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

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

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

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

New issue paper on a ‘Review of Pharmaceutical Patents’

On 15 October 2012, the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus, announced the establishment of a Pharmaceutical Patents Review Panel. The panel has now released an issues paper inviting public submissions on the topic. A link to the issues paper can be found here.

One of the key topics of interest relates to the issue of extensions of term under Australian patent law. Pharmaceutical patents are potentially eligible for a grant of an extension of term beyond the normal maximum 20 years. The extension mechanism is designed to be a matter for compensating a patentee for being unable to commercially exploit the patent while delays are encountered when seeking regulatory approval from the Therapeutic Goods Administration.

It should be noted that no other type of invention is able to apply for an extension of term and, in fact, there are particular requirements that dictate what can be considered a pharmaceutical patent.

Australia, in accordance with obligations under the TRIPS agreement, is required to offer some form of extension of patent term for pharmaceutical patents. However, the extent of extension or how it should be applied and calculated is left open under the TRIPS agreement.

The issues paper notes that a comparative study of extensions of term by Australia and other major jurisdictions indicates that Australia may be more generous in the extent of extra term granted compared with other countries. This implies that the Review Panel may indeed be targeting this issue to align Australia’s extension of term provisions closer to those applied elsewhere.

The closing date for public submissions for review is 21 January 2013.


by Simon Ellis

IP and Fast Moving Consumer Goods

I have had a number of interesting discussions with people working in innovation in the Fast Moving Consumer Goods (FMCG) industry in the past month. A few of these occurred at the 'Innovating for the Future' workshop in Sydney a couple of weeks ago, at which I spoke on intellectual property in the food industry.

What I am seeing from these companies are a lot of 'light-bulb' moments where they are finally starting to see the value in strategically protecting their technology- and design-related intellectual property (IP).

One of the reasons why this value may not have been so evident in the past is due to the nature of the industry. The IP system is fundamentally set up to encourage innovation in situations where innovation might not naturally occur. However, part of the nature of the FMCG business is that innovation has been a given: new features, new flavours, new packaging are a must to compete in a crowded shelf space. No special incentives have historically been necessary in a world where products lives are relatively short and competitors are continually pushing for market share.

That is the way things have been. But that is changing.

Throughout the developed world, and especially so in Australia, the rise of the 'private label' or house brand product in the various supermarket chains means your biggest threat now comes from your main customer! Where those customers are large and dominant in the market place, which is certainly the case in Australia's concentrated retail environment, the FMCG manufacturer is being squeezed continuously.

Most significantly, the retailers are adept and pressuring the innovative manufacturer to 'hand over' any successful innovation for use in their own private label range. This, over time, because a severe disincentive to innovate, as the expense and energy required to deliver innovation now provides almost no period of exclusivity in which the innovator can recoup and profit on their investment in innovation. There are always contract manufacturers who the retailers will set up to copy innovations almost immediately if the innovator is reluctant to share their work with the retailer.

And so enters the IP system, where innovation is has been disincentivised, a new tool can be found to, if not stop, at least slow down the march of innovations from the innovator to the retailer. Judicious use of the patent and design systems can create a better power relationship between the innovator and the retailer. The contract manufacturer can no longer step in with impunity to copy a protected new package, product, ingredient etc. In turn, the retailer has to wait longer, or pay more, for innovative FMCG products.

I expect to see this as a trend amongst the more 'switched on' FMCG companies.


by Adam Hyland

Changes Proposed to Australian Patent Prosecution

We have previously reported on the extensive changes to substantive patent law which will come into effect on 15 April 2013.

As with all patent office examinations throughout the world, one aspect is the substantive law: the other is the procedural rules under which the patent office operates. The draft amended regulations which implement these aspects of change have now been placed open for public comment.

Patent Examination
As had been foreshadowed by IP Australia, there are changes to the time frames for dealing with examination. Australia operates a deferred examination system, in which you may request examination at any time, but must do so within five years of the effective filing date, or within a deadline set by IP Australia in a direction to request examination. Third parties can also request examination. In many cases, international applicants await a direction.

At present, directions from IP Australia have a deadline of 6 months. This will now become 2 months. In general, this is a positive change, as it will reduce the period of time in which it is unclear whether an applicant will proceed further or not. From the perspective of the public, or someone conducting a freedom to operate enquiry, time periods where the intention of the applicant to proceed is unclear create uncertainty, and potentially clog up the system with patent applications that are never going to be progressed. It does mean that applicants will have to act more promptly on receiving a direction to request examination.

In a similar vein, at present once a first examination report issues, the applicant has 12 months to place the application in order for acceptance, plus a further 9 months for which response fees are payable, but only when a response is filed. This creates the situation that even where a highly adverse examination report issues, another party cannot be sure of the fate of the application for almost two years, until the notice of lapsing is published. That will now be reduced to a straight 12 months. Consequently, in almost all cases (other than where a hearing or appeal is filed), the fate of an Australian patent application will be clear within a year.

Again, in most cases this is a positive change, as it will mean that applications will be brought to a conclusion more quickly. However, it does allow less time for an applicant to wait for the outcomes of prosecution in other countries, which may lead to inefficiencies in some cases.

Effective date
These changes are proposed to be effective for any application where a request for examination or direction to request examination (as applicable) occur after 15 April 2013. We think that it is unlikely that these changes will not proceed.

These changes provide another reason why we urge applicants to consider entering national phase in Australia early, and requesting examination prior to April 2013. The changes to onus of proof, new rules on support for claims, increased scope for inventive step attacks, and other amendments mean that there are very clear advantages for applicants to have requested examination in Australia before 15 April 2013.


by Peter Franke