My attempt to summarise Parma Session 1 ‘Sufficiently plausible’ has been posted on IPKat here.
Clare Cunliffe’s report on the session about IP and competition is here.
Government consultation papers on patent and trade marks
The Australian government has issued 5 consultation papers on how to implement some of the recommendations it has accepted from the Productivity Commission’s Final Report into Intellectual Property Arrangements:
Submissions are required by 17 November 2017 (with a view to introducing a bill as soon as possible).
I can’t say that introducing yet another inventive step test (there are 4 if you count common general knowledge alone – depending on which regime applies to the patent in question) makes much sense.
Most of the Productivity Commission’s reasoning was based on the common general knowledge alone test used in Alphapharm.1 It did find, however, that there had not been much change in the Commissioner’s rate of granting patents relative to the EPO since the Raising the Bar act was passed. However, so far as I could see, it doesn’t tell us how many applications the Commissioner had examined under the Raising the Bar regime and you would have to guess a large number were still under the 2001 regime.2
Essentially, the Raising the Bar regime allows any piece of prior art to be combined with common general knowledge to test obviousness. It also allows prior art information to be combined in the same way as one might expect an English court or an EPO board would.3 The Raising the Bar regime should in fact operate just like the UK/EPC regime and one would have thought we should give it a good chance to work!
The Government has published its response to the Productivity Commission’s Intellectual Property Arrangements – Final Report.
Further comment will have to await. In the meantime, the media release notes:
A key priority will be to align Australian inventive step law with international best practice to ensure that the necessary protections are available to deserving inventions. The Government has also accepted the Productivity Commission’s recommendation to phase out the Innovation Patent System.
and, in not accepting the proposal to adopt a general “fair use” defence to copyright:
It is important copyright reform is considered in a holistic context rather than focused on individual issues. We will continue to work closely with stakeholders over the next 12 months to develop effective options for copyright reform.
The Australia Copyright Council is very pleased.
There will also be a new IP Policy Group (within government) to, er, monitor IP policy!
According to the Government’s Media Release, the Government is still considering the merits of a number of other proposals and “will work on these further”.
Media release 25 August 2017
Following on from the Full Court’s warnings in Australian Mud Company v Coretell, Dowsett J has now dismissed Morellini’s claim for damages for unjustified threats. This is a short point, but it bears notice as people often come to me thinking it is enough to show there has been an unjustified threat – it isn’t, if you want monetary compensation.
Mizzi and Morellini are both in North Queensland and came up with machines for planting sugar cane. Mizzi patented his. Dowsett J found that Morellini’s machine did not infringe Mizzi’s patent and Mizzi had made unjustified threats of patent infringement. On appeal, the Full Court also ruled that Mizzi’s patent was invalid for false suggestion.
There was no dispute that Mizzi had made unjustified threats. On 5 April 2010, it had caused to be published in the Canegrower trade magazine a notice about its pending patent and an article by “Invention Pathways” about the consequences “[i]f the patent owner decides to pursue his rights ….” Then in June 2011, Mr Mizzi made oral threats to a Mr Girgenti about the use of a Morellini machine.
The problems for Morellini were essentially two fold. First, much of the evidence about people’s reluctance to deal with Morellini related to things which happened before the threats were made or in circumstances where Dowsett J could not attribute them to the actual threats as opposed to just rumours circulating in the industry:
There is no direct evidence that anybody declined to deal with Mr Morellini as a result of the threats. It seems that even before the newspaper article on 5 April 2010, there was a degree of reluctance concerning any such dealings. That reluctance cannot have been attributable to the threats. Mr Morellini has not demonstrated that any adverse effect resulted from either of the threats.
Secondly, Dowsett J accepted that damages could be available for lost sales opportunities and delayed sales, if they could be linked to the threats. However, Morellini did not provide detailed evidence about how he would have exploited his machine commercially and why he had not been exploiting it “in more recent times”. That is, Dowsett J wanted to know what was Morellini’s plan (if he had one) for exploiting his machine commercially and why he had not been doing so.
Mizzi Family Holdings Pty Ltd v Morellini (No 3)  FCA 870
The Report does not appear to be the US Commissioner’s recommendations, but rather the results of consultations with the public.
As the Report notes, it is widely accepted in the USA that the Supreme Court’s decisions between 2010 to 2014 in Bilski, Mayo, Myriad and Alice have substantially altered what is patentable subject matter under US law and what not. The most dramatic effects being experienced by the life sciences and computer-related technologies.
While some submissions considered that it would sufficient to let the common law process of evolution unfold or the Commissioner could take administrative action to alleviate the effects of the Supreme Court’s decisions, “a majority, however, recommended legislative change”:
According to these participants, the Court’s precedent is having such a harmful impact on innovation and business development that a legislative solution is critical. ….
There appears to have been rather less uniformity about what the legislative solution should be.
A claimed invention is ineligible … only if the claimed invention as a
whole exists in nature independent and prior to any human activity, or
can be performed solely in the human mind.
Our High Court in its own Myriad decision managed to adopt an even more alarming approach to patentable subject matter notwithstanding that Parliament had introduced an explicit research defence in s 119C. While it would appear likely to be some time before a clear solution emerges in the USA, maybe these developments should also give us pause for thought, given how enthusiastically the Patent Office and, under its guidance, the Full Court has jumped on the Alice type bandwagon, albeit drawing on the even more curious European approach.
Lid dip: Patently-O
Last week, in Impression Products v Lexmark the US Supreme Court declared that an authorised sale of a patented product abroad exhausts the patentee’s rights within the United States of America. This follows on from 2013’s Kirtsaeng ruling adopting international exhaustion for copyright.
The underlying issue is printer manufacturers’ ongoing attempts to extract value according to usage of the printer by “metering” usage through charges on toner cartridges.
Lexmark has a number of patents over its toner cartridges. It offered patented toner cartridges for sale in two ways: at full price, with no restrictions or, for a 20% discount in return for a signed contractual condition that the customer would not refill the cartridge but return it to Lexmark.
Remanufacturers (vendors of refilled toner cartridges) had been acquiring Lexmark toner cartridges, circumventing the microchips preventing refilling then and reselling them.
In this action, Lexmark had sued two groups of remanufacturers . The first group had obtained the cartridges they refilled within the United States (presumably the original owner of the cartridges was in breach of its contract by passing its used (empty) cartridges along). The second group had acquired their cartridges outside the United States and imported them into the United States for resale.
In summary, the majority of the Supreme Court held:
We conclude that a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.
In the majority opinion, Robert CJ noted that the 1890 decision of Boesch v Graff – the Supreme Court’s only previous consideration of this issue, did not concern parallel imports, but products made in Germany legally by someone other than the US patentee.
Given Lexmark itself appears to have sold the cartridges overseas, Prof. Wasserman Rajec notes that the Supreme Court’s decision does not settle what qualifies as an sale abroad authorised by the patentee.
As her Honour did in Kirtsaeng, Ginsburg J dissented from the adoption of international exhaustion:
Because a sale abroad operates independently of the U. S. patent system, it makes little sense to say that such a sale exhausts an inventor’s U. S. patent rights. U. S. patent protection accompanies none of a U. S. patentee’s sales abroad—a competitor could sell the same patented product abroad with no U. S.-patent-law consequence. Accordingly, the foreign sale should not diminish the protections of U. S. law in the United States.
Her Honour also considered that patent law and copyright law were sufficiently different that the rule applicable in copyright (in the USA) should not apply to patent law:
the two “are not identical twins,” id, at 439, n. 19. The Patent Act contains no analogue to 17 U. S. C. §109(a), the Copyright Act first-sale provision analyzed in Kirtsaeng. See ante, at 13–14. More importantly, copyright protections, unlike patent protections, are harmonized across countries. Under the Berne Convention, which 174 countries have joined, members “agree to treat authors from other member countries aswell as they treat their own.” Golan v. Holder, 565 U. S. 302, 308 (2012) (citing Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, as revised at Stockholm on July 14, 1967, Arts. 1, 5(1), 828 U. N. T. S. 225, 231–233). The copyright protections one receives abroad are thus likely to be similar to those received at home, even if provided under each country’s separate copyright regime.
Until the High Court makes another one of its ex cathedra policy declarations, the position in Australia is different.
First, when a patentee sells a patented product in Australia, the purchaser gets an implied licence to exercise all the rights in the patent: National Phonograph Co v Menck. Being an implied licence, it could be excluded by appropriate contractual terms.
Secondly, where a patentee itself sells the product in an overseas market, there is also an implied licence to import it into Australia. If the sale in the overseas market was made by a licensee from the patentee which did not also have a licence to sell in Australia, however, parallel importing would infringe.
Impression Products Inc v Lexmark International Inc (30 May 2017)
IP Australia has published its Australian Intellectual Property Report 2017.
Some key points:
IP Australia has completed a draft of its cost-benefit analysis for Australia joining the Hague Agreement and “will look to share the draft and seek feedback on the research later in 2017”.
There is also a long(-sh) chapter challenging the view that there is an Australian crisis in university-business collaboration. The chapter includes convoluted node diagrams showing the types of collaboration by institution and concludes that, rather than being at the bottom of the OECD rankings, we are merely “middle of the road”; in about 13th place.
With a view to geographical indications, IP Australia and Melbourne University have been building a world-first database linking Australian registered trade marks to a global atlas of place names. Apparently, this database will be released later this year.
On the research front, IP Australia has also released the 2017 edition of “IPGOD”. This year IP Australia should also release a database of pharma substances subject to patent term extensions. IP Australia has also made available the literature review on grace periods it commissioned from the University of California, Davis here (pdf). There is also a paper (pdf) on how grace periods affect innovation.
Download the report from here.
Minister’s press release here.
Back in the dying days of 2016, IP Australia landed us with the early Christmas present of an exposure draft of a proposed Intellectual Property Laws Amendment Bill 201? and associated regulations and explanatory materials.
After everyone (well, 17 different organisations) ran around getting in their comments so that IP Australia had something to do after they came back from the holidays …
… IP Australia has announced that the bill itself is still coming, but will be delayed until the Government has finalised its response to the Productivity Commission’s Final Report on Intellectual Property Arrangements.
IP Australia explains:
This is because if any legislative amendments are required as a result of the Government’s response, two intellectual property Bills might be in Parliament at the same time, leading to great complexity and uncertainty.
In the meantime, you could spend World IP Day (or what’s left of it) reviewing the sterling efforts of those brave souls who responded to the call for comments.
Previously, we looked at Moshinsky J’s reasons for finding that Intervet was not entitled to the invention claimed in its patent application for a “soft chew” dosage. In what appears to be one of the first judicial considerations of the inventive step requirements introduced by the Patents Amendment Act 2001, Moshinsky J has also allowed Merial’s opposition on the grounds of lack of inventive step.
To recap, claim 1 of Intervet’s patent application was for:
A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
In addition to challenging Intervet’s entitlement to the claimed invention, Merial successfully argued that Intervet’s patent application lacked an inventive step in light of common general knowledge combined with the “Christensen” patent. The interest in the present case (unless you are in the business of developing soft chews) lies in how Moshinsky J applied the version of s 7(3) as amended by the Patents Amendment Act 2001 operates.
Section 7(2) and 7(3) in their second incarnation provided:
(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).
(3) The information for the purposes of subsection (2) is:
(a) any single piece of prior art information; or
(b) a combination of any 2 or more pieces of prior art information;
being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant
to work in the relevant art in the patent areaand, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.
The second version of s 7(3) should liberalise the ability of the skilled addressee to combine 2 or more pieces of prior art. It also omitted the words struck out in the quote above which the High Court in Lockwood No 2 considered imposed a significant constraint on what information could be added to common general knowledge. Of those now omitted words, the High Court in Lockwood No 2 explained at  that:
… the phrase “relevant to work in the relevant art” should not be construed as meaning relevant to any work in the relevant art, including work irrelevant to the particular problem or long-felt want or need, in respect of which the invention constitutes an advance in the art. The phrase can only be construed as being directed to prior disclosures, that is publicly available information (not part of common general knowledge) which a person skilled in the relevant art could be expected to have regarded as relevant to solving a particular problem or meeting a long-felt want or need as the patentee claims to have done. Otherwise the words of limitation in the last 40 words of s 7(3) would have no role to play. Any piece of public information in the relevant art would be included, as is the case with the much broader and quite different formulation in the cognate provisions in the United Kingdom, which do not depend on the standard of a skilled person’s opinion of the relevance of the information.
This difference in wording between the first and second iterations of s 7(3) does not appear to have been the subject of debate between the parties. Rather, the evidence appears to have proceeded on the basis that it was necessary to show that the skilled addressee could reasonably have been expected to regard the additional information as relevant to the problem of developing a “soft chew” medicament for animals. In addition, Merial pitched its attack on the basis of the modified “Cripps” question approved in Alphapharm. This does not appear to have been contested by Intervet.
On that basis the evidence showed that a skilled addressee, given that task at the priority date, would be both likely to have carried out a search of the patent literature and found the Christensen patent. Merial’s witnesses said that they would have regarded Christensen as relevant to the problem. Intervet’s witness said he would not, on the basis that it did not teach him anything he did not already know. Moshinsky J accepted the evidence of Merial’s witnesses.
Having found that Christensen could be added to common general knowledge, Moshinsky J found that the claims of Intervet’s patent application were obvious. His Honour found that claim 1 for example could be characterised as having several elements:
(a) a flavouring component;
(b) a starch component;
(c) a sugar component;
(d) an oil component;
(e) an emulsifying agent that acts as a forming agent,
wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, and the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
The inclusion of a flavouring component was taken as a given in such an exercise. All the experts said they would include flavouring in any product developed for such a project – apparently, animals have taste too! All three experts, Merial’s and Intervet’s, agreed that an emulsifying agent would be used as a forming agent.
The water content range, 5 to 7.5% wt, was the range Merial’s experts would aim for in a “soft chew” product. Intervet’s witness gave evidence that the moisture content he would have aimed for was between 18 to 21%, but that was discounted because he had been asked how he would have developed a “semi-moist formulation” rather than a “soft chew” formulation as claimed.
The Christensen patent supplied features (b), (c) and (d). Christensen described formulation by extrusion rather than knock-out. However, all experts agreed that, at the priority date, a knock-out process was known to be preferable to extrusion.
Taking all these matters together as a whole, Moshinsky J was clearly satisfied that the claimed invention was obvious at the priority date. On the other hand, some of the dependent claims would not have been obvious.
For example, claim 2 was for:
The soft chew formulation according to claim 1 characterized in that the emulsifier is a polyethylene glycol (PEG).
PEG was known at the priority date, but not for use in a moulding process for an oral formulation. PEG was not disclosed in Christensen. One of Merial’s experts, Dr Pougnas, gave evidence that he would have considered using it for the emulsifier. The other expert did not mention it and, while Intervet’s expert knew of PEG, he had not had cause to consider it for use in pet foods.
Moshinsky J was not satisfied that the skilled addressee would have been directly led as a matter of course to use PEG in the expectation that it might well produce a useful alternative or better formulation. At , his Honour explained:
… I am not satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try PEG in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Dr Pougnas’s evidence did not contain, to my mind, a satisfactory explanation as to why he would have considered PEG in addressing the notional development task. It would be different if, for example, there had been evidence that the common general knowledge included that PEG imparted softness and evidence that, for that reason, the skilled person or notional research team would have tried PEG in the expectation that it might well produce a useful alternative or better formulation. That would provide a logic for trying PEG. However, in the absence of such a rationale, I am not persuaded that the skilled person or notional research team would be directly led as a matter of course to try PEG in the expectation that it might well produce a useful alternative or better formulation. ….
His Honour also expressed doubts as Dr Pougnas might be “too inventive”, having at least 13 patents to his name. He also admitted to being involved in some experimental work at the priority date, the details of which he was not at liberty to disclose. The research project did not form part of the common general knowledge. Moshinsky J was concerned, however, that that experience might explain why Dr Pougnas was willing to consider using PEG.
Moshinsky J’s decision does show the importance when assessing obviousness of ensuring the expert one advances is appropriately skilled and tasked. As it was sought to add only one piece of prior art to common general knowledge, the Christensen patent, it does not explore how much the second (2001 Act) version of s 7(3) liberalised the willingness of the Courts to combine prior art which did not form part of the common general knowledge. It was not necessary for Moshinsky J to explore the significance of the omission from the second version of s 7(3) of the words which the High Court focused on in Lockwood (No 2). The parties and hence his Honour appear to have proceeded on the basis that the skilled addressee must regard the prior art as relevant to the problem, or long felt want, that the patentee was seeking to address through the invention.
Merial, Inc. v Intervet International B.V. (No 3)  FCA 21