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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Tags: Australia, Exhaustion, Implied licence, Patent law

Games — Now Less Patentable than Ever in Australia

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

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

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

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

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

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Tags: Australia, Games, IPGOD, Patentable subject matter

COVID Update – Surprise Surge in September Patent Filings

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

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

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

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

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