With Second-Tier Patent Rights in Retreat in Australia, Are They Making an ‘Advancement’ in New Zealand?

While the second-tier innovation patent may be out-of-favour with the Australian government (a late stay of execution notwithstanding), there is at least one New Zealand parliamentarian who is bold enough to stand up for the rights of incremental innovators.  Dr Parmjeet Parmar is a list member for the opposition National Party in New Zealand, who has drafted and submitted a private member’s bill titled the Patents (Advancement Patents) Amendment Bill.  The bill proposes the introduction of a new second-tier patent right which has many similarities with – and a few differences from – the Australian innovation patent, and Dr Parmar suggests that it would fill a gap in the availability of intellectual property rights in New Zealand that was widened by the enactment of the Patents Act 2013.

Generally speaking, the proposed ‘advancement patent’ would – like the innovation patent – provide for a shorter-term patent right, permit fewer claims, and feature a bifurcated system of registration and optional examination and enforceability.  Some of the major differences from the innovation patent would be:

1. terminology, i.e. ‘advancement’ rather than ‘innovation’, and ‘advancement step’ rather than ‘innovative step’;
2. maximum term, i.e. up to ten years, rather than eight years; and
3. lifecycle, i.e. an ‘advancement patent’ would be considered ‘provisional’ initially, and only have the status of ‘granted’ following examination/certification.

Reading Dr Parmar’s maiden speech in the New Zealand parliament, it is not hard to see where she finds her enthusiasm for innovators and innovation.  Born, raised and originally educated in India, she moved to be with her husband in New Zealand where she completed a PhD in biological sciences at the University of Auckland.  She subsequently worked in both academic and commercial science and research, before establishing a business manufacturing natural health products.  Clearly this is a level of hands-on experience with research, innovation, business and entrepreneurialism to which few – if any – of the politicians, bureaucrats and economists currently gunning for the Australian innovation patent can lay claim.

Many people will be surprised to see this new bill introduced in New Zealand at the same time that Australia is looking to abolish the innovation patent.  A common theme in the long gestation of the New Zealand Patents Act 2013 and the recent review of Australia’s IP arrangements by the Productivity Commission was the view, held particularly by certain economists, that for net importers of intellectual property and technology, such as Australia and New Zealand, intellectual property rights tend to be owned predominantly by foreign entities, and that it is therefore not in our interests to grant such rights improvidently, or too easily.

My own analysis of innovation patent data over a nine-year period showed that while the target community of Australian small and medium enterprises (SMEs) were indeed, by filing numbers alone, the dominant users of the system, too many of these were ‘self-filers’, who generally gain no value from their patents, while many of the largest individual users of the system are foreign entities that filed innovation patents for strategic reasons (e.g. Apple, Inc), or merely to take advantage of economic incentives in their own home countries (e.g. many Chinese companies).  While probably not enough to justify abolition – rather than improvement – of the innovation patent, this is not a great look, and is hardly a glowing endorsement of the domestic benefits of a second-tier patent system.

Considering these current concerns with the innovation patent, I decided to take the opportunity to reach out to Dr Parmar and ask her about her motivations for drafting her bill, and why she believes that a New Zealand ‘advancement patent’ would fare better than the Australian innovation patent.  She was kind enough to take the time out of her busy schedule to answer my emailed questions, and I am pleased to be able to present her views in her own words.

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Tags: Innovation patent, Innovation policy, Law reform, New Zealand, Public policy

A ‘Death Row Reprieve’ for Innovation Patents as IP Laws Amendment Legislation Reaches Parliament

On 28 March 2018, the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2018 was introduced to the Australian House of Representatives.  Schedule 1 of the Bill, along with associated regulations, will implement various recommendations arising from the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, namely: clarifying the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark; expanding the scope of ‘essentially derived variety’ declarations in the Plant Breeder’s Rights Act; reducing the grace period for filing non-use applications under the Trade Marks Act; and eliminating requirements for patentees to provide certain data relating to pharmaceutical patents with an extended term.

Notably absent from the bill as introduced to parliament, however, are provisions for phasing out Australia’s second tier patent system, the innovation patent.  As recently as early March, IP Australia published its response to submissions on the proposed phase-out, rejecting continuing calls for the innovation patent system to be retained in some form, and indicating its intention to proceed with the transition process set out in the exposure draft of the legislation.  But if a week is a long time in politics, three weeks is a veritable eternity, and IP Australia has now announced that ‘the Government has decided to undertake further industry consultation targeted at better understanding the needs of innovative SMEs before the phase out of the innovation patent occurs.’

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Tags: Australia, Innovation patent, Law reform

Is Australia Headed for a ‘Technology’ Test for Patent-Eligibility?

Last week I reported on IP Australia’s response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  Now, hot on the heels of that development, IP Australia has also published the submissions it received in its other ongoing consultation process, commenced in September 2017, along with its corresponding further response.  This consultation also relates largely to implementing recommendations made by the Productivity Commission, and accepted by the Australian Government, including: amending inventive step requirements; introducing an objects clause into the Patents Act 1990; amending the provisions for Crown use of patents (and designs); and amending the provisions for compulsory licensing of patents.  In this case, however, proposed legislation has yet to be drafted, and the initial consultation has been directed to obtaining feedback from stakeholders on a number of potential implementation options for each recommendation.

A total of 18 non-confidential submissions were received in response to IP Australia’s consultation papers.  Once again, a number of these submissions argued against changes in the law, notwithstanding that the Government has already decided to implement the various Productivity Commission recommendations, and doing nothing is therefore not an option that is open to IP Australia.  Fifteen non-confidential submissions provided comments on the options for amending the inventive step requirements, of which 14 did not support making any changes.  Fourteen non-confidential submissions were received in relation to introducing an objects clause, of which just six submissions were in favour, and eight did not support the change.

There was less stakeholder interest in Crown use and compulsory licensing, however among those that did make submissions on these issues there was somewhat greater support for change.  Of seven non-confidential submissions relating to Crown use, five supported amending the law.  In relation to compulsory licensing provisions, three out of eight non-confidential submissions supported change.

Crown use and compulsory licensing provisions have rarely been invoked in Australia (and no compulsory licence has ever been granted).  Furthermore, the proposed amendments are unlikely to result in any increase in the use of these provisions.  The relative lack of interest in these areas is therefore not very surprising.

However, the proposed changes to the inventive step requirements, and the preferred wording of the objects clause, could have the more profound effect of introducing a ‘technology’ requirement into Australian patent law, creating tension with previous statements of the Full Bench of the Federal Court of Australia rejecting the proposition that patentable inventions be required to fall within an ‘area of science and technology’.

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Tags: Australia, Law reform, Public consultation

Continuing Opposition to Abolition of the Innovation Patent Falls On Deaf Ears at IP Australia

IP Australia has published its response to submissions made in its consultation on the Exposure Draft Intellectual Property Laws Amendment Bill 2017 and Regulations.  The period for comment on the proposed legislation closed on 4 December 2017.  The draft legislation contains measures to implement aspects of the Government’s response to the Productivity Commission’s inquiry into Australia’s intellectual property arrangements, along with amendments to strengthen plant breeder’s rights (PBR) enforcement, streamline official processes, and make technical improvements to the legislation.

While the majority of Productivity Commission recommendations addressed by the draft legislation relate to PBRs and trade marks, the most significant patent-related provisions are those implementing the abolition of the innovation patent system.  The proposed approach would see a fairly gentle transition, with applicants given a year’s notice within which innovation patents would still be granted under the current system, followed by eight years during which all existing innovation patents would gradually cease or expire, and restrictions would be imposed on new applications and the certification of innovation patent claims.

When the draft legislation was published, I argued that the proposed transition could be viewed as too gentle, considering the Productivity Commission’s relatively strong objections to the strategic use of divisional innovation patents, and the uncertainty caused by uncertified claims.  This was, however, very much a contingent view – i.e. given that the innovation patent system is to be abolished based upon the Productivity Commission’s recommendation, the abolition should be implemented in a way that most-effectively addresses the Commission’s reasons for making that recommendation. 

In fact, I would prefer to see the innovation patent system given a second chance, in an improved form.  However, since the Government has accepted the Productivity Commission’s recommendation, and the consultation was directed to its implementation, rather than being a further opportunity to canvas objections to this decision, I did not make a submission.  This did not, however, prevent a number of others from taking the opportunity to once again express their opposition to abolishing the innovation patent system.

Unsurprisingly, these repeated objections fell on deaf ears, with IP Australia focussing in its response on the few submissions that actually addressed the merits of the proposed legislation.  On this basis, it appears at this stage that – absent a last-minute reprieve at the parliamentary level – the process of abolishing the innovation patent system is likely to proceed in substantially the manner set out in the draft legislation.

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Tags: Australia, Innovation patent, Law reform, Public consultation

The Need to Perform ‘Complex, Time-Consuming and Expensive’ Clinical Trials Does Not Make a Patent Invalid

Patents play an important role in the development of new pharmaceutical compounds, and therapies based upon the use of such compounds.  The primary global model for drug development is based upon private enterprise and competition.  Within this model, the carrot of a potential patent ‘monopoly’ provides an incentive for companies to deploy the considerable resources – with costs commonly estimated in the billions of dollars – necessary to discover, research, trial, and market new drugs and therapies.  Although not everyone agrees that this is the best approach, it is difficult to dispute that it has, nonetheless, contributed to the delivery of great benefits to humanity over the past century or so.

Within the realm of conventional ‘small molecule’ drugs (i.e. setting aside, for present purposes, recent developments in biotechnology and biologics) four broad categories of patent protection can be identified.

1. New compounds.  When an innovator discovers or synthesises a compound that was not previously known to exist and/or to have any useful therapeutic effect, a patent may be obtained for the compound itself.
2. Formulations.  While it is one thing to identify a biologically-active compound, it is often another altogether to find a safe and effective way of delivering it to a patient.  When an innovator develops a new and/or more effective formulation (e.g. a particular tablet or other oral dosage form), a patent may be obtained for that formulation, even if the active ingredient is well-known and no longer patentable.
3. New therapeutic effects.  When an innovator discovers that a compound already known to have one or more therapeutic effects has a further, and unforeseen, therapeutic use (e.g. in the treatment of a different disease or condition), a patent may be obtained for a method of using or making the compound specifically for the new therapeutic purpose.
4. Improved methods of treatment.  When an innovator discovers that a known compound with a known therapeutic use can be made even more effective, e.g. by combining it with other compounds or therapies, or using a different dosing regime, a patent may be obtained for the new method of treatment.

Of course, a patent will only be validly granted in any of these cases if all of the legal requirements for patentability – novelty, inventive step, sufficiency of description, and so forth – are all satisfied.  These requirements are intended to balance the rewards available to innovators against the rights of the broader community to access knowledge and to engage in free competition.

From a policy perspective, getting the balance right is particularly important in the case of pharmaceutical products.  If it is too difficult to obtain a valid patent, there may be insufficient incentive for companies to invest billions of dollars in new drug development.  On the other hand, it is important to keep in mind that, one way or another, it is the wider community – either individually, or through taxes in countries where healthcare is substantially subsidised by government – that ultimately pays for that development, through the higher prices charged for patented drugs.  Allowing patents to be granted too easily therefore may therefore represent a significant social cost.

A major component of the cost of bringing a drug to market is the need to conduct extensive clinical trials in order to prove the effectiveness and safety of the drug, and thus to obtain regulatory and marketing approval.  Such trials typically take years to complete, following the initial discovery of a new compound, or of a new use for an existing compound.  However, a patent application must be filed as early as possible to ensure that any available protection is secured in the event that the trials are successful.

A recent appeal decision of a Full Bench of the Federal Court of Australia sheds light on how the balance between an innovator’s need to file early, and the community’s right to receive a full disclosure of the invention, is struck in the case of a patent for a new therapeutic use of a known compound: Warner-Lambert Company LLC v Apotex Pty Limited (No 2) [2018] FCAFC 26.  The court has confirmed that the fact that the clinical trials required to establish an effective and safe dosage of a drug for a new therapeutic use may be ‘complex, time-consuming and expensive’ will not render invalid a patent that was filed prior to conducting this essential research.

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Tags: Australia, Enablement, Pharmaceuticals, Sufficiency