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

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

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

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

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

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

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

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

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

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

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

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

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

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Tags: Claim construction, Infringement, Patent law, Pharmaceuticals

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

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

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

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

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

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

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

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

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

How Many Patents Are There?

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

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

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

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Tags: Australia, Patent analytics

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

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

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

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

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

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

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