Update June 2013 – Issue 20 davies.com.au
Google changes its Adwords policy Eli Lilly’s ZYPREXA patent withstands validity challenge Australia’s customs seizure procedures strengthened
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Type #
Contents
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Insight
Case Studies
Practice Updates
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Significant policy change to Google’s trade mark Adwords in Australia
22 Intellectual property laws amendment bill 2013 introduced to Parliament
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What’s in a name? Eli Lilly’s olanzapine patent deemed valid on all grounds
24 Trade mark and copy right owners benefit under new Australian Customs seizure procedures
Eli Lilly and Company Limited v Apotex Pty Ltd [2013] FCA 214
10 Federal Court: Snack Foods’ interlocutory injunction application unsuccessful in trade mark infringement case Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135
14 Application for a licence to exploit a patented invention refused Le Clan Brunet: CC-BY 2.0 flickr.com/photos/ clanbrunet/3469253568
Garden City Planters Pty Ltd v Vivre Veritas Pty Ltd [2012] APO 113
18 Software patents in Australia: court prefers curves to asset index Research Affiliates LLC v Commissioner of Patents [2013] FCA 71
26 DCC News 26 DCC Out & About
IP Update
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Insight: Bridging the Tasman with patents
G.B. Shaw considered England and America to be “two countries divided by a common language”. I doubt he would have said the same of Australia and New Zealand. Australia and NZ, unlike Shaw’s England and America, possess more in common than the language. Shared attributes include wonderful wildernesses, great food and wine, and an obsessive interest in sport – and the list is set to grow. Legislation currently before parliament would give both countries a common patent attorney profession and, more importantly, a single patent application and examination process. The move towards unification of the Australian and NZ patent systems has been long in the making. Beginning 30 years ago with the signing of the Closer Economic Relations Trade Agreement, the two countries have sought market harmonisation wherever possible. The target of harmonisation was extended to patents in 1998, with mutual recognition of the attorney professions. The trans-Tasman Single Economic Market agenda of 2009 introduced the objective of a single patent examination process. What is the significance of the latest reforms? History suggests that while the individual impacts will be small initially, over time the cumulative effect will be substantial.
The move to a common patent attorney profession will mean that NZ attorneys in the future, like Australian attorneys currently, must have a technical academic qualification. However, it is unlikely to result in a major change in the structure of professional practices on either side of the Tasman. The merging of Australian and NZ firms was made possible by the earlier reform of mutual recognition. That reform saw only one (short-lived) trans-Tasman merger. I think most practices will do as my firm has done for many years: remain based in one country, but prepare and file patent applications for both jurisdictions. The impact of the move to a single application and examination process is likely to be more profound. Under the process, an applicant can file in one country an application for a patent in the other country, and an examiner in one country can examine an application for a patent in the other country. However, the process does not create a single patent covering both countries – each country will continue to grant patents under its own legislation. The explanatory memorandum to the Bill states the process “will reduce duplication, leading to increased efficiencies and potential cost savings for inventors and users of the patent system”. Whether these desirable outcomes will eventuate remains to be seen. What seems clear, however, is that there will be an increased incentive within the patent offices, and hence within the legislatures, of the two countries to harmonise as much as possible both the procedure and the law of their respective patent systems. If such harmonisation eventuates, the ultimate outcome may be a trans-Tasman unitary patent in all but name. Will an Antipodean Shaw of the future opine “Two countries united by a common patent application system”?
Leon Allen, Managing Partner
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Case Study 1
SIGNIFICANT POLICY CHANGE TO GOOGLE’S TRADE MARK ADWORDS IN AUSTRALIA
From 23 April 2013, Google’s trade mark Adwords policy has been updated so that Google no longer restricts 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.
Robert Scoble: CC-BY 2.0 flickr.com/photos/scobleizer/4249731778
IP Update
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Now that Google has avoided responsibility in the High Court … Google is taking a more relaxed approach to its Adwords policy.
This policy change follows the Australian 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 pages1. HOW does 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 no longer intervenes to restrict Company A using Company B’s trade mark as a keyword. In addition, if Company B had previously filed a trade mark 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 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.
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 mark 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 trade mark policy revision, visit Google’s website2.
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http://www.davies.com.au/pub/detail/683/ google-not-responsible-for-misleading-anddeceptive-adword-advertisements-high-court http://support.google.com/adwordspolicy/ answer/177578?hl=en&rd=1
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
Elizabeth Godfrey, Senior Associate
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Case Study 2
What’s in a name? Eli Lilly’s olanzapine patent deemed valid on all grounds
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.
fdecomite: CC-BY 2.0 flickr.com/photos/fdecomite/5094337695/
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.
IP Update
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 unmistakable directions, and thus did not constitute an anticipation of the later claim. Ambiguous prior art failed to provide clear and unmistakable 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 unmistakable directions to adopt the invention as claimed. As an alternative, Justice Middleton
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, Justice Middleton considered that it was
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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
June 2013
2-methyl-4-(4-methyl-1piperazinyl)-10H-thieno[2,3-b][1,5] benzodiazepine (Fig. 2A). The claims of the patent were instead directed to 2-methyl-10-(4-methyl-1piperazinyl)-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.
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.
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.
Michael Caine, Partner Amanda Lee, Trainee Patent Attorney
IP Update
Jack Dorsey: CC-BY 2.0 flickr.com/photos/jackdorsey/170257936
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Case Study 3
Federal Court: Snack Foods’ interlocutory injunction application unsuccessful in trade mark infringement case 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.
Liz West: CC-BY 2.0 flickr.com/photos/calliope/7564086796
IP Update
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… that there would be almost certain prejudice to Premier 1st if the injunction was granted.
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
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… Snack Foods could have pressed for an early final hearing but instead chose to pursue interlocutory relief …
-- 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:
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-- 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 preexisting trade marks, any similar products or any other rights of third parties and had done nothing); and
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Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257. Ibid at [57], [61]-62]. 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. Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [61]. Ibid [26] – [28]. Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257. Ibid [62]. 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]). Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [63]. Ibid [53] – [55]. Ibid [65] – [66]. Ibid [66]. 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]). Snack Foods Limited v Premier 1st Pty Ltd [2013] FCA 135, [67].
-- a respondent has established the likelihood of irreparable or certain damage should the injunction be granted.
John Hannebery, Partner Jessica Sapountsis, Graduate Lawyer
IP Update
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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.
mnchile: CC-BY 2.0 flickr.com/photos/50228879@N00
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Case Study 4
Application for a licence to exploit a patented invention refused
Garden City Planters Pty Ltd v Vivre Veritas Pty Ltd [2012] APO 113
Background to the case
Where a person exploits (or takes definite steps to exploit) an invention that is the subject of a lapsed/ ceased patent, and that patent is subsequently restored, the Commissioner of Patents may grant the person a licence to exploit the invention. This decision relates to an opposition filed by Garden City Planters Pty Ltd (the Opponent – “Garden City”) contesting an application filed by Vivre Veritas Pty Ltd (the Applicant – “Vivre”) requesting that the Commissioner grant a licence for it to exploit an invention that is the subject of a patent in the name of Garden City.
Australian Patent No. 769039 (“the Patent”) relates to label retention improvements on a container such as a plastic plant tray, or a so-called “punnet”. The patent ceased for non-payment of a renewal fee due in February 2008. On 1 September, 2009, Garden City applied for an extension of time within which to pay the overdue renewal fee. The extension application was advertised in the Official Journal on 26 November, 2009, and was granted unopposed on 12 January, 2010. The Patent was subsequently restored. On 25 June, 2010, Vivre applied to the Patent Office for a licence to exploit the subject matter of the Patent. Garden City subsequently filed a Notice of Opposition to the licence application on 26 July, 2010, followed by relevant supporting submissions. The licence application Vivre asserted that it first became aware of the Patent in January 2008, as a result of an enquiry from a potential client, and alleged that a conscious effort had been made to ensure that a plant tray it intended to produce and supply to the client would not fall within the scope of the claims of the Patent. There was no suggestion by Vivre that the status of the Patent was investigated at that time, although had this been done, the publicly available information would have indicated that the Patent was still in force.
Amplified2010: CC-BY 2.0 flickr.com/photos/amplifieduk/8398099982/
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… Vivre carried the legal burden of proving that it exploited the patent because of its ceased status.
Subsequent events led Vivre’s director to check the status of the Patent on IP Australia’s database which revealed that the Patent had ceased. In February 2009 discussions were conducted with clients regarding the supply of plant trays falling within the scope of the ceased Patent. These led to a number of purchase orders and by the end of November 2009 sample plant trays had been produced and were being tested by a number of clients. In March, 2010, after discussions with a client to which the plant trays were to be supplied, Vivre rechecked the status of the Patent and, learning that it had been restored, sought advice from a Patent Attorney. This led to the application for a licence. The Evidence In support of their opposition to the application for the licence, Garden City submitted numerous statutory declarations and a legal letter attesting that: -- It (and its predecessors in business) had and continued to produce and market significant quantities of various forms of plant containers falling within the scope of the Patent; -- It had recently become aware that Vivre allegedly sold, or offered for sale or dealt with, infringing products before the Patent had ceased; and
-- Its legal representatives had sent a letter to Vivre raising allegations of infringement of the Patent (by or with the authorisation of Vivre) prior to its cessation. By way of answer, Vivre contended that during the time at which the Patent had ceased a number of nurseries in Australia purchased “large numbers” of plant trays falling within the scope of the claims of the Patent from Vivre, and also that Vivre paid for equipment to produce the plant trays, and by way of evidence, tendered a number of invoices, receipts and purchase orders. The Decision In reaching a decision, the Delegate gave consideration to relevant statutory framework of the Patents Act 1990, namely section 223 under which a ceased patent may be restored, and subsection 223(9) that provides a mechanism for a person to seek protection or compensation where they exploited a patent during a time in which the patent was ceased. The Delegate’s attention turned primarily to consideration of the facts surrounding whether or not Vivre is a person who warranted such protection or compensation under the circumstances, and in particular, pursuant to subsection 223(9), if Vivre should be granted a licence under to exploit the invention that is the subject of the Patent.
The Delegate made reference to Law v Razer Industries Pty Limited [2010] FCA 1058 (see our earlier case review) in which the grant of a licence under Regulation 22.21 was considered by Justice Bennett. In that case her Honour noted at [27]: “ Section 223(9) of the Act is not designed to protect a person who by happenstance takes steps to exploit a patent during a period in which it is ceased … there must be a link between the fact that the particular patent has ceased and reliance upon that fact by the person seeking to obtain the protection …“ The Delegate also considered where the legal burden of proof lay under the circumstances. While noting that it is generally incumbent upon an opponent to establish their case, the Delegate agreed with the position put forward by Garden City that in the current proceedings the Applicant carried the legal burden of proving that it exploited the patent because of its ceased status. The Delegate further highlighted the importance of credibility of witnesses in legal proceedings. In connection with this, the Delegate specifically pointed out that Vivre’s director “was at times less than forthright when giving oral evidence which left the distinct impression that his evidence was at least to some extent coloured by perceptions of self-interest”.
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Had Vivre sought appropriate legal advice they may not have proceeded with seeking the licence…
While being particularly mindful that Vivre was not legally represented during the proceedings and therefore may not have been familiar with relevant procedural and legal requirements, the Delegate proceeded to carefully consider the evidence led by Vivre to support its application. Despite the sentiment of this evidence asserting that during the time in which the Patent had ceased Vivre had, as a result of the ceased status of the patent, (i) sold, or agreed to sell plant trays falling within the scope of the Patent, and (ii) made payments for equipment required to manufacture the plant trays, the Delegate noted there was simply no substance at all in the evidence to establish that (i) the plant trays referred to in the evidence were in fact of a type that fell within the scope of the Patent, or (ii) the equipment paid for by Vivre was in any way associated with manufacturing the relevant plant trays. The Delegate subsequently concluded that the “evidence on which the Applicant relied was insufficient to demonstrate that it exploited or took definite steps to exploit the invention because of the ceased status of the Patent and was therefore not entitled to a licence to exploit the subject matter of the Patent”.
Whilst commenting that it was unnecessary to make any decision on whether Vivre had exploited the invention prior to cessation of the Patent, the Delegate made a point of noting that the “evidence adduced by the opponent to support the assertion of infringement has revealed further anomalies in the Applicant’s evidence regarding its conduct which suggests that there may be some force to this assertion”.
This case also serves to highlight the importance of seeking professional legal advice upon being drawn into or initiating any form of proceeding before the Patent Office (or a Court). Had Vivre sought appropriate legal advice they may not have proceeded with seeking the licence in the first place, or if they did, their evidence to support the application is likely to have been presented in a more favourable light.
Commentary and lessons for patent owners
Also noteworthy is the Delegate’s comments concerning the credibility of witnesses. Delegates/ Judges often rely on evidence given by witnesses to assist them in understanding the facts and deciding the outcome of a given case. It is particularly important that a witness remain impartial and objective in providing evidence. Where the credibility of a witness is called into question, there is a real risk that some or all of the evidence provided by that witness will be given little weight.
This case follows the decision by Justice Bennett in Law v Razer Industries Pty Limited [2010] FCA 1058 where her Honour pointed out that in order for a person to be granted a licence to exploit a patent under subsection 223(9) and regulation 22.21, that person, at the time when the patent had ceased, must have exploited (or taken definitive steps to exploit) the patent as a direct consequence of knowing the patent had ceased. In other words, these provisions are not deemed to operate if a person has no knowledge of a relevant patent and that person happens by chance to exploit (or taken definitive steps to exploit) the patent at a time when it was ceased.
Ramon Tozer, Partner
IP Update
Conrad and Peter: CC-BY 2.0 flickr.com/photos/conradpeter/7388856282
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Case Study 5
SOFTWARE PATENTS IN AUSTRALIA: COURT PREFERS CURVES TO ASSET INDEX
Research Affiliates LLC v Commissioner of Patents [2013] FCA 71
Software patents have been available in Australia for over 20 years since the Federal Court considered IBM’s curve generation process patentable1. The same Court has now made it clear that schemes or business methods do not become patentable just by implementing them in a computer2. In Research Affiliates3, using a computer to generate a weighted index of assets was found to be not patentable because the steps could have readily been done manually and the computer implementation was nothing more than the use of a computer for a standard purpose4. It seems using software to generate curves is fine, but not to generate financial data.
A computer-implemented method for generating an index The Court focused on one claim of two patent applications that had been rejected by the Patent Office, and the claim read: A computer-implemented method for generating an index, the method including steps of: -- accessing data relating to a plurality of assets; -- processing the data thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof; -- accessing a weighting function configured to weight the selected assets; -- applying the weighting function, thereby to assign to each of the selected assets a respective weighting, wherein the weighting: i. is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and ii. is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof, thereby to generate an index5.
Mike Renlund: CC-BY 2.0 flickr.com/photos/deltamike/2317156775
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‌ the index generated was nothing more than a set of data, information, or a set of numbers and was no more patentable than a bank balance.
An example of an index generated using the method, known as the Colonial Index, was given during the trial. This is created by importing into a computer program data relating to entities that offer securities listed on the Australian Securities Exchange (ASX) and processing the data to generate four measures of company size, together with a fundamental score for each security. The data is populated in an Excel file that in one example relates to 496 entities listed on the ASX. That Excel file is further manipulated, so that the top 250 securities are selected by reference to the fundamental score for each security and the weighting of each security within the top 250 is calculated. The file with the selected top 250 securities and the file weightings forms the Colonial Index which Research Affiliates licensed to owners of assets and fund managers6. Australian patentable subject matter Australian law simply requires that for a process to be patentable, it needs to offer some advantage that is material, in the sense that the process belongs to a useful art, as distinct from a fine art. Its value to the community must be in the field of economic endeavour7. An artificial state of affairs needs to exist, and a physical effect, in the sense of a concrete effect or phenomenon or manifestation or
transformation, is required. It is sufficient if there is a component that is physically affected or a change in state or information that is part of a machine. However, if the claimed invention is a mere scheme, an abstract idea or mere information, it will not be patentable as there is no physical consequence8. Court relies on deficiencies Research Affiliates argued9 that the claimed method resulted in the generation of an index and was the same kind of artificially created state of affairs as IBM’s curve, the representation of Chinese characters approved in CCOM10, and the writing of data to a smart card approved in Catuity11. Research Affiliates also argued that it was clear the index produced by the method had utility in the field of economic endeavour, particularly when it had been licensed to Colonial First State for a significant fee. The Court, however, felt that in the previous decisions there was a component physically affected or a change in state in a part of a machine which made the inventions patentable12. It considered that the index generated was nothing more than a set of data, information, or a set of numbers and was no more patentable than a bank balance13. It said the patent specification appeared to be intended to create the impression of detailed
computer implementation, but said almost nothing about how that was to be done14. The Court said the method did not involve a special effect being generated by a computer, there was no practical application in the method for improved use of computers, nor did the effect of the implementation improve the operation or effect of the use of the computer15. The Court found there was nothing in the specification or claim 1 to indicate: how the data was accessed in the first step of the claim; the nature of the processing undertaken in the second step to identify the assets; how the weighting function is accessed in the third step; how the relevant measure of scale is chosen in the fourth step; or how the weighting function is applied in the fourth step to assign a weighting to each asset16. The reliance placed on the Colonial Index was a good example of what was not in the specification17. In rejecting Research Affiliate’s applications, the Court felt the implementation of the method was no more than a modern equivalent of writing down the index on pieces of paper and the series of steps that give rise to the generation of index could even have been carried out manually18.
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The Court was particularly critical of the lack of disclosure in the specification regarding actual data processing.
Lessons learned for software patents in Australia The Federal Court has made it clear there are limits to patentable subject matter in Australia and that merely relying on implementing in a computer a general process that can be done manually, with nothing more, will not be sufficient. The Court was particularly critical of the lack of disclosure in the specification regarding actual data processing. It was clearly looking for more than just a recital of high level process steps that can be carried out manually, but are claimed as being done by a computer. It indicated that while what constitutes a patentable invention is still evolving, and new developments in technology might widen the notion of what is patentable, the modern availability of computers as a standard means of implementing arithmetic or computational processes, which could have been implemented manually in the past, does not carry with it a broadening of the scope of patentable subject matter19.
For large data sets, it is of course impractical for the index generation method to be carried out manually. Perhaps if the specification had included some more detail on the actual processing performed, and this was claimed, then the result may have been different. Also it seems unjust to approve processes that generate curves and display Chinese characters and reject one that generates clearly useful and very valuable financial data. Focussing on what a process produces rather than the steps claimed also seems incorrect. The claim was limited to a process performed by a machine, not a manual process. Surely the real enquiry should be whether the process is inventive or properly defined if the claim is considered too broad? Yet this would involve more evidence and analysis, and perhaps it is easier for decision makers to apply the blunt instrument of lack of patentable subject matter, regardless of the damage and financial loss this may cause.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
International Business Machines v Commissioner of Patents (1991) 33 FCR 218. Research Affiliates LLC v Commissioner of Patents [2013] FCA 71, 13 February 2013. Ibid Ibid, Para 72. Ibid, Para 50. Ibid, Para 51. Ibid, Para 13. Ibid, Para 22. Ibid, Para 63. CCOM Pty Limited v Jiejing Pty Limited (1994) 51 FCR 260 Welcome Real-Time SA v Catuity Inc (2001) 113 FCR 110 Supra no.2, Para 65. Ibid, Para 67. Ibid, Para 68. Ibid, Para 70. Ibid, Para 70. Ibid, Para 68. Ibid, Para 72. Ibid, Para 73.
David Webber, Partner
IP Update
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Practice Update 1
INTELLECTUAL PROPERTY LAWS AMENDMENT BILL 2013 INTRODUCED TO PARLIAMENT
The Government has introduced yet another IP Laws Amendment Bill to Parliament. The new Bill, entitled the “Intellectual Property Laws Amendment Bill 2013”, was introduced to Parliament on 30 May 2013. A copy of the Bill and the accompanying Explanatory Memorandum can be found on our summary paper on our website1.
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http://www.davies.com.au/pub/detail/731/ intellectual-property-laws-amendment-bill-2013introduced-to-parliament
Michael Caine, Partner
The main aspects of the Bill can be summarised as follows: Scope of Crown use provisions clarified; processes improved Amendments proposed seek to implement some of the recommendations made by the Productivity Commission in their recently completed report entitled ‘Compulsory licensing of patents’. The Bill provides amendments to the Patents Act 1990 to clarify that Crown use provisions can be used, in appropriate circumstances, to enable the provision of services that the Australian, State and/ or Territory Governments have primary responsibility for funding or providing. The provisions also seek to improve transparency and accountability in the process for using the Crown use provisions. Interestingly, the Productivity Commission’s report was only released to the public in late May 2013. New TRIPS protocol amendments for compulsory licensing of pharmaceutical patents The TRIPS protocol was accepted by Australia in September 2007, and the Bill contains provisions intending to implement this protocol. The TRIPS protocol provides a waiver for Articles 31 (f) and (h) of the TRIPS Agreement in particular circumstances, and is intended to assist developing
countries with serious health problems. The provisions will allow the Federal Court to issue compulsory licenses to Australian medicine producers to manufacture and export pharmaceuticals which are the subject of one or more Australian patents to those developing countries. Unfortunately, the legislation does not appear to be well drafted. Although Section 136R specifies that an order must not be made under the provisions that is “inconsistent with a treaty between the Commonwealth and a foreign country”, the provisions themselves provide for the export of pharmaceuticals to countries which are not members of the WTO. This appears to go beyond the TRIPS Protocol and may represent a technical breach of the TRIPS agreement. The Bill also includes particular provisions for “ancillary” compulsory licenses and “cross” licenses in circumstances where the Australian pharmaceutical manufacturer has applied for an order in relation to one patent, but cannot work the invention without infringing another patent. These provisions appear to be completely misplaced, and the cross-licence mentioned in the provisions is not a crosslicence at all; it only goes one way from the patentee of the original pharmaceutical invention to the patentee of the other invention. It is difficult to see how such ancillary licences and cross licences are
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needed to give effect to the TRIPS protocol, and references to these licences introduce a lack of clarity. It appears that the provisions were thought necessary to comply with Article 31(l) of the TRIPS Agreement, however Article 31(l) is not relevant to the TRIPS protocol. Article 31(l) is only relevant in circumstances where a patentee of one invention is blocked from working his invention by the patent of another, and where that invention involves “an important technical advance of considerable economic significance� over the blocking patent. It is hoped that these unnecessary provisions will be deleted from the Bill before it is passed. Federal Circuit Court given jurisdiction over Plant Breeders Rights The Bill includes provisions that allow the Federal Circuit Court to deal with matters relating to the Plant Breeders Rights Act. The Federal Circuit Court was previously known as the Federal Magistrates Court. Unified patent applications and patent attorneys register for Australia and NZ These amendments introduce a process for applying for patents in Australia and New Zealand simultaneously, and for examination of the common applications by a single examiner. The aim is to remove a duplication
of effort, and make it easier to obtain patents in Australia and New Zealand. The provisions also introduce a new regime for transTasman patent attorneys. Although Australian patent attorneys can currently register as patent attorneys in New Zealand and vice versa, the new arrangement will provide for a single trans-Tasman register of patent attorneys, with registration giving the person the right to practice as a patent attorney in both countries. A single set of registration requirements will be introduced which will substantially conform with the current Australian requirements, and a single trans-Tasman IP Attorneys Disciplinary Tribunal will be established. Although there will be no residency requirement under the new provisions, a trans-Tasman patent attorney will need to have undertaken relevant employment in Australia or New Zealand. Corrections to the Raising the Bar Act The Bill includes a number of additional amendments which are necessary to address errors in the drafting of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012. They also remove some unnecessary provisions from the Patents, Trade Marks and Designs Acts. These amendments are relatively minor in nature, and
some have taken effect from the date of commencement of the Raising the Bar Act, 15 April 2013. New measures proposed According to the press release announcing the Bill, the Government also proposes to undertake a number of other measures to further clarify the patent system and strengthen mechanisms for oversight. According to the new parliamentary secretary for the Department of Industry and Innovation, the Government will: -- appoint a Patent Audit Committee to advise on patent policy settings and undertake audits of patent approvals for certain technology groups, -- commence consultations on a new objects clause for the Patents Act, and -- consult on excluding certain inventions that would be offensive to the public. It will be interesting to see how many of these measures are implemented given the upcoming election on 14th September 2013. Any questions in relation to the issues mentioned above, please do not hesitate to contact Michael Caine.
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June 2013
Practice Update 2
Trade mark and copyright owners benefit under new Australian Customs seizure procedures
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. Chris Jordan, Partner Jessica Sapountsis, Graduate Lawyer
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
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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.
Next steps for rights holders 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.
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.
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DCC News
Davies Collison Cave is proud to have been announced as the winner of the 2013 Corporate Intl Magazine Legal Awards ‘Trademarks Law Firm of the Year in Australia’. 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, expertise and leadership. Corporate Intl Magazine is a global business publication both online and print, with a readership of 125,000 people.
June 2013
DCC Out & About
BIO 2013
AusBiotech
In April Chicago hosted the world’s largest gathering of the biotechnology community. If you were in Chicago during the BIO International conference you may have run into our DCC representatives Dr Gavin Recchia and Dr Tania Obranovich. During the conference they took the opportunity to catch up with their contacts and friends from around the world.
DCC has been actively involved with the Biotech industry over the past few months. Earlier this year DCC became a sponsor of BioSA. Part of this sponsorship included hosting the ‘AusBiotech Business Development Forum Welcome Reception in Adelaide at which Mathew Lucas and John Hughes, partners of DCC, gave a welcome speech.
BioMelbourne DCC hosted the BioMelbourne May Briefing – “Rethinking Your Patent Strategy”. DCC took the audience through the most important aspects of the IP Law changes and provided recommendations on how patent protection and enforcement strategies need to be modified to meet the challenges of this rapidly changing landscape.
DCC and AusBiotech continued to build on the success of the University Leader Speaker Series by welcoming faculty leaders from the University of Sydney to the DCC Sydney office. 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. Mark Roberts and Robert Finn, partners of DCC, attended the AusMedtech Conference 2013 which was held in Melbourne for the first time. It provided Mark and Robert with the opportunity to meet with key stakeholders of the Australian and international medical devices and diagnostics sector and discuss the major issues in global medtech success and the emerging markets.
IP Update
Life Science Queensland
INTA 2013
Part of DCC’s founding sponsorship to LSQ included sponsoring the ‘Life Sciences in Parliament’ event held in Brisbane. The event raised awareness of the challenges and opportunities that the life sciences industry provide for a diversified Queensland. The Hon Ian Walker MP, Minister for Science, Information Technology, Innovation and The Arts, spoke at the event.
If you were at the annual International Trademark Association (INTA) conference in Dallas from 4th May – 8th May 2013 you may have caught up with Marion Heathcote, Trevor Stevens, Michael Wolnizer, Adam Sears, Nick Holmes, Brett Lewis, Ian Drew, Carly Mansell, Chris Jordan, David Webber and Ross Clark from DCC.
DCC and Hynes Breakfast IP Workshop On May 8th DCC and Hynes Lawyers in Brisbane teamed up to provide a before Breakfast and after Workshop that involved the analysis of a real life case study of a successful intellectual property protection strategy. It provided a unique opportunity to see how an IP protection strategy was developed and implemented, as well as highlighting the issues that the client faced in implementation and how they were overcome. Alistair Smith (DCC) and Rachel Sciascia (Hynes) created a highly interactive event which involved lots of questions, answers and discussions. Due to the success a follow up event is planned for August. If you are interested in attending please contact events@davies.com.au.
Amongst the many and varied networking events DCC hosted the traditional BBQ event complete with Aussie beer and wines, Akubra hats, blow up Kangaroos and glorious sunshine. INTA proved once again to be a fantastic opportunity to catch up with clients and associates from around the world. We are already looking forward to Hong Kong INTA 2014.
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DCC BBQ event at INTA
L-R: Brian Burfitt, David Webber, Ian Drew and Chris Jordan getting ready for the DCC BBQ at INTA
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