Once again, Christmas has rolled around. 2013 has been a great year for Franke Hyland and we hope that it has been for you as well. We would like to thank our clients and associates for the support they have shown Franke Hyland over the year and we look forward to continuing our associations with each one of you in 2014.
Our office will be closed from midday on 24 December and will re-open on 2 January 2014. Should an urgent issue arise during this time please contact us via email at: mail@frankehyland.com.au – this address will be monitored throughout the holiday period.
Please also note that IP Australia and IPONZ are closed between the same dates, so any official deadlines falling due during this period have, in effect, been moved to 2 January 2014 and we will ensure they are dealt with upon our return.
We wish you a very happy end to 2013 and we look forward to speaking to you all again when Franke Hyland returns, refreshed and relaxed, in 2014. If you would like to see Franke Hyland's Christmas message (with thanks to FabZing) please click here.
23 December 2013
09 December 2013
Resolving Disputes: Certainty and the Sunk Cost Fallacy
IP disputes will inevitably arise from time to time. In a typical process, one party will become aware of circumstances that they consider to infringe their rights. They seek advice, and if positive, proceed to send a letter of demand to the other party. This will set out their rights, the action complained of, and the outcomes which they desire.
In many cases, this leads to a resolution, either by the accused party ceasing their conduct, or a negotiated settlement being reached.
However, in a small number of cases, this is not the end, but the beginning. Formal proceedings are commenced. Early on in litigation within Australia (and in many other jurisdictions), the parties will be directed to undertake mediation. Most disputes will settle at some point before the final decision is reached.
The longer it progresses, the greater the costs for both parties.
I do not propose to address all the fine points of such negotiations, which will try and balance future ups and downs, money, time, prospects and other commercial and emotional factors.
I want to talk about one issue – the value of certainty. Knowing exactly what is going to happen next, even if it is expensive and unpleasant, can be dealt with and planned for much more effectively than the ongoing uncertainty that is inherent in litigation. This is especially true for a start-up or early stage company. The continuing dispute can be concerning to customers and prospects. It also is likely to eat up a lot of management time for the key decision makers; that may be better spent on business development, marketing, operational supervision. Anything that might actually make money.
The problem is that we are all wired to value the time and money we have already spent (or perceive we have spent) more highly than our future returns, even if they are greater. Emotional sunk cost manifests as "we have spent too much money on this to let them get away with this". The real question is, how much more will you have to spend from now to get to a conclusion, what are the chances of getting a conclusion that you want, and how else could we resolve this.
I was recently assisted in a trade mark dispute between an early stage company, and a U.S. based multinational. The multinational was not really in the same business, had no local presence, and it was dubious whether they could succeed. The law in this space is not clearly settled, and will always heavily depend on the facts and the evidence. After a letter of demand, the multinational commenced proceedings. It would have involved a large expenditure of time and money for the early stage company, to fight this in earnest. Even if they won, they would be well out of pocket, and the management time invested would never come back again. There was a risk of substantial damages and costs if they lost.
The client made the wise decision that certainty was more important. They decided to instead change their trading name, and invest the time and money in promotion and business development of the new name instead of legal costs. Particularly at their business stage, certainty was more important than being found to be right.
Walking away like this is by no means always the right course of action, but the value of certainty should not be underestimated.
by Peter Franke
In many cases, this leads to a resolution, either by the accused party ceasing their conduct, or a negotiated settlement being reached.
However, in a small number of cases, this is not the end, but the beginning. Formal proceedings are commenced. Early on in litigation within Australia (and in many other jurisdictions), the parties will be directed to undertake mediation. Most disputes will settle at some point before the final decision is reached.
The longer it progresses, the greater the costs for both parties.
I do not propose to address all the fine points of such negotiations, which will try and balance future ups and downs, money, time, prospects and other commercial and emotional factors.
I want to talk about one issue – the value of certainty. Knowing exactly what is going to happen next, even if it is expensive and unpleasant, can be dealt with and planned for much more effectively than the ongoing uncertainty that is inherent in litigation. This is especially true for a start-up or early stage company. The continuing dispute can be concerning to customers and prospects. It also is likely to eat up a lot of management time for the key decision makers; that may be better spent on business development, marketing, operational supervision. Anything that might actually make money.
The problem is that we are all wired to value the time and money we have already spent (or perceive we have spent) more highly than our future returns, even if they are greater. Emotional sunk cost manifests as "we have spent too much money on this to let them get away with this". The real question is, how much more will you have to spend from now to get to a conclusion, what are the chances of getting a conclusion that you want, and how else could we resolve this.
I was recently assisted in a trade mark dispute between an early stage company, and a U.S. based multinational. The multinational was not really in the same business, had no local presence, and it was dubious whether they could succeed. The law in this space is not clearly settled, and will always heavily depend on the facts and the evidence. After a letter of demand, the multinational commenced proceedings. It would have involved a large expenditure of time and money for the early stage company, to fight this in earnest. Even if they won, they would be well out of pocket, and the management time invested would never come back again. There was a risk of substantial damages and costs if they lost.
The client made the wise decision that certainty was more important. They decided to instead change their trading name, and invest the time and money in promotion and business development of the new name instead of legal costs. Particularly at their business stage, certainty was more important than being found to be right.
Walking away like this is by no means always the right course of action, but the value of certainty should not be underestimated.
by Peter Franke
03 December 2013
Thoughts from the USA
I recently had the pleasure of attending the AIPLA annual meeting in Washington DC. The main focus of the sessions was, as expected, around the impact of the changes to U.S. patent law brought about by the America Invents Act (AIA). There were also a number of sessions dealing with the practicalities of Chinese patent law. This is an interesting, but not unexpected development as U.S. companies seek to engage with the Chinese IP system more seriously. It also indicates the evolution of the Chinese patent system and the importance of the Chinese market to U.S. businesses.
Some other thoughts from the AIPLA meeting include:
• U.S. attorneys expect to be making much more use of provisional applications as establishing a first-to-file priority disclosure becomes more important.
• A possible increase in requests for Supplemental Examination (basically a re-examination requested by the patentee based on new newly uncovered prior art), including using the process to cure possible instances of ‘inequitable conduct’ where the full range of relevant prior art may not have been notified to the Examiner. However, it is an expensive process to engage in - official fees of USD 21,260 with no small entity discount - meaning it is likely to only be used where a substantial litigation is expected.
• ‘Functional’ patent claims are still valid under the AIA, provided there is sufficient disclosure of the structure to meet the function.
• Most U.S. attorneys I spoke to said their clients are adjusting well to the AIA, and to the first-to-file system. In most cases, U.S. patent applicants who were interested in overseas patent protection were operating to the system in any case.
I am also pleased to report that the mood around the U.S. economy is much more positive than I had encountered in the last 2 to3 years. Many attorneys saw a big spike in new applications in April prior to the AIA being implemented, much as we had seen in Australia preceding the Raising the Bar Act. However, the expected slump afterwards has not eventuated, meaning the rate of filing new applications has taken a consistent step upwards.
I enjoyed catching up with U.S. associates in Minnesota and Colorado. Both of these states’ history is not unlike that of Australia, with their economies being originally built on mining and agriculture. But now as water resources become a significant issue, both regions are looking to technology developers to be the mainstay of future economies. It turns out that both value-added agrifood processing and medical device design & manufacture have found favour in these regions, which fits well with Franke Hyland’s focus and capabilities.
by Adam Hyland
Some other thoughts from the AIPLA meeting include:
• U.S. attorneys expect to be making much more use of provisional applications as establishing a first-to-file priority disclosure becomes more important.
• A possible increase in requests for Supplemental Examination (basically a re-examination requested by the patentee based on new newly uncovered prior art), including using the process to cure possible instances of ‘inequitable conduct’ where the full range of relevant prior art may not have been notified to the Examiner. However, it is an expensive process to engage in - official fees of USD 21,260 with no small entity discount - meaning it is likely to only be used where a substantial litigation is expected.
• ‘Functional’ patent claims are still valid under the AIA, provided there is sufficient disclosure of the structure to meet the function.
• Most U.S. attorneys I spoke to said their clients are adjusting well to the AIA, and to the first-to-file system. In most cases, U.S. patent applicants who were interested in overseas patent protection were operating to the system in any case.
I am also pleased to report that the mood around the U.S. economy is much more positive than I had encountered in the last 2 to3 years. Many attorneys saw a big spike in new applications in April prior to the AIA being implemented, much as we had seen in Australia preceding the Raising the Bar Act. However, the expected slump afterwards has not eventuated, meaning the rate of filing new applications has taken a consistent step upwards.
I enjoyed catching up with U.S. associates in Minnesota and Colorado. Both of these states’ history is not unlike that of Australia, with their economies being originally built on mining and agriculture. But now as water resources become a significant issue, both regions are looking to technology developers to be the mainstay of future economies. It turns out that both value-added agrifood processing and medical device design & manufacture have found favour in these regions, which fits well with Franke Hyland’s focus and capabilities.
by Adam Hyland
11 November 2013
A new way to get faster international grant
IP Australia announces new Global Patent Prosecution Highway pilot
One of the keys to a faster, more efficient and less repetitive international patent system is for various patent offices to better use the work of their peers. The old paradigm is that each patent office is an island, and behaves as if the same invention had never been examined by any other patent office, starting at the beginning and working through to the end, regardless of the work done elsewhere.
A major change was the first patent prosecution highway (PPH) agreements reached by the USPTO with various patent offices, including IP Australia. In essence, if you had a final decision from IP Australia to allow at least one claim, and the claims in the US matched, you can go to the front of the examination queue. By using this with expedited examination in Australia, we have been able for several clients to achieve grant of a US patent in less than a year from the first Australian filing. While this is not the best strategy for everyone, in the case of a company seeking funding based on its IP, a granted US patent is a lot more valuable than an application.
The new scheme will allow this process to occur with 12 other patent offices, including Japan, Korea, US, Canada, the UK, Spain, Russia, Denmark, Norway, Portugal, Nordic Patent Institute, and Finland. It is likely that other countries and regional offices will join. While at this stage this is a pilot program, it is open to Australian applicants to apply to use the scheme in those patent offices after 6 January 2014. For countries that are notoriously slow, for example Japan, this could be a very great advantage. This is no guarantee of a patent, or of any preferential treatment in the substantive outcome. However, it is a way to accelerate consideration where that is going to be helpful.
Please contact us for a discussion if you think this program would be of interest.
One of the keys to a faster, more efficient and less repetitive international patent system is for various patent offices to better use the work of their peers. The old paradigm is that each patent office is an island, and behaves as if the same invention had never been examined by any other patent office, starting at the beginning and working through to the end, regardless of the work done elsewhere.
A major change was the first patent prosecution highway (PPH) agreements reached by the USPTO with various patent offices, including IP Australia. In essence, if you had a final decision from IP Australia to allow at least one claim, and the claims in the US matched, you can go to the front of the examination queue. By using this with expedited examination in Australia, we have been able for several clients to achieve grant of a US patent in less than a year from the first Australian filing. While this is not the best strategy for everyone, in the case of a company seeking funding based on its IP, a granted US patent is a lot more valuable than an application.
The new scheme will allow this process to occur with 12 other patent offices, including Japan, Korea, US, Canada, the UK, Spain, Russia, Denmark, Norway, Portugal, Nordic Patent Institute, and Finland. It is likely that other countries and regional offices will join. While at this stage this is a pilot program, it is open to Australian applicants to apply to use the scheme in those patent offices after 6 January 2014. For countries that are notoriously slow, for example Japan, this could be a very great advantage. This is no guarantee of a patent, or of any preferential treatment in the substantive outcome. However, it is a way to accelerate consideration where that is going to be helpful.
Please contact us for a discussion if you think this program would be of interest.
by Peter Franke
04 November 2013
New Zealand Patents Act 2013
It has been a long time coming, but finally New Zealand has a new Patents Act. The Patents Act 2013 received Royal assent on 13 September 2013. While a few administrative provisions took immediate effect, the majority of the provisions are not expected to take effect until 13 September 2014. Patent applications or national phase entries made before the new provisions take effect will remain subject to the current Patents Act.
Supporting Regulations for the new Act are not expected until mid-2014.
There are a lot of changes made by the new Act, some of the more interesting ones are as follows:
- an expansion of the prior art base applicable for assessing novelty and inventive step
- increasing the applicable grounds for examination with a higher standard being on ‘balance of probabilities’ (previously ‘benefit of doubt’)
- an invention must be ‘useful’ by having ‘a specific, substantial and credible utility’
- complete specifications must disclose ‘best method’ and the invention in a ‘clear and complete enough manner’ to be performed by a person skilled in the art
- claims to be ‘clear and concise’ and ‘supported by matter’ disclosed in the complete specification
express exclusions from patentability
- re-examinations available on all grounds between post-acceptance/pre-grant period for patent applications and at any stage after grant for granted patents
- post-acceptance/pre-grant opposition available on all grounds
- revocation of granted patents available before Patent Office or Court
- no extensions of patent term are available
- particular exclusions to infringement provided for seeking regulatory approval, prior use and experimental research
It has to be said that there is significant borrowing and influence from European patent law, particularly in respect to the substantive patentability tests and the use of particular exclusions. The computer programs exclusion was a particular sticking point in the lead up to the new Act and contributed to quite a few years delay. The fact that it is ‘computer programs as such’ smells very strongly of the European influence and it will be interesting to see how this develops given that the European development has not resulted in a blanket ban on software implemented inventions. Similarly, it will be interesting to see if New Zealand examiners adopt a European style approach to assessing inventive step, given that until now inventive step was not an examinable criterion.
The new Patents Act also introduces a Maori advisory committee who will have the power to veto inventions which, if commercially exploited in New Zealand, would be offensive to the indigenous culture. Similar powers have existed under the New Zealand Trade Mark law and appear to have worked very effectively and practically.
All in all, the new Act significantly raises the patentability standard in New Zealand, albeit to a standard more consistent with other countries. Until the new provisions come into force, the lesser standard of the current patent law applies. Hence, to take advantage of the current law, it may be worth considering filing or entering national phase in New Zealand early.
by Simon Ellis
Supporting Regulations for the new Act are not expected until mid-2014.
There are a lot of changes made by the new Act, some of the more interesting ones are as follows:
- an expansion of the prior art base applicable for assessing novelty and inventive step
- increasing the applicable grounds for examination with a higher standard being on ‘balance of probabilities’ (previously ‘benefit of doubt’)
- an invention must be ‘useful’ by having ‘a specific, substantial and credible utility’
- complete specifications must disclose ‘best method’ and the invention in a ‘clear and complete enough manner’ to be performed by a person skilled in the art
- claims to be ‘clear and concise’ and ‘supported by matter’ disclosed in the complete specification
express exclusions from patentability
- contrary to public order or morality (e.g. cloning of human beings, commercial use of human embryos, modifying germ line genetic identity of animals likely to cause suffering without substantial medical benefit)
- human beings and biological processes for their generation
- methods of medical treatment of humans by surgery or therapy
- methods of diagnosis practiced on humans
- ‘computer programs as such’
- re-examinations available on all grounds between post-acceptance/pre-grant period for patent applications and at any stage after grant for granted patents
- post-acceptance/pre-grant opposition available on all grounds
- revocation of granted patents available before Patent Office or Court
- no extensions of patent term are available
- particular exclusions to infringement provided for seeking regulatory approval, prior use and experimental research
It has to be said that there is significant borrowing and influence from European patent law, particularly in respect to the substantive patentability tests and the use of particular exclusions. The computer programs exclusion was a particular sticking point in the lead up to the new Act and contributed to quite a few years delay. The fact that it is ‘computer programs as such’ smells very strongly of the European influence and it will be interesting to see how this develops given that the European development has not resulted in a blanket ban on software implemented inventions. Similarly, it will be interesting to see if New Zealand examiners adopt a European style approach to assessing inventive step, given that until now inventive step was not an examinable criterion.
The new Patents Act also introduces a Maori advisory committee who will have the power to veto inventions which, if commercially exploited in New Zealand, would be offensive to the indigenous culture. Similar powers have existed under the New Zealand Trade Mark law and appear to have worked very effectively and practically.
All in all, the new Act significantly raises the patentability standard in New Zealand, albeit to a standard more consistent with other countries. Until the new provisions come into force, the lesser standard of the current patent law applies. Hence, to take advantage of the current law, it may be worth considering filing or entering national phase in New Zealand early.
by Simon Ellis
27 September 2013
Latest WIPO Innovation Data Shows Australia is Lagging
Recently I attended the World Intellectual Property Organisation (WIPO) information roadshow, where WIPO officials updated us on their latest international IP statistics.
Firstly, overall PCT patent applications continue to grow strongly, after a brief setback in 2008-2010 due to the GFC, etc.
Australia ranks as the 14th most common source of PCT applications, with the U.S. and Japan the most common. China is now ranked fourth, just behind Germany.
The U.S. is still the most popular place to file national patent applications out of the PCT. China is now the third most popular place to file patent applications, moving past Japan. Relatively strong growth in patent applications is still being experienced in the USA, India, Brazil and Russia all growing at >7% over 2010-2011. However, interest in filing patent applications in Australia has declined in the same period.
Most interestingly, there are now two Chinese companies in the top four individual filers of PCT applications, with ZTE Corporation remaining way out in front as the top filer for 2012:
1. ZTE Corporation—CN (3906)*
2. Panasonic—JP (2951)
3. Sharp—JP (2001)
4. Huawei—CN (1801)
5. Bosch—DE (1775)
6. Toyota—JP (1652)
7. Qualcomm—US (1305)
8. Siemens—DE (1272)
9. Philips—NL (1230)
10. Ericsson—SE (1197)
11. LG Electronics—KR (1094)
12. Mitsubishi Electric—JP (1042)
13. NEC—JP (999)
14. Fujifilm Corporation (891)
15. Hitachi—JP (745)
16. Samsung Electronics—KR (683)
17. Fujitsu—JP (671)
18. Nokia—FI (670)
19. BASF—DE (644)
20. Intel—US (640)
In all, the PCT system continues to grow strongly overall, with the USA and Europe leading but with the developing economies making up ground. Australia remains a middling player in the global IP market, and appears to be gradually losing ground since 2008.
Firstly, overall PCT patent applications continue to grow strongly, after a brief setback in 2008-2010 due to the GFC, etc.
Australia ranks as the 14th most common source of PCT applications, with the U.S. and Japan the most common. China is now ranked fourth, just behind Germany.
The U.S. is still the most popular place to file national patent applications out of the PCT. China is now the third most popular place to file patent applications, moving past Japan. Relatively strong growth in patent applications is still being experienced in the USA, India, Brazil and Russia all growing at >7% over 2010-2011. However, interest in filing patent applications in Australia has declined in the same period.
Most interestingly, there are now two Chinese companies in the top four individual filers of PCT applications, with ZTE Corporation remaining way out in front as the top filer for 2012:
1. ZTE Corporation—CN (3906)*
2. Panasonic—JP (2951)
3. Sharp—JP (2001)
4. Huawei—CN (1801)
5. Bosch—DE (1775)
6. Toyota—JP (1652)
7. Qualcomm—US (1305)
8. Siemens—DE (1272)
9. Philips—NL (1230)
10. Ericsson—SE (1197)
11. LG Electronics—KR (1094)
12. Mitsubishi Electric—JP (1042)
13. NEC—JP (999)
14. Fujifilm Corporation (891)
15. Hitachi—JP (745)
16. Samsung Electronics—KR (683)
17. Fujitsu—JP (671)
18. Nokia—FI (670)
19. BASF—DE (644)
20. Intel—US (640)
In all, the PCT system continues to grow strongly overall, with the USA and Europe leading but with the developing economies making up ground. Australia remains a middling player in the global IP market, and appears to be gradually losing ground since 2008.
by Adam Hyland
13 September 2013
ACIP Releases Options Paper on Review of the Innovation Patent System
In a previous blog, we reported that ACIP had initiated a review of the innovation patent system.
Further to the review, ACIP have now issued an options paper and have invited public submissions on the paper by 4 October 2013. The options paper can be viewed here.
At its heart, the innovation patent system offers a second-tier patent enforcement regime to the standard patent system. The innovation patent requires the satisfaction of an 'innovation step' test, which is considered and intended to be a lower threshold than the 'inventive step' test required for a standard patent. The trade-off for this lower threshold test being that the maximum term of an innovation patent is less than that for a standard patent – 8 years as opposed to 20 years. However, there have been criticisms that, while for a shorter term, the innovation patent offers the same level of infringement enforcement as a standard patent, although is much harder to counter due to its lower validity threshold requirements.
The innovation patent has been criticised as being overly generous to patent owners and open to abuse. The innovation patent is much more encompassing in terms of what subject matter it can provide patent protection for when compared with other second-tier patent mechanisms offered in some other countries (notably utility models provided in Germany, China, Japan and Korea).
In recent changes, the inventive step threshold for standard patents was raised in the ‘Raising the Bar’ amendments to the Patents Act. As a consequence, there is now a perception that the gap between the inventive step test and the innovative step test has widened.
The paper points to a variety of options available to consider. Interesting proposals are mentioned around possible limitations upon the monopoly afforded to the owner of an innovation patent or a reduction to the available remedies for infringement of an innovation patent.
The option which has generated most support is in somehow raising the innovative step threshold. However, opinions vary on what that should be or how it could be implemented, if the innovative step is still to be a lower threshold than the inventive step. There have been suggestions that the innovative step should just be the same as inventive step. Fortunately, ACIP have remarked that this would present a ludicrous outcome and would make the innovation patent a redundant system, in which case it would be more viable to simply abolish the innovation patent system.
ACIP intends to finalise and present its recommendations to the Australian Government later this year. It will be interesting to see what they do come up with. Having said that, regardless of the final recommendations, it is up to the Government as to whether anything is done and they have been dismissive in the past.
by Simon Ellis
23 July 2013
Islamic Republic of Iran becomes the Latest Contracting State to the PCT
On 4 July 2013, the Islamic Republic of Iran became the latest addition as a PCT Contracting State. The PCT will come into force for Iran from 4 October 2013. This brings the current total of countries applicable to the PCT system to 148.
Earlier this year, Saudi Arabia also became a PCT Contracting State and will become bound on 3 August 2013.
Hopefully, we are seeing a trend in the so-called Gulf States to join the PCT system.
All full list of PCT Contracting States is available here:
http://www.wipo.int/pct/en/pct_contracting_states.html
by Simon Ellis
Earlier this year, Saudi Arabia also became a PCT Contracting State and will become bound on 3 August 2013.
Hopefully, we are seeing a trend in the so-called Gulf States to join the PCT system.
All full list of PCT Contracting States is available here:
http://www.wipo.int/pct/en/pct_contracting_states.html
by Simon Ellis
14 June 2013
U.S. Supreme Court hand down Myriad Genetics decision
The U.S. Supreme Court has handed down its unanimous decision today in relation to the patentability of naturally occurring DNA sequences. It has determined that merely isolating and determining the functions of a naturally occurring DNA sequence does not entitle the discoverer to a patent on that sequence. However, application and derivatives of that sequence, for example cDNA, are patentable subject matter.
In my humble opinion, the court has got this completely right. Merely isolating something from nature is not invention, although there is a level of case law which suggests that it is, in relation to pharmaceuticals. This case has significant implications in other areas of technology, for example for patents on any naturally occurring but isolated substances. Unless a ‘non-naturally occurring manufacture or composition of matter’ is brought into existence, there is no patentable subject matter.
This case was specifically concerned with patents around, inter alia, the BRCA1 and BRCA2 genes which indicate an increased risk of breast and ovarian cancer.
The court went to some lengths to be clear that they has no decided anything about non-naturally occurring DNA sequences, nor about methods for sequencing, nor about applications of the newly discovered knowledge. This case concerned the patents directed to the cDNA and DNA per se.
For those interested, the full decision is available here:
http://www.supremecourt.gov/opinions/12pdf/12-398_8njq.pdf
The equivalent Australian case found for Myriad at first instance, and is currently on appeal to the Full Court of the Federal Court.
by Peter Franke
In my humble opinion, the court has got this completely right. Merely isolating something from nature is not invention, although there is a level of case law which suggests that it is, in relation to pharmaceuticals. This case has significant implications in other areas of technology, for example for patents on any naturally occurring but isolated substances. Unless a ‘non-naturally occurring manufacture or composition of matter’ is brought into existence, there is no patentable subject matter.
This case was specifically concerned with patents around, inter alia, the BRCA1 and BRCA2 genes which indicate an increased risk of breast and ovarian cancer.
The court went to some lengths to be clear that they has no decided anything about non-naturally occurring DNA sequences, nor about methods for sequencing, nor about applications of the newly discovered knowledge. This case concerned the patents directed to the cDNA and DNA per se.
For those interested, the full decision is available here:
http://www.supremecourt.gov/opinions/12pdf/12-398_8njq.pdf
The equivalent Australian case found for Myriad at first instance, and is currently on appeal to the Full Court of the Federal Court.
by Peter Franke
29 April 2013
The Bar Has Risen
Following from our previous blog posts on the ‘Raising the Bar’ legislation, you will be aware that the commencement date has passed for the various changes to patentability (and other) requirements in Australia. If you did not request examination before 15 April 2013, your Australian patent application(s) will now be subject to the new and generally more stringent validity requirements.
IP Australia have received an avalanche of patent applications and examination requests in the weeks leading up to the change; estimated to be a normal year’s worth of requests in the month before the deadline. We suspect that this spike in activity will substantially affect the internal examination queue at IP Australia, resulting in longer delays before examination reports are issued.
Inventive Step Present, but Innovative Step Not?
The innovation patent is typically thought of as necessarily requiring a lower or lesser differentiation from the prior art (innovative step) than that required for the standard patent (inventive step). However, a recent case decided by the Federal Court of Australia shows that it is possible for virtually identical innovation and standard patent applications to be (respectively) rejected for lack of innovative step and found to have an inventive step.
Delnorth Pty Ltd v Commissioner of Patents [2013] FCA 165 was an appeal from a decision of IP Australia to revoke a granted standard patent following re-examination based on a number of prior art documents. These documents had not been considered during original examination, but had emerged later. They had also been considered during litigation of a separate Delnorth innovation patent having practically identical claims to the standard patent. Some of the innovation patent claims had been revoked by the Federal Court for lack of innovative step on by comparison with the same prior art.
A key difference between the legislation regarding ‘innovative step’ and ‘inventive step’ was that for any prior art document to be used in an assessment of inventive step, it had to pass three specific hurdles: that it would have been ‘ascertained’, ‘understood’ and ‘regarded as relevant’ by the patent addressee; while no such hurdles were applicable to inventive step.
In this case, some of the key prior art documents that were used to invalidate the innovation patent did not clear those hurdles, and so were excluded from the inventive step assessment. The judge made this decision on the basis that there was not convincing evidence that those documents would definitely have been looked for, nor that they would then have been found, by the patent addressee.
It has not been common for documents to be excluded in this way, as evidence is usually presented that the prior art documents will meet those requirements. However, when the technical field of a patent is fairly ‘low-tech’ (in this case it related to roadside posts) the possibility remains that a general lack of patent searching or patent awareness (or a lack of evidence of this) in an industry could lead to the exclusion of prior art used in assessing novelty from the assessment of inventiveness.
It should be noted that those ‘hurdles’ have now been removed from the Patents Act 1990; all applications coming under the post-‘Raising the Bar’ legislation will face a potentially tougher assessment of inventiveness. However, the old standards will still apply to a vast number of patents and applications existing and sent for examination prior to 15 April 2013.
by Adam Hyland
02 April 2013
The U.S. Implementation of The Hague Agreement on Industrial Designs
In all the hype and profile of the changes introduced to U.S. patent laws by the America Invents Act, it has been easy to overlook another significant change that occurred in the U.S. with the signing of the Patent Laws Treaties (PLT) Implementation Act in December 2012 and, in particular, the sections pertaining to the implementation of The Hague Agreement. These sections are expected to become effective sometime in 2013.
The Hague Agreement relates to an international system for designs. In the U.S., legislation governing the protection of designs is provided within the U.S. patent legislation. The Hague system, administered by the World Intellectual Property Office (WIPO), is a procedural system that facilitates seeking design protection in multiple member countries through the filing of a single application. Whether design protection in each country is conferred remains at the discretion of the intellectual property office of each country. However, the purported benefits of the system come from the centralised filing approach. The Hague system can be readily compared to what the PCT system is to patents and to what the Madrid system is to trade marks.
Historically, the Hague system has suffered from a number of issues which has detracted from the potential benefits of using the system. A main issue is that, compared with the PCT system or Madrid system, the number of member countries is relatively small and the geographical spread of member countries is quite limited, notably to European and African countries. Hence, as an ‘international’ system it lacks a true international coverage.
There have been a few inherent sticking points to the Hague system which has hindered the attraction for countries to consider joining up. A main hurdle concerned an incompatibility between two schools of design regimes which exist in different countries. A number of countries adopt a fairly European–type of regime in which design protection is conferred without any form of substantive examination. The Hague system was originally conceived for this non-examination regime. Other significant countries (which include the U.S.) require a design to be subjected to substantive examination before protection can be conferred. The Hague system did not prove compatible for such examination regimes. However, in 1999, the Geneva Act amended the Hague system to make the system compatible to countries which adopt the examination regime.
Another flaw in the Hague system concerns the fact that member countries may (and, in fact, do) have different and incompatible formal requirements concerning the drawings that form the main basis of any design application. For example, some countries allow the use of ‘ghost’ lines (used to disclaim aspects of the design) while other countries forbid the practice; some countries allow and encourage the use of shading, while other counties forbid shading. In a centralised filing system, where only one set of drawings is submitted, how is this set of drawings able to satisfy the conflicting requirements of all the countries? Until a practical harmonisation of design practice is achieved, this remains a key flaw in the Hague system.
The fact that the U.S. has taken the step of effecting law change to adopt The Hague Agreement, it can be speculated that design law and practice is likely to be the hot topic for international change and harmonisation. Having a country as significant as the U.S. become a member country of the Hague system is likely to cause a number of other countries to consider following suit. The attraction to joining the Hague system would inevitably lead to a desire for international design harmonisation and change to make the Hague system effective.
One hopes that the U.S. has possibly instigated the seeds for international change towards harmonisation in design law and practice with the growth of membership of a consequentially effective Hague Agreement. Companies that do require design protection in multiple countries would find the benefits of being a user of an effective Hague system would be significant.
by Simon Ellis
07 March 2013
The road ahead: changes in patent systems, surprisingly, help applicants
Over the past couple of years, major amendments have been made to the European, Australian and U.S. systems, and these will be implemented over the next year or so. The Australian and U.S. changes will be fully implemented (apart from the inevitable transition provisions) within a month or so. So what do these changes mean for an Australian technology developer? As I will explain below, if the promise and intention of the changes is realised, the international system will get cheaper, probably faster, and probably more predictable. This is because of changes on several important fronts.
Patentability Rules
The U.S. has moved to a first inventor to file system, in line with the rest of the world. Directly, this avoids a whole raft of disputes, and improves certainty in transactions. The U.S. substantive rules on novelty and obviousness have been clarified and are now closer to other major patent offices, and also to Australia. Overall, a lot of idiosyncratic U.S. rules have been either removed or limited.
In Australia, we have removed some of the restrictions on the type of material that can be used to mount an inventive step attack, and also increased the requirements for disclosure to support valid claims. The latter brings us consciously more in line with the U.S. and Europe.
Aligning with everyone else allows work product from the USPTO to be more readily used by other patent offices, as well as allows the USPTO to more readily use the Examiner’s work done in other patent offices. This should, over time, reduce the extent to which each Examiner approaches each national version of the same patent application as if it has never been seen by an Examiner before.
Burden of Proof
In Australia, it is currently difficult for a patent to be ultimately refused by the Examiner. The amendments mean that it is now up to the applicant to show that, on the balance of probabilities, the patent is valid. Additional grounds for re-examining granted patents are also now available.
U.S. law applies two different standards to assessing validity, depending upon the stage of the patent’s life and the process being undertaken. At the patent office, the standard is preponderance of evidence – that is, that there is a preponderance of evidence suggesting that on each of the various grounds, the patent should be granted. In court proceedings, in relation to validity, a much higher standard applies of ‘clear and convincing evidence’. As a result, there are situations where on the same evidence, a patent would be held invalid in Australia, Europe or Japan, but not in the U.S. There are several new ways to challenge patent validity at the patent office in the U.S., which rely on the ‘preponderance of evidence’ standard.
Overall, the effect of these changes is to ensure that it is less likely that dubious patents will be granted, and that there are better avenues for challenge at the patent office level, avoiding the expense and delay of court proceedings.
One European patent (sort of)
The EU has had a patent system for 35 years. The European Patent Convention imposes common laws on most aspects of patent validity and infringement. However, the grant stage requires translations in many countries, and formalities to be undertaken to achieve effective grant in each member country. This is time consuming and inefficient, making an EU patent many times more expensive than a U.S. patent, despite covering a similar market size. Another problem relates to enforcement - this has to be country by country at present, with no common appeal court, so that there is divergent law in each country.
A treaty has been agreed allowing for the option of a unitary European Patent, covering the EU except for Spain and Italy, who have opted out. This will be able to be enforced using a unified patent court system. Hence, if a party is infringing in France, Germany and Finland, one court action can address all of these, obtain enforceable judgements, and provide a common set of procedures no matter where the case is heard.
In combination, these measures will lower the cost of obtaining a patent across Europe, as well as increase the value of the patent as it can be centrally enforced across the EU.
Conclusion
The process of harmonisation continues within the patent system, and is hugely beneficial to applicants from countries such as Australia who need protection in much larger export markets. There are also moves towards a treaty on substantive patent law, to further align the law particularly in the developed countries.
As the cost and complexity of international filings are reduced, and their effectiveness is improved, the benefits for Australian technology developers are clear. There are good prospects for even greater harmonisation just around the corner.
by Peter Franke
12 February 2013
The clock is ticking on the new Australian patent law …
In November 2012 we reported on the detail of some of the changes that are going to come into effect on 15 April 2013 in the examination of Australian patent applications. As these changes are now only two months away, we thought it would be useful to give an ‘in-a-nutshell’ guide to what applicants and potential applicants need to do NOW to give their applications the most favourable future in light of the changes.
To recap: for applications where examination is requested after 15 April 2013, it will be more difficult to get a patent. More stringent conditions will be applied to (among other things) the level of inventiveness in light of the prior art, the level of disclosure of all of the aspects and advantages of the invention in the priority application, and the degree to which the examiner needs to be convinced that the invention is patentable.
The old ‘lower’ standards will apply for the life of your patent if you request examination before that date.
If you have a pending PCT application and you will be entering national phase in Australia:
- Consider entering national phase early in Australia, and requesting examination before 15 April.
If you have a pending Australian complete application:
- Consider voluntarily requesting examination prior to 15 April, regardless of whether a direction to request examination has been issued by IP Australia.
If you have filed a priority application (such as a provisional application) and you have continued development of your invention:
- Don’t wait for the full 12 months from the priority date to file your complete (standard or PCT) application, update your specification to the latest development and file a further priority application.
If you are developing a technology and considering filing a priority application:
- Consider postponing the filing of that application until your technology is more fully understood/trialled so all of the details can be captured; or
- Consider a program of filing multiple priority applications to achieve the earliest priority for each of the aspects of the invention as they are developed.
by Adam Hyland
22 January 2013
Update on Integrated Patent Examination of Australian and New Zealand Patents
Further to our blog dated 16 May 2011, in which we announced the joint Australia and New Zealand initiative to integrate examination of Australian and New Zealand patent applications within a three year period, there has been the official announcement of the completion of the first stage in the in initiative.
The initiative is intended to provide a harmonisation of examination for patents which are applied for in both New Zealand and Australia. Consequently, both the New Zealand and Australian patent applications could be examined by a single Examiner, albeit under the respective different rules and regulations.
This first stage entailed a gathering of Examiners from both IP Australia and IPONZ to undertake a three month pilot skills and knowledge program to assess what training needs may be required to allow Examiners from each jurisdiction to examine patent applications from the other jurisdiction.
The next planned stages in the initiative pertain to designing and allowing a filing system in which an Australian and New Zealand patent application can be simultaneously filed as a single application. Each country has expended considerable advances in electronic filing capabilities over the last few years. The next stage will concentrate upon how to provide a harmonious electronic filing capability.
The last (and final) stage will be to determine an appropriate harmonious examination initiative to allow both a New Zealand and a corresponding Australian patent application to be examined by a single Examiner from either jurisdiction.
by Simon Ellis
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