Bye Bye Fair Basis?

As previously reported, the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 was enacted on 15 April 2012.

One aspect of the changes is the apparent demise of the test for 'fair basis'. Prior to the amendment, the claims of a patent must be (among other things) 'fairly based' on the matter described in the specification. The changes now say that the claims must be 'supported' by matter disclosed in the specification. This 'supported' concept is in line with the majority of overseas jurisdictions and was intended to be so.

The concept of 'fair basis' has often been a difficult concept to properly define. As a component of Australian patent law it was supposed to be a mechanism for balancing the scope of a patent claim granted to a patentee against what the patentee has revealed, in a practical sense, of how to implement the invention. In other words, the test for fair basis was to ensure that a patentee was not given a scope of patent monopoly beyond what is fair in consideration of what the patentee provides to the public. This is in line with the public policy considerations of the patent system, whereby a patent monopoly, of finite term, is given in exchange for a full public disclosure of how to implement the invention, which disclosed teaching is effectively public domain at the end of the patent's life.

What, then, is to provide the checks and balances against undue(albeit 'supported') breadth of patent claims?

There are two further changes effected by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 which may go towards filling in the gap left by fair basis in this regard.

Firstly, there has been a raising in the standard of disclosure in a patent specification. Whereas, a patent specification, prior to the amendment, was required to described an invention fully; it must now disclose the invention in a manner clear enough and complete enough for the invention to be performed by a person skilled in the relevant art. This raised standard of disclosure now also applies to Australian provisional patent applications. Consequently, provisional applications having overly conceptual disclosure (which was permitted) rather than real nuts and bolts practical disclosure will now be a thing of the past.

The second significant change relates to the issue of utility. A claimed invention has been required to be 'useful' to be patentable. The changes have introduced a threshold definition of when a claimed invention is to be taken as not useful: "... an invention is taken not to be useful unless a specific, substantial and credible use for the invention (so far as claimed) is disclosed in the complete specification". Furthermore, "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".

This change not only raises the disclosure requirements for Australian patent specifications, but also requires a disclosure of utility which supports the entire breadth of the invention claimed. In other words, conceivably a claim which covers something more than the level of disclosure provides sufficient utility may be found to be lacking in utility. An example of where this may prove relevant are claims which provide excessive ranges of parameters but where the specification provides practical working examples of only specific parameters, i.e. not the entire claimed range. This is not an uncommon feature of chemical and pharmaceutical patents.

This change in the utility threshold does have an aspect of providing some of the balance against undue claim scope which 'fair basis' once presided. One can predict that this area of patent law may become fertile ground for judicial review and development in the years to come.

The above changes will come into effect for all Australian patents and patent applications in which a request for examination is filed on or after 15 April 2013. Consequently, these changes can have a retrospective effect on existing pending Australian applications, unless a request for examination is filed by 14 April 2013.

by Simon Ellis

Thoughts from IFT12

I recently had the opportunity to attend the U.S. Institute of Food Technology (IFT) 2012 annual convention (IFT12) in Las Vegas. It was even bigger than IFT11: over 18,000 attendees, over 1,000 exhibiting companies.

So while the U.S. food manufacturing industry appears to be in rude health, food technologists are worried. They fear the erosion of trust by the public of the food industry as a whole. The misunderstanding (wilful or otherwise) of what ‘processed food’ actually is continues to be a very real threat to the industry, and also the food technology profession’s ability to attract students and members.

A number of presentations addressed this issue at the convention. The fundamental fact is that humans have been processing food for thousands of years. ‘Processing’ has always been performed to make food last longer, less susceptible to spoilage, better tasting, more convenient to store and consume, etc.

However, when consumers are surveyed as to what they think about processed foods, the most common reactions include words such as: ‘added chemicals’, ’unnatural’, ’preservatives’, and ’unhealthy’. Even the term ‘food technology’ had become problematic, as consumers don’t enjoy the idea that ‘technology’ has somehow been involved in the production of their food, in contrast to the way that they DON’T have an issue with ‘medical technology’ or ‘communications technology’.

Now with the proliferation of social media and the ‘food bloggers’, some of whom have an ‘anti-processing’ agenda, the ability of misinformation about food processing to spread and become part of public consciousness has changed the game for food manufacturers. The message I heard at IFT12 is that while patient explanation of the scientific reality of modern processed foods is still necessary, it will never be enough on its own to win the debate.

Some of the collective wisdom of the presenters is:

• Communicate the real need for food science and technology, e.g. that the world will need to feed 33% more mouths in the next few years, but that right now 30% of the worlds food production is spoiled by pests or micro-organisms long before it reaches the consumer.
• Play up the culinary aspect of food manufacturing, because this is something consumers can more readily engage with.
• Get on the front foot against misinformation – don’t run from or hide the fact that food technology is a key part of a safe and reliable food chain.
• Never overestimate the credentials and knowledge of those seeking to spread sensational misinformation – challenge their ‘facts’; don’t accept their premise.
• Recognise that in a politically polarised media landscape, the noisiest minority views will tend to rule.
• Be transparent: throw open the factory door; don’t appear secretive as this will equate to a perception of underhandedness.
• Partner, at ‘arm’s length’, with independent online opinion leaders. This means maintaining an open, factual dialogue with them, not necessarily trying to ‘recruit’ them as a mouthpiece.

The IFT itself has responded to what they see as a crisis, via activities such as a workshop entitled ‘Changing the Conversation About Food Science’, reported here.

I particularly like the following observation:

Author Michael Pollan, an outspoken critic of processed foods, says that “food is what your great-grandparents ate,” said Fergus Clydesdale of the University of Massachusetts, adding that he hopes that is not the case because what our grandparents ate wasn’t always optimal. Consider Ireland in the mid-19th century, for example; when the potato blight struck, millions died or were forced to emigrate.

“I really think the media should look at just how good were the good old days,” said Clydesdale. “We have to approach it on an historical level with real data.” He pointed out that many people today are losing touch with some of the benefits of food science because they’ve rarely encountered a spoiled food and “therefore they don’t understand how a food stays stable and safe and why they should be concerned about it.”

The IFT has also produced a number of emotive videos aimed at reminding consumers of the positive role food science plays in a modern society, which are published here.

The challenge is real, and the message is important, because the misinformation that pushes consumers away from ‘processed foods’ may well be pushing them toward unsafe foods.


by Adam Hyland

Raising The Bar On Inventive Step

As previously reported, the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 was enacted on 15 April 2012. One of the most significant and publicised changes concerned the inventive step test.

The inventive step test revolves around a hypothetical person skilled in the relevant art to an invention under scrutiny. If this person would have considered the claimed invention to have been obvious as at the claim's priority date then the claim in question fails the inventive step test.

The question of obviousness is effectively based upon two sources of information, that being common general knowledge and prior art information (or a combination of common general knowledge and prior art information).

Common General Knowledge

Prior to the recent changes, the common general knowledge was restricted to that as it existed in the patent area (which effectively meant Australia). The changes have now removed this jurisdictional limitation. Hence, the test now allows consideration of a conceptually global common general knowledge.

Prior Art Information

Prior art information includes documents made publicly available (anywhere in the world) and information made publicly available through an act (anywhere in the world). In assessing inventive step, the skilled person is allowed to consider a single piece of prior art information or a combination of pieces of prior art information (if the skilled person could have been reasonably expected to make the combination).

Prior to the recent changes, there were restrictions upon the applicability of each piece of prior art information. In effect, each piece of prior art information needed to satisfy the requirement that the skilled person could reasonably have been expected to have ascertained, understood and regarded as relevant the prior art information as at the priority date. The changes have now removed these restrictions. In effect, if something is prior art, it is applicable.

Ramifications

While the changes to inventive step have, in essence, raised the threshold bar; the changes have also, in fact, simplified the inventive step question in a more practical sense. The benefits of this simplification will probably become more apparent in cases where the validity of a claim is challenged in oppositions and judicial proceedings. Wrangles over what prior art information can or cannot be considered may become a thing of the past. Furthermore, the admissibility or relevance of evidence from overseas experts will become uncontroversial.

The changes have moved the inventive step question closer in line with other major patent jurisdictions. Whether this means a claim passing inventive step scrutiny by IP Australia will give better weight when the claim is assessed in other jurisdictions will remain to be seen. However, it's nice to be optimistic.

Coming Into Effect

The relevant changes will come into effect on 15 April 2013. However, the manner in which the changes take effect requires careful consideration.

The new inventive step test will be applicable to all Australian patents and patent applications in which a request for examination is filed on or after 15 April 2013.

As a consequence, the new inventive step test can have a retrospective effect on existing pending Australian patent applications, unless a request for examination is filed by 14 April 2013. On the flip side, future Australian patent applications which are filed on or before 14 April 2013 AND have examination requested by 14 April 2013 will retain the application of the lower threshold inventive step test.

While, under Australian practice, examination must be requested within certain deadlines (i.e. within 5 years of filing or 6 months from being directed to do so), examination can be requested voluntarily at any time. Hence, if the change in inventive step test raises any cause for concern, it may be worth considering voluntarily requesting examination before 14 April 2013.

On a similar note, anybody considering filing an Australian patent application in the future (whether as an application claiming priority from an overseas application or a national phase from a PCT application) may want to think seriously about doing so earlier than planned and also requesting examination.

by Simon Ellis

Trouble with Chinese IP? You bet!

It is a fairly common fear of those whose businesses rely on intellectual property rights: the worry that the Chinese manufacturing juggernaut will thumb their nose at their IP rights and ride roughshod over them by sheer weight of numbers, unencumbered by the need to respect IP rights or the responsibility of doing their own research and development.

Looking to the future, I think Chinese companies will continue to present serious IP challenges, although perhaps of a different kind to those of the past.

There is no doubt that enforcing IP rights against Chinese companies, especially in China, has been difficult in the past. However, it would be wrong to think that China is akin to a lawless land, inhabited by IP cowboys.

Some interesting facts to consider:

• There are over 697,000 valid Chinese patents, and 351,000 of these are owned by Chinese companies. For the first time, more than 50% are owned by Chinese companies.

• In 2009, over 30,000 lawsuits were filed in the Chinese IP courts (absolutely dwarfing the number of cases filed in Australia).

• Approximately 90% of IP lawsuits in China involve Chinese companies suing one another.

• China is ranked 4th behind the USA, Japan and Germany in the number of international PCT patent applications filed, and they are growing more rapidly than any other country.

• Chinese companies ZTE and Huawei are ranked 1st and 3rd on the list of top PCT patent applications published in 2011, having had 4,657 PCT applications published between them – that’s over 12 patents filed for every day of the year!

So what does this mean? Chinese companies are filing, and will be granted, a massive number of patents at home and around the world; they are used to IP litigation and they won’t be afraid to use it, especially in the more established Western legal systems.

So what does this mean for you? The real problem you will have with Chinese competitors and IP rights is that soon they will be enforcing their rights against you, in your backyard. So you need to be prepared, not caught thinking about how it used to be.


by Adam Hyland

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