Once again, Christmas has rolled around. 2013 has been a great year for Franke Hyland and we hope that it has been for you as well. We would like to thank our clients and associates for the support they have shown Franke Hyland over the year and we look forward to continuing our associations with each one of you in 2014.
Our office will be closed from midday on 24 December and will re-open on 2 January 2014. Should an urgent issue arise during this time please contact us via email at: mail@frankehyland.com.au – this address will be monitored throughout the holiday period.
Please also note that IP Australia and IPONZ are closed between the same dates, so any official deadlines falling due during this period have, in effect, been moved to 2 January 2014 and we will ensure they are dealt with upon our return.
We wish you a very happy end to 2013 and we look forward to speaking to you all again when Franke Hyland returns, refreshed and relaxed, in 2014. If you would like to see Franke Hyland's Christmas message (with thanks to FabZing) please click here.
23 December 2013
09 December 2013
Resolving Disputes: Certainty and the Sunk Cost Fallacy
IP disputes will inevitably arise from time to time. In a typical process, one party will become aware of circumstances that they consider to infringe their rights. They seek advice, and if positive, proceed to send a letter of demand to the other party. This will set out their rights, the action complained of, and the outcomes which they desire.
In many cases, this leads to a resolution, either by the accused party ceasing their conduct, or a negotiated settlement being reached.
However, in a small number of cases, this is not the end, but the beginning. Formal proceedings are commenced. Early on in litigation within Australia (and in many other jurisdictions), the parties will be directed to undertake mediation. Most disputes will settle at some point before the final decision is reached.
The longer it progresses, the greater the costs for both parties.
I do not propose to address all the fine points of such negotiations, which will try and balance future ups and downs, money, time, prospects and other commercial and emotional factors.
I want to talk about one issue – the value of certainty. Knowing exactly what is going to happen next, even if it is expensive and unpleasant, can be dealt with and planned for much more effectively than the ongoing uncertainty that is inherent in litigation. This is especially true for a start-up or early stage company. The continuing dispute can be concerning to customers and prospects. It also is likely to eat up a lot of management time for the key decision makers; that may be better spent on business development, marketing, operational supervision. Anything that might actually make money.
The problem is that we are all wired to value the time and money we have already spent (or perceive we have spent) more highly than our future returns, even if they are greater. Emotional sunk cost manifests as "we have spent too much money on this to let them get away with this". The real question is, how much more will you have to spend from now to get to a conclusion, what are the chances of getting a conclusion that you want, and how else could we resolve this.
I was recently assisted in a trade mark dispute between an early stage company, and a U.S. based multinational. The multinational was not really in the same business, had no local presence, and it was dubious whether they could succeed. The law in this space is not clearly settled, and will always heavily depend on the facts and the evidence. After a letter of demand, the multinational commenced proceedings. It would have involved a large expenditure of time and money for the early stage company, to fight this in earnest. Even if they won, they would be well out of pocket, and the management time invested would never come back again. There was a risk of substantial damages and costs if they lost.
The client made the wise decision that certainty was more important. They decided to instead change their trading name, and invest the time and money in promotion and business development of the new name instead of legal costs. Particularly at their business stage, certainty was more important than being found to be right.
Walking away like this is by no means always the right course of action, but the value of certainty should not be underestimated.
by Peter Franke
In many cases, this leads to a resolution, either by the accused party ceasing their conduct, or a negotiated settlement being reached.
However, in a small number of cases, this is not the end, but the beginning. Formal proceedings are commenced. Early on in litigation within Australia (and in many other jurisdictions), the parties will be directed to undertake mediation. Most disputes will settle at some point before the final decision is reached.
The longer it progresses, the greater the costs for both parties.
I do not propose to address all the fine points of such negotiations, which will try and balance future ups and downs, money, time, prospects and other commercial and emotional factors.
I want to talk about one issue – the value of certainty. Knowing exactly what is going to happen next, even if it is expensive and unpleasant, can be dealt with and planned for much more effectively than the ongoing uncertainty that is inherent in litigation. This is especially true for a start-up or early stage company. The continuing dispute can be concerning to customers and prospects. It also is likely to eat up a lot of management time for the key decision makers; that may be better spent on business development, marketing, operational supervision. Anything that might actually make money.
The problem is that we are all wired to value the time and money we have already spent (or perceive we have spent) more highly than our future returns, even if they are greater. Emotional sunk cost manifests as "we have spent too much money on this to let them get away with this". The real question is, how much more will you have to spend from now to get to a conclusion, what are the chances of getting a conclusion that you want, and how else could we resolve this.
I was recently assisted in a trade mark dispute between an early stage company, and a U.S. based multinational. The multinational was not really in the same business, had no local presence, and it was dubious whether they could succeed. The law in this space is not clearly settled, and will always heavily depend on the facts and the evidence. After a letter of demand, the multinational commenced proceedings. It would have involved a large expenditure of time and money for the early stage company, to fight this in earnest. Even if they won, they would be well out of pocket, and the management time invested would never come back again. There was a risk of substantial damages and costs if they lost.
The client made the wise decision that certainty was more important. They decided to instead change their trading name, and invest the time and money in promotion and business development of the new name instead of legal costs. Particularly at their business stage, certainty was more important than being found to be right.
Walking away like this is by no means always the right course of action, but the value of certainty should not be underestimated.
by Peter Franke
03 December 2013
Thoughts from the USA
I recently had the pleasure of attending the AIPLA annual meeting in Washington DC. The main focus of the sessions was, as expected, around the impact of the changes to U.S. patent law brought about by the America Invents Act (AIA). There were also a number of sessions dealing with the practicalities of Chinese patent law. This is an interesting, but not unexpected development as U.S. companies seek to engage with the Chinese IP system more seriously. It also indicates the evolution of the Chinese patent system and the importance of the Chinese market to U.S. businesses.
Some other thoughts from the AIPLA meeting include:
• U.S. attorneys expect to be making much more use of provisional applications as establishing a first-to-file priority disclosure becomes more important.
• A possible increase in requests for Supplemental Examination (basically a re-examination requested by the patentee based on new newly uncovered prior art), including using the process to cure possible instances of ‘inequitable conduct’ where the full range of relevant prior art may not have been notified to the Examiner. However, it is an expensive process to engage in - official fees of USD 21,260 with no small entity discount - meaning it is likely to only be used where a substantial litigation is expected.
• ‘Functional’ patent claims are still valid under the AIA, provided there is sufficient disclosure of the structure to meet the function.
• Most U.S. attorneys I spoke to said their clients are adjusting well to the AIA, and to the first-to-file system. In most cases, U.S. patent applicants who were interested in overseas patent protection were operating to the system in any case.
I am also pleased to report that the mood around the U.S. economy is much more positive than I had encountered in the last 2 to3 years. Many attorneys saw a big spike in new applications in April prior to the AIA being implemented, much as we had seen in Australia preceding the Raising the Bar Act. However, the expected slump afterwards has not eventuated, meaning the rate of filing new applications has taken a consistent step upwards.
I enjoyed catching up with U.S. associates in Minnesota and Colorado. Both of these states’ history is not unlike that of Australia, with their economies being originally built on mining and agriculture. But now as water resources become a significant issue, both regions are looking to technology developers to be the mainstay of future economies. It turns out that both value-added agrifood processing and medical device design & manufacture have found favour in these regions, which fits well with Franke Hyland’s focus and capabilities.
by Adam Hyland
Some other thoughts from the AIPLA meeting include:
• U.S. attorneys expect to be making much more use of provisional applications as establishing a first-to-file priority disclosure becomes more important.
• A possible increase in requests for Supplemental Examination (basically a re-examination requested by the patentee based on new newly uncovered prior art), including using the process to cure possible instances of ‘inequitable conduct’ where the full range of relevant prior art may not have been notified to the Examiner. However, it is an expensive process to engage in - official fees of USD 21,260 with no small entity discount - meaning it is likely to only be used where a substantial litigation is expected.
• ‘Functional’ patent claims are still valid under the AIA, provided there is sufficient disclosure of the structure to meet the function.
• Most U.S. attorneys I spoke to said their clients are adjusting well to the AIA, and to the first-to-file system. In most cases, U.S. patent applicants who were interested in overseas patent protection were operating to the system in any case.
I am also pleased to report that the mood around the U.S. economy is much more positive than I had encountered in the last 2 to3 years. Many attorneys saw a big spike in new applications in April prior to the AIA being implemented, much as we had seen in Australia preceding the Raising the Bar Act. However, the expected slump afterwards has not eventuated, meaning the rate of filing new applications has taken a consistent step upwards.
I enjoyed catching up with U.S. associates in Minnesota and Colorado. Both of these states’ history is not unlike that of Australia, with their economies being originally built on mining and agriculture. But now as water resources become a significant issue, both regions are looking to technology developers to be the mainstay of future economies. It turns out that both value-added agrifood processing and medical device design & manufacture have found favour in these regions, which fits well with Franke Hyland’s focus and capabilities.
by Adam Hyland
11 November 2013
A new way to get faster international grant
IP Australia announces new Global Patent Prosecution Highway pilot
One of the keys to a faster, more efficient and less repetitive international patent system is for various patent offices to better use the work of their peers. The old paradigm is that each patent office is an island, and behaves as if the same invention had never been examined by any other patent office, starting at the beginning and working through to the end, regardless of the work done elsewhere.
A major change was the first patent prosecution highway (PPH) agreements reached by the USPTO with various patent offices, including IP Australia. In essence, if you had a final decision from IP Australia to allow at least one claim, and the claims in the US matched, you can go to the front of the examination queue. By using this with expedited examination in Australia, we have been able for several clients to achieve grant of a US patent in less than a year from the first Australian filing. While this is not the best strategy for everyone, in the case of a company seeking funding based on its IP, a granted US patent is a lot more valuable than an application.
The new scheme will allow this process to occur with 12 other patent offices, including Japan, Korea, US, Canada, the UK, Spain, Russia, Denmark, Norway, Portugal, Nordic Patent Institute, and Finland. It is likely that other countries and regional offices will join. While at this stage this is a pilot program, it is open to Australian applicants to apply to use the scheme in those patent offices after 6 January 2014. For countries that are notoriously slow, for example Japan, this could be a very great advantage. This is no guarantee of a patent, or of any preferential treatment in the substantive outcome. However, it is a way to accelerate consideration where that is going to be helpful.
Please contact us for a discussion if you think this program would be of interest.
One of the keys to a faster, more efficient and less repetitive international patent system is for various patent offices to better use the work of their peers. The old paradigm is that each patent office is an island, and behaves as if the same invention had never been examined by any other patent office, starting at the beginning and working through to the end, regardless of the work done elsewhere.
A major change was the first patent prosecution highway (PPH) agreements reached by the USPTO with various patent offices, including IP Australia. In essence, if you had a final decision from IP Australia to allow at least one claim, and the claims in the US matched, you can go to the front of the examination queue. By using this with expedited examination in Australia, we have been able for several clients to achieve grant of a US patent in less than a year from the first Australian filing. While this is not the best strategy for everyone, in the case of a company seeking funding based on its IP, a granted US patent is a lot more valuable than an application.
The new scheme will allow this process to occur with 12 other patent offices, including Japan, Korea, US, Canada, the UK, Spain, Russia, Denmark, Norway, Portugal, Nordic Patent Institute, and Finland. It is likely that other countries and regional offices will join. While at this stage this is a pilot program, it is open to Australian applicants to apply to use the scheme in those patent offices after 6 January 2014. For countries that are notoriously slow, for example Japan, this could be a very great advantage. This is no guarantee of a patent, or of any preferential treatment in the substantive outcome. However, it is a way to accelerate consideration where that is going to be helpful.
Please contact us for a discussion if you think this program would be of interest.
by Peter Franke
04 November 2013
New Zealand Patents Act 2013
It has been a long time coming, but finally New Zealand has a new Patents Act. The Patents Act 2013 received Royal assent on 13 September 2013. While a few administrative provisions took immediate effect, the majority of the provisions are not expected to take effect until 13 September 2014. Patent applications or national phase entries made before the new provisions take effect will remain subject to the current Patents Act.
Supporting Regulations for the new Act are not expected until mid-2014.
There are a lot of changes made by the new Act, some of the more interesting ones are as follows:
- an expansion of the prior art base applicable for assessing novelty and inventive step
- increasing the applicable grounds for examination with a higher standard being on ‘balance of probabilities’ (previously ‘benefit of doubt’)
- an invention must be ‘useful’ by having ‘a specific, substantial and credible utility’
- complete specifications must disclose ‘best method’ and the invention in a ‘clear and complete enough manner’ to be performed by a person skilled in the art
- claims to be ‘clear and concise’ and ‘supported by matter’ disclosed in the complete specification
express exclusions from patentability
- re-examinations available on all grounds between post-acceptance/pre-grant period for patent applications and at any stage after grant for granted patents
- post-acceptance/pre-grant opposition available on all grounds
- revocation of granted patents available before Patent Office or Court
- no extensions of patent term are available
- particular exclusions to infringement provided for seeking regulatory approval, prior use and experimental research
It has to be said that there is significant borrowing and influence from European patent law, particularly in respect to the substantive patentability tests and the use of particular exclusions. The computer programs exclusion was a particular sticking point in the lead up to the new Act and contributed to quite a few years delay. The fact that it is ‘computer programs as such’ smells very strongly of the European influence and it will be interesting to see how this develops given that the European development has not resulted in a blanket ban on software implemented inventions. Similarly, it will be interesting to see if New Zealand examiners adopt a European style approach to assessing inventive step, given that until now inventive step was not an examinable criterion.
The new Patents Act also introduces a Maori advisory committee who will have the power to veto inventions which, if commercially exploited in New Zealand, would be offensive to the indigenous culture. Similar powers have existed under the New Zealand Trade Mark law and appear to have worked very effectively and practically.
All in all, the new Act significantly raises the patentability standard in New Zealand, albeit to a standard more consistent with other countries. Until the new provisions come into force, the lesser standard of the current patent law applies. Hence, to take advantage of the current law, it may be worth considering filing or entering national phase in New Zealand early.
by Simon Ellis
Supporting Regulations for the new Act are not expected until mid-2014.
There are a lot of changes made by the new Act, some of the more interesting ones are as follows:
- an expansion of the prior art base applicable for assessing novelty and inventive step
- increasing the applicable grounds for examination with a higher standard being on ‘balance of probabilities’ (previously ‘benefit of doubt’)
- an invention must be ‘useful’ by having ‘a specific, substantial and credible utility’
- complete specifications must disclose ‘best method’ and the invention in a ‘clear and complete enough manner’ to be performed by a person skilled in the art
- claims to be ‘clear and concise’ and ‘supported by matter’ disclosed in the complete specification
express exclusions from patentability
- contrary to public order or morality (e.g. cloning of human beings, commercial use of human embryos, modifying germ line genetic identity of animals likely to cause suffering without substantial medical benefit)
- human beings and biological processes for their generation
- methods of medical treatment of humans by surgery or therapy
- methods of diagnosis practiced on humans
- ‘computer programs as such’
- re-examinations available on all grounds between post-acceptance/pre-grant period for patent applications and at any stage after grant for granted patents
- post-acceptance/pre-grant opposition available on all grounds
- revocation of granted patents available before Patent Office or Court
- no extensions of patent term are available
- particular exclusions to infringement provided for seeking regulatory approval, prior use and experimental research
It has to be said that there is significant borrowing and influence from European patent law, particularly in respect to the substantive patentability tests and the use of particular exclusions. The computer programs exclusion was a particular sticking point in the lead up to the new Act and contributed to quite a few years delay. The fact that it is ‘computer programs as such’ smells very strongly of the European influence and it will be interesting to see how this develops given that the European development has not resulted in a blanket ban on software implemented inventions. Similarly, it will be interesting to see if New Zealand examiners adopt a European style approach to assessing inventive step, given that until now inventive step was not an examinable criterion.
The new Patents Act also introduces a Maori advisory committee who will have the power to veto inventions which, if commercially exploited in New Zealand, would be offensive to the indigenous culture. Similar powers have existed under the New Zealand Trade Mark law and appear to have worked very effectively and practically.
All in all, the new Act significantly raises the patentability standard in New Zealand, albeit to a standard more consistent with other countries. Until the new provisions come into force, the lesser standard of the current patent law applies. Hence, to take advantage of the current law, it may be worth considering filing or entering national phase in New Zealand early.
by Simon Ellis
27 September 2013
Latest WIPO Innovation Data Shows Australia is Lagging
Recently I attended the World Intellectual Property Organisation (WIPO) information roadshow, where WIPO officials updated us on their latest international IP statistics.
Firstly, overall PCT patent applications continue to grow strongly, after a brief setback in 2008-2010 due to the GFC, etc.
Australia ranks as the 14th most common source of PCT applications, with the U.S. and Japan the most common. China is now ranked fourth, just behind Germany.
The U.S. is still the most popular place to file national patent applications out of the PCT. China is now the third most popular place to file patent applications, moving past Japan. Relatively strong growth in patent applications is still being experienced in the USA, India, Brazil and Russia all growing at >7% over 2010-2011. However, interest in filing patent applications in Australia has declined in the same period.
Most interestingly, there are now two Chinese companies in the top four individual filers of PCT applications, with ZTE Corporation remaining way out in front as the top filer for 2012:
1. ZTE Corporation—CN (3906)*
2. Panasonic—JP (2951)
3. Sharp—JP (2001)
4. Huawei—CN (1801)
5. Bosch—DE (1775)
6. Toyota—JP (1652)
7. Qualcomm—US (1305)
8. Siemens—DE (1272)
9. Philips—NL (1230)
10. Ericsson—SE (1197)
11. LG Electronics—KR (1094)
12. Mitsubishi Electric—JP (1042)
13. NEC—JP (999)
14. Fujifilm Corporation (891)
15. Hitachi—JP (745)
16. Samsung Electronics—KR (683)
17. Fujitsu—JP (671)
18. Nokia—FI (670)
19. BASF—DE (644)
20. Intel—US (640)
In all, the PCT system continues to grow strongly overall, with the USA and Europe leading but with the developing economies making up ground. Australia remains a middling player in the global IP market, and appears to be gradually losing ground since 2008.
Firstly, overall PCT patent applications continue to grow strongly, after a brief setback in 2008-2010 due to the GFC, etc.
Australia ranks as the 14th most common source of PCT applications, with the U.S. and Japan the most common. China is now ranked fourth, just behind Germany.
The U.S. is still the most popular place to file national patent applications out of the PCT. China is now the third most popular place to file patent applications, moving past Japan. Relatively strong growth in patent applications is still being experienced in the USA, India, Brazil and Russia all growing at >7% over 2010-2011. However, interest in filing patent applications in Australia has declined in the same period.
Most interestingly, there are now two Chinese companies in the top four individual filers of PCT applications, with ZTE Corporation remaining way out in front as the top filer for 2012:
1. ZTE Corporation—CN (3906)*
2. Panasonic—JP (2951)
3. Sharp—JP (2001)
4. Huawei—CN (1801)
5. Bosch—DE (1775)
6. Toyota—JP (1652)
7. Qualcomm—US (1305)
8. Siemens—DE (1272)
9. Philips—NL (1230)
10. Ericsson—SE (1197)
11. LG Electronics—KR (1094)
12. Mitsubishi Electric—JP (1042)
13. NEC—JP (999)
14. Fujifilm Corporation (891)
15. Hitachi—JP (745)
16. Samsung Electronics—KR (683)
17. Fujitsu—JP (671)
18. Nokia—FI (670)
19. BASF—DE (644)
20. Intel—US (640)
In all, the PCT system continues to grow strongly overall, with the USA and Europe leading but with the developing economies making up ground. Australia remains a middling player in the global IP market, and appears to be gradually losing ground since 2008.
by Adam Hyland
13 September 2013
ACIP Releases Options Paper on Review of the Innovation Patent System
In a previous blog, we reported that ACIP had initiated a review of the innovation patent system.
Further to the review, ACIP have now issued an options paper and have invited public submissions on the paper by 4 October 2013. The options paper can be viewed here.
At its heart, the innovation patent system offers a second-tier patent enforcement regime to the standard patent system. The innovation patent requires the satisfaction of an 'innovation step' test, which is considered and intended to be a lower threshold than the 'inventive step' test required for a standard patent. The trade-off for this lower threshold test being that the maximum term of an innovation patent is less than that for a standard patent – 8 years as opposed to 20 years. However, there have been criticisms that, while for a shorter term, the innovation patent offers the same level of infringement enforcement as a standard patent, although is much harder to counter due to its lower validity threshold requirements.
The innovation patent has been criticised as being overly generous to patent owners and open to abuse. The innovation patent is much more encompassing in terms of what subject matter it can provide patent protection for when compared with other second-tier patent mechanisms offered in some other countries (notably utility models provided in Germany, China, Japan and Korea).
In recent changes, the inventive step threshold for standard patents was raised in the ‘Raising the Bar’ amendments to the Patents Act. As a consequence, there is now a perception that the gap between the inventive step test and the innovative step test has widened.
The paper points to a variety of options available to consider. Interesting proposals are mentioned around possible limitations upon the monopoly afforded to the owner of an innovation patent or a reduction to the available remedies for infringement of an innovation patent.
The option which has generated most support is in somehow raising the innovative step threshold. However, opinions vary on what that should be or how it could be implemented, if the innovative step is still to be a lower threshold than the inventive step. There have been suggestions that the innovative step should just be the same as inventive step. Fortunately, ACIP have remarked that this would present a ludicrous outcome and would make the innovation patent a redundant system, in which case it would be more viable to simply abolish the innovation patent system.
ACIP intends to finalise and present its recommendations to the Australian Government later this year. It will be interesting to see what they do come up with. Having said that, regardless of the final recommendations, it is up to the Government as to whether anything is done and they have been dismissive in the past.
by Simon Ellis
Subscribe to:
Posts (Atom)