Patent Harmonisation – what is it all about?

History
Patent law is a public policy instrument to encourage innovation. It has been employed over hundreds of years by many countries. Each country historically imposed its own rules, restrictions and processes around patent law, and operated its law in isolation. This was very problematic for early inventors, and the likes of Colt, Watt and Edison famously spent large sums of money to protect their inventions outside their home countries. As is the case today, significant inventions were not confined to the country of the inventor – they have international application, and the inventors therefore require protection throughout many different countries.

The Paris Convention of 1883 established some minimum requirements on signatories. Each country agreed to provide a right of priority to applications filed in other member countries, provided they were filed within a year of the first application. Another important requirement imposed by the treaty is national treatment – nationals and residents of member countries must be treated by the national laws no less favourably than nationals of that country.

The Paris convention has been expanded and updated several times, and other agreements have governed areas such as formal requirements for patent applications (Patent Law Treaty), a common filing and preliminary search and examination process (Patents Co-operation Treaty), and deposits of micro-organisms to support patent applications (Budapest Treaty). Over the years, more and more countries have joined these agreements, so that the major agreements are operative in over 140 countries, including all developed countries and major emerging economies such as China, India, Brazil, and Indonesia.
Even more significantly, an intellectual property agreement, TRIPS, is a key component of the international trade system established and regulated by the World Trade Organisation. This allows countries to use the dispute provisions of the WTO when IP standards are not being honoured, and this has been used on several occasions.

In parallel, there has been a gradual trend towards national laws being amended so as to reduce unnecessary differences. Recent major amendments in the United States and Australia are illustrative of this trend. Hence, the core features of patent legislation are not greatly different between most countries, particularly developed countries, and most of the formal requirements can be met in most cases by following appropriate common standards. This also applies to emerging economies such as China, Indonesia, Thailand, and Malaysia.
Further substantive patent law harmonisation at the international level has been slow, but there are recent signs of progress.

So where is the problem?
‘Black letter’ patent law being harmonised is important, and carries great advantages for technology developers. However, the law is administered by a patent office in each country, which examines and grants patents. Patents are enforced by courts, which apply the law through the filter of their own national constitution, other fundamental laws, and underlying practices and principles.
As I will explain in more detail below, even if the same laws are in place and the same patent application is filed, completely different practical outcomes in different countries will be achieved if the administrative authorities operate different rules and practices. Similarly, if the courts apply different approaches to interpreting and enforcing patents, then even the same law and the same patent will produce different outcomes.

Patent Examination
In the past, each country has conducted its own search, examination and grant processes, in isolation from all other patent offices. A patent filed in 10 countries will be examined on similar grounds by 10 different Examiners, and this is a waste of resources. This is hugely inefficient on any objective analysis. This is particularly the case for the search component of examination, where often the same search is repeated in each country. While different patent offices will search somewhat differently – for example, the Japanese Examiner will often search Japanese material better than anyone else – there is a large degree of duplication. On the other hand, even where law appears similar, patent examination can be very different. It is not uncommon for the same patent have few objections which are readily overcome in one country, and have significant difficulties in another, based on the same prior document.

A form of harmonisation is taking place at many levels to improve co-operation between patent offices and remove duplication. One approach is a regional patent office, which examines for all the countries in a region, at least when the applicant decides to use that path. This exists in Europe, as the European Patent Office (EPO) and in parts of Africa.

Another form is the increased co-operation between patent offices, particularly in sharing their Examiners’ work. There are even proposals to have the Examiners from different countries discuss a particular invention which has been applied for in both countries, in some circumstances. The largest patent offices – the United States, China, European Patent Office, Japan, and South Korea - have all invested large resources in working to allow recognition and understanding of each other’s work products. This ranges from making translations of their national filings available in search databases, to working groups of Examiners examining the same applications and comparing the results. This is likely to eventually bear significant fruit.

The resources at stake are considerable - for example, the USPTO employs over 6,800 Patent Examiners, and has 644,387 applications (as at April 2012) that it has not yet examined. The statistics of the other large offices are similar in dimension. The economic drivers for improvement and co-operation are clear.
Despite some regional success with the EPO, there are many political barriers to any formal, legal recognition system for granting patents. However, from hearing speakers from all of the major patent offices over the past year, it is clear that they are all moving to recognise each other’s work, which in turn will tend to remove unnecessary differences in practice and approach between the different patent granting authorities. This is a project which all the large patent offices see as essential. The advantages for an Australian applicant are that this should reduce the cost of obtaining international protection.

The Courts
In the final analysis, the value of a patent is the ability to enforce it against an infringer. The underlying court processes of each country differ considerably, and this inevitably affects the enforceability of a patent in each territory. I am not referring here to patent law as such, but to issues such as the availability and quantum of damages, the availability of injunctions pending trial and final injunctions afterwards, the ability to compel the production of documents and witnesses, the time to reach a decision and the cost of proceedings. These are all matters of carefully protected national sovereignty, and not likely to change in a hurry.

Within the specific scope of patent law, one of the best examples is the Remington lady shaver case. This was a granted European Patent, with identical claims and (in principle) harmonised law in each country, and an identical infringing product. However, enforcement of European patents is a national activity. Out of seven cases in different countries, three went in favour of the infringer, four in favour of the patentee. This illustrates the complexity of practical harmonisation. Unless the patents are interpreted in the same way, differences will persist in outcomes even in a system of common administrative processes and closely harmonised law.
Judges in different countries who try patent cases do hold conferences, talk to each other, and reference each other’s judgements. There is a lot more scope for judge made harmonisation, but it is as yet embryonic.

Conclusion
From the perspective of the patent owner, in an ideal world, one authority would grant patents which would be granted internationally, and enforced internationally at a single court. This is not going to happen any time soon.

Gradual measures to harmonise the law, and remove formal and procedural differences between jurisdictions, have been occurring and are likely to continue. Patent offices are working together more than ever, with improved tools and a new determination from the administrators in each country. Judges are also talking to each other and this can only help to achieve improved consistency and understanding.
However, a grand, complete harmonisation is nowhere on the horizon. Improvements will come, but don’t hold your breath.

The only practical strategic approach is to try and draft patents to ensure that the specific requirements of the target countries are all considered in preparing the specification.

by Peter Franke

Innovation, Change and IP

It is a common refrain from business commentators and government – businesses must become more innovative. ‘Innovation’ can sometimes be a handy piece of jargon, thrown in to any address or policy paper in order to appear modern, up to date with trends and economically responsible.

So what is innovation, and why does it matter?

Innovation is a word which is not in itself well defined, and so it is important to be clear what I mean by innovation. One useful definition of innovation which has been developed by the OECD (the Oslo manual) is:

An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.

That is, innovation is a much broader concept than just product and technological innovation. It extends to business practices, business process and how businesses interact, both within the organisation and external to the organisation. In one sense, it is the adaptive changes that a business makes in order to adapt to the changing markets, technologies and general business environment. It is possible to run a business which has a little or no innovation. However, any such business is vulnerable to the inevitable shifts in the market and changes in competitor behaviour. With few exceptions, businesses which fail to innovate fail to thrive, and often die.

From an overall economic perspective, it is useful to consider the role of innovation in increasing productivity. A variety of studies have indicated that the major component of productivity growth in organisations and in the economy at large is innovation.

What implications does increasing the level of innovation within an organisation have for their IP strategy and risk profile?

Firstly, a simple statement. If you keep doing exactly what you have been doing for the last 20 years, then you have no real IP risks, and you have no IP opportunities. Of course, you are completely vulnerable to all changes in technology, and if you want to change to match the actions of competitors, you may not find the world so simple.

The more complex part is that as any organisation increases its level of innovation, then it also increases both the opportunities for IP protection, and the risks of infringing another party’s IP.

The first part is fairly intuitive – if you are doing something new, you will inevitably be producing new IP. This can range from copyright in new artwork, software, packaging and manuals, through trade marks for new brands, and patent and design protection for new products or processes. If you are investing in innovation, then to ensure you maximise the benefits of it, you need to be able to control the innovation. This can mean making sure that agreements with employees and contractors transfer the IP to your company, that there are effective processes to record and capture IP, and that there are incentives and rewards for those who are doing the innovating in your company. It is never just about the IP in isolation – it is always about how the IP serves and supports your business strategy.

Why do risks increase? Well, if you are doing something new, there is a risk that someone else has already established rights. A competitor may have a trade mark, or sometimes a party in another industry may have a broad trade mark registration which your new product name infringes. If you broaden your product offering, you will have a whole new set of competitors. Competitors may have broad patents over platform technologies that you need for your new product.

Innovation also encompasses doing something new in your business which competitors are already doing, and the risks are fairly clear in that case. Failure to check a competitor’s rights in such a situation is akin to walking into a wall.

The message is that as you innovate more, so your exposure to IP – both as a protection for your business and a potential intrusion into the rights of others – will increase. Asking questions along the way, anticipating possible issues and managing the risk, with the help of your IP advisors, will ensure that innovation is more of an opportunity than a risk.



by Peter Franke

Changes effected to Australian Trade Mark Opposition Process

As previously reported, the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 was enacted on 15 April 2012. While the main changes in the Act pertain to Patent law, other legislation was also affected, including Trade Mark legislation. In particular there is an aim to effect changes which will reduce delays in third party opposition proceedings against the registration of a trade mark application.

The relevant changes introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 will come into effect of 15 April 2013.

After IP Australia has formally accepted a trade mark application for registration, a third party is entitled to commence an opposition against the registration of the mark by filing a notice of opposition. Currently, an opponent has a three month period from advertisement of acceptance to file the notice; although this can be readily extended by a further three months. After filing the notice of opposition, the proceedings head into an evidence stage, the first evidence stage being the opponent’s evidence-in-support. Currently, evidence-in-support is to be completed within three months of the notice of opposition being filed. Fairly lenient extension of time provisions mean that in practice the evidence-in-support may not be required to be completed for a much longer period. Following the evidence-in-support, the applicant may counter with evidence-in-answer. In effect, this is the first part of the opposition proceedings in which the applicant makes any contribution. This could potentially be a year since the opposition began. The applicant also has time (readily extendible) before completing evidence-in-answer.

In practice, until the applicant does anything, which could now be 18 months after the opposition began, the opponent has no idea of gauging whether the applicant is really going to defend the mark. By which point, the opponent has obviously spent considerable time and money.

A key change that will come into effect on 15 April 2013 is the introduction of an additional step in the opposition proceedings. Following the filing of a notice opposition by an opponent, the applicant ‘may’ file a notice of intention to defend the mark. This is not as optional as it ‘may’ appear as the consequences of not doing so will result in the application being taken to have lapsed, thus ending the opposition at a very early stage.

While this is one change that is to be effected to opposition proceedings under the Trade Marks Act, further changes to the opposition proceedings are afoot under new Regulations which have yet to be finalised. The Regulations govern aspects of procedural timing and rules concerning extensions of time. It is understood that the intention will be to cut a number of the deadline periods for the opposition stages and toughen the requirements for obtaining extensions of time. Therefore, we will have to stay tuned to see how the timing issues are affected.

by Simon Ellis

Raising the Bar Bill passes House of Representatives

On 20 March 2012, the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 was passed by the House of Representatives, and will enter into force once the royal assent is granted by the Governor General in Council, likely within a week or two.

This brings into law the most wide ranging changes to Patent law in Australia for 20 years, and makes changes to Trade Marks, Designs, Copyright and Plant Breeder's legislation and other legislation as well. The bill was passed with bipartisan support and without amendment.

I have outlined the most important changes in earlier posts: Major Changes to Australian Patent Law is now Imminent!; More on major changes afoot for Australian patent law; and Major changes afoot for Australian Patent Law. Important substantive changes to the inventive step test and prior art base, requiring disclosure of a 'specific, sustainable and credible use', changes to the nexus between a provisional specification and to the support requirement are only a few of the important changes.


When will it come into effect?

Most of the changes will come into force a year after royal assent. However, some important provisions are effective more or less immediately.

The Act creates new, specific patent infringement exemptions for two situations.

First, acts done solely for the purposes of obtaining an approval required under a Commonwealth or State or Territory law, or similar law of another country, are not infringements. This does not apply to pharmaceutical patents, which already have a comparable provision (new S119B).

Second, acts "done for experimental purposes relating to the subject matter of the invention" do not infringe (new S119C). An inclusive definition of such purposes includes determining the properties of the invention, improving or modifying the invention, and various activities relating to determining the scope, validity and infringement of the invention. Importantly, there is no 'academic' or 'non-commercial' criteria here - the exemption specifically applies to an attempt to improve, or indeed disprove, the efficacy of a competing commercial product.

Another area is in effect more or less immediately, by implication. The legislation, in a year plus a few days, will require some new things of a patent specification in Australia:

• That (in order to be considered useful) a specific, substantial and credible use for the invention (so far as claimed) [must be] disclosed in the complete specification, and the disclosure in the complete specification must be sufficient for that specific, substantial and credible use to be appreciated by a person skilled in the relevant art (section 7A).
• That the specification disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art (s 40(2)(a)).
• That the claim or claims must be clear and succinct and supported by matter disclosed in the specification (s 40(3)).

These are new requirements in Australian law, although they are familiar requirements in other jurisdictions. What is important is that all new filings, especially provisional applications and complete applications on which a claims to priority may be made, MUST now be drafted to meet these requirements.

We will be working through many of the changes over a series of blogs – but be aware, major change is coming.

by Peter Franke

Major Changes to Australian Patent Law is now Imminent!

Further to our blogs of 27 January 2011 and 4 March 2011, we can now report that The Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 passed the Australian Senate on 27 February 2012. The Bill was passed without any changes being proposed. The Bill now awaits a final passage through the House of Representatives before it can be passed as an Act. It is expected that this may occur within the next three or four months.

As a consequence, it would appear that the number of issues we highlighted in our 27 January 2011 blog are about to happen. Patent applicants will face a tougher standard to obtain valid patent rights in Australia, more closely aligned with the standards in other major jurisdictions. Furthermore, a number of procedural issues are being tightened up to remove potential options for patent applicants to exploit procedural delays when prosecuting a application.

We will provide more detailed review of the pending changes in future blogs once the final wording of the Act becomes public.

by Simon Ellis

IPONZ Leading the Way

Franke Hyland is pleased to hear about the recent developments in the way the Intellectual Property Office of New Zealand (IPONZ) will be communicating with patent, trade mark and design applicants, and their agents.

IPONZ is in the midst of implementing (for trade mark and design applications) a full 'B2B' communication system for all official correspondence. This means NO MORE PAPER. This is a bit unusual for the IP world, and as far as national IP offices go, we think IPONZ are the first to be fully electronic.

The new system went live for trade marks and designs on 13 February 2012 and is expected to extend to patents in mid-2012. More information is available from the IPONZ website at:
http://www.iponz.govt.nz/cms/iponz/latest-news/expired-items/iponz-new-case-management-system.

The system IPONZ is implementing travels beyond the optional use of email or fax to receive documents; this is a system where all communication from IPONZ will be via direct download from their database, and communications to IPONZ will be by upload to their database.

Each application will have its own 'page' on the IPONZ website (www.iponz.govt.nz) where all transactions can be effected – reading examination reports, uploading responses to examination reports, submitting assignments to the recorded, changing the applicant’s or agent’s details etc. Specifically, IPONZ will not be issuing paper of any kind to applicants – even registration certificates will be 'download only'. No more stamps, ribbons or other traditional finery.

An area where problems may arise for IPONZ, at least for the medium term, will be in the issue of certified copies to other national IP offices to support Paris Convention applications made in those offices. Nevertheless, their policy is that they will provide these electronically. If this is in some way unacceptable to a National Office, IPONZ will deal with them directly.

This is a bold, but welcome, move by IPONZ. As a relatively smaller office, they are well placed to try to bring the business of national IP offices into the 21st century. This obviously accords very well with Franke Hyland's approach to communication with clients and IP offices, and we are looking forward to working with IPONZ's new system and seeing it develop.


by Adam Hyland

What is the problem with confidential information?

For all kinds of business purposes, it is essential to disclose confidential information. Some common examples include providing specifications to suppliers, business proposals to financiers and customer lists to sales or marketing consultants. However, this is a process which needs to handled with great care. I will discuss some of the issues below, but here are the key issues in a nutshell:

1. If it isn't really a secret, you can't protect it.
2. If it isn't your secret, then you have no right to protect it.
3. If it isn't something specific and identifiable, you can't protect it.
4. You need to make it clear to the receiving party in writing (even by email) that you are telling them something confidential. A signed agreement is preferable.
5. You have to manage the information as if you think it is a secret and take steps to keep it that way – or the court will not assist you.
6. You should consider other ways to protect the information, such as a patent where you can, because once the secret is gone you can't get it back in your control.

Requirements for protecting confidential information
Generally, such disclosures are best covered by a clear, written confidentiality agreement. However, confidentiality can also be protected without a written agreement, where the basic requirements for confidential information being protected by the courts are met. These vary from country to country. In Australia, the three requirements for protection by the courts are:

• can the information be identified with 'specificity, and not merely in global terms';
• does the information have the necessary 'quality of confidence'; and
• has the information been imparted in circumstances where the party receiving the information would understand that there is an obligation of confidence?

What information can be protected?
The first requirement means that it is no good alleging that the confidential information was 'all our future business plans'. It must be something much more specific. Typical protectable confidential information includes customer lists, financial records, specific written business proposals, detailed future marketing plans, confidential process parameters, designs that have not been made public, and in some cases, formulae and recipes.


What information can't be protected?
It isn't possible to protect negative information. What is negative information? It is knowledge of what a company can't or won't do, or that something doesn't work. You don't generally need to tell anyone else negative information, it is used in the background to assist in making decisions. For example, consider the situation where a researcher has considered 17 different ways to achieve a particular product outcome. There are only three possibilities left. The researcher leaves and works on the remaining three for a new employer. Assuming that those possibilities are not in themselves confidential, this is not a breach of confidence; the researcher just doesn't go down blind alleys.


What does confidential mean?
In short, it has to be secret – not generally known. The information must be treated internally as something confidential and protected – taking steps such as control of copies and access, marking 'confidential', and not providing access to people who do not need access. You can't leave a document, for example, on a generally accessible server in a large company system, and later allege that it is confidential.


You also can't magically make something confidential which is known elsewhere – if the information is able to be ascertained without breaching confidence, then it does not have the quality of confidence. You can't change that with an agreement.


This leads to one of the key weaknesses of confidential information. When the genie is out of the bottle, it can't be put back in. The internet is forever. Even if the first breach is unlawful, other parties who come across the information in most cases will not be able to be effectively restrained from using the information.
Does the party receiving the information understand that there is an obligation of confidentiality?


This requirement is best met with a clear written agreement. It is really best if the agreement is specific as to what is going to be disclosed, not just a generally expressed 'everything we disclose is confidential'. This is for two reasons. First, much of what you discuss will not objectively be a secret, and it leaves the task of sorting out what is really covered to the courts. Second, if the disclosures are 'new product specifications for our cleaning liquid', ideally with an annexed written disclosure, then no one is in any doubt what is covered.
It isn't a good idea to try and fix this afterwards, with an agreement which purports to be backdated, or to confirm that the disclosure was confidential. Prevention is better than cure – especially when it isn't difficult or expensive, as in this case.


Pitfalls for the unwary
A recent Australian case provides a good example of when failure to think through a disclosure of confidential information in advance, and then attempting to rectify it later, can lead to disaster. In Abrahams v. Biggs, [2011]FCA 1475, Mr Abrahams was a property manager who became aware of the problem of bed bugs. He came up with the idea of a device to be attached to the bed, to prevent the bugs crossing a barrier, formed from a sticky material. He filed a patent application for that idea.


Mr Abrahams then had a non-confidential discussion with Dr Doggett, an expert on bed bugs. In the course of that discussion, the idea of a device based not on glue, but on the need to traverse a surface that the bugs could not grip, was conceived. Dr Doggett suggested that a possible material was Teflon.


To halt the story at this point, Abrahams has already acted fairly unwisely. He has sought a solution from an expert, with no agreement in place. The best interpretation at this stage is that if there is any invention, it is jointly owned by Doggett and Abrahams, as they have both been necessary contributors. On another interpretation, Doggett alone owns the invention. A simple consulting agreement with Doggett could have created a confidential relationship, transferred any IP rights, and avoided this situation.


He then had a conversation, and subsequent email exchanges, with Ms Biggs, an acquaintance of his, about the product and the proposed improvements. The exact nature of the discussions, and who said what to whom, was the subject of some dispute.


However, the general thrust is that Abrahams initiated a discussion with a business acquaintance, and did not make it clear in writing or verbally that it was confidential – at least until after they talked. There was a degree of on-going interaction, but in the end no business arrangement went ahead.


Biggs then proceeded to produce her own design, using Teflon, and using Doggett as a consultant. She, perhaps unwisely, made what were held to be misleading statements comparing the effectiveness of her product and Abrahams. One wonders if this dispute would ever have got to court had this action not happened to inflame matters.


On the confidential information issue, however, Abrahams failed, on the basis that none of the key requirements for a breach of confidence action were made out. His Honour held that the information was conveyed to Biggs in general terms, that at that stage Abrahams had no idea what his design was, and so the information lacked sufficient specificity. He also held that on the basis that there was evidence that Teflon was known as a material for impeding the movement of insects already, and in any case the suggestion originated with Doggett, so the information did not have the necessary quality of confidence. Finally, it was not clear on the facts that Biggs ought to have understood that the information was received in confidence.




by Peter Franke