Eli Lilly and Company Limited v Apotex Pty Ltd [2013] FCA 214

The Federal Court has upheld the validity of Eli Lilly’s Australian patent covering anti-psychotic drug olanzapine in a recent revocation action, with Apotex failing on all grounds.

Olanzapine, marketed under the name ZYPREXA®, has enjoyed significant commercial and therapeutic success in the treatment of schizophrenia and bipolar disorder. Given the commercial success, it was perhaps unsurprising that generic pharmaceutical manufacturer Apotex took steps to market their own generic olanzapine pharmaceuticals. Although Apotex succeeded in securing marketing approval from the Therapeutic Goods Administration (TGA) in November 2009 (involving registration of its generic products on the Australian Register of Therapeutic Goods (ARTG)), it was restrained from marketing its products pending the outcome of proceedings brought by patentee Eli Lilly to determine whether Apotex's intended action would infringe Eli Lilly’s patent rights. Apotex concurrently made a cross claim for revocation. In unusual circumstances, the Patents Act 1952 applied to considerations of validity while the Patents Act 1990 applied to the issue of infringement, due to the respective dates of filing and grant of the patent in suit.

Eli Lilly's earlier patent not an anticipation

Eli Lilly’s olanzapine patent family included an earlier patent to a broad class of benzodiazepines. While olanzapine fell within the scope of the earlier broad disclosure, it was not explicitly disclosed in the earlier patent. Accordingly, Eli Lilly subsequently pursued and was granted a patent of narrower scope that was directed to olanzapine per se. Apotex cited Eli Lilly's earlier patent, containing the broad disclosure of the class of benzodiazepines, against the later patent in suit on grounds of novelty. While Justice Middleton considered the principles governing selection patents in this instance, they were not applied in reaching a decision on novelty. On this issue, the Court applied the general principles of novelty; finding that even though olanzapine is encompassed within the broad scope of the earlier patent, the earlier disclosure failed to provide clear and unmistakeable directions, and thus did not constitute an anticipation of the later claim.

Ambiguous prior art failed to provide clear and unmistakeable directions

In addition to the earlier patent, a 'note' published in the East German journal Die Pharmazie in 1983 was also considered for purposes of novelty. However, the title of the Die Pharmazie publication and the structures of the compounds reported therein, were inconsistent. In considering whether the Die Pharmazie publication anticipated olanzapine it was necessary for The Court to first resolve this inconsistency.

The Die Pharmazie publication cited two earlier publications. Upon reference to the two earlier citations, it was apparent that the Die Pharmazie publication in fact contained two errors in the structures of the compounds depicted therein, and had intended to refer to the structurally related compound flumezapine instead of olanzapine. The errors included i) the depiction of a piperidine ring rather than a piperazine ring, and ii) the omission of a fluorine on the benzene ring. Nevertheless, it was submitted that in the event a person skilled in the art proceeded to correct one of the two errors (the nitrogen in the piperazine ring), then this may lead to the identification of olanzapine.

The Court however considered that because of the inherent ambiguity or lack of reliability in the eyes of the skilled addressee, the Die Pharmazie publication could not be considered to provide clear and unmistakeable directions to adopt the invention as claimed. As an alternative, Middleton J suggested that it was a reasonable and prudent step for the skilled addressee to refer to the earlier citations to resolve the ambiguity. However, in so doing, the skilled addressee would note that the compound referred to was in fact flumezapine, which would further confirm the unreliability of the Die Pharmazie publication. On either approach, the Die Pharmazie publication did not constitute an anticipation of the later claim.

Impermissible to disregard olanzapine's utility in considering inventive step

The Patents Act 1952 was applied to considerations of inventive step, whereby a patent may be revoked if the invention does not involve an inventive step having regard to what was known or used in Australia on or before the priority date of the claim. At issue was the starting point from which obviousness should be considered. As the claims of the patent in suit were not limited to any particular therapeutic use, Apotex submitted that it was sufficient to demonstrate that olanzapine lacked inventiveness on its face. Accordingly, they argued that the correct starting point for consideration of inventive step was the structurally related compound flumezapine. However, Middleton J considered that it was impermissible to divorce olanzapine from its context and to subject it to an obviousness test that disregarded its utility. The Court held that structurally related flumezapine was not part of the common general knowledge in Australia at the priority date, and as such, was irrelevant to the question of inventive step. Furthermore, Justice Middleton highlighted that while the "problem-solution" approach was helpful, it should not be universally applied in determining the question of obviousness.

Olanzapine was the compound claimed, despite unconventional nomenclature

The issue of infringement and construction of the claims was also considered at length, as the claims of Eli Lilly's patent made reference to olanzapine by chemical name only, with no chemical structure appearing in the claim. However, the compound as claimed did not follow conventional International Union of Pure and Applied Chemistry (IUPAC) nomenclature, typically relied upon for the systematic naming of chemical compounds. It was agreed by all parties that the correct IUPAC name for olanzapine is 2-methyl-4-(4-methyl-1-piperazinyl)-10H-thieno[2,3-b][1,5]benzodiazepine (Fig. 2A). The claims of the patent were instead directed to 2-methyl-10-(4-methyl-1-piperazinyl)-4H-thieno-[2,3-b][1,5]benzodiazepine (Fig. 2B).

The question thus arose as to what was actually claimed. Apotex contended that the IUPAC name is the only name which unambiguously describes the structure of olanzapine, and that there was no basis to extend to Eli Lilly what it might have intended to claim, rather than what the claim specifically recites.

Despite the ambiguity with regard to nomenclature, it was noted that throughout the specification the ambiguous chemical name was clearly associated with the correct chemical structure of olanzapine. The Court highlighted that the claims must not be construed in isolation, finding that a skilled person, based on the specification as a whole, would understand that olanzapine was the compound claimed.

Eli Lilly's patent valid on all grounds

Eli Lilly's patent was thus upheld on all grounds, with the Court determining that Apotex's intention to exploit olanzapine during the term of the patent would constitute infringement. It is of note that the patent in suit expired on 5 March 2012 and is no longer in force.

Davies Collison Cave and AusBiotech continued to build on the success of the University Leader Speaker Series by welcoming faculty leaders from the University of Sydney on 8 May.

Dr Anders Hallgren, Director of Commercial Development and Industry Partnerships at the University, was joined by key Professors to showcase the work of the university to interested parties in the biotechnology and medical devices industries.

The event was both well attended and well received, and each presentation provided a fascinating overview of the crucial research and work of various Partners of the University.

Speakers included:
Prof Steve Simpson, Academic Director at the Charles Perkins Centre;
Prof Carol Pollock, Associate Director of the Kolling Institute of Medical Research; and
Prof Graham Mann from the Westmead Millennium Institute and Melanoma Institute of Australia.

Hosted at DCC Sydney, this series of seminar-style events has been ongoing since 2011. It provides university leaders the opportunity to present their work to the broader biotechnology industry and highlight areas where opportunities exist for collaborative research, partnerships and licensing.

In considering a request for an interlocutory injunction, the High Court of New Zealand found that use of the term “intercity” as a keyword and in Internet advertisements did not infringe a trademark registration for the identical word. InterCity Group (NZ) Ltd v. Nakedbus NZ Ltd, [2013] NZ 379 (Mar. 1, 2013) (Hansen, J.). The decision demonstrates the influence of European trademark law in New Zealand and the difficulties that an owner of a registered trademark may face in similar circumstances if its mark is descriptive.

The decision relates only to an interlocutory hearing. Mr. Justice Hansen noted that the court might reach a different decision at a full trial, in which all of the complex issues and facts could be considered.

InterCity Group alleged that the use by Nakedbus of “intercity” or variants of that word as a keyword or in online advertising infringed its prior-registered trademark INTERCITY and related common-law rights. In order to succeed in its request for an interlocutory injunction, InterCity needed to satisfy the court that there was a serious issue to be tried and that the balance of overall convenience weighed in its favor. If InterCity proved those elements, then the court needed to assess whether the overall justice of the case favored the grant of an interlocutory injunction or whether it was preferable for the Court not to intervene until all of the issues were canvassed fully at a substantive hearing.

The court considered numerous recent European cases, including Interflora v. Marks & Spencer ([2012] Bus LR 1440 (CJEU)) and 32Red Plc v. WHG International Ltd & Others ([2011] EWHC 62 (Ch)), in demonstrating the difficulty of determining whether use of a third party’s trademark as a keyword will damage the reputation or distinctive character of that trademark—in circumstances where the trademark is descriptive of the relevant goods or services. The 32Red case was cited to support the conclusion that, for purposes of this interlocutory hearing, the use by Nakedbus of the INTERCITY trademark as a keyword and in Internet advertisements did not “lead to a risk of confusing or deceiving consumers as to the origin of the services on offer.” As such, InterCity Group had failed to establish that there was a serious question to be tried on the issue of trademark infringement. Important in the court’s reasoning was the primarily descriptive significance of the mark INTERCITY.

Does confusion matter if the infringing mark is identical to a registered mark?

The court concluded that Nakedbus’s use of InterCity’s trademark as a keyword and in Internet advertisements had not been shown to lead to a risk of consumer confusion or deception as to the origin of Nakedbus’s services on offer. Consequently, the court found it unnecessary to consider whether the mark that Nakedbus used was “identical or merely similar” to the registered INTERCITY trademark.

However, in New Zealand there is no need to prove that the use of an allegedly infringing mark in relation to the same goods or services is likely to cause confusion if the mark in question is identical to the relevant registered mark. Hence, it was very important for the court to assess whether the infringing mark was identical or only similar to InterCity’s registered mark before moving on to consider any risk of confusion.

Although it was not clear from the judgment, the court did not conclude that Nakedbus was using the term “intercity” and related terms as trademarks, as they were not shown to have been used to indicate the origin of Nakedbus’s services. If so, this would be a narrow interpretation of what constitutes use of a term as a trademark, as the court seemed prepared to find that there was not even an arguable case that the use was potentially liable to adversely affect one of the functions of the trademark—not just the origin function, but also its quality, communication, investment and advertising functions, particularly as it had found that the way in which the defendant used the “intercity” word was “ambiguous.”

The court also found that InterCity Group did not establish that there was a serious issue to be tried as to whether Nakedbus’s use of “intercity” did not constitute passing off or contravention of the Fair Trading Act 1986, as it had not been shown that Nakedbus had made representations to the public that would be likely to lead the public to believe that its services were those of InterCity Group.

Breach of undertaking

InterCity also alleged that Nakedbus had breached an undertaking not to promote itself as “intercity.” As the undertakings to which InterCity referred were never recorded in writing, InterCity sought to rely on oral undertakings between the parties to support its position. It failed to establish this cause of action, as the court ruled that the oral undertakings were unclear and should have been confirmed in writing.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers
are urged to check independently on matters of specific concern or interest.

This article was orginally published in the INTA Bulletin Vol. 68 No. 9 and has been rupublished here with permission.

In a Supplementary Order Paper (SOP No. 237) released on 9 May 2013, proposed amendments to the New Zealand Patents Bill have explicitly excluded computer programs 'as such' from patentability. Whilst many IT industry players have reportedly welcomed the decision as an effective ban on software patents, it appears that the extent of the exclusion is likely to be limited, and in practice is merely aligning the law with that of the UK.

A brief history of the software patent debate in NZ

The Patents Bill, which has been on the NZ parliamentary agenda since 2008, seeks to replace the Patents Act 1953, and intends to strike a balance between protecting the interests of inventors' and the general public. Prior to the proposed amendments, patenting of software had been hotly debated, with some members of the IT industry, including free and open source (FOSS) advocates, backing an outright ban. Indeed, an earlier version of the Patents Bill included a sweeping exclusion that '[a] computer program is not a patentable invention'.

Proposed amendments to exclude computer programs 'as such'

The latest round of proposed changes seek to ensure NZ complies with its obligations under international agreements, such as TRIPS. The changes appear to have tempered the previous exclusion, requiring that a 'computer program is not an invention ... only to the extent that a claim in a patent or an application relates to a computer program as such'. A number of additional sub-clauses are also provided which attempt to clarify the nature of a 'computer program as such'. Several examples are offered in this regard, including one which indicates that a process relating to embedded software controlling a washing machine may be patentable.

Following the UK lead on software patenting

Indeed, the corresponding Explanatory note clarifies that the approach of the new clause is intended to be consistent with UK precedent. In particular, some commentators have drawn parallels between the proposed clause, and the tests outlined in Aerotel Ltd. v Telco Holdings Ltd [2006] EWCA Civ 1371.

It should also be noted that recent case law in the UK has held that subject matter such as a software method for designing a drill bit,¹ and a system for monitoring electronic communications and alerting users when content may be inappropriate,² do not fall within the 'computer programs "as such"' exclusion and are thus patentable.

Will software patents be banned in NZ?

Therefore, whilst on the face of it the amendments in their current form appear to embrace an outright ban on software patenting, the recitation of the phrase 'as such', means that in practice the exclusion will not be so far reaching, and at least some software processes will still be protectable. Ultimately this will be for the courts to decide but in any event, given the legislation has not passed in the last five years, it is unlikely this will have a resolution in the short term.

Endnotes

1. Re Halliburton Energy Services Inc [2011] EWHC 2508 (Pat).
2. Re Protecting Kids the World Over (PKTWO) Ltd [2011] EWHC 2720 (Pat).

On 15 April 2013, some important (and positive) changes came into force regarding the Australian Customs seizure provisions in the Trade Marks Act 1995 and Copyright Act 1968, as a result of the Raising the Bar reforms to Australian intellectual property legislation.

The three major changes to Customs seizure provisions

There are three major changes to customs seizure procedures which will affect trade mark and copyright owners who have Notices of Objection in place. These are:

1. The initial onus will shift from the rights holder to the importer in relation to goods seized by Australian Customs pursuant to a Notice of Objection. The seized goods will now be forfeited to Customs unless the importer makes a claim for them.
2. Rights holders may now be able to obtain additional information about the importer of the seized goods (and possibly also the exporter) from Customs.
3. Rights holders may now be able to inspect samples of the seized goods in some circumstances, rather than just relying on photographs to determine whether the goods are genuine or counterfeit.

In practice, these changes mean that in the majority of cases, rights holders will not need to take steps, such as sending a letter of demand, to ensure counterfeit goods being imported into Australia are forfeited to, and destroyed by, Customs.

It appears that Australia may be one of the first jurisdictions in the world to adopt this new "reverse onus" procedure for forfeiture of goods. The other changes to the Customs provisions (regarding the provision of additional information about the importer and exporter and the right to inspect samples) bring Australia into line with practices that are already occurring in other jurisdictions, including the European Union.

The new Australian customs seizure procedure – in practice:

Here is how the new procedure works:

1. The rights holder lodges a Notice of Objection with Australian Customs listing the registered Australian trade marks or copyright works that it would like to protect. The Notice remains in force for 4 years.
2. Customs seizes the goods (which bear a trade mark or contain a copyright work that is listed on the Notice of Objection) if it suspects they are counterfeit and provides the importer and rights holder with a Seizure Notice. The Seizure Notice will set out the claim and action periods (explained below), and the name and address – of the rights holder (if the notice is given to the importer), or the importer (if the notice is given to the rights holder);
3. The importer has 10 working days ("the claim period") after the Seizure Notice is given to lodge a Claim for Release with Customs. In the Claim for Release, the importer must provide their name, address and telephone number and the grounds for seeking the release of the seized goods;
4. If no Claim for Release is lodged, the goods are automatically forfeited to Customs (and eventually destroyed). (There is some provision for late claims to be filed by the importer and therefore Customs must hold onto forfeited goods for 30 days in case a late claim is lodged);
5. If a Claim for Release is lodged, then the rights holder has 10 working days ("the action period") to institute court proceedings against the importer, or persuade them to forfeit the goods, failing which the goods will be released to the importer.

It is likely that in many cases an importer of counterfeit goods will not lodge a Claim for Release at all and the goods will be automatically forfeited to Customs.

The only potential downside to the new procedure is that a rights holder's 10-day action period cannot be extended (unlike the previous system, which allowed for a 10-day extension). This provides a rights holder with a very tight timeframe to reach agreement with the importer to forfeit the goods or to institute legal proceedings against the importer to prevent the release of the goods, if the importer lodges a Claim for Release.

In most cases, under the new system, rights holders who have a Customs Notice in place need not do anything to ensure counterfeit goods detected by Australian Customs are forfeited and destroyed. Of course, rights holders can still choose to send a letter of demand or take other action against importers of counterfeit goods, but in the majority of cases, it will not be necessary to send a letter to persuade an importer to forfeit goods.

These are positive changes which should result in better cost-effective mechanisms for rights holders to prevent counterfeit goods from entering Australia.

Next steps for rights holders

If a rights holder already has a Customs Notice in place:

These changes automatically took effect from 15 April 2013. There is no need for current holders of an Australian Notice of Objection to do anything to avail themselves of the new procedure.

If a rights holder does not have a Customs Notice in place:

Rights holders who have not lodged a Notice of Objection with Customs should contemplate lodging such a notice as it now provides a simpler and more effective means of identifying potentially counterfeit goods entering Australia.

Should you wish to lodge a Notice of Objection with Customs, or if you have any questions about the new Australian Customs seizure procedures, please contact us.

Davies Collison Cave is excited to support the latest initiative of the Royal Australian Chemical Institute - the new Food Nutrition and Analytical Chemistry group.

The RACI Food Nutrition and Analytical Chemistry group will be holding their inaugural networking event on Thursday 16 May 2013 from 5.30-7.30pm at Taste Baguette, Menzies Building, Monash University, Clayton as an evening networking event for people in food nutrition, analytical, nutraceutical and chemical sciences.

Innovation in food technology and analytical science offers exciting new opportunities for a number sectors central to the Australian economy, including dairy, grain, nutraceutical, pharmaceutical, polymer, materials, health, and manufacturing. Davies Collison Cave is pleased to assist those working in research, government, industry and business to forge new connections across these key sectors.

Registration and further details are available from the RACI website.

From 23 April 2013, Google’s Trademark Adwords policy will be updated so that Google will no longer restrict advertisers purchasing and using trade marks as keywords in Google Ads (previously known as sponsored links). These changes affect Australia, China, Hong Kong, Macau, Taiwan, New Zealand, South Korea and Brazil and bring the Australian Google Adwords policy into line with the rest of the world.

This policy change follows the High Court's finding that Google was not responsible for the content of third party Adword advertisements (formerly sponsored links) displayed on Google search result pages (see http://www.davies.com.au/pub/detail/683/google-not-responsible-for-misleading-and-deceptive-adword-advertisements-high-court).

How will the change to the Google keyword policy affect trade mark owners?

Below is an example to illustrate the change:

Company A and Company B are competitors.  Company A has purchased and is using Company B’s trade mark as a keyword to trigger its Google Ad. When a user enters the trade mark into the Google search engine, an ad appears in the Google Ads section (previously the Sponsored Links section).

Regime before 23 April 2013: Company B could file a Trademark Complaint with Google complaining about use of its trade mark as a keyword and Google would restrict Company A from bidding on the trade mark as a keyword.

Regime after 23 April 2013: Google will no longer intervene to restrict Company A using Company B’s trade mark as a keyword.  In addition, if Company B had previously filed a Trademark Complaint, Google will no longer restrict that use.

What can trade mark owners do to prevent use of their trade marks in Google Ads?

Despite this policy change, trade mark owners still have the following options:

1. to complain to Google about unauthorised use of their trade mark in Ad text.  In other words, trade mark owners can still complain if their trade mark is being used in the text of the Google Ad.  Google will restrict this use;
2. depending on the circumstances, to take action under the Australian Consumer Law 2010 (Cth) directly against the advertiser (in the above example, Company A) if the advertiser's use of the trade mark is likely to mislead or deceive the public into believing that when they click on the Ad they will be taken to the trade mark owner's website or into believing that the advertiser or its goods/ services are somehow associated with the trade mark owner or its goods and/or services.

Implications for trade mark owners in relation to Google Adwords

All is not lost!  Based on the material before the High Court, the public understands the difference between Google Ads (formerly sponsored links) and organic search results.  As such, consumers appreciate that the Google Ads that appear at the top or to the right hand side of organic search results are just that, paid advertisements and that the organic search results are those of the trade mark owner.  Now that Google has avoided responsibility in the High Court of Australia, it would appear that Google is taking a more relaxed approach to its Adwords policy.  Trade marks owners can still take advantage of other avenues for recourse against advertisers.

The new policy is already in effect in all other regions throughout world.

To learn more about this trademark policy revision, visit :
http://support.google.com/adwordspolicy/answer/177578?hl=en&rd=1

Delnorth Pty Ltd v Commissioner of Patents [2013] FCA 165 (6 March 2013)

This decision concerns an appeal to the Federal Court of Australia following re-examination of an Australian standard patent directed to roadside posts (the patent) in the name of Delnorth Pty Ltd (Delnorth) by the Commissioner of patents.  Re-examination resulted in a number of claims of the patent being considered to lack an inventive step and being revoked.

Background - Delnorth and Dura-Post

Delnorth operates in the field of highway, traffic and roadside products. Delnorth has previously been involved in other litigation with Dura-Post (Australia) Pty Ltd (Dura-Post) in respect of other related patents which are also directed to roadside posts.

Prior to the re-examination process, grant of the patent was successfully opposed by Dura-Post¹, and the Commissioner’s delegate considered that claims 1 to 36 lacked an inventive step.  Delnorth appealed the delegate’s decision to the Federal Court but an administrator was appointed to Dura-Post before the matter was heard. The administrator advised the court that he withdrew Dura-Post’s objection to the patent and as Dura-Post bore the onus of proving that the claims would be invalid if granted, the patent proceeded to grant. 

Re-examination and the decision of the Commissioner's delegate

Following grant the patent was re-examined on the basis of evidence filed in the opposition proceedings, resulting in a number of claims of the patent being considered by the delegate to lack an inventive step so that they were subsequently revoked.  The delegate’s decision is the subject of this appeal.

The delegate considered that certain claims of the patent did not involve an inventive step in light of two prior US patents² (the Pellowski patents).  In reaching this decision, the delegate appreciated that the claims of the patent would only lack an inventive step in light of the Pellowski patents if either document could be considered a piece of information which a person skilled in the art could be “reasonably expected to have ascertained, understood and regarded as relevant”, so as to satisfy section 7(3) of the Patents Act 1990 (the Act).

Lack of evidence that discussed the Pellowski patents

The expert evidence that was filed in the opposition discussed a number of prior art documents and upon consideration of the evidence, the delegate considered that roadside posts have a reasonable level of associated patenting activity and that a person skilled in the art could have been reasonably expected to review patent literature at the priority date of the invention.

Although the evidence suggested that the skilled addressee could be expected to conduct patent searches, there was no evidence that specifically discussed the Pellowski patents and showed that patent searches would have extended to these documents, which were published in the 1960’s and well before the other documents addressed in the evidence. 

The decision - the evidence did not support a finding of lack of inventive step of the claims of Delnorth's patent

Justice Nichols found that the evidence did not justify a finding that the Pellowski patents could be considered information which a person skilled in the art could be “reasonably expected to have ascertained, understood and regarded as relevant”, so as to satisfy section 7(3) of the Act and render any of the claims as lacking an inventive step.  Accordingly, Justice Nichols set aside the delegate’s decision to revoke claims of the patent.

It was noted by Justice Nichols that a “peculiar” position exists in which claims of the patent which were “in substance, the same” as claims of a related innovation patent which were considered in a separate decision³ to not involve an innovative step.  In this regard, Justice Nichols commented that a claim lacking an innovation step “might not be invalid on the basis that it lacked any inventive step”.

In summary, although claims 1 and 2 of the related innovation patent were found to lack an innovative step in light of the Pellowski patents, the evidence failed to show that these same patents were pieces of prior art information that could render the claims of the patent as lacking an inventive step.

Considering Raising the Bar

With the terms "ascertained, understood and regarded as relevant" being removed from the Act under the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, were the same facts considered under the new provisions a different outcome may have been likely.

Endnotes:

1. Delnorth Pty Ltd v Dura-Post (Australia) Pty Ltd (2009) 81 IPR 396
2. US patent nos. 3,312,156 and 3,362,305
3. Delnorth Pty Ltd (ACN 051 954 977) v Dura-Post (Australia) Pty Ltd (ACN 101 287 512) [2008] FCA 1225

On 12 April 2013, the Federal Magistrates Court of Australia changed its name to the Federal Circuit Court of Australia. The change comes about as a result of legislation passed last year which aims to better reflect the court's role as a federal court, and to emphasise the Court's extensive circuit work. In addition to the Court's new name, Federal Magistrates also became known as Judges from 12 April.

The name change came into force just prior to the new Raising the Bar legislation coming into effect on 15 April 2013. From 15 April, the Federal Circuit Court has increased intellectual property jurisdiction, namely in trade mark and design matters.

The new website for the Federal Circuit Court is www.federalcircuitcourt.gov.au.

The most significant reforms in over 20 years to Australia’s IP framework have now come in to effect. Davies Collison Cave has compiled these resources to explain how the changes affect you.

What's changed: a 4-minute overview

DCC partners Michael Caine (patents), Michael Wolnizer (trade marks) and Chris Jordan (IP law) explain the most significant changes.

Further information for your industry

General IP

• Raising the Bar: what you need to know
• Raising the Bar: final regulations released
• Basic overview of the law reforms

Patents

• 12 ways patent applicants should prepare
• Raising the Bar regulations published for public consultation
• Intellectual Property Laws Amendment (Raising the Bar) Act 2012

• Australia's Raising the Bar reforms: changes to trade mark registrations, oppositions and enforcement

Trade Marks

• Summary of the key issues with the draft Trade Mark Regulations for the Raising the Bar Act

Customs seizure

• Raising the Bar: improvements to Customes seizures for trade mark and copyright owners

Have questions? Get in touch

Today marks the commencement of The Intellectual Property Laws Amendment Act 2012. This is the most significant amendment to Australia's intellectual property laws since the Patents Act 1990 was enacted. As of today the Act raises the requirement for patentability (particularly inventive step) and the description requirements for patent specifications, it changes trade mark opposition case management, enforcement and customs siezure provisions. Below is a summary of the key changes now enacted.

Key changes for patents

There will be shortened time periods for requesting examination and for securing acceptance of a patent application. The period for requesting examination following the issuance of a Direction to Request Examination will be reduced from 6 months to 2 months and the previous 21 month period within which an application must be accepted (following issuance of the first examination report) is now 12 months. As patent examiners will have greater scope to maintain objections under the new law it is likely to be necessary for examination issues to be argued at a hearing more often than previously. Due to the shortened acceptance period it will be important for applicants to progress examination quickly to allow for time for objections to be resolved and for hearings to take place.

Key changes for trade mark opposition case management

Timeframes

The period to file a Notice of Opposition and the period to file evidence in reply has been shortened from 3 months to 2 months. It is no longer possible to obtain an extension of time to file a Notice of Opposition on the basis that further time is required to undertake genuine research or on the basis of negotiations with the applicant. It will now be more difficult to obtain extensions of time to file evidence and extensions will only be allowed if a party has acted promptly and diligently at all times throughout the period.

Notice of opposition

A Notice of Opposition now comprise two documents:

• A Notice of Intention to Oppose; and
• A Statement of Ground of Particulars due one month from the filing of the Notice.

If grounds are not sufficiently particularised then the Registrar has the power to amend the Statement to remove certain grounds or to dismiss the opposition outright. Amendments to the Statement will only be allowed if the Registrar is satisfied that the amendment relates to information which the opponent could not have reasonably have known at the time of filing the Statement.

In a positive development, once the Statement of Ground of Particulars is filed, deemed adequate, then the applicant must file a Notice of Intention to Defend the opposition otherwise the application will lapse.

Once the Statement of Ground of Particulars is filed, it will be open to the parties to request a cooling off period of six months which may be extended once by six months.

Key changes to enforcement

The Act introduces new summary offences which have lower thresholds of fault and lower penalties. The maximum penalty for indictable offences is increased and falls more in line with other IP legislation. In addition, it will now possible to obtain additional damages in trade mark infringement proceedings. It is also now possible to appeal a decision of the Registrar to the Federal Circuit Court.

Key changes to customs seizure provisions

The onus is now on the importers of seized goods to make a claim for the release of the goods if they wish to have them returned. This is a significant change as under the previous system it was often difficult to track down counterfeit importers. It is hoped importers of counterfeit product will now simply allow the product to be impounded by customs. This will mean that trade mark owners will often not have to do anything to ensure counterfeit goods never get on the market (thus cutting enforcement costs). The Act also gives Customs increased powers to provide contact details for the importer and exporter of the seized goods and allows for inspection of the goods.

For more details on the Raising of the Bar Act 2012 please visit www.davies.com.au/raisingthebar

Davies Collison cave is very pleased to have been announced as the Corporate Intl Magazine Legal Awards 'Trademarks Law Firm of the Year in Australia' winner for 2013. As Australia’s largest dedicated trade mark law practice, filing the most trade mark applications in Australia each year, we take great pride in being acknowledged for our professional experience and expertise.

About the Corporate Intl Legal Awards

The Corp Intl Magazine Legal Awards are for law firms and lawyers only. The awards process is extensive and involves a large external nomination process, over 1 million invitations to nominate our sent out to business leaders, investors and professional advisers around the world. Following this the Corporate Intl in-house team of researchers review the nominations and assess other mediums, such as ranking websites, lawyer/firm websites, recent cases, other publications and news outlets. A shortlist is complied and those firms are asked to submit additional supporting information. Finally a panel of judges review the information collated and agree on a winner for the category in question.

Corporate Intl Magazine is a global business publication both online and print, with a readership of 125,000 people.
 

Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135

On 23 November 2012, Justice Foster of the Federal Court dismissed an application for injunctive relief by Snack Foods Limited against its competitor, Premier 1st. Snack Foods was planning to launch a proposed new corn chip product under the mark "Popped Corners". In its application for injunctive relief, it sought to restrain Premier 1st from importing and selling a similarly named popped corn chip product in Australia called "Popcorners". In his reasons, handed down on 25 February 2013, Justice Foster held that despite finding that a prima facie case of infringement had been established, the balance of convenience and justice favoured refusing Snack Foods' application for injunctive relief.

Snack Foods' "Popped Corners" trade mark

Snack Foods claimed that in late 2010, it began to develop a popped corn chip product for Australian consumers to be marketed under the trade mark "Popped Corners". In June 2011, it filed an application to register the "Popped Corners" mark, which was subsequently registered in January 2012. According to Snack Foods, in late November 2012, the product was at an advanced stage and ready for release to the Australian market in March 2013.

According to Premier 1st, it started negotiating a distribution agreement in or about March 2011 and subsequently entered into an arrangement with Medora Snacks (also a respondent in the proceeding), to import and distribute a popped corn product manufactured in the United States by Medora and sold under the name "Popcorners". Medora owns the trade mark for "Popcorners", which was registered in the United States in March 2010.

After learning of Premier 1st's plans, Snack Foods sought to restrain Premier 1st from importing, selling, offering for sale, distributing, advertising or promoting the "Popcorners" product in Australia on the basis that the "Popcorners" mark was substantially identical or deceptively similar to the "Popped Corners" registered mark.

General principles regarding interlocutory injunctions

In deciding whether to grant an interlocutory injunction, Justice Foster referred extensively to the Samsung Electrics Co Ltd v Apple Inc case.¹ In that case, the Federal Court set down some general questions to consider, which were:

1. is there a serious question to be tried (or has the applicant made out a prima facie case)?;
2. does the balance of convenience favour the granting of an injunction? One of the matters a Court must consider in assessing the balance of convenience is whether the applicant would suffer irreparable harm (for which damages would not be an adequate remedy), if an injunction were not granted.²

Was there a serious question to be tried?

Premier 1st accepted that Snack Foods had established a prima facie case of infringement of its "Popped Corners" trade mark due to the similarity of the trade marks.³ However, Justice Foster held that Premier 1st also had reasonable prospects of defending the infringement action and of securing the cancellation of the "Popped Corners" mark⁴ on the basis of its arguments that:

1. Snack Foods was not the true owner of the trade mark when it applied in June 2011 for registration in Australia; and/or
2. the use of the "Popped Corners" trade mark in Australia was likely to mislead or deceive and cause confusion on the basis of Medora and Premier 1st's prior reputation in Australia; and/or
3. Premier 1st had a defence of honest concurrent use.⁵

The balance of convenience and justice

Justice Foster referred extensively to the Samsung v Apple case.⁶ In considering where the balance of convenience lay, the court in that case said that:

The assessment of harm to the plaintiff, if there is no injunction, and the assessment of prejudice or harm to the defendant, if an injunction is granted, is at the heart of the basket of discretionary considerations which must be weighed as part of the court's consideration of the balance of convenience and justice.⁷

Justice Foster considered a range of discretionary factors, most of which were in Premier 1st's favour. His Honour took into account the following:

• Whereas the potential harm to Snack Foods if the injunction was not granted was almost entirely speculative,⁸ for Premier 1st, there was a real and significant potential loss that would be caused if an injunction were granted. In this regard, Premier 1st put forward evidence regarding its extensive marketing campaign of the "Popcorners" products, the potential damage to its supply relationship with Woolworths if it were not able to supply the product, and the potential risk of liquidation to the company if it were unable to sell its "Popcorners" stock. In reviewing this information, Justice Foster held that there would be almost certain prejudice to Premier 1st if the injunction was granted.⁹
• It appeared that Snack Foods was aware of Medora's registered trade mark as early as February 2011 and it could be reasonably inferred that Snack Foods made the trade mark application for "Popped Corners" in circumstances where it was well aware of Premier 1st's and Medora's businesses and the "Popcorners" registration in the United States.¹⁰
• Snack Foods' delay in bringing the application after hearing of the intentions of Premier 1st to import and sell in Australia the "Popcorners" products.¹¹ His Honour noted that Snack Foods could have pressed for an early final hearing but instead chose to pursue interlocutory relief on a contested basis.¹²
• Since at least January 2012, a third party, Dainty Food Australia Pty Ltd, had imported into Australia and supplied to retailers such as Coles and Woolworths, kosher popped corn products bearing the "Popcorners" trade mark, yet Snack Foods had made no contact with Dainty until 1 November 2012.¹³ This further highlighted Snack Foods' delay in acting.

After considering all these matters, Justice Foster concluded that the balance of convenience and justice favoured the refusal of interlocutory relief to Snack Foods.¹⁴

Issues to consider in applications for interlocutory relief

Snack Foods is yet another case where an intellectual property rights holder has been refused interlocutory relief, even though it has established that it has a prima facie case of infringement. This case highlights the difficulties of obtaining an interlocutory injunction and matters that a court will take into account when assessing the discretionary considerations going to the issue of the balance of convenience, including whether:

• a respondent has a good defence to infringement and any prospects of having the trade mark(s) which it has allegedly infringed cancelled;
• an applicant has delayed in applying for interlocutory relief;
• an applicant has "clean hands" when making the application (for example, whether the applicant knew of any pre-existing trade marks, any similar products or any other rights of third parties and had done nothing); and
• a respondent has established the likelihood of irreparable or certain damage should the injunction be granted.

Lessons for trade mark owners

• This case serves as a reminder that trade mark owners should regularly monitor their competitors' products, and act quickly when potentially infringing products are discovered in the marketplace. This may assist rights holders in successfully obtaining interlocutory relief to restrain the sale of those products, pending a full trial.
• In addition, when applying for urgent injunctive relief, trade mark owners should ensure that the validity of their mark is likely to withstand an attack by an infringing party.

Endnotes

1. Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257.
2. Ibid at [57], [61]-62].
3. Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [25]. At [31], Justice Foster also accepted that a prima facie case had been established by the Applicants.
4. Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [61].
5. Ibid [26] – [28].
6. Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257.
7. Ibid [62].
8. On the question of damages, his Honour considered that any potential harm to Snack Foods was almost entirely speculative as its "Popped Corners" product was not yet on the market, and any comparisons of the impact of the "Popcorners" products on Snack Foods' products were purely hypothetical (Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [52], [62]).
9. Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [63].
10. Ibid [53] – [55].
11. Ibid [65] – [66].
12. Ibid [66].
13. After which Dainty gave an undertaking not to supply the kosher "Popcorners" products pending the determination of the proceeding (Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [11] – [12]).
14. Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [67].

As is reasonably well known now, intellectual property (IP) rights can represent powerful business tools that can be used to help secure market position.

An IP right, in the form of a registered patent, trade mark, or design can be used to establish an absolute market monopoly around new innovations important for your business growth and development.

Many local businesses now use the IP rights regime in Australia and overseas but are those businesses getting the most effective use out their IP rights?

What many businesses don't realise is their rights don't need to be at the heavy end of a contentious and expensive infringement action – their rights can be working quietly in the background 24/7, pre-emptively protecting market position.

This passive protection role can be achieved through simple and effective marking practices, to convey details of the IP rights to the public and competitors in particular.

Rights can prevent infringement

Many business owners may not be aware, but from an IP practitioners perspective, the passive force of IP rights is very evident.

We regularly see clients who seek non-infringement advice before initiating a business plan, even before they enter a market, concerned that there are no relevant IP rights to interfere with their freedom to operate. If IP rights are found, such clients will often elect not to proceed with a particular project, adopt an alternative product, or possibly enter negotiations for a licence.

So the trick is to make your competitors aware of your rights. Often this is done after the event, when instances of infringement become apparent and the matter can be resolved with a simple 'cease and desist' letter. But there is a risk that, by that stage, your competitor is too financially committed to stop the infringement, and will then seek to defend their position.

If your competitors are not aware of your rights there is also a chance they might innocently infringe your IP rights. Innocent infringement provides an infringer with a defence that will allow them to escape paying financial penalties, even if infringement is established in Court.

As such, it again comes down providing effective notification to competitors of the existance of any relevant IP rights, to act as a pre-emptive deterrent and to remove access to the innocent infringer defence.

Conventional Marking

Traditionally, relevant notification has been provided by marking products directly with product specific registration numbers or wording. Many people would be aware of the "Patent Pending", "Patent Applied For" or "Registered Design" wording.

This practice still has relevance for products with few associated IP rights. However, today, any one company can have a multitude of IP rights across multiple jurisdictions. A single product such as a computer tablet may, for example, have rights relating to individual components, a manufacturing technique, a method of use, various registered designs or the like, or a combination of all of those forms of protection. Those various forms of protection may also apply across an entire range of products and business divisions.

The scope of the IP rights may also differ across different jurisdictions.

With different products, and different types of IP rights and jurisdictions, traditional marking practices can become unmanageable and, in some case, impractical.

The distance between a competitor being aware of your product and them being able to clearly identify the relevant IP rights needs to be a short as possible for your IP rights to work in their pre-emptive capacity.

So how is it possible to accurately convey to competitors the particular IP rights they should be aware of, where multiple rights exist?

Virtual Marking

Like many other modern day business practices, traditional marking techniques are migrating online. "Virtual marking" is a new and growing trend for IP rights marking practices.

Virtual marking allows all information relating to IP rights to be easily and readily stored online.

So instead of having to mark all goods independently with individual numbers and details, only a single website address or URL needs to be identified, with all relevant rights details then stored online.

Imagine the comparative ease with which a competitor can now be taken to a menu list where the relevant rights can be located by company name, product name or brand name. Background IP rights that may not be readily apparent from the product itself can also be readily identified, such as patents directed to manufacturing techniques and the like.

Not only does this improve the efficiency and effectiveness of information transfer, to satisfy conventional marking requirements, virtual marking also provides the rights holder with a tool to keep track of their own IP rights and portfolios.

Virtual marking has potentially significant cost advantages too. Only a single address or URL is needed for an entire product range, so multiple and individual printing and tooling is not required for each product.

The ultimate cost saving, however, comes from your IP rights being allowed to fulfill their passive role in protecting market share by notifying competitors of those rights.

It should be noted that virtual marking is a relatively recent development. In the USA, the America Invents Act recently introduced new patent laws and officially sanctioned the use of virtual marking as a legitimate means of providing patent rights information. However at this point, Australia has not yet officially recognised the practice, and there has been no judicial comment on the role of virtual marking in removing an innocent infringer defence.

This article was originally published in the Western Sydney Business Access and has been republished here with permission
 

On 2 April 2013 the Pharmaceutical Patents Review Panel released its draft report for public comment. While the findings and recommendations in the Report are not unexpected, given the make up of the panel and the short time frames provided to the Panel for carrying out its enquiry, the Report will nonetheless be of great concern to the research based pharmaceutical sector. The Report can be found on the Review Website, and in it the Panel members make it clear that they would like to see a reduction in the term of pharmaceutical patent extensions, agreement from pharmaceutical patent owners that they will not enforce their patents in respect of manufacture for export activities, limitations on the contributory infringement provisions which allow patents relating to new therapeutic methods to be enforced, and the introduction of various committees to monitor IP Australia's activities and the operation of the Pharmaceutical Benefits Scheme. The Panel does not recommend any expansion of the classes of pharmaceutical patents that may be eligible for pharmaceutical patent term extensions, even when the patent owners experience significant regulatory delays in obtaining the necessary approvals to allow them to market those pharmaceutical inventions. All in all, there is not much in it that is attractive to the research based pharmaceutical sector, except perhaps removal of the requirement to file expenditure returns to complete the patent term extension process. It should be understood, however, that this report represents merely an interim report, which will be finalised based upon further public consultation. Once the report is finalised the Government will be able to accept, modify or reject any of the Panel's recommendations. Given that a federal election is scheduled for 14 September 2013, there is already a full legislative program up to the election and the Government currently holds a slender majority it appears unlikely that any substantial legislative reform could take place within the current Government's term.

Nonetheless, if you have concerns with regard to any of the draft recommendations we suggest that you engage in the public consultation process by filing a submission in response. The deadline for filing submissions in response to the 224 page report is 30 April 2013. Submissions should be sent to:

Terry Moore
IP Australia
PO Box 200
Woden ACT 2606
pharmapatents@ipaustralia.gov.au

SNF (Australia) Pty Ltd v CIBA Specialty Chemicals Water Treatment Limited [2013] HCATrans 54

In an earlier briefing, we reported that SNF had filed a special leave application in the High Court of Australia in a last-ditch attempt to have Ciba's innovation patents relating to treatment of mine tailings revoked. The special leave application was refused following a hearing held on 15 March 2013 in Melbourne. In refusing to grant special leave to SNF to appeal the Full Federal Court's decision, the High Court rejected SNF's argument that the judges of the lower courts had incorrectly applied the legal principles relevant to claim interpretation and innovative step.

It is particularly noteworthy that the High Court did not accept SNF's submissions that the innovative step test applied previously by the Federal Court – namely, that any difference between the claimed invention and the prior art simply needs to affect the way that the invention works, rather than providing any particular benefit or advance - was not the correct test.

SNF has no further avenues of appeal, so it appears that Ciba's innovation patents are here to stay.

Does innovative step include negative or neutral effects?

The statutory test for innovative step requires that any difference between a claimed invention and the prior art make "a substantial contribution to the working of the invention". The Full Federal Court has previously interpreted the test as essentially requiring that there be a functional difference between the invention as claimed and the prior art. Any such difference, the Court has previously held, need not constitute an advance in the art.

SNF's argument was that the variation between Ciba's claims and previously known tailings treatment processes in fact resulted in a negative, or at best neutral, effect on the known processes. They argued that this could not be a "substantial contribution" for the purposes of innovative step, since a process which worked worse than known processes, or even just as well, could not possibly be an "innovation".

The High Court rejected this argument. Referring to the lower courts' findings that certain differences in Ciba's claimed process had “an important effect” on the process, Chief Justice French commented when handing down the High Court's decision on the special leave application that this was "a statement of an evaluative kind which, taken in context, did not disclose an approach … which was inconsistent with the statutory test."

Was expert evidence in relation to claim construction properly handled by the Federal Court?

SNF submitted that evidence provided by an expert witness had been given undue weight, because the witness was genuinely an expert in the field, rather than a person of ordinary skill in the relevant art. They also submitted that the expert's interpretation of "improved rigidification" was at odds with evidence provided by other experts, and should not have been relied upon by the Federal Court.

The High Court rejected SNF's submissions that the Federal Court (whether at first instance or on appeal) had made an error of legal principle in relation to claim interpretation.

Lessons for innovation patent applicants

Given that the High Court has refused the special leave application, the innovative step test previously applied by the Federal Court will stand. That is, so long as your invention works in a different way than previously known devices or methods – regardless of whether the difference is a beneficial one – it may be patentable.

Sebel Furniture Limited v Furnware Limited [2013] APO 19 (26 February 2013)

Successfully overcoming an inventive step objection raised by an Examiner at the Australian Patent Office has historically been relatively straightforward. In recent years, the Patent Office has endeavoured to be tougher in the application of the inventive step tests. A recent decision includes comments from the Delegate of the Commissioner of Patents that provide guidance on the current position taken by the Patent Office, and this is valuable for responding to objections raised in Examiner's Reports on patent applications.

Nature of the dispute

Furnware Limited is the applicant of Australian Patent Application No. 2004283634, which relates to recline mechanisms for seat backs and bases. Sebel Furniture Limited opposed grant of a patent on the application. In addition to a challenge of the inventive step, Sebel raised lack of novelty and lack of clarity grounds.

The lack of inventive step challenge

Before comparing the documents and claims in detail, the Delegate of the Commissioner of Patents addressed two preliminary requirements to the inventive step assessment as follows:
The identity of the person skilled in the art: the Delegate considered that this would be a furniture designer with possession of "all the engineering competencies relevant to the art of furniture design, and tilting mechanisms in particular".

The common general knowledge in the art: acknowledging the very limited declaratory evidence, the Delegate considered that it could only be said with confidence that the common general knowledge in this art included providing "tilting mechanisms for seats and/or back rests in all their manifestations".

The Delegate then considered whether the claimed invention lacked inventive step (in other words, was obvious) from two different approaches:

1. Was the invention obvious in light of a first prior art document (US Patent No. 2,796,920) when combined with a second prior art document (US Patent No. 4,890,886)?
2. Was the invention obvious in light of the second prior art document?

First approach in assessing inventive step

In order for the first approach to succeed in finding the claimed invention lacking inventive step, two separate enquiries were required. The first enquiry is whether "the person skilled in the art could reasonably be expected to have combined" the first and second documents. If the documents can be combined, then the second enquiry is whether the claimed invention would have been obvious in light of the combined disclosure of the first and second documents.

The Delegate recognized that the first document described a mechanism that possessed all but one of the features defined in the relevant claim, and indicated that this represented a fundamental difference. The Delegate found that the omitted feature was disclosed in the second prior art document. Therefore, all the features of the claimed invention were present in the two documents. In the first approach it was necessary that the first and second documents be combined to find lack of inventive step.

In addressing the first enquiry, the Delegate concluded that there was sufficient similarity in technology of the first and second documents that this requirement was satisfied. In other words, the Delegate's opinion is that the person skilled in the art could reasonably be expected to have combined the disclosures of the documents.

Key Point 1 – Combining prior art documents in inventive step assessment: 
The similarity or disparity in the technology of two (or more) prior art documents is relevant to the issue of whether the person skilled in the art could reasonably be expected to have combined the disclosures of prior art documents.

To address the second enquiry, the Delegate then asked whether it would have been obvious to fundamentally alter the mechanism disclosed in the first document to arrive at the claimed invention. This, the Delegate concluded, was not something that the person skilled in the art would be directly led to try. Consequently, the first approach failed to render the claimed invention lacking inventive step.

Key Point 2 – Fundamental alteration of prior art is unlikely to render invention obvious:
An inventive step objection may be overcome on the basis that the disclosure of a prior art document must be fundamentally altered to arrive at the claimed invention if the person skilled in the art would not be directly led to try the alteration. One example of a fundamental alteration is the incorporation of a feature into the prior art document's disclosure.

Second approach in assessing inventive step

In the second approach, the Delegate observed that the second document disclosed the mechanism defined in the relevant claim, but that the claim was directed to a different application. In this case, the claim was to the tilting mechanism of the seat back, whereas the document only disclosed the mechanism used in tilting the seat base. The question then was: would it be obvious to deploy the disclosure of the second document in a new application? In answering this question, the Delegate observed that the second document indicated that other potential applications were envisaged, but were not explicitly stated. Consequently, the Delegate held that a person skilled in the art would be directly led to utilize the mechanism disclosed in the second document in the tilting mechanism for a seat back, and that the claimed invention lacked inventive step in light of the second document alone.

This finding of lack of inventive step is essentially implementing the principle that there is no invention in a new use for a known product. However, the Delegate's comments suggest that in application of this principle, the language in the prior art document under consideration is relevant to the issue. It seems possible that a different conclusion may have been made had the second document not contemplated alternative applications, such that the person skilled in the art would not be directly led to the new application of the known product.

Key Point 3 – Inventive step in a new use for a known product: 
A new use for a known product is unlikely to be inventive, but an exception may be if the person skilled in the art would not be directly led to try the new use with the expectation of success 

Further comments on the decision

The Delegate's analysis of inventive step is based on the question of whether the person skilled in the art would, in the circumstances, be directly led to try the claimed invention in the expectation that it might well produce the desired result. This test was set out in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd¹, and has subsequently been approved by the High Court of Australia.

This decision provides some guidance on how inventive step may be judged in examination before the Patent Office, in which there is often very limited evidence regarding the common general knowledge in the relevant art. The key points listed above can assist practitioners in formulating arguments to challenge inventive step (obviousness) objections raised by Examiners. However, it is important to recognize that this is the decision of a Delegate, and it is possible that Australian Courts will take a different view on these issues.

The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 will remove from the legislation the requirements that documents must satisfy in order to qualify as part of the prior art for inventive step. These requirements are that the person skilled in the art must reasonably be expected to have ascertained, understood and regarded as relevant each document. The Explanatory Memorandum for this Act states that some of the current requirements will remain relevant to inventive step assessments for cases considered under the amended patent laws, and on this basis it appears that the conclusions that can be drawn from the decision will remain relevant. 

Endnotes

1. Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157

Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp. (Fed. Cir. 2012)

In September 2012, the full bench of the United States Court of Appeals for the Federal Circuit handed down a decision that dramatically alters the previous understanding of the law of induced infringement, strengthening the law for patentees in the process. In Akamai, the Federal Circuit held that induced infringement can be found where multiple entities collectively perform all of the steps of a patented method.

Infringement law prior to the Akamai decision

Direct infringement is covered by 35 U.S.C. § 271(a). The courts have long held that for direct infringement to occur, a single actor and/or an agent of that actor (e.g. a contractor under the control of the actor), must practise each and every element of the claimed invention. This is known as the "single-entity rule".

Induced infringement is covered by 35 U.S.C. § 271(b), which states that "[w]hoever actively induces infringement of a patent shall be liable as an infringer". Prior to the Akamai decision, the courts had interpreted induced infringement as requiring that:

1. the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement¹; and
2. the inducement leads to direct infringement by a single actor.²

Thus, both direct and induced infringement required infringement of all steps of a method by a single actor. As a result, divided infringement was often asserted as a defence in instances where a party did not perform all steps of a method claim.

Background to the Akamai v Limelight decision

Akamai is the owner of US Patent No. 6,108,703, directed to methods for the efficient delivery of web content. Akamai accused Limelight of performing all but one of the steps of Akamai’s patented method of delivering web content, with Limelight’s customers performing the last step, pursuant to Limelight’s instructions. Akamai asserted that Limelight had sufficient control over its customers to be considered an agent relationship, and should therefore incur liability for joint direct infringement. In 2010, a Federal Circuit panel held that there was no joint direct infringement because Akamai failed to show an agency relationship and thus failed to demonstrate that a single actor performed all of the steps of the method.³

McKesson owns US Patent No. 6,757,898 directed to methods for electronic communication between healthcare providers and their patients. McKesson alleged that Epic Systems Corp. induced Epic's customers to infringe the patent. Epic did not perform any steps of the claimed method. Rather, some steps were performed by the patients and some were performed by the healthcare providers. In 2011, a Federal Circuit panel held that there was no infringement because Epic's direct customer, the healthcare providers, did not perform all of the steps of the method.⁴

The U.S. Court of Appeals for the Federal Circuit agreed to a rehearing en banc of these decisions to consider if, and under what circumstances, there can be joint liability when at least two parties collectively perform all of the steps of a patented method, but no one party performs all of the steps.

The decision to expand the definition of induced infringement

In a close 6-5 decision, the court overturned precedent and ruled that induced infringement under 35 U.S.C. §271(b) does not require a single, direct infringer (as previously held), but can involve two or more parties that collectively perform all of the steps of a patented method. In arriving at this decision, the majority observed that a party who knowingly induces others to engage in acts that collectively perform the steps of a patented method should not be immune from liability simply because they have delegated infringement activity.

This decision expands the definition of induced infringement to include divided infringement. The court re-iterated that the element of intent to infringe must be shown to establish induced infringement. Although there remain no clear guidelines as to what is required to prove intent, at the very least the inducing infringer should be shown to have had knowledge of the asserted patent.

With this new understanding of induced infringement, inducement liability exists where the accused infringer:

1. was aware of the patent and the patented method;
2. induced one or more parties to perform the steps of the patented method; and
3. those steps were performed, either by a single induced party, collectively by multiple induced parties or collectively by the accused infringer and one or more induced parties.

The majority's decision was met with strong dissent from the other five members of the court. Both defendants, Limelight and Epic, subsequently petitioned the Supreme Court to review the induced infringement question, although Epic has now withdrawn their petition following a settlement with McKesson. Limelight's petition is still pending.

Implications of the decision

Decision strengthens the law of induced infringement for patentees

This decision strengthens the law of induced infringement for patentees, with divided infringement no longer a defence for accused infringers. In light of the expanded definition of induced infringement, those with patented methods in the United States should review the practices of competitors in that country to determine whether induced infringement may be occurring. Those with business in the United States should also review their own practices to ensure that they are not liable for infringement under these new rules.

Claim drafting

The decision also has implications for claim drafting. Where possible, method claims were previously drafted to ensure that a single entity would perform all of the steps. While this is still preferable, there is now more flexibility to include claims that contain steps that may be performed by multiple parties, as such claims now have added value.

Implications for the Biotechnology industry

The expanded definition of induced infringement under Akamai has particular implications for the biotechnology industry and the information and communications technology (ICT) industry, both of which commonly utilise methods that may require multiple entities to perform the steps.

Diagnostic and personalised medicine methods may be particularly affected by the Akamai decision. These methods often include steps carried out by multiple users or entities, such as laboratories, pharmaceutical companies, technicians, nurses, doctors and even patients. Patented methods that require multiple users may now be more easily enforceable. Of course, where possible claims to these types of methods were drafted to ensure that a single entity, such as a laboratory technician, would perform all of the steps. While this practice should certainly continue, additional emphasis can now be given to claims that include steps performed by other entities.

The expanded definition of induced infringement can be used to strengthen personalised medicine method claims. Some of these types of claims have recently come under attack as not being patent-eligible subject matter under 35 USC § 101 in the wake of Mayo v Prometheus. Claims to personalised medicine methods, such as those that were held invalid in Mayo v Prometheus, could be drafted to include, for example, a treatment step to help satisfy the 35 USC § 101 requirement. Such claims would typically require at least two parties to perform the method (e.g. a laboratory or clinical technician and a nurse or doctor), but would be enforceable against induced infringement under the new standards set by Akamai.

Implications for the ICT industry

Inventions within the ICT industry have long been recognised as having the potential to include methods involving multiple entities. This is not only exemplified in the patents considered in the Akamai decision, but also in the majority's decision itself. In discussing the legislative history of contributory infringement, the majority point to a 1948 hearing in which the speaker conceives of a new radio communication method necessarily including both transmitting and receiving steps.⁵ In more recent times, growth in fields such as distributed computing and cloud based applications, only further highlight this issue.

With this in mind, whilst claims directed towards ICT methods should continue to be drafted such that all steps are performed by a single entity, claims including multiple entity steps may also be considered for those seeking protection in light of Akamai, for example, to provide additional fallback positions. However, this approach should be used with caution, particularly in respect of cloud-based inventions and other distributed ICT methods which have the potential for multiple-entity steps to also be performed in different jurisdictions. Attempting to assert patented method rights against multiple entities across multiple jurisdictions, for example in cloud-based applications utilising off-shore servers, may introduce additional complication.

Endnotes

1. DSU Med. Copr v JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc)
2. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007)
3. Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010)
4. McKesson Techs., Inc. v. Epic Systems Corp., No. 2010-1291, 2011 WL 1365548 (Fed. Cir. Apr. 12, 2011)
5. Akamai, p 19.

This edition’s Case Studies explain why Google is not liable for displaying misleading AdWords advertisements, while a Facebook user is liable for posting disparaging comments about a competitor (Seafolly). We also discuss why SUNNY ROO is deceptively similar to SUNNY BOY, and whyuse of a trade mark in a domain name redirecting consumers to a third party website is an infringement (DRH Holdings).

A printer cartridge compatibility chart is an original literary work, says the court in Tonnex. We review that decision, plus the saga of Lundbeck’s extension of patent term application and the forthcoming High Court case on the patentability of treatment of the human body (Apotex).

See our Practice Updates to learn why the America Invents Act has been revised, and to understand Europe’s forthcoming unitary patent system. And read our Insight to see why Europe’s next reform should be a patent grace period.

In this issue

Insight

Case studies

• Seafolly sues competitor over misleading and deceptive Facebook posts
  Seafolly Pty Ltd v Madden [2012] FCA 1346
• Google not responsible for misleading and deceptive Adword advertisements: High Court
  Google v ACCC [2013] HCA 1
• Lessons learned on website redirection and trade mark infringement
  DRH Holdings (Australia) Limited v David Reid Homes Australia Pty Ltd [2012] FCA 1336
• Reliance in patent litigation on experimental work referenced in specification
  Bristol-Myers Squibb Company v Apotex Pty Ltd (No 4) [2012] FCA 1433
• SUNNY ROO trade mark deceptively similar to SUNNY BOY trade mark
  SMA Solar Technology AG v Beyond Building Systems Pty Ltd (No 5) [2012] FCA 1483
• Full Federal Court agrees that copyright subsists in original printer cartridge chart
  Tonnex International Pty Ltd v Dynamic Supplies Pty Ltd [2012] FCAFC 162
• Lundbeck extension of time upheld in LEXAPRO extension of pharmaceutical patent term saga
  Aspen Pharma Pty Ltd and Ors and Commissioner of Patents and H Lundbeck [2012] AATA 851
• Is a method of treatment of the human body a patentable invention?
  Apotex Pty Ltd v Sanofi-Aventis Pty Ltd

Feature article

• Raising the Bar

Practice updates

• Federal Magistrates Court reforms: new name and expanded intellectual property jurisdiction
• Europe nearly has a Unitary Patent – 2014?
• America Invents Act Revised

DCC Update

• DCC News
• DCC Out & About
• Articles on davies.com.au

“When the facts change, I change my mind. What do you do, sir?” said John Maynard Keynes to a colleague challenging him for changing his position on an economic issue.

I’m with Keynes. The facts on the potential perils of a grace period in patent law have changed, and so I’ve changed my mind. When Australia introduced a 12-month general grace period ten years ago, I feared that the obvious problems would outweigh the expected advantages, and I resisted the change. A decade of experience has shown my fears were largely unfounded – and so I’ve shifted my position.

The main argument against a grace period is the increase in “uncertainty”, for both applicants and third parties. A grace period may give patent applicants a false sense of security, misleading them to think the local grace period will save them in other countries. More problematic is the increase in uncertainty for third parties – the normal 18-month delay in knowing whether patent rights may exist becomes up to 2.5 years.

The Australian experience has been that the concern of increased uncertainty is more theoretical than real. Inventors do not appear to have become more likely to disclose their invention before filing an application, and competitors do not appear to have become more constrained in their operations.

What is real, however, is the problem caused by the lack of international uniformity on the issue – and, in particular, by the absence of an equivalent grace period in the European Patent Convention. The Australian experience of no observed increase in pre-filing disclosures suggests that applicants won’t take advantage of a grace period unless it applies in all major markets. Until Europe adopts a grace period provision compatible with those in Australia, the US and elsewhere, the full benefits of the grace period will not be achieved.

Harmonising the grace period has been on the international patent law reform agenda for more than a century. Although the story to date has been one of constant failure, recent changes to the law in the US, Japan and Korea have added momentum to the movement.

An important development is the initiative of the Tegernsee Group of patent offices. Its September 2012 comparative study identified four issues on which development of an EPC grace period should focus: duration of period (6 or 12 months?), procedure for use (declaration/notification required?), type of disclosure graced (all applicant disclosures?), effect of intervening 3rd party disclosure (prejudicial to applicant?). While resolving these issues is not straightforward, it is possible. And, making sure they are resolved is important for all patent system users, both in Europe and elsewhere.

I’m hopeful that those who have resisted a grace period will see that the facts have changed – and will do what Keynes would do.

It is not long before commencement on 15 April 2013 of most provisions of The Intellectual Property Laws Amendment (Raising the Bar) Act 2012. This is the most significant amendment to Australia’s intellectual property laws since the Patents Act 1990 was enacted and now is the time to ensure you are ready to deal with the impact of the new law.

New requirements for patent applications

The Act raises the requirements for patentability (particularly inventive step), and the description requirements for patent specifications, for all applications filed from 15 April 2013, and for patent applications filed prior to that date if an examination request has not been filed by 12 April 2013.

Preparing for raising the bar commencement

To ensure that patent applications are subject to the current, more lenient patentability and description requirements, patent applicants can take the following actions by no later than Friday, 12 April 2013.

1. Request examination of any pending patent applications.
2. Enter the national phase or file a complete patent application (as opposed to a provisional application) in Australia with an examination request.
3. File any divisional applications required in view of lack of unity objections or to cover separately disclosed inventions with a request for examination.
4. If examination will not be requested, consider amending pending applications to include additional description or examples, or to recite a specific, substantial or credible use, as required under the new law.

Changes to examination request and acceptance periods

You will need to ensure that you are ready to deal with shortened time periods for requesting examination and for securing acceptance of a patent application after commencement of the new law. From 15 April 2013 the period for requesting examination following the issuance of a Direction to Request Examination will be reduced from 6 months to 2 months and the current 21 month period within which an application must be accepted (following issuance of the first examination report) will be reduced to 12 months.

As patent examiners will have an improved ability to maintain objections under the new law it is likely to be necessary for examination issues to be argued at a hearing more often than is currently the case. In view of the shortened acceptance period it will be important for applicants to progress examination quickly to allow time for objections to be resolved and for hearings to take place.

Changes to Trade Mark oppostion case management

There are significant changes to opposition procedures, the most significant of which are:

Timeframes

The period to file a Notice of Opposition and the period to file evidence-in-reply have been shortened from three months to two months. The ability to obtain an extension of time to file Notice of Opposition on the basis that further time is required to undertake genuine research or on the basis of negotiations with the applicant, has been removed. Moreover, it will be more difficult to obtain extensions of time to file evidence and this will only be allowed if a party has acted promptly and diligently at all times throughout the period.

Notice of opposition

A Notice of Opposition will now comprise two documents:

• A Notice of Intention to Defend; and
• A Statement of Ground of Particulars due one month from the filing of the Notice.

If grounds are not sufficiently particularised then the Registrar has the power to amend the Statement to remove certain grounds or to dismiss the opposition outright. The ability to later amend the Statement is limited and amendments will only be allowed if the Registrar is satisfied that it relates to information which the opponent could not have reasonably have known at the time of filing the Statement.

In a positive development, once the Statement of Ground of Particulars is filed then the applicant must file a Notice of Intention to Defend the opposition otherwise the application will lapse.

Once the Statement of Ground of Particulars is filed, it will be open to the parties to request a cooling off period of six months which may be extended once more by six months.

Enforcement

The Act introduces new summary offences which have lower thresholds of fault and lower penalties. The maximum penalty for indictable offences has also been increased to fall more in line with other IP legislation. In addition, it will now be possible to obtain additional damages in trade mark infringement proceedings.

Customs changes

The onus has shifted to the importers of seizured goods to make a claim for the release of the goods if they wish to have them returned. This is a significant change as under the current system it is often difficult to track down counterfeit importers . As a result of the changes it is hoped importers of counterfeit product will simply allow product to be impounded by customs. This will mean that trade mark owners will often not have to do anything to ensure counterfeit goods never get on the market (thus cutting enforcement costs) The Act also gives Customs increased powers to provide contact details for the importer and exporter of the seizured goods and allows for inspection of seized goods.

On the minus size time limits for taking action have been reduced (so they are no longer TRIPS compliant).

We have previously reported on the 1930 new gTLD proposals which were submitted to ICANN in June 2012. Two important deadlines in this process occur this month:

1. 13 March 2013 – End of the New gTLD Objection Filing Period
2. 26 March 2013 – Trade Mark Clearinghouse is scheduled to open for business.

What brand owners need to do:

• Ensure there are no gTLD applications of concern prior to 13 March 2013; and
• Begin preparations for lodging trade mark claims in the Clearinghouse.

13 March 2013 – End of the new gTLD Objection Filing period

This is the last day brand owners can object to applications for a new gTLD. There are currently 1,916 applications being considered. Brand owners should review this list for gTLDs which may violate their legal rights, such as its trade mark rights (both registered and unregistered). A gTLD is considered to violate a brand owner's trade mark rights if it:

• takes unfair advantage of the distinctive character or the reputation of the opponent's registered or unregistered trade mark or service mark; or
• unjustifiably impairs the distinctive character or the reputation of the opponent’s mark; or
• otherwise creates an impermissible likelihood of confusion between the applied-for gTLD and the opponent’s mark..

There have been few legal rights objections lodged and most clients have elected to protect their brands through defensive measures such as the Trade Mark Clearinghouse.

26 March 2013 – Trade Mark Clearinghouse is scheduled to open for business

This is the intended date for the launch of the Trade Mark Clearinghouse. The Clearinghouse will be a central trade mark repository whereby owners of registered brands can authenticate their marks in order to better monitor and police use of their marks as second level domain names in new gTLDs. The benefit of authenticating trade marks with the Clearinghouse include:

• Trade mark reservation: Each time a new gTLD goes live, its operator is obliged to offer a Sunrise period of at least 30 days during which brand owners may request registration of their authenticated trade marks as domain names.
• Notice of conflicting domain names: Owners of authenticated trade marks will be notified if a third party seeks Sunrise registration for a domain name that is identical to the mark.
• Domain name complaints: The Clearinghouse provides brand owners with a convenient way of establishing their trade mark rights in any future domain name complaints.

The Clearinghouse will remain open throughout the delegation of new gTLDs which, on current estimates, could be as early as June 2013, and possibly stretch into early 2015. The Clearinghouse will be operated by Deloitte Enterprise Risk Services, who has published a Fee Structure of US$150 for a 1 year listing, US$435 for a 3 year listing and US$725 for a 5 year listing. Submission may be made either through an Agent such as DCC or direct via the Trade Mark Clearinghouse website.
 

Dynamite Games Pty Limited v Aruze Gaming Australia Pty Limited [2013] FCA 163

In the recent case of Dynamite Games v Aruze Gaming & Ors, Justice Emmett of the Federal Court of Australia considered the validity and infringement of patents directed to a style of game playable on a gaming machine. Although small variations in game design may be critical to the success of a game in this industry, the Court found that the patented game features were not innovative or inventive, and ordered that the patents be revoked. In doing so, the Court commented on innovative step, the importance of the description in the specification, and patentable subject matter.

Dynamite's proceedings against Aruze

Dynamite Games Pty Limited instituted proceedings against Aruze Gaming Australia Pty Limited and Aruze Gaming America, Inc (together, Aruze) for infringement of some claims of their Australian standard patent, and Australian innovation patent, both entitled "Gaming Apparatus and Systems". Unsurprisingly, Aruze denied that they had infringed the patents, and cross-claimed seeking revocation of the patents. Aruze argued that the claims were not novel, were not directed to patentable subject matter, and did not involve an inventive step (in the case of the standard patent) or an innovative step (in the case of the innovation patent).

Was Dynamite's invention a guaranteed win?

Dynamite's invention was intended to provide a way of increasing interest in a game played on a gaming machine. A large number of consecutive losses at a gaming machine may cause a player to lose interest in game. Dynamite suggested that this potential loss of interest may be mitigated by the gaming machine guaranteeing the "triggering" of a "game event" (for example, a payout or jackpot). The Dynamite gaming machine can monitor the games played, and trigger a payout if a "set guaranteed gameplay amount" is reached (for example, a predetermined number of games have been played) without the payout or jackpot having been triggered. This provides a mechanism by which losing streaks can be interrupted with a win.

To ensure that a player does not get disheartened by the losing streak, Dynamite's invention involves an indicator which indicates the amount of gameplay remaining to be played before the payout or jackpot is triggered. For example, a player who has lost the last 10 games may feel like giving up, but with Dynamite's invention, the player is shown an indicator which indicates that if the player loses the next 5 games, they will receive a jackpot or payout.

Was a "rescue payout" (with indicative display) inventive or innovative?

Aruze asserted that Dynamite's invention was not inventive or innovative based on four earlier US patents, and four earlier gaming machines or systems.

Reformulation of the inventive step test

Dynamite argued that in view of the large number of patents in the gaming industry, seemingly small differences between competing games may be important, and so small differences between the claimed invention and the prior art may be sufficient for an inventive step. Although the Court did not comment on this assertion, it agreed that no more than a scintilla of an invention was required.

Dynamite also urged the Court to adopt the inventive step formulation expressed by the High Court of Australia in the Alphapharm case,¹ that is, whether a person skilled in the art, in all of the circumstances (which include knowledge of all relevant prior art) would be led directly, and as a matter of course, to the invention. However, the Court considered that this formulation of the inventive step test is somewhat inapt when considering the design of a gaming machine, and is more suited to an analysis where a chemical compound is being sought that might have a particular effect. Accordingly, the court posed the question of whether the essential feature (the event guarantee component) was obvious to try in order to produce an enhancement of gameplay interest.

The innovative step test

The Court applied the same innovative step test as set out in the Dura-Post case:²

The person skilled in the art must identify and assess the variations between the invention as claimed in each claim and the prior art, and determine whether or not those variations make a substantial contribution to the working of the invention as claimed in each claim. Substantial contribution in [this context] means real or of substance. [This provision] contemplates that, in performing that task, a person skilled in the art has certain background knowledge that that person uses in identifying and assessing such variations.

Dynamite's invention was neither inventive nor innovative

The Court held that the four prior US patents could not be used when assessing inventive step, as it was not convinced that there was any general practice among game designers in Australia (at the priority date) of studying Australian or United States patents. Despite this, the Court found that none of the claims in Dynamite's patents involved an inventive or innovative step, primarily because each of the features of the claims, and each combination of features, were part of the common general knowledge in Australia at the priority date.

Inventive step, designer choice and enabling description

In considering each of the dependent claims of Dynamite's standard patent, the Court considered that a dependent claim would lack an inventive step if the feature or features introduced by the claim were:

• well known in Australia (before the priority date);
• matters of "designer choice"; or
• not sufficiently described in the specification.

The distinction between a "designer choice" and an "inventive step" is not altogether clear from this judgment. However, the Court clearly assumed that where a feature was not properly "enabled" by the specification (that is, was not described in detail in the specification) that feature must be part of the common general knowledge. Unfortunately, the decision does not shed any light on whether the reverse is true, that is, whether the fact that a feature is comprehensively described in the specification would lead a Court to consider that the feature was not part of the common general knowledge, or how much detail is required to provide sufficient enablement.

Similar considerations informed the Court's decision on the claims of the innovation patent - if a claim only introduced a "matter of arbitrary choice" (that is, a feature made no substantial contribution to the way the claimed gaming machine worked) the claim lacked an innovative step.

Are gaming machine games patentable subject matter?

As the Court had already found the claims of Dynamite's patents lacking an inventive and innovative step, it did not come to a concluded view on the other grounds of invalidity. However, it usefully made observations on those other grounds.

Applications of algorithms and software are patentable

As indicated above, this case was heard by Justice Emmett, who also recently heard and determined the Research Affiliates decision, which we reported here. His general comments on the law of patentable subject matter in this judgement reflect those he expressed in Research Affiliates.

Relevantly, Justice Emmett confirmed that:

• a new use of an algorithm may be a patentable invention;
• although a mathematical equation may not be patentable in isolation, a process which incorporates a more efficient solution of the equation may be patentable — that is, the use of the equation may be patentable; and
• a method involving the operation or control of a computer, programmed in a particular way, may be patentable — computer programs that have the effect of controlling computers to operate in a particular way, where such programs are embodied in physical form, are properly the subject matter of the grant of a patent.

Importance of the result of computer programs

With respect to computer programs, the Court considered that to determine whether the claim involved more than mere intellectual information, it was necessary to consider whether the application of the program produced a practical and useful result. A physically observable tangible product is not required:

Even if there is not a physically observable end result, in the sense of a tangible product, a claimed invention may be patentable if it involves an application of an inventive method, where part of the invention is the application and operation of the method in a physical device.….It is sufficient if there is a component that was physically affected or a change in state or information in part of a machine.

An invention may be found in the idea

The Court seemed to recognise that in the area of software and computer-implemented methods, the invention may lie in the conception of the idea, and not necessarily in the way it is carried out.

When an idea is incorporated into means for carrying out the idea, the idea itself can be taken into account when considering validity. Inventiveness may repose largely in the idea. It is almost inevitable that the subject matter of an invention that involves an improvement to a known combination will be described as an idea or as a concept. Invention may lie in the idea of taking a particular step. Accordingly, there may be an inventive step in having an insight that, although simple, genuinely requires an active insight rather than a mere development and application of existing ideas.

Although Dynamite in this case argued that it was not simply an idea which was described and claimed, but a gaming apparatus having specific components by which the idea will be implemented, Aruze contended that the specifications of the patents did not teach the reader how to implement the claimed invention, and that the invention was essentially no more than a concept, a mere idea as to the rules of a game.

Dynamite's claims may not be directed to patentable subject matter

In expressing some doubt as to whether the claims were directed to patentable subject matter, the Court seemed to be influenced by its findings that the patents did not suggest that the claimed invention lies in the use of a particular computer program to bring about a desired result, and that the patents gave no indication as to how the idea was to be implemented.

Did Aruze infringe Dynamite's (invalid) claims?

Although the Court did not need to deal with infringement, having already found all of Dynamite's patent claims invalid, it still concluded that Aruze did not infringe any of the claims of Dynamite's patents based on a construction of the "indicator component". The claims required an indicator component for indicating the amount of gameplay remaining to be played before a guaranteed game event will trigger.

A central issue to be determined was whether the claimed indicator component was required to indicate the precise number of games remaining, or a much broader, imprecise indication of gameplay remaining. Aruze's indicator component was non-linear, and did not indicate with any accuracy the number of games remaining before the guaranteed game event would trigger.

The Court concluded that the indicator component of the claims referred to an indicator component that provided information on precisely the number of games or amount of gameplay required to trigger the guaranteed event. An influencing factor in the Court's decision on this issue was that there was no disclosure in the specifications of a non-specific, inaccurate type of indicator.

Lessons for software patents

For software-based inventions, particularly those that do not fundamentally change the general operation of the computer (for example, many smartphone applications), a question will arise as to whether the invention is merely a concept, and therefore unpatentable. A detailed description of at least one concrete implementation of the invention in the patent specification (together with appropriately drafted claims) may assist in convincing a court or tribunal that the claimed features are more than just common general knowledge, or a designer's choice, and that the invention relates to a tangible implementation deserving of patent protection.

Endnotes

1. Aktiebolaget Hassle v Alphapharm Pty Limited (2002) 212 CLR 411
2. Dura-Post (Aust) Pty Limited v Delnorth Pty Limited (2009) 177 FCR 239 at [54], [74] 

Davies Collison Cave is proud to have again been ranked as a Top Tier Firm in Australia in the MIP (Managing Intellectual Property) annual rankings for Trade Mark Prosecution. The rankings have been published in the March magazine and on the MIP website.

This complements the firm's recent success of being ranked Top Tier for both Patent prosecution and contentious work in the MIP Patent survey ranking published in February.

About the survey and rankings

The MIP Survey is the industry's biggest, oldest and most detailed analysis of the leading patent firms world wide. MIP's rankings of leading firms are based on extensive research by a dedicated team in London, Hong Kong and New York. Researchers contact all the listed firms as well as other practitioners and clients, to rank the leading practices in tiers, according market perceptions.

In Federal Court cases decided in 2011 and 2012, SNF (Australia) Pty Ltd sought to revoke five innovation patents owned by Ciba Specialty Chemicals Water Treatments Limited, and to obtain relief for unjustifiable threats of infringement proceedings. Ciba cross-claimed for infringement. At first instance, the patent claims were held to be valid and infringed. As reported in an earlier briefing, SNF then unsuccessfully appealed to the Full Federal Court, which upheld the primary judge's findings in relation to validity (SNF did not challenge the infringement ruling). One of the main issues in each case was the interpretation of the claims, and in particular the meaning of the term "rigidification" in relation to mine tailings.

Having lost in the Full Federal Court, the only avenue of appeal left for SNF was to seek special leave to appeal to the High Court of Australia. The nature of SNF's application is not yet known. It will be interesting to see whether the appeal relates to the lower Courts' findings in relation to innovative step as well as in relation to the claim interpretation issues. Either way, if special leave is granted, it will be the first time that the validity of an innovation patent has been considered by the High Court.

The special leave application will be heard in Melbourne on 15 March 2013. We will keep you updated as to the status of the case.

The Federal Government has released the explanatory statement and final draft version of the Regulations implementing the changes to Australia's intellectual property laws brought about by the Raising The Bar reforms.

The Regulations, which are still awaiting approval by the Australian Governor-General, will come into force on 15 April 2013.

The Raising the Bar reforms are the most significant reforms to Australia's intellectual property laws in over 20 years. The reforms extend across Australian patent, trade mark, copyright and design laws.

The draft Explanatory Statement and Regulations are available for download from IP Australia's website.

Please continue to refer back to our website regularly for further updates and more detailed comment on the draft Regulations.

On Monday 25 February 2013, Apple and Samsung returned to the Federal Court of Australia to resume their long-running patent dispute relating to each other’s smartphone and tablet products. However, for the first time in the history of the Federal Court, a two-judge panel has now been appointed to hear the trial at first instance. Justice David Yates has now joined Justice Annabelle Bennett who has been presiding over the case since its commencement in July 2011.

The complexity of the case and the sheer volume of material likely to be considered by the Court may be the reason behind the appointment of a second judge. Apple is alleging that Samsung has infringed 19 of its patents. In return, Samsung has launched a cross-claim seeking to revoke some of those patents. Samsung has also alleged that Apple has infringed some of its patents. It is quite unusual for patent infringement litigation in Australia to involve more than a handful of claims, and the large number of patents generally applicable to a tablet or smartphone may go some way to explaining the size of the case.

Typically in Federal Court cases in Australia, a single judge hears a trial at first instance and if that decision is subsequently appealed, a panel comprising an odd number of judges (usually three) is appointed to hear the appeal. Having two judges hear the initial case raises the interesting question of what the overall verdict will be if the two judges reach different conclusions. The Court may also divide the issues to be determined, so that each judge decides different parts of the case, thereby reducing the possibility of inconsistent judgments.

The trial is currently expected to run until at least the end of 2013.
 

In April this year, the most significant changes to Australian intellectual property (IP) laws in over 18 years will come into effect. For many business owners, inventors and researchers, this is good news. After all, the last major IP law changes came with the Trade Mark Act in 1995, when the world wide web was in its infancy and an app was just an abbreviation, not a social necessity. A lot has changed.

In 2008, the Federal Government reviewed Australia’s national innovation strategy for the 21st century , which highlighted concerns around the strength of our IP laws. The current Intellectual Property Laws Amendment Act 2012 – aptly tagged the “Raising the Bar” Act – addresses many of these.

The amendments affect all the major IP Acts – for patents, trade marks, designs and copyright. Some of the changes will effectively raise the standard and quality of patents to align closely with international standards. Others alter the Customs seizure process, making it easier for trade mark and copyright owners to enforce their rights against illegal imports.

While the most significant changes are outlined briefly here, for comprehensive advice on the changes and their long-term impact, you should consult an IP professional.

Patents and Inventions

A word of timely advice for those out there with an invention or innovation that requires protection; now is the best time to ensure a complete patent application is in place and a request for examination is filed by 12 April 2013.

After this date, patents will be harder to obtain as the changes will raise the requirements of ‘inventiveness’ and how the invention is specified. The standards for assessing patent applications will also be stepped up.

This is not a bad thing at the end of the day, and changes to simplify procedures and reduce delays in processing have also been introduced, which will benefit applicants.

For a useful list of ways to prepare for the changes see 12 ways patent applicants should prepare.

Manufacturing and Research

The good news continues for manufacturers, universities and research facilities, like Westmead Millenium Institute, with the introduction of an ‘experimental use’ exemption for patents.

Currently, a patent owner has a monopoly right to prevent unauthorised use of the invention, including for research.

The ‘experimental use’ exemption will formally provide certainty for researchers and manufacturers across all fields of technology including genetic, biotech and pharmaceutical research, allowing them to operate free from fear of delay or infringement.

Customs seizure of counterfeit goods

For business owners dealing with imported goods that infringe on their registered copyrights or trade marks, changes will come into effect in April 2013 that make identifying and enforcing their rights easier.

Providing the importer wants the seized goods back, these IP rights owners will have access to information about the importer without the need to apply for a court order. This should make it considerably easier and faster to commence legal proceedings and defend IP rights.

Opposition to a trade mark application

The current timing and procedure requirements surrounding an opposition to a trade mark application will also be stepped up with the new laws.

If you apply for a particular trade mark but registration is opposed by a third party, the opposing party has to submit a detailed statement to outline the grounds of their opposition within 1 month, otherwise the opposition will be dismissed.
Other timelines have also been tightened up to speed up the opposition process considerably.

There are, of course, many other changes included in the Raising the Bar Act, and overall those changes will bring a more robust framework to support and encourage innovation of local business owners by providing higher quality IP protection in a more timely manner.

In what will undoubtedly be an important decision for the medical and pharmaceutical industries, the High Court of Australia will this year¹ consider:

1. whether a claim for a method of treatment of the human body is a patentable invention within the meaning of s 18(1)(a) of the Patents Act 1990 (Cth); and
2. whether a claim for a second or subsequent medical use of a previously known product claims a patentable invention.

Update on the Apotex Pty Ltd v Sanofi-Aventis Pty Ltd case

We previously reported the Full Federal Court's decision in Apotex Pty Ltd v Sanofi-Aventis Pty Ltd (No. 2) [2012] FCAFC 102.² On 14 December 2012, the High Court granted Apotex special leave to appeal from that decision.

The parties have now filed their written submissions in the Appeal.³

Patentability of a method of treatment of the human body (Issue 1)

Before the Full Federal Court, Apotex submitted that claims to methods of medical treatment should not be patentable. The Full Court rejected that submission. In doing so, Justices Bennett and Yates observed that the patentability of methods of treatment represented "orthodoxy in Australian patent law".⁴ They also observed that, both before and since the Patents Act 1990 was passed, it had been commonplace for patents to be granted for methods of treatment.⁵ They also noted that although it had ample opportunity to do so in recent years, the Australian Parliament had not been persuaded to legislate to change the Patents Act to exclude such methods from patentability.⁶

S18(1)(a) of the Patents Act requires that the claimed invention be a manner of manufacture within the meaning of section 6 of the Statute of Monopolies 1623. In National Research Development Corporation v Commissioner of Patents (NRDC)⁷, the High Court said that "the right question" in this regard was whether a claimed invention is a "a proper subject of letters patent according to the principles which have been developed for the application of section 6 of the Statute of Monopolies?".⁸ 

Apotex's Submissions

It appears from Apotex's submissions that Apotex will argue that, according to the High Court's dicta in the NRDC case, the answer to that question with respect to methods of treatment of humans was "probably not".⁹

Furthermore, Apotex will argue that the High Court in the NRDC case saw methods of treatment as remaining outside the broader concept of invention it was articulating and that a method of treatment is "essentially non-economic", particularly where the question is whether the physician's intent accords with the claimed method.¹⁰

Sanofi-Aventis' submissions

On the other hand, it appears from Sanofi-Aventis' submissions that it will argue that given the wording and context of the Patents Act 1990¹¹, the fact that methods of treatment have been held to be patentable at the Federal Court level¹², and the fact that no High Court decision has held to the contrary, methods of treatment of the human body are patentable.¹³

Furthermore, Sanofi-Aventis has noted that no decision of the Federal Court or High Court has upheld the exclusion of methods of treatment from patentability on the grounds that they are "non-economic".¹⁴

Also, to the extent that there might be any exclusion of methods of treatment on the ground of "general inconvenience" as opposed to the matter being "non-economic", Sanofi-Aventis will apparently argue that that ground is not open to Apotex¹⁵, and, in any event, is not an appropriate basis for excluding methods of treatment from patentability.¹⁶

Patentability of the second or subsequent use of a previously known product (Issue 2)

Apotex's alternative argument is that methods of treatment of the human body are not patentable if they involve a second or subsequent use of a previously known product.¹⁷ The rationale given for this is that an invention limited by purpose is not patentable.¹⁸ That is, a claim to a new purpose is not a manner of manufacture.¹⁹

Sanofi-Aventis' submissions in this regard note that, inter alia, the Full Court's construction of the relevant claim²⁰ did not compel an enquiry into the subjective purpose or "state of mind" of the medical practitioner. Rather, the construction required an objective assessment to be made of the object or end in view of the medical practitioner in prescribing or administering leflunomide for the treatment of the patient.²¹

Full Federal Court decision on Section 117

As we also previously reported²², the Full Court relied on Apotex's own Product Information Document (PID) as well as expert evidence to determine whether section 117 would apply. The evidence established that psoriasis is a diagnostic criterion of psoriatic arthritis (PsA), and that patients with psoriatic arthritis will have or eventually develop psoriasis. Thus it was accepted that rheumatologists would routinely prescribe leflunomide to treat PsA as well as psoriasis in patients presenting with concurrent conditions. Furthermore, although the PID expressly disclaimed the treatment of psoriasis in the absence of manifestations not associated with arthritic disease, the Full Court agreed with the primary Judge and construed the double negative as a positive instruction by Apotex for the treatment of psoriasis associated with arthritic disease. On that basis, the Full Court concluded that either of sections 117(2)(b) or (c) would be sufficient to engage the application of section 117(1) and render Apotex liable for infringement.

Apotex's application for special leave to appeal

Apotex's application for special leave to appeal the Full Court's decision in respect of this point will be heard at the commencement of the hearing of Apotex's Appeal.

Endnotes

1. Probably in April or May 2013
2. http://www.davies.com.au/pub/detail/637/method-of-treatment-claims-to-be-construed-with-the-object-or-end-view-in-mind-but-apotex-still-liable-for-contributory-infringement
3. Apotex on 25 January 2013 and Sanofi-Aventis on 15 February 2013
4. [2012] FCAFC 102 at [193]
5. [2012] FCAFC 102 at [193]; Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 50 FCR 1 at 17G; Bristol-Myers Squibb Co v FH Faulding & Co (2000) 97 FCR 524 at [16]
6. [2012] FCAFC 102 at [193]
7. (1959) 102 CLR 252
8. (1959) 102 CLR 252 at 269
9. Appellant's submissions, para 17
10. Appellant's submissions, paras 36 – 37. The method in this case is a "method of preventing or treating … psoriasis, which comprises administering to the recipient an effective amount of … [leflunomide]".
11. Respondent's submissions, paras 19 – 29
12. Respondent's submissions, paras 39 – 48
13. Respondent's submissions, paras 30 – 38
14. Respondent's submissions, paras 49 – 60
15. Respondent's submissions, paras 36 – 38
16. Respondent's submissions, paras 61 - 66
17. Appellant's submissions, paras 2, 46 – 53
18. Appellant's submissions, para 51
19. Appellant's submissions, para 48
20. "method of preventing or treating … psoriasis, which comprises administering to the recipient an effective amount of … [leflunomide]"; [2012] FCAFC 102 at [37], [40], [125] – [128]
21. Respondent's submissions, para 72
22. http://www.davies.com.au/pub/detail/637/method-of-treatment-claims-to-be-construed-with-the-object-or-end-view-in-mind-but-apotex-still-liable-for-contributory-infringement