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
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