DCC IP Update - Issue 17 - September 2012 by Davies Collison Cave Patent, IP Law & Trade Mark Attorneys

Update September 2012 – Issue 17 davies.com.au

Brand owners liable for user’s comments on social media Lonsdale Australia v Paul’s Retail: Parallel importer liable for trade mark infringement Apotex v Sanofi Aventis: leflunomide appeal fails

September 2012

Type #

Contents

Insight

Case Studies 4

Brand owners responsible for user generated Facebook and Twitter content

Parallel importer guilty of trade mark infringement after importing ‘Lonsdale’ branded products Lonsdale Australia Limited v Paul’s Retail Pty Ltd [2012] FCA 584

12 Method of treatment claims to be construed with the “object or end view” in mind but Apotex still liable for contributory infringement Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd v (No. 2) [2012] FCAFC 102

M Hooper: CC-BY 2.0 www.flickr.com/photos/michaelhooper/7910028504/

16 Apotex appeal fails: no implied licence over Sanofi’s copyright in leflunomide product information 18 Australian Federal Court hands down Markmanlike decision on patent construction Britax Childcare Pty Ltd v InfaSecure Pty Ltd [2012] FCA 467

20 Federal Court dismisses Sanitarium’s claim: Granola not used as a trade mark Australian Health & Nutrition Association Limited (t/as Sanitarium Health Food Company) v Irrewarra Estate Pty Limited (t/as Irrewarra Sourdough) [2012] FCA 592

24 Innovation patents for treatment of mine tailings upheld on appeal SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Limited [2012] FCAFC 95

Practice Updates 28 ALRC review on copyright and the digital economy commences 30 Productivity Commission: Is the compulsory patent licensing system working? 31 Australia releases draft Bill to allow compulsory licences of patented pharmaceutical products to alleviate health crises. 34 Changes to US Patent System Imminent! 36 Effect of Mayo v Prometheus on systems medicine patent eligibility 39 DCC News 40 DCC Out & About 42 Articles on davies.com.au

IP Update

Insight

Biotechnology accounts for about 2% of all patent applications, but – in Australia, at least – for about 100% of public discussion on patents. The idea of ‘gene patents’ is, for many, a fearsome spectre. In the past decade Australia has seen two enquiries by independent advisory bodies, two Senate committee enquiries, one private member’s Bill and another threatened, one pending Federal Court action, and a number of current affairs TV programs on the topic. This has generated much heat, but little light. The public commonly misunderstands both genes and patents. Being something everyone has, genes are imbued with a deep, and personal, connection to the human body. Patents, meanwhile, are often wrongly perceived as the means by which corporations engage in anti-competitive behaviour. When the patent system is applied to subject matter in one’s own body, for many the cry is “Hands off!” Is the solution special treatment of, or even a ban on, the patenting of genetic inventions? That would be an over-reaction, out of kilter with the rest of the world, and counter-productive. The better response is to retain the traditional, technology-neutral, test for what is patentable; raise the patentability requirements for all technologies (as do the recent ‘Raising the Bar’ amendments); and look to other mechanisms when inappropriate economic consequences occur.

Also, the patent system must be able to deal with ethical concerns. Adoption of the Advisory Council on Intellectual Property’s recommendation of a general exclusion of inventions whose commercial exploitation would be wholly offensive to the Australian public would provide the final piece in the puzzle. The U.S., like Australia, uses a technology-neutral test of patentable subject matter. On page 36 we discuss the U.S. Supreme Court’s interpretation of that test in Prometheus. Also like Australia, the U.S. now adopts a first-to-file system, the impacts of which we explain on page 34. The emulation of system features is bi-directional, as shown by a recent decision of the Australian Federal Court adopting the U.S. Markman approach to phased hearing of infringement and invalidity claims (see page 18). Compulsory licences are one means for ameliorating the economic consequences of patents. We explain the Australian Productivity Commission’s current enquiry into compulsory patent licensing on page 30. Concurrently, the Australian Law Reform Commission is enquiring into the need for additional exceptions to copyright rights (see page 28). We also discuss two important trade mark infringement decisions: one on what constitutes infringing, as distinct from descriptive, use (page 20); and the other on when the mark has been applied “with consent” in the case of parallel importation (page 8). Have a view on how to treat gene patents? You can share it with me by email to lallen@davies.com.au.

Leon Allen, Managing Partner

September 2012

Case Study 1

Brand owners responsible for user generated Facebook and Twitter content

The Advertising Standards Bureau has recently determined that brand owners are responsible for ensuring that user generated content appearing on their Facebook pages complies with advertising codes. The determination follows an earlier Federal Court decision which suggests that brand owners may also be held liable for user generated social media content that contravenes Australian consumer laws. These decisions place a heavy onus on brand owners to closely monitor and moderate their social media pages.

Advertising code compliance on Facebook Advertising regulation in Australia

Advertising in Australia is selfregulated by a set of codes that are administered by the Advertising Standards Bureau (ASB). The codes apply to “Advertising or Marketing Communications”, which are generally defined as: broadcast or published material and activities over which the advertiser has a “reasonable degree of control” and that “draws the attention of the public in a manner calculated to promote or oppose directly or indirectly a product, service, person, organisation or line of conduct”.1 General advertising standards are set out in the Australian Association of National Advertisers Code (the AANA Code).2 The AANA Code provides that, amongst other things, advertising must not: a) mislead or deceive or be likely to mislead or deceive; b) be discriminatory; c) use inappropriate language; or d) be contrary to prevailing community standards on health and safety.

Johan Larsson: CC-BY 2.0 www.flickr.com/photos/johanl/5144798765

IP Update

… the [advertising] codes applied to material or comments posted by users on brand owner Facebook pages …

Goiabarea: CC-BY 2.0 www.flickr.com/photos/goiabarea/5886225374

The AANA Code is complemented by other guidelines directed at particular types of advertising, such as advertising to children, and the advertisement of food, beverages and alcohol. Enforcement of advertisement standards

Compliance with the codes is voluntary. However the ASB may refer advertising that contravenes enforceable regulations and laws to other government bodies (such as the Australian Competition and Consumer Commission (ACCC), the government body responsible for enforcing compliance with competition and consumer protection laws), which have the power to issue fines, and order the cessation and correction of illegal advertisements. The ASB may also unilaterally release its adverse determinations to the public and liaise with industry and media bodies to procure the removal of noncompliant advertisements. Recent complaint in relation to Smirnoff Vodka’s Facebook page

Earlier this year, the ASB received a complaint asserting that the brand owner of Smirnoff Vodka, Diageo Australia Ltd, had contravened the AANA Code by instigating, allowing or facilitating the posting of discriminatory and obscene comments on the official Smirnoff Facebook page.3

In response, Smirnoff contended that: a) the Code did not apply to its Facebook page, as the page was simply used as a networking tool for existing product consumers, and did not meet the definition of “Advertising or Marking Communications” (set out above); b) the statements published by users did not represent the opinion of Smirnoff; and c) it wanted to try and allow its Facebook page to be an “honest open channel for discussion” and to that end, did not keenly control user generated content. Smirnoff described this practice as “a universal strategy recommended by Facebook and applied by many successful global brands”.

User generated content on social media is “advertising”

The ASB considered that the codes applied to material or comments posted by users on brand owner Facebook pages (as well as content generated by advertisers), and that, as a result, brand owners are responsible for ensuring that such content complies with advertising standards. The ASB ultimately found that the content on Smirnoff’s Facebook page did not contravene Australian advertising codes, and accordingly dismissed the complaint.

September 2012

… the ACCC is committed to pursuing brand owners in respect of misleading and deceptive comments posted by third parties on official brand social media pages.

Australian Consumer Law compliance on Facebook and Twitter A 2011 decision of the Federal Court also suggests that brand owners may be held liable for false or misleading statements posted on their Facebook and Twitter pages by users or subscribers.4 In the decision, (which was referred to in the advertising complaint against Smirnoff) the Court found that an allergy treatment company, Allergy Pathway, and its sole director had breached certain undertakings previously given to the Court by knowingly allowing false and misleading user generated testimonials to remain on its official Facebook site. The Court’s decision was supported by English defamation case law standing for the proposition that publishers assume liability for the defamatory comments of others in circumstances where the publisher is “aware of the material being published and has accepted general responsibility for its publication”. 5

Lessons for brand owners using social media -- Recent Australian decisions suggest that brand owners are responsible for ensuring that user generated content appearing on their social media pages complies with advertising codes and consumer laws. -- The decisions place a heavy onus on brand owners to closely monitor and moderate their social media content for compliance. -- Brand owners should familiarise themselves with Australian advertising and consumer laws and review their social networking policies to ensure a correct balance is reached between the censorship of user views on the one hand, and the risks of advertising and consumer law non-compliance on the other.

The undertakings were couched in different terms to Australia’s misleading and deceptive conduct statutory provisions6, however, the Court’s findings are likely to influence future determinations of liability under these consumer laws in Australia. In this regard, the ACCC has recently indicated its support of the ASB’s Smirnoff Vodka decision, and has explained that the ACCC is committed to pursuing brand owners in respect of misleading and deceptive comments posted by third parties on official brand social media pages.7

1 2

4 5 6 7

The codes do not apply to certain specified materials such as product labelling. The AANA Code and other advertising guidelines are available here: http://www.aana.com.au/ pages/codes.html A similar complaint has been lodged against Australian beer brand “VB”, however this complaint is yet to be determined. ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 at [30] See, for example section 3 18 and 29 of the Australian Consumer Law http://www.adnews.com.au/adnews/accc-backsasb-s-facebook-ruling

Des Ryan, Consultant Aaron Yates, Lawyer

IP Update

JefferyTurner: CC-BY 2.0 www.flickr.com/photos/respres/3231178720/

September 2012

Case Study 2

Parallel importer guilty of trade mark infringement after importing ‘Lonsdale’ branded products

Lonsdale Australia Limited v Paul’s Retail Pty Ltd [2012] FCA 584

The Federal Court of Australia has found Paul’s Retail Pty Ltd guilty of trade mark infringement for a second time this year when it imported into Australia “Lonsdale” branded products without the consent of the owner of the Australian registered “Lonsdale” trade marks, Lonsdale Australia Limited. The Federal Court held that this was not a case of parallel importation in the strict sense of the term, because Lonsdale Australia had not consented to the application of its trade marks to the goods in question and as such Paul’s Retail could not rely upon the defence to trade mark infringement under section 123 of the Trade Marks Act 1995 (Cth). This case further clarifies the position under Australian law with respect to parallel importing, and is of relevance to trade mark owners when considering strategies to protect against infringement by parallel imports.

Paul’s Retail acquired “Lonsdale” products from European licensee Lonsdale Australia is the current owner of various Australian registered “Lonsdale” trade marks (the Australian Lonsdale Marks). In 2011, its parent company, Lonsdale Sports Limited (LSL) transferred ownership of the Australian registered trade marks to Lonsdale Australia, who then licensed a distributor of Lonsdale products in Australia (the Australian distributor). At the same time, LSL licensed an unrelated German company to manufacture, distribute and sell Lonsdale products within Europe (the European licensee). Paul’s Retail had previously sold through its retail outlets “Lonsdale” branded products which it had acquired from the Australian distributor. Around April 2011, the Australian distributor ceased supplying Paul’s Retail, and in August 2011, Paul’s Retail ordered 293,329 “Lonsdale” branded products manufactured by the European licensee for Lonsdale products (who was licensed by LSL). In April 2012, the first shipment of the “Lonsdale” branded products which Paul’s Retail had acquired from the European licensee arrived in Australia (the European Lonsdale goods). Paul’s Retail sold $344,838.50 worth of those goods in its stores. However, another shipment of goods valued at

Trade Mark by Steve Snodgrass: CC-BY 2.0 www.flickr.com/photos/stevensnodgrass/3990917040

IP Update

Even though the goods were sourced from the European licensee, Justice Gordon held that … section 123 of the Trade Marks Act did not apply.

$1,736,613 destined for Paul’s Retail’s stores was seized by Customs pursuant to a Customs Seizure Notice, which Lonsdale Australia had lodged with Customs. In May 2012, Lonsdale Australia commenced trade mark infringement proceedings against Paul’s Retail under section 120 of the Trade Marks Act seeking amongst other things an interim injunction to prevent Paul’s Retail from importing, promoting, distributing, offering for sale and selling the European Lonsdale goods. On 23 May, the Federal Court granted the interim injunction, partly on the basis that the seized goods that were being held by Customs would be released before the date of the hearing and judgment. The case subsequently went before Justice Gordon on 31 May. Trade mark infringement and parallel importation Section 123 of the Trade Marks Act provides a defence to trade mark infringement in the following circumstance: “ …a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.”

Parallel importation refers to when a third party imports “genuine” branded goods (in the sense that the registered trade mark owner (or its authorised licensee) has applied the mark to the goods in an overseas country) into Australia without the consent of the trade mark owner. Parallel importation does not usually constitute trade mark infringement, as the trade mark on the imported goods is usually applied with the consent of the trade mark owner, and as such the section 123 defence will apply. Section 123 of the Trade Marks Act did not apply to the European Lonsdale goods Paul’s Retail sought to rely on the section 123 defence to the trade mark infringement allegations made against it. It submitted that it did not infringe the Australian Lonsdale Marks in contravention of section 120 because the marks were legitimately applied by LSL’s European licensee and as such they were “genuine” Lonsdale goods.1 Even though the goods were sourced from the European licensee, Justice Gordon held that Paul’s Retail had infringed the Australian Lonsdale Marks and that section 123 of the Trade Marks Act did not apply. In reaching this conclusion, Her Honour found that:

1. the trade marks applied to the European Lonsdale goods were substantially identical with and/or deceptively similar to the Australian Lonsdale Marks2 (this was not in issue and was conceded by both parties); 2. Paul’s Retail “used” the trade marks for the purposes of section 120 of the Trade Marks Act when it imported, offered for sale and sold the European Lonsdale goods3 (confirming previous decisions that importation alone can constitute “use” of a trade mark by the importer); and 3. section 123 of the Trade Marks Act did not apply because the registered owner of the Australian Lonsdale marks, Lonsdale Australia, had not consented to the application of the trade marks to the European Lonsdale goods by the European licensee (the European licensee was a German company that was unrelated to the Lonsdale corporate group). Justice Gordon based this finding on the following factors:4

September 2012

a) the chain of title or the supply chain did not show that Lonsdale Australia played any role in the European licensee’s application of the trade marks to the goods; b) the European licensee that applied the marks did not belong to the same corporate group as Lonsdale Australia; and c) there was no evidence to suggest that Lonsdale took any step, or failed to take any step, that could be considered “consent” in relation to the European licensee’s activities. This case also confirmed that the onus of establishing consent for the purposes of section 123 lies with the parallel importer, and in this case the Judge held that Paul’s Retail had failed to discharge its evidentiary burden.5 Another important consideration was that the European licensee had breached its own license agreement with LSL, as some of the marks that it had applied to the goods

were not actually covered by the European license agreement. The Judge held that these goods were clearly “counterfeit” goods (as the marks had not even been applied with LSL’s consent) to which the section 123 defence could not apply regardless.6 Justice Gordon also noted that in these types of cases, where there are elements of parallel importation, “it is important to focus upon the trade marks registered in Australia, the identity of the parties involved and the transactions preceding the arrival of the goods bearing the allegedly infringing marks.”7

1 2 3 4 5 6 7 8 9

Lonsdale Australia Limited v Paul’s Retail Pty Ltd [2012] FCA 584 at [23]. Ibid at [20]. Ibid at [22]. Ibid at [50] to [52]. Ibid at [48]. Ibid at [27]. Ibid at [9]. Section 8 of the Trade Marks Act 1995 (Cth). Lonsdale Australia Limited v Paul’s Retail Pty Ltd [2012] FCA 584 at [50].

Chris Jordan, Partner Cara Gerace, Lawyer

IP Update

Lessons for trade mark owners This was a case in which different corporate entities within the same global group owned the trade mark registrations in different countries. Had the “Lonsdale” trade marks been owned by one global entity, the outcome of this case might have been different. It is important to bear in mind that although this corporate arrangement may have assisted Lonsdale Australia in this case to prevent the sale of parallel imports, this arrangement might not be appropriate in all cases. In particular, under the Australian Trade Marks Act a trade mark owner must “use” its registered trade mark (so that the mark is not vulnerable to removal or cancellation) by exercising some degree of quality and/or financial control over the goods to which the mark is applied.8 In this case, the evidence showed that Lonsdale Australia designed and arranged the manufacture of goods that bore the Australian Lonsdale Marks which were different in terms of design, composition and quality compared to their European counterparts.9

This case also highlights the importance of putting in place enforcement procedures with Australian Customs (through the lodgement of Notices of Objection which may cover registered trade marks and copyright material) to protect against intellectual property infringement. These procedures (which will be strengthened next year as a result of recent reforms to Australian intellectual property legislation) can result in the identification and detainment of infringing (or potentially infringing) goods at the Australian border, before the goods enter the Australian market. On 11 September 2012 Paul’s Retail lost its appeal against Justice Gordon’s decision.

Trade Mark by Steve Snodgrass: CC-BY 2.0 www.flickr.com/photos/stevensnodgrass/3990917040

September 2012

Case Study 3a

Method of treatment claims to be construed with the “object or end view” in mind but Apotex still liable for contributory infringement Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd v (No. 2) [2012] FCAFC 102

The Full Federal Court has recently handed down its decision on Apotex’s appeal against the earlier finding that its proposed sale of Apo-Leflunomide would infringe Sanofi’s claim to a method of treating psoriasis. Although the Court held that a claim to a method of treatment should be construed with the “objective purpose” in mind, it nevertheless found that the use of Apotex’s Apo-Leflunomide to treat psoriatic arthritis would invoke the operation of contributory infringement provision section 117.

Sanofi’s allegation of patent infringement As previously reported (SanofiAventis v Apotex, September 2011) Sanofi had asserted that Apotex had infringed its claim to a method for treating psoriasis by registering a generic version of its drug, leflunomide, on the Australian Register of Therapeutic Goods (ARTG) for the treatment of psoriatic arthritis (PsA) and rheumatoid arthritis (RA). In its defence, Apotex argued that the supply of leflunomide for the treatment of PsA would not infringe the claim because, if properly construed, the claimed method is for the treatment of a skin disease only (psoriasis) and not for the treatment of joint conditions such as PsA or RA. Apotex also crossclaimed for revocation, asserting that the patent was invalid for want of novelty. The findings at first instance Apotex argued before the primary judge that the claim should be construed based on the “objective purpose” of the administration of leflunomide; that is, for the treatment of psoriasis. Justice Jagot dismissed Apotex’s construction and found in favour of Sanofi, distinguishing between the purpose of administration of leflunomide and the result to be achieved.

Muffet: CC-BY 2.0 www.flickr.com/photos/calliope/69793118

IP Update

… what distinguished the claimed invention from what had gone before is the recognition that leflunomide can be used in a new method of treatment involving a new and different therapeutic use, regardless of the result to be achieved.

Separately to the question of construction, the primary judge also concluded that the supply of ApoLeflunomide would bring section 117 of the Patents Act 1990 (Cth) into operation and render Apotex liable for infringement as the supplier. On the question of validity, Apotex argued that the claim lacked novelty in light of the disclosure of the specification of Australian Patent No 529,341 (the ‘341 patent), which taught that leflunomide was effective in the treatment of RA and multiple sclerosis. However, absent any explicit reference to PsA or psoriasis, Her Honour found that the ‘341 specification did not direct, recommend or suggest the administration of leflunomide for the treatment of PsA or psoriasis and, therefore did not anticipate the claim. Full Court confirms that the method of treatment claim is novel and infringed by Apotex’s proposed activities On appeal, Apotex argued that Her Honour erred in (i) her construction of a claim to a method of medical treatment; (ii) her finding that contributory infringement under section 117 of the Patents Act applied to the circumstances of the present case; and (iii) her finding that the invention as claimed was novel in light of the publication of the ‘341 patent .

On the question of claim construction, the Full Court unanimously agreed with Apotex’s submission and held that the primary judge erred in her approach to the construction of the claim being based on the “result or effect” achieved rather than the objective purpose. Their Honours’ view was that the construction preferred by the primary judge would result in an exclusive right to exploit the invention in a manner that extended beyond the claimed advance in the art. It was their Honours’ opinion that the wording of the claim made it clear that the invention (i.e., the claimed advance in the art) concerned a method directed to preventing or treating psoriasis. Their Honours stated that the correct inquiry was to the “object or end in view” of the method of treatment involving the administration of leflunomide by the medical practitioner, noting that what distinguished the claimed invention from what had gone before is the recognition that leflunomide can be used in a new method of treatment involving a new and different therapeutic use, regardless of the result to be achieved.

Notwithstanding that the Full Court found that the primary judge had erred on the question of construction, this was not sufficient to save Apotex on the question of contributory infringement under section 117 which could be decided independently on fact. The Court considered the forms of use which could invoke the operation of section 117 and relied on Apotex’s own Product Information Document (PID) as well as expert evidence to determine whether any such use would apply. The evidence established that psoriasis is a diagnostic criterion of psoriatic arthritis, 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 for the treatment of psoriasis associated with arthritic disease. On the basis of these findings 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.

September 2012

… the ‘341 patent did not provide clear and unmistakable directions to administer leflunomide for the purpose of treating or preventing psoriasis (or PsA).

On the question of validity, the Full Court agreed with the primary judge and saw no error in Her Honour’s finding that the person skilled in the art would have understood the ‘341 patent as being concerned only with the most common form of inflammatory arthritis, RA, and multiple sclerosis, which are expressly mentioned. Their Honours agreed that the ‘341 patent did not provide clear and unmistakable directions to administer leflunomide for the purpose of treating or preventing psoriasis (or PsA). Hence, the disclosure made by the ‘341 specification did not anticipate the claim.

The value of second medical use claims Although sometimes dismissed as the poor cousin of a “composition of matter”-type claim, the decision highlights the valuable role a second medical use-type claim can play in a patent portfolio. Notwithstanding that the claim would not be directly infringed by a medical practitioner prescribing the drug for a previously identified indication, such a claim may still afford useful protection by excluding competitors under contributory infringement provisions. See also our report on the copyright aspects of this case on pages 16 & 17.

Finally, the Full Court also considered, but ultimately rejected, Apotex’s submission that claims to methods of medical treatment should not be patentable. In doing so, their Honours said that they would not depart from the position represented by the previous dicta of the Court that had supported the patentability of methods of medical treatment, noting that although it had ample opportunity to do so in recent years, the Australian Parliament has not been persuaded to legislate any change to the Patents Act to give specific effect to policy considerations that argue against the patentability of methods of medical treatment.

Paula de Bruyn, Partner Alex Tzanidis, Senior Associate

snre: CC-BY 2.0 www.flickr.com/photos/snre/6946914191

IP Update

September 2012

Case Study 3b

Apotex appeal fails: no implied licence over Sanofi’s copyright in leflunomide product information

After considering patent infringement issues (as reported on pages 12 to 15), the Full Court of the Federal Court of Australia confirmed that Apotex did not have an implied licence to copy the Product Information (PI) for trade rival Sanofi’s anti-arthritis drug, Arava (active ingredient leflunomide) for the purposes of obtaining TGA approval of Apotex’s generic leflunomide products. The Court held that Apotex had therefore infringed Sanofi’s copyright.

Sanofi’s allegations of copyright infringement In 2008, Sanofi issued Federal Court proceedings against Apotex alleging that, amongst other things, Apotex had infringed the copyright subsisting in the PI for its antiarthritis drug “Arava” (leflunomide) by submitting PI for Apotex’s generic leflunomide products that reproduced a substantial part of the Arava PI.1 Apotex’s initial response In response, Apotex contended that copyright did not subsist in the Arava PI and that, in any event, it had an implied licence to copy the Arava PI for the purposes of TGA approval, which arose either out of customary practices in the pharmaceutical industry or the conduct and acquiescence of Sanofi. The copyright findings at first instance In July 2011, Justice Jagot found that, notwithstanding Apotex’s assertions to the contrary, copyright subsisted in the Arava PI as original literary works, and that Apotex was not an implied licensee of that copyright.

Trace Meek: CC-BY 2.0 www.flickr.com/photos/tracemeek/5327224133

IP Update

In relation to the latter finding, Justice Jagot considered that Apotex had failed to show a proper foundation for the existence of an implied licence in circumstances where: a) the evidence was insufficient to establish the existence of an industry wide practice of PI copying; b) it was not necessary for drug companies seeking to register a generic version of the drug to copy originator PI; and c) there was no mutuality as between originator and generic pharmaceutical companies, in the sense that generic companies rarely contributed original PI to the pool of approved PI. Full Court confirms that Apotex did not have an implied licence In December 2011, Apotex appealed Justice Jagot’s decision to the Full Court of the Federal Court of Australia contending that Her Honour wrongfully rejected its claim to an implied licence. Apotex did not seek to disturb Her Honour’s copyright subsistence findings.

Pills By e-MagineArt.com: CC-BY 2.0 www.flickr.com/photos/emagineart/4655345131

On appeal, the Full Court dismissed Apotex’s assertions, finding that Justice Jagot’s views were “amply justified”.2 Chief Justice Keane considered that Justice Jagot’s findings were also consistent with “the common law’s disapproval of horizontal arrangements between traders which might tend to blunt the edge of competition between them”.3 New PI exemptions to copyright infringement Sanofi was entitled to relief in respect of copyright infringement by Apotex that occurred before the commencement of new PI exemptions in the Australian Copyright Act on 28 May 20114. However, as a result of those new exemptions, Sanofi was not entitled to any relief for copyright infringement occurring on or after 28 May 2011. This means that as of 28 May 2011, generic pharmaceutical companies can copy originators’ PI documents without liability for copyright

infringement in certain circumstances, but they may still be held liable for any copying that occurred prior to 28 May 2011. A detailed discussion of the new copyright infringement exemptions may be found on the DCC website.5

2 3 4

http://www.davies.com.au/pub/detail/514/ sanofi-aventis-v-apotex-method-of-treatmentclaim-found-valid-and-infringed [2012] FCAFC 102 at [75] per Keane CJ [2012] FCAFC 102 at [79] per Keane CJ http://www.davies.com.au/pub/detail/449/ tga-pharmaceutical-product-information-losescopyright-protection-in-australia http://www.davies.com.au/pub/detail/514/ sanofi-aventis-v-apotex-method-of-treatmentclaim-found-valid-and-infringed

Ian Pascarl, Partner Aaron Yates, Lawyer

September 2012

Case Study 4

AUSTRALIAN FEDERAL COURT HANDS DOWN MARKMAN-LIKE DECISION ON PATENT CONSTRUCTION Britax Childcare Pty Ltd v Infa-Secure Pty Ltd [2012] FCA 467

A recent judgment of the Federal Court of Australia has shown a willingness to hear and decide upon patent infringement cases in a phased mannerâ&#x20AC;&#x201D;first ruling on the manner in which patent claims should be construed and only then (if the parties choose to continue) hearing and deciding upon resultant issues of patent infringement or validity. This approach is a common practice in US patent litigation (where it is referred to as a Markman hearing) but until now has been largely absent from Australian patent litigation.

SAKURAKO. Sleep in car. by MJ/TR: CC-by 2.0 www.flickr.com/photos/mujitra/3900472300

IP Update

… handing down a decision specifically in relation to the claim construction provides insight for both parties regarding the likely outcome of the litigation …

Britax’s claims of patent infringement In 2009, child accessories manufacturer Britax Childcare Pty Ltd sought relief from a competitor, Infa-Secure Pty Ltd, for infringement of nine innovation patents and one Australian standard patent concerning child safety seats. Infra-Secure subsequently sought revocation of patents upon various grounds of validity. Interpretation of the claims Due to the number of patents, the Federal Court decided to hand down an initial decision specifically concerning the claim construction only. Issues regarding validity and infringement are to be considered by the Court later should the parties wish to continue litigation. This appears to be the first time an Australian Court has issued a decision specifically with regard to claim construction without also considering issues such as validity or infringement. Due to a significant amount of patent litigation turning on the interpretation of the language in the claims, the practice of handing down a decision specifically in relation to the claim construction

provides insight for both parties regarding the likely outcome of the litigation should the Court be required to continue hearing the matter. As a result, this practice, which the Federal Court of Australia now appears willing to apply, at least in some circumstances, encourages a cost effective and timely process to promote settlement between parties in response to the Court’s interpretation of the claims.

Thus, potentially an expert whom may be considered too inventive for assisting the Court with issues such as novelty and inventive step, may still provide assistance in relation to interpretation of the claims. This is particularly important to litigants as this decision potentially broadens the range of experts that can be utilised for the purposes of assisting the Court with interpretation of the claims.

Inventiveness of experts In this decision, the Federal Court also shed light upon the level of inventiveness which an expert can possess for assisting the Court with the claim construction. Specifically, Justice Middleton acknowledged that traditionally, for issues such as novelty and inventive step, the person skilled in the relevant art is a non-inventive worker in the relevant field of technology in Australia. However, His Honour concluded that the same qualities were not necessary for an expert who provides evidence for the purposes of assisting the Court with matters of claim construction.

Chris Carter, Partner Simon Reynolds, Associate

September 2012

Case Study 5

FEDERAL COURT DISMISSES SANITARIUM’S CLAIM: GRANOLA NOT USED AS A TRADE MARK Australian Health & Nutrition Association Limited (t/as Sanitarium Health Food Company) v Irrewarra Estate Pty Limited (t/as Irrewarra Sourdough) [2012] FCA 592

The Federal Court of Australia has dismissed an application by Sanitarium Health Food Company alleging infringement by Irrewarra Sourdough of the trade mark “GRANOLA”. Justice Jagot found that Irrewarra did not use the word “granola” as a trade mark to distinguish its goods from other traders. Instead, the Court found that Irrewarra’s use of the word “granola” on its packaging was purely descriptive of its cereal product.

This case emphasises the importance of considering the context in which a word appears on a product label when determining whether or not that word has been used as a trade mark. It also illustrates the dangers when trade mark owners are not diligent in preventing their trade mark from becoming descriptive. Irrewarra’s granola product Irrewarra manufactures and distributes breads, baked goods and a cereal product which was the subject of the trade mark infringement proceedings. Since August 2004, Irrewarra has been making and distributing the cereal product which is sold in a clear plastic bag and has a front and rear label. At issue was the front label which featured the word “granola” as part of the phrase “all natural handmade granola”. The label has taken three slightly different forms since 2004 (see figure 1).

granola by little blue hen: CC-by 2.0 www.flickr.com/photos/notahipster/4403628830

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Figure 1:Irrewarra’s front product labels, from earliest (at left) to latest (at right).

Sanitarium’s trade mark “GRANOLA”

“Granola” not used as a trade mark

Sanitarium is an authorised user of the trade mark “GRANOLA”, which has been registered since 1921 in respect of goods in class 30 which includes preparations made from cereals. The registered owner of the “GRANOLA” trade mark is Australasian Conference Association Limited who was also a party to the proceedings.

Justice Jagot agreed with Irrewarra and held that Irrewarra had not used the word “granola” as a trade mark on its packaging. Her Honour found that the word “granola”, in the context in which it appeared on the label, did not indicate a connection between Irrewarra and its cereal product, but rather described the contents of the package.1 Her Honour reached this finding based on the following factors:

Did Irrewarra use the word “granola” as a trade mark? Sanitarium contended that Irrewarra had used the “GRANOLA” mark in contravention of section 120 of the Trade Marks Act 1995 (Cth). Irrewarra argued that it had not used the word “granola” as a trade mark, rather its use of the word was purely descriptive to describe its cereal product. In determining whether or not Irrewarra had used the word “granola” as a trade mark, Justice Jagot posed the following question: Did the words GRANOLA, Granola or granola in the context of the packaging as a whole distinguish Irrewarra’s product from other cereal food products in the course of trade? Alternatively, did Irrewarra use the word “granola” as a “badge of origin”?

- Whilst the word “granola” is an invented word (it was invented in 1876 in the United States to refer to a wheat and oat breakfast cereal), the word is now inherently suggestive of meaning. In the context of the clear packaging and the size of the package (500g) it would be obvious to consumers that the phrase “all natural handmade granola” describes the contents of the package, that being a grain, fruit and nut breakfast cereal.2

Justice Jagot was also unpersuaded by Sanitarium’s argument that the word “granola” has meaning only in the United States. Her Honour noted that “the modern world is characterised by rapid communication and extensive cultural exchanges” and through films, television programs, music,

books and travel, Australians are routinely exposed to many words which are commonplace in the United States.3 - The word “granola” does not appear in isolation on the package and reads as part of the phrase “all natural handmade granola”. The words “all natural handmade” are descriptive of the product, and in the context, the word “granola” also reads as part of the product description.4 - Her Honour was of the view that in the context of the packaging as a whole, the word “granola” as used on Irrewarra’s packaging lacked the necessary prominence to be a trade mark. In reaching this conclusion, Justice Jagot considered:5 - Irrewarra’s prominent use of its own “Irrewarra Sourdough” trade mark; - the phrase “all natural handmade granola” is in a plain font style located below Irrewarra’s “Irrewarra Sourdough” trade mark; and - the absence of the word “granola” on the rear label.

September 2012

This case confirms that a trader may still use a registered trade mark descriptively.

Justice Jagot went further and considered what the case would have been if Sanitarium established that Irrewarra had used the word “granola” as a trade mark (which it did not). If Her Honour had to determine the issues of substantial identity and deceptive similarity, Justice Jagot considered that the mark used by Irrewarra on its product was the phrase “all natural handmade granola” (and not the word “granola” by itself). Her Honour also found that the phrase was not substantially identical with or deceptively similar to Sanitarium’s trade mark “GRANOLA”.6

2 3 4 5 6

Australian Health & Nutrition Association Limited (t/as Sanitarium Health Food Company) v Irrewarra Estate Pty Limited (t/as Irrewarra Sourdough) [2012] FCA 592 at [31]. Ibid at [28]. Ibid at [34]. Ibid at [29]. Ibid at [30]. Ibid at [38]

Chris Jordan, Partner Cara Gerace, Lawyer

Lessons for brand owners: when is a word used as a trade mark? -- This case emphasises the importance of considering the context in which a word appears on a product label in determining whether or not that word has been used as a trade mark. A word is used as a trade mark if it is used as a “badge of origin” to indicate the source of that particular product. It is not enough for the word or words in issue to simply appear on the product label, they must also possess the character of a “brand”, in that they are capable of distinguishing those products from similar products from other traders. -- In determining the context in which a word is used on a product label, the Court will consider the packaging as a whole. This includes consideration of whether the trader has prominently used its own trade mark on the goods to show “commercial origin”, the font style of the word in issue and whether the word has been used descriptively. This case confirms that a trader may still use a registered trade mark descriptively. This is consistent with previous decisions by the Federal Court including Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCA 198.

-- Whilst a word might originate or have common meaning in an overseas country, this does not mean that the word cannot also have meaning in Australia. Through “rapid communication and cultural exchanges”, the word can also acquire meaning in Australia. -- An invented word which starts its life as a trade mark can become descriptive over time if the use of the mark is not carefully monitored and controlled. Once a trade mark becomes generic or descriptive, the ability of the trade mark owner to prevent others from using that word is greatly diminished. -- Justice Jagot considered the sign used by Irrewarra to be the phrase “all natural handmade granola”. Her Honour was not willing to isolate or separate the word “granola” from the phrase for the purpose of determining substantial identity and deceptive similarity (which the Court did not have to do because the Court ultimately found that Irrewarra had not used the word “granola” as a trade mark).

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September 2012

Case Study 6

INNOVATION PATENTS FOR TREATMENT OF MINE TAILINGS UPHELD ON APPEAL

SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Limited [2012] FCAFC 95

In a majority decision, the Full Federal Court has affirmed the decision of Justice Kenny at first instance, finding five innovation patents owned by Ciba Specialty Chemicals Water Treatments Limited to be valid. SNF (Australia) Pty Ltd, the appellant and accused infringer, had sought to overturn the primary judge’s findings on validity but did not challenge the infringement findings.

The issues raised by SNF and Ciba on appeal SNF appealed the first instance decision primarily on the basis that the primary judge had incorrectly applied legal principles of claim construction, and had given undue weight to evidence from an expert who was not suitably qualified to comment on how particular terms in the claims would be interpreted by a skilled addressee of the patents. The appeal turned almost entirely on the interpretation of the term “rigidification” (as it applied to the state of a slurry containing tailings) in the context of the patents. SNF contended that, if its interpretation was adopted, the claims lacked novelty or an innovative step in view of one of a number of pieces of prior art information including prior publications and prior public uses at various mining sites. Ciba’s contention, in line with the evidence of its expert, was that the term “rigidification” implied the presence of a networked or chemically bonded structure, thereby distinguishing it from settling or sedimentation processes disclosed by the prior art.

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… this distinction [of “rigidification” as opposed to settling and sedimentation] made a substantial contribution to the working of the invention …

The Court’s conclusions on interpretation of the claims The Court’s decision was made with reference to one of the innovation patents, in which the claims were directed specifically to use of the process in rigidifying coal tailings. The parties had agreed that this patent was representative of the patents as a whole for the purposes of settling the issues. On the issue of construction, neither Justice Bennett (with whom Justice Finn agreed) nor Justice Dowsett found the expert evidence regarding the meaning of rigidification to be of assistance. Accordingly, construction of the claims was carried out purely with reference to the content of the patent specification. Justice Bennett considered the meaning of “rigidification” in the context of the problems addressed by the invention, including improving on the prior art processes described in the specification. In that context, Her Honour found, the specification referred to advantageous results achieved by the claimed process by particular means, namely the use of “an effective rigidifying amount” of aqueous solution of a water-soluble

polymer. This was to be contrasted with the “natural” rigidification process brought about by settling and sedimentation, which in her Honour’s view did not fall within the meaning of “rigidification” in the sense meant by the patents. Notably, interpretation of the claims did not depend on the concept of a networked structure or the evidence in relation to it. In a dissenting judgment, Justice Dowsett came to a different conclusion regarding the meaning of “rigidification”. His Honour considered the use of the term throughout the specification and rejected Ciba’s contention that the term had a special meaning which implied the presence of a networked structure, finding that nothing in the specification provided any reason for departing from the usual meaning of the word. In particular, the specification did not disclose the presence of any networking or chemical bonding effect within the slurry. “A process of improving rigidification” was held to mean “a process which develops yield strength”, and thus to encompass settling and sedimentation processes of the prior art.

Validity depended on the claim interpretation adopted The claims were novel over the prior art relating to settling and sedimentation

The claim interpretation adopted by Justices Bennett and Finn, in the majority, was determinative of novelty and innovative step. On the basis that “rigidification” was distinct from settling and sedimentation, it followed that the claimed process was distinguished over the majority of the prior art relied upon by SNF. It was apparent from the evidence at trial that this distinction made a substantial contribution to the working of the invention, and the majority therefore upheld the primary judge’s finding that the claims involved an innovative step. Had SNF’s (and Justice Dowsett’s) interpretation of “rigidification” been adopted, the claims would have lacked novelty in view of one of a number of pieces of prior art and it would have been unnecessary to consider the issue of innovative step.

September 2012

â&#x20AC;Ś the importance of features recited in the claims should be discussed in the body of the specification whenever possible and appropriate.

Did the prior art disclose aqueous solutions of watersoluble polymers?

Lessons for patent owners

A further issue on appeal was whether two of the prior art documents disclosed use of a flocculant in the form of an aqueous solution of a water-soluble polymer.

In Australian patent litigation, expert evidence typically plays an important role in assisting the Court to interpret the claims and to ascertain common general knowledge. This was certainly the case in the first instance decision. However, on appeal, it is apparent that none of the judges considered the evidence as it related to claim interpretation to be particularly helpful. As a result it was the wording of the specification itself which was critical in determining the outcome. In particular, the specification included statements in the summary of the invention section which explained the effects of certain features of the claims. These statements proved to be persuasive, in the eyes of the Court, in distinguishing the claims over the prior art.

The majority held that the first document disclosed, in isolation, an aqueous solution of a water-soluble polymer. Importantly, however, it did not disclose that feature in combination with all the other features of the claimed process, and so did not deprive claim 1 of novelty. With regard to the second document, it was agreed that although it may have disclosed an aqueous solution of a water-soluble polymer, this was not in the context of its use in a process of the type claimed in the patents. The Court therefore found that the claims were novel in view of the second document.

Importance of statements in the patent specification

The decision provides an important reminder that the claims are interpreted in the light of the specification as a whole, and that the importance of features recited in the claims should be discussed in the body of the specification whenever possible and appropriate.

Given that neither document disclosed a process in which an aqueous solution of a water-soluble polymer was used as a flocculant, and that the evidence showed that this made a substantial contribution to the working of the invention, the majority held that the claims involved an innovative step.

Raymond Hind, Partner Ken Simpson, Associate

IP Update

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September 2012

Practice Update 1

ALRC REVIEW ON COPYRIGHT AND THE DIGITAL ECONOMY COMMENCES

Recently we reported on the proposed ALRC Review of Australian copyright law1 to be led by Professor Jill McKeough. The final Terms of Reference for the proposed ALRC review have now been published and set a deadline of November, 2013 for a final report from the ALRC with recommendations for reform. An issues paper was also released on 20 August, 2012 which invites submissions by 16 November, 2012 from interested parties.2

Are current copyright exceptions adequate in the digital environment? The primary focus of the ALRC review is to consider whether the exceptions and statutory licences in the Copyright Act 1968 (Cth) are adequate and appropriate in the digital environment. The ALRC will consider whether there should be additional exceptions which: 1) cover “fair use”3 of copyright material; 2) “allow transformative, innovative and collaborative use of copyright materials to create and deliver new products and services of public benefit”; and 3) “allow appropriate access [to] use, interaction and production of copyright material online for social, private or domestic purposes”.

Limitations on scope of ALRC review Reining in what could otherwise be described as broad Terms of Reference, the ALRC has been specifically directed to consider: 1) the impact of any proposed legislative solutions on other areas of law and their consistency with Australia’s international obligations; and 2) recommendations from related reviews, specifically the Government’s Convergence Review.4 The Terms of Reference also expressly direct the ALRC not to deal with the issues of: 1) unauthorised distribution of copyright materials using peer to peer networks; 2) the scope of the safe harbour scheme for ISPs; 3) the exceptions applicable to technological protection measures; and 4) increased access to copyright works for persons with a print disability.

IP Update

Digital technologies create new opportunities for innovation The Terms of Reference affirm that the objective of copyright law remains an incentive to create and disseminate copyright materials, but equally recognise the importance of the digital economy and the opportunities for innovation created by new digital technologies leading to national economic and cultural development. Issues Paper The ALRC Issues Paper invites comments or submissions on a range of topics within the scope of the review, including: -- caching -- cloud computing -- copying for private use -- online use for social, private or domestic purposes -- transformative use -- data and text mining -- retransmission of free-to-air broadcasts

Davies Collison Cave will continue to monitor and report on the progress of the ALRC review and invites stakeholders interested in discussing any of the issues or topics likely to be covered by the review or who might be considering a potential submission to the ALRC to contact us. The closing date for submissions to the ALRC is 16 November, 2012.

2 3

See www.davies.com.au/pub/detail/570/prof-jillmckeough-to-lead-alrc-review-of-copyright-lawand-exceptions The issues paper can be viewed at http://www. alrc.gov.au/publications/copyright-ip42 Curiously the Terms of Reference use the U.S. term, in contrast to the term â&#x20AC;&#x153;fair dealingâ&#x20AC;? which applies in Australia. Australian Government Report released on 30 April, 2012, proposing fundamental change to the regulatory frameworks applying to the converged media and communications landscape in Australia.

-- statutory licences in the digital environment -- fair dealing exceptions.

Darron Saltzman, Partner

September 2012

Practice Update 2a

PRODUCTIVITY COMMISSION: IS THE COMPULSORY PATENT LICENSING SYSTEM WORKING?

On 9 August 2012, the Productivity Commission released an Issues Paper outlining the scope of its inquiry into the compulsory licensing provisions of the Patents Act 1990 (Cth) and calling for submissions from interested parties.1 The Federal Government’s Terms of Reference require the Commission to: -- assess whether the current provisions for the compulsory licensing of patents can be invoked efficiently and effectively; -- recommend any measures to ensure that the compulsory licensing mechanisms can be efficiently and effectively utilised in a manner consistent with Australia’s international obligations; and -- recommend any alternative mechanisms to ensure that the balance between the incentives to innovate and access to technology best reflects the objectives of reasonable access to healthcare solutions, maximising economic growth and growing the Australian manufacturing industry. Currently, the compulsory licensing provisions of the Patents Act allow a person to apply to the Federal Court for an order requiring a

patentee to grant the applicant a licence to “work” a patented invention.2 An applicant must, however, meet either a public interest or competition test in order to be granted a compulsory licence under those provisions and must pay the licensor compensation for the granted rights. To date, only two cases have specifically considered an application for a compulsory licence under these provisions and in both cases a compulsory licence was refused.3 The Productivity Commission’s inquiry comes in the context of the Federal Government’s recent reforms to the Patents Act4, and the release of an exposure draft of an amendment to the Patents Act to enable courts to grant compulsory licences to manufacture and export pharmaceuticals to countries dealing with epidemics and other health crises.5 This amendment is as a result of Australia’s accession to the Doha Declaration on the TRIPS Agreement and Public Health (see also Practice Update 2b on page 31). The Terms of Reference also

expressly direct the Commission to consider the broader relevance of compulsory licensing, including in the context of gene patents and healthcare, climate change mitigation and alternative energy technologies, food security6 and standard essential patents.7

The Commission invites interested parties to prepare submissions on the issues raised in the Issues Paper. Submissions are due by 28 September 2012. Details on how to make a submission are set out on the Productivity Commission’s website. 1

2 3

Australian Productivity Commission 2012, Compulsory Licensing of Patents: Issues Paper [Canberra] (http://www.pc.gov.au/__data/assets/ pdf_file/0018/119061/patents-issues.pdf). See sections 133 to 140 of the Patents Act. See Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation (1969) 119 CLR 572 and Wissen Pty Ltd v Kenneth Mervyn Lown (1987) 9 IPR 124. Including as a result of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, which aims to raise the standard of patents granted in Australia and which includes express exceptions to patent infringement for research and experimentation purposes. The exposure draft of the IP Laws Amendment Bill 2012 (Cth) and the accompanying Explanatory Memorandum is available for public comment at http://www.ipaustralia.gov.au/about-us/publicconsultations/ip-laws-amendment-bill/. Written submissions on the draft Bill and Explanatory Memorandum are due by 1 October 2012. On 17 July 2012, the Federal Government released its National Food Plan green paper, the next step towards the Government’s development of a National Food Plan to ensure food security in the future Standard essential patents are currently the subject of the high-profile litigation between Apple and Samsung in relation to standard technologies incorporated into 3G telecommunications.

Rodney De Boos, Consultant TIm Creek, Associate

IP Update

Practice Update 2b

Australia releases draft Bill to allow compulsory licences of patented pharmaceutical products to alleviate health crises In March, 2011 the Australian Government announced that it would introduce legislation to implement the Doha Declaration in relation to TRIPS and public health. The effect of this would be to allow Australian Courts to grant compulsory licences to manufacture patented pharmaceuticals and export them to countries dealing with epidemics and other health crises. The Australian Government has now released an exposure draft in the form of the Intellectual Property Laws Amendment Bill to formally implement the Declaration although the proposed provisions go beyond the requirements of the Declaration.

To date, over 40 World Health Organization member countries have acceded to the Doha Declaration including Australia (on 12 September, 2007), New Zealand (on 21 October, 2011), the United States, India, Japan, China and the European Union. If the exposure draft is passed into legislation, the following regime will be established: 1. Any person may apply to the Federal Court of Australia for a compulsory licence in respect of a patented pharmaceutical invention for the purpose of exporting a pharmaceutical product to an eligible importing country, provided that the application includes a statement from the eligible importing country to the effect that it will take reasonable measures within its means to prevent re-export of the product from its territory. 2. An eligible importing country is one which is: (a) recognised by the United Nations as a least developed country; (b) has made a notification to the Council for TRIPS of its intention to use the system; or (c) included in a class of foreign countries to be prescribed for the purposes of the Act.

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3. The Federal Court is given power to grant a compulsory licence if it is satisfied that, among other things, the application is made in good faith, the proposed use

September 2012

… the proposed use of the pharmaceutical product [must be] to address a public health problem in circumstances of emergency or by the public non-commercial use of the product in the eligible importing country …

of the pharmaceutical product to address a public health problem in circumstances of emergency or by the public noncommercial use of the product in the eligible importing country, the applicant and the eligible importing country will take reasonable measures to prevent the exported pharmaceutical product to be used for purposes other than addressing the relevant public health problem and, in the case of public noncommercial use, a voluntary licence was unable to be obtained. 4. The terms of the compulsory licence must include the quantity of the product to be produced, that the product be labelled and marked in accordance with certain Regulations (yet to be released) or as determined by the Court and that certain notifications be made, among other things. 5. In default of agreement between the patentee and the applicant, the Court will determine the remuneration to be paid to the patentee for the licence.

6. Applications may be made to amend a licence, the granting of cross-licences and the revocation of licences. 7. A licence may be revoked if the substantive circumstances which justified the grant have changed or the terms of the licence have been breached, provided that, in each case, the Court is satisfied that the legitimate interests of the licensee or the eligible importing country are not likely to be adversely affected by the revocation.

should be a set of universal standards for the protection of intellectual property. As part of the Declaration, least developed member countries were given an extension for compliance with this objective to 1 January, 2016. By allowing non-members to obtain the benefits of the system, Australia is not putting pressure on non-members to join WTO and agree to the adoption of these standards.

Secondly, the dispute settling mechanisms existing within the WTO will not be applicable to the extent that disputes might arise between Australia and eligible importing countries which are not members of the WTO.

Finally, the inability of member countries to challenge compulsory licences granted in conformity with the Doha Declaration is compromised to the extent that the Australian legislation departs from the terms of the Declaration. Thus, in a politically charged environment, another member country could challenge compulsory licences granted on the basis that Australia is not complying with TRIPS.

Two points to note in respect of the Bill are that: 1. The definition of “eligible importing country” goes beyond the class of countries which were to benefit from the Doha Declaration. Under the Declaration, an eligible importing country had to be a member of the World Trade Organization. This departure has at least three consequences. First, non-members can now take a significant benefit which membership would otherwise bestow and which would otherwise encourage non-members to become members. It also defeats one of the premises on which TRIPS was founded; that there

IP Update

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2. The Court must be satisfied that, among other things, the patented product will be imported by or “on behalf of, and with the authorization of” the eligible importing country. However, a person importing a patented product “on behalf of” an eligible importing country is not a party to the proceedings and therefore cannot be compelled to give undertakings as to dealings with the product which is the subject of the compulsory licence. Whilst the eligible importing country is required to satisfy the Court as to the steps it will take to prevent re-export and licensed use, the actual importer is

not. Again, the notion that a pharmaceutical product subject to a compulsory licence can be imported “on behalf of” an eligible importing country was not contemplated in the Declaration. The rationale for this extension given by the Australian government is that it allows a product to be imported by another country, regional group or non-government organization to provide for more flexible and efficient distribution in appropriate circumstances. It is interesting that the government states in the Explanatory Memorandum accompanying the Bill that the limitation in the Declaration

to importation by eligible importing “Members” alone was included “to avoid misuse”. Notwithstanding this, the draft Bill broadens the range of permissible applicants to other countries, regional groups and NGOs, among others, in the interests of flexibility and efficiency without imposing any additional requirements to avoid the misuse which was apparently of concern to the negotiators of the Declaration. Submissions on the Bill can be made up until 1 October 2012.

Rodney De Boos, Consultant

September 2012

Practice Update 3

Changes to US Patent System Imminent!

On 16 September 2012, one year on from the enactment of the America Invents Act, some sweeping changes to the US patent system resulting from that Act will take effect, including in particular those discussed below.

Changes to Third Party Submissions on US Patent Applications Under the current provisions, a party can file a third party submission to draw the attention of the United States Patent and Trademark Office (USPTO) to particular prior art which that party believes is relevant to the patentability of one or more claims of a pending patent application. However, the third party cannot comment on the relevance of the prior art. Under the new provisions, a third party submission (which may concern a utility, design or plant patent application) can, and indeed must, be accompanied by a short but comprehensive outline of the alleged relevance of the prior art. Changes to Challenging Patents at the United States Patent and Trademark Office At present, a party wishing to challenge a US patent within the USPTO must request ex partes or inter partes re-examination. The latter will now be replaced by two alternative forms of â&#x20AC;&#x153;reviewâ&#x20AC;?, namely Inter Partes Review (IPR) and Post-Grant Review (PGR) which will provide routes for challenging patents which are faster and less expensive than litigation.

IPR can be sought in respect of a patent regardless of its priority date, but only nine months or more after it is granted or any PGR proceeding in respect of it has concluded. PGR can only be sought within nine months following issuance of the patent and will, to start with, only be available for business method patents. It will become available for other (non-business method) patents with a priority date of 16 March 2013 or later. IPR grounds of invalidity are generally restricted to novelty and obviousness in the light of patents and printed publications, whereas PGR can be based on any of the grounds of invalidity that can be asserted in patent litigation, including prior public use or sale of the claimed invention, lack of enablement and claim indefiniteness. IPR can proceed provided the USPTO is satisfied there is a reasonable likelihood [the challenger] will prevail whereas PGR can only proceed if it is more likely than not that at least one claim is invalid or there is an important new or unsettled legal question. Both forms of review have a 12to 18-month duration and have significant estoppel ramifications for the challenger in that, assuming the parties do not settle, the challenger cannot, in any later USPTO proceeding or district court action, challenge on any ground that it raised, or reasonably could have raised, during the review.

IP Update

Supplemental Examination to Rule Out Inequitable Conduct A US patent applicant and its agent must, up until grant, disclose to the USPTO all prior art known to them which is considered material to patentability; where there has been a failure to do so the patent is at risk of being unenforceable on the grounds that the failure constituted inequitable conduct (IC). The only means of redress has been to subject the patent claim(s) to examination (again), which is often undesirable, particularly given that the prior art in question is often not particularly relevant and is to be disclosed merely as a precaution. The new supplemental examination process offers a simpler, quicker and generally more secure remedy. Provided the USPTO is satisfied, at the conclusion of supplemental examination (which must be reached within three months), that the prior art does not raise a substantial new question of patentability, the patent cannot thereafter be held unenforceable, in light of that prior art, on IC grounds. If the USPTO finds that the prior art does raise such a question, it will order re-examination of the patent claim(s).

VinothChandar: www.flickr.com/photos/vinothchandar/7499947288

Supplemental examination can be invoked even where there has been a deliberate omission to disclose the prior art, though if that omission is found to constitute material fraud criminal charges can result. Supplemental examination cannot be invoked to remedy preexisting IC allegations or to shut out IC assertions made as a defence in enforcement proceedings if they are raised before the conclusion of supplemental examination or a reexamination resulting from it.

regard allow for the submission of a streamlined form of inventor oath/declaration, a statement in lieu of such an oath/declaration in particular circumstances (including where an inventor refuses or is unavailable to make the oath/declaration), the filing of the oath/declaration to be postponed until the application is otherwise allowable, and assignments containing oath or declaration statements.

Inventorâ&#x20AC;&#x2122;s Oath/Declarations To date, only in very limited circumstances could a patent applicant be anyone other than an inventor. In future, any juristic entity (such as a company) to which an inventor has assigned or is obliged to assign rights in the invention, or which otherwise has sufficient proprietary interest in the invention, can initiate and progress a US patent application as a patent applicant. The changes in this

Robert Finn, Partner

September 2012

Practice Update 4

EFFECT OF MAYO v PROMETHEUS ON SYSTEMS MEDICINE PATENT ELIGIBILITY

Systems Medicine

Prometheus

Systems medicine represents the transition of systems biology to a clinical paradigm. Biomedical and biological research has been significantly advanced by a holistic approach to the interaction of components within biological systems. The translation of systems biology to medical outcomes represents the field of systems medicine. Systems medicine has been defined as integrating cellular organisational data by various modelling techniques to assess pathophysiological outcomes.

It is of interest to consider the impact of the US Supreme Court decision in Mayo Collaborative Services et al. v Prometheus Laboratories(“Prometheus”), handed down on 20 March, 2012. The Prometheus patent claimed inter alia a method for optimising therapeutic efficacy to treat an immune-related gastrointestinal disorder by administering a known drug and measuring the level of a metabolite from that drug, wherein the level of the metabolite correlates with a need to either increase or decrease the dosage of the known drug. The US Supreme Court’s analysis of the claim in question centred around whether there was sufficient application of laws of nature to render the subject matter patent-eligible. Laws of nature include physical correlations and phenomena, and in the Prometheus case, the relationship between metabolite levels and dosage efficacy. Potential application steps recited in the claim were:

One example is the diagnosis of a disease condition or state based on biomarkers. A clinical translation of such diagnosis can constitute elements of personalised medicine, where pharmacoresponsiveness of a patient is determined prior to selection of an agent or the protocol for administration of an agent. For example, the current trend in cancer care is the individualisation of treatment programs to provide the best care based on the possession of certain biological characteristics. The personalised aspect of systems medicine is becoming increasingly important due to its significant potential for reducing the total cost of care and to deliver improved patient outcomes. Systems medicine offers attractive commercial opportunities for those developing agents for therapies.

-- administration, -- the wherein clause; and -- determination. The Supreme Court concluded that none of these application steps contributed more to laws of nature other than what is a “well-understood, routine, conventional activity, previously engaged in by the field”. In essence, the Court is seeking an application step which is not “conventional or well known” to transform a law of nature into a patent-eligible application of such a phenomenon.

IP Update

Impact of Prometheus on Systems Medicine Prometheus highlights the challenge of protecting various applications of systems medicine in the US. Diamon v Diehr established that an application of a law of nature may represent patent-eligible subject matter, and Gottschalk v Benson required that the application must be inventive. Prometheus stated “to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words “apply it””. Hence, the mere application of a law of nature would, based on Prometheus, not be patent-eligible, unless this application is nonconventional. Interestingly, recent guidelines issued by the USPTO for examination of claims involving laws of nature make it clear that the transformation step need not be novel and non-obvious to carry the claim across the patentability threshold.

DNA Lab by snre: CC-by 2.0 www.flickr.com/photos/snre/6800805516/

Practical considerations The Prometheus decision has caused some concern in the life science industry and diagnostic and method of treatment claims should be drafted with care. The challenge to patent drafters is to define a physical transformation step which is more than a correlation mechanism, assuming the correlation is achieved by conventional techniques. Such a step, whilst not necessarily novel nor non-obvious in its own right, needs to render the method, as a whole, novel and non-obvious. However, any adverse impact of the Prometheus decision can be mitigated to some extent by including embodiments in a patent specification supporting claim language in the US which provide an overall novel and inventive application of a method involving a putative law of nature. Such applications include the use of diagnostic platforms, interfacing with diagnostic assays, devices, use of genetically modified cells and drug design and possibly selection based on potential pharmacoresponsiveness of a subject.

Notwithstanding, the identification of novel biomarkers or the use of non-conventional techniques to identify a correlation may nevertheless go beyond Prometheus. For example, determining a pattern of biomarkers such as single nucleotide polymorphisms associated with a level of pharmacoresponsiveness creates a level of determination which is more than the use of conventional analysis. The claim then is directed to the pharmacoresponsiveness of a subject or agent rather than the treatment. It may also be worth considering if in conjunction with the natural principle, methods can be described in terms of the use of a new drug or in terms of a new use of an existing drug.

September 2012

[Prometheus] provides the impetus to develop a holistic approach to protecting innovation in this area [systems medicine].

Myriad and patent eligibility

Protecting Innovation in Systems Medicine

The life science industry can take heart from the Myriad decision handed down on 16 August, 2012 which noted that “patents on life-saving material and processes, involving large amounts of risky investment, would seem to be precisely the types of subject matter that should be subject to the incentives of exclusive rights”. Importantly, isolated DNA molecules and methods for screening for therapeutic agents were held to represent patent-eligible subject matter. Furthermore, Myriad states that a “determination” step does not necessarily render a claim patent-ineligible, especially if it is based on an artificially created entity, e.g. genetically transformed cells.

1. Systems medicine represents the transition of systems biology to a clinical paradigm.

It is important to note that Prometheus does not necessarily represent a threat to patenting applications of systems medicine in the US. Rather it provides the impetus to develop a holistic approach to protecting innovation in this area. Such innovation will likely need to be protected by claim language based on the merits of each case. Prometheus focused on a concern that permitting patents on certain subject matter defined by a correlation would prevent others using that correlation. However, Myriad confirms that a non-naturally occurring composition of matter is not a law of nature representing a rational application of Prometheus. We would suggest that Prometheus is not inconsistent with protecting innovation in systems medicine especially in the light of Myriad.

2. Prometheus on the one hand highlights the challenge of protecting various applications of system medicine, however, provides the impetus to develop a holistic approach to protecting innovation in this area. This is supported by Myriad. 3. The identification of novel biomarkers or the use of non-conventional techniques to identify a correlation may be enough to go beyond Prometheus. 4. Systems medicine patents need to contain language in the US which provide an overall novel and inventive application of a method involving a putative law of nature, e.g. use of diagnostic platforms, interfacing with diagnostic assays, devices, use of genetically modified cells and drug design and possibly selection based on potential pharmacoresponsiveness of a subject.

Dr John Hughes, Partner Dr Rachel Stevenson, Patent Attorney

IP Update

DCC News DAVIES COLLISON CAVE 2012 STAFF APPOINTMENTS

The partners of Davies Collison Cave are pleased to announce the following appointments effective 1 July 2012. Partners

Senior Associates

associates

Robert Finn

Hayden Barke

Timothy Creek

B.E. (Mech.)(Hons.), B.Sc. (Chem.), Dip.IPP (IPTA), Patent Attorney

B. Eng (Hons.), Patent Attorney

LL.B (Hons.), B.Com, Lawyer

Nik Ramchand

Ian Drew

Cheryl Hrvoj

B.E. (Hons.), LL.B. (Hons.), M.IP Law, Patent Attorney and Lawyer

B.A., B.Ec., LL.B. (Hons.), M.IP Law, Trade Mark Attorney

LL.B. (Hons.), BIntStud, DipBus (FrontlineMgt), Lawyer and Trade Mark Attorney

Ramon Tozer

Carly Mansell

Ken Simpson

B.Sc. (Hons.), Ph.D., Patent Attorney

LL.B(Hons), B.A. Lawyer and Trade Mark Attorney Dual qualified in Australia and UK

B.Sc.(Hons.), PhD, Patent Attorney

Fiona Symons B.Sc. (Hons) LL.B. (Hons.), Lawyer and Trade Mark Attorney

Miriam Zanker B.Sc. (Hons.), LL.M, Lawyer

Board Appointment

ACCOLADES

CONDOLENCES

Tania Obranovich, partner at DCC has been appointed by the Federal Government to the Professional Standards Board for Patent and Trade Mark Attorneys. The Board is responsible for dealing with the professional conduct, qualification requirements and course accreditation for registration of Australian patent and trade mark attorneys.

Davies Collison Cave has been awarded the ‘Trademark Law Firm of the Year 2012 Australia’ in the Corporate Intl Magazine Global Awards 2012. As Australia’s largest dedicated trade mark law practice we take great pride in being acknowledged for our professional experience and expertise.

We are sad to advise of the passing of Trevor Beadle. Trevor was a consultant to DCC for a number of years. Trevor was very active in the Institute of Patent Attorneys of Australia, among other things serving on the Institute Council and as President. Through the Institute and otherwise he was also very active in education in the profession. He is a Distinguished Fellow of the Institute; an honour rarely conferred. Our condolences go to his family.

September 2012

DCC Out & About

BIO (Biotechnology Industry Organization) International Convention

The annual BIO International Convention is the largest annual gathering of the biotechnology community. BIO attracts participants from all over the world, including biotechnology CEOs, research scientists, academics, venture capitalists, technology transfer specialists, lawyers, patent attorneys, and even politicians looking for a photo opportunity. BIO2012 was held in Boston, from 18 to 21 June. DCC was represented by Tania Obranovich and Gavin Recchia. One essential function during BIO is the Australian Reception which this year was very successful with more than 200 hundred attendees and a keynote address delivered by Peter Beattie, encouraging the US crowd to invest in Australian biotechnology. With 16,500 delegates in attendance, organising meetings with everyone we wanted to see at BIO required a fair deal of plotting and planning, but with the excellent help of the marketing team (and Google maps) it all ran smoothly. As usual, it was a very hectic schedule with meetings all day every day from breakfast through to very late in the evening. There was some compensation, however, with a few functions held in great locations: the highlight, organised by Hamilton Brook Smith & Reynolds, was a baseball game at Fenway Park in which the Boston Red Sox beat the Miami Marlins.

Nanotechnology

The nanotech team has been busy over the last couple of months attending conferences and seminars. In July Ramon Tozer presented at the 3rd International NanoMedicine Conference at Coogee Beach in Sydney. Ramon presented on the topic of Raising the Bar. As part of our sponsorship we donated a bottle of Grange for the Conference dinner door prize. We followed the conference up by hosting a seminar in conjunction with the Australian Center for Nanomedicine and the Australian Nanotechnology Alliance in Melbourne. Alan Trounson from the California Institute for Regenerative Medicine (CIRM) presented at the seminar on the topic of Stem Cells in Biomedicine: New Opportunities in Human Therapeutics. The following week Ramon attended the International Conference on BioNano Innovation at the Brisbane Convention and Exhibition Centre. This was a great forum to connect scientists, researchers and entrepreneurs in this rapidly expanding area. Engineering

Davies Collison Cave sponsored Engineering Week from 6 to 12 August with Engineers Australia Victoria Division. This great initiative brings further information and opportunities to those interested in all areas of engineering. As part of this week full of events DCC held an Entrepreneurs Workshop in the Melbourne office. We were lucky enough to have some very interesting speakers including Jeremy Stone, the Group Manager-Innovation at GHD, who was the leader of GHDâ&#x20AC;&#x2122;s award winning global innovation program and Jason Coonan, the General Manager of Contract and Asset Management at UoM Commercial Ltd. They both bought great insight to the attendees. In July, DCC hosted the annual Entrepreneurs Workshop, in association with Young Engineers Australia, in Sydney.

IP Update

Attended by over 100 students, engineers and entrepreneurs, the evening included fascinating insights and informative presentations that gave attendees both useful tools and food for thought.

Young Entrepreneurs Workshop, Sydney

Simon Reynolds organised the evening and presented on behalf of DCC, and was joined by Liz Pridham, Insights Manager and lecturer at APM Business College, and entrepreneur Sebastien Eckersley-Maslin, founder of Blue Chilli. Liz presented on marketing, and provided workable and useful methods to determine the marketability of a product, and keep sight of a definitive marketing objective. Sebastien spoke about the many start-ups and learnings he has experienced through his entrepreneurial journey. He provided attendees an often animated insight to some of the key factors in creating a successful business.

EA Week, Entrepreneurs Workshop, Melbourne

Feedback from the evening was excellent and we hope attendees are able to put the information to good use. Regional

Peter Gretton and Liz Godfrey got out of the city and headed to Wodonga in regional Victoria for the Wodonga- Business after hours event which was co hosted by DCC and Dan Yassin and Kate Bullock, owners of the Hideout CafĂŠ. The event attracted around 100 attendees. These lucky people enjoyed the fine food of chef Dan Yassin, wines from Heathcote and the Macedon ranges, and craft beer from the Bright Brewery. Wodonga Business After Hours

September 2012

Articles on davies.com.au

In addition to articles published in our IP Update, Davies Collison Cave partners and staff regularly post intellectual property updates and bulletins to our website. These articles report on recent cases and legal developments in a timely manner. A list of articles posted to our website since our last IP update are listed in the table. To read the entire article, please click on the title.

June Articles

August Articles

Mesoblast not allowed to appeal Revasc trade mark decision

Intellectual Property Laws Amendment (Raising the Bar) Act 2012

John Hannebery, Aaron Yates New gTLD’s: all is revealed!

Des Ryan, Sally Foreman, Michael Wolnizer When is it safe to refile or update a priority application?

Michael Caine The history of pre-acceptance patent publication in Australia

Michael Caine

Michael Caine Action for removal for non-use of Evian trade marks fails

Carly Mansell Australian Patent Office considers “inherent disclosure” arguments during patent re-examination

Nigel Lokan September Articles Intellectual Property 101

July Articles Google granted leave to appeal to the High Court in Adwords case

Liz Godfrey Circumstances not “special” enough to maintain registered trade mark in New Zealand

Nick Holmes

Damon Henshaw Fix your warranty documentation before 30 September 2012

Rodney De Boos

September 2012

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