendment (Tax Concession for Australian Medical Innovations) Bill 2022 was introduced to the Australian parliament, and received its first and second readings in the House of Representatives.  The Bill represents the fulfilment of an undertaking in the Federal Government’s 2021 budget to introduce a ‘patent box’ scheme to encourage innovation and commercialisation in the Australian medical and biotechnology sectors.  A ‘patent box’ (the name refers either to an actual box on a form, or to a notional box into which a company allocates a proportion of its income) is a tax incentive scheme under which income that can be directly attributed to the commercialisation of patented technology (as distinct from other attributes, such as branding, know-how, or manufacturing capability) is taxed at a reduced rate. 

Under the scheme established by the legislation, the minimum concessional tax rate is 17%, compared with the normal corporate tax rate of 30% for large companies, or 25% for small and medium enterprises (SMEs).  However, the full benefit of the scheme is only available to the extent that R&D leading to development of a patented invention is conducted in Australia.

As the government had indicated in its original budget announcement, only medical and biotechnology inventions will be eligible for the patent box tax concession.  In particular, a patent will be eligible if it is ‘linked’ to a therapeutic good included on the Australian Register of Therapeutic Goods (ARTG).  This means that a product, which is covered wholly or in part by the claims of the patent, must be a therapeutic good (e.g. a pharmaceutical substance or medical device) that requires, and has received, marketing approval in Australia.

Interestingly, however, the patent relied upon as the basis for eligibility under the patent box scheme need not be an Australian patent.  A patent will qualify under the scheme if it is an Australian standard patent (i.e. innovation patents are not eligible), a US utility patent, or a European patent granted under the European Patent Convention (EPC). 

It was initially proposed that only patents having a priority date after the announcement would qualify.  However, in further positive news, according to the Bill patents granted or issued after the date of the budget announcement (11 May 2021) will be eligible.

It is intended that the patent box concession will commence in the coming financial year, i.e. from 1 July 2022.  However, for this to happen the legislation will need to be passed in both houses of parliament before federal election is called.  It is widely anticipated that this will occur in early to mid April, shortly after the government hands down its budget on 29 March 2022.  With no further sitting days scheduled prior to budget week, it could become a race against time to get the legislation through.

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