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The Productivity Commission’s report on Compulsory Licensing of Patents has been published.

One key recommendation is to replace the compulsory licence provisions in the s 133 of the Patents Act with a compulsory licence regime in the Competition and Consumer Act:

The Australian Government should seek to remove s. 133(2)(b) from the Patents Act 1990 (Cwlth), so that a compulsory licence order based on restrictive trade practices of the patent holder is only available under the Competition and Consumer Act 2010 (Cwlth). The remedy provisions in the Competition and Consumer Act should be amended to explicitly recognise compulsory licence orders to exploit a patented invention as a remedy under the Act.

The Productivity Commission also recommends that the “reasonable requirements of the public” test in s 135 of the Patents Act be replaced with a “public interest” test:

Section 136 should be repealed and future Treaty obligations should be incorporated into the Patents Act directly.

The Productivity Commission would also like to see s 51(3) of the CC Act repealed:

but any changes to s.51(3) will need to be based on a consideration of the implications for all types of intellectual property, including those beyond this inquiry’s terms of reference.

Further recommendations relate to Crown Use,which appear to have been largely adopted already in the Intellectual Property Laws Amendment Bill 2013.

Download Full Report, or interesting chapters, here.

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The patent war over escitalopram in Australia is still going!

One aspect of the Alphapharm / Lundbeck case I had forgotten (if I appreciated it at the time) was that Lindgren J quashed the extension of the patent’s term under s 70ff.

In June 2009, after the Full Court upheld Lindgren J’s decision, Lundbeck made a new application for an extension of term and also applied under s 223 for an extension of time to make that application – an extension of some 10 years or so.

In June 2011, the Commissioner granted Lundbeck’s application for an extension of time over oppositions by Alphapharm, Aspen and others. The AAT dismissed an appeal Aspen et al. and Aspen et al. have appealed from the AAT’s decision to the Full Court. That appeal is still pending.

Pending the outcome of the appeal, Yates J has now refused Aspen et al. a stay on the Commissioner’s decision to extend the term of the patent.[1]

Accepting that it was not ordinarily desirable that there be parallel proceedings before both the Commissioner and the Court, Yates J considered it was not appropriate to exercise his discretion to stay the proceedings before the Commissioner in this case.

While a number of considerations were advanced by both sides, the central consideration was that Lundbeck could well lose the ability to sue for some infringements if it was successful in extending the term of its patent. The issue here is that under s 120(4) proceedings for infringement must be brought within 6 years of the infringing conduct. Aspen et al. were not able to point to any real prejudice outweighing that.[2]

It may be of interest to note that the point in common between the 2 sets of proceedings is Aspen _et al._’s contention that the Commissioner has no power to grant the extension of term now under s 70(4) as she has already exercised the power (albeit invalidly) in granting the extension quashed by Lindgren J.[3]

Aspen Pharma Pty Ltd v H Lundbeck A/S [2013] FCA 324

ps [4]

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Most of the substantive Raising the Bar amendments came into force today.

Amongst other things, schedule 1 of the Raising the Bar Act introduced a raft of changes designed to raise the threshold of patentability – i.e., make it harder to get a patent.

These include:

• introducing the really diligent searcher of prior art for obviousness via changes to s 7(3)[1] so that it will be permissible to combine any piece of prior art with common general knowledge (if the skilled addressee could reasonably be expected to combine the two), not just those elements of the prior art that the skilled addressee could be reasonably expected to have found;
• a new concept of utility based on the US approach; and
• doing away with the ’old’[2] fair basis requirement in s 40 as interpreted by the High Court in that Lockwood ruling.

Instead of fair basing, a patent will be required by s 40(2) to disclose:

(a) the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art; and

(aa) the best method known to the applicant of performing the invention; and …

and s 40(3) will read:[3]

“The claim or claims must be clear and succinct and [fairly based on the matter described] supported by matter disclosed in the specification.”

Provisional specifications will have to meet the requirements set out above in s 40(2)(a) also.

This is intended to introduce into Australian law the requirements under the UK’s 1977 Act: s 72(1)(c).

The Court of Appeal[4] provides an interesting example of how these new rules should work in it Merial ruling. Merial had (at least) 2 patents relating to its Frontline brand of flea-treatment products. One of these, the 881 patent survived the attack on sufficiency of description, but the other, the 564 patent did not.

Kitchin LJ identified the crucial difference between the 2 patents at [85] – [86]:

…. This was a matter to which the judge expressly referred at [77]:

”77. In contrast to the examples in 881, the examples of 564 simply specify different concentrations of the active ingredients. The examples do not contain any formulation details beyond saying that there should be present a crystallisation inhibitor, an organic solvent and an organic co-solvent.”

This then was the critical difference between the disclosures of the two patents. Omnipharm failed to establish that the practical guidance given by the examples of the 881 patent was not sufficient to enable the skilled team to work across the breadth of the claims. But the 564 patent claimed a combination of actives and did so without any worked examples at all. It provided no real practical assistance over and above the common general knowledge.

Kitchin LJ accepted Merial’s argument that the UK Act did not impose an obligation to include examples of the way the claimed invention worked. However, his Lordship considered that was not why the trial judge, Floyd J, upheld the attack. Rather, the description was insufficient because it did not give sufficient guidance about which ingredients to choose and in what proportions. So, Kitchin LJ explained at [89]:

I reject these submissions. I think it is clear from [151] – [152] that the judge did not find that the absence of any detailed examples was, in itself, fatal to the sufficiency of the 564 patent. What rendered it insufficient, in his view, was the absence of proper exemplification of a formulation of the invention in the context of a specification which was generally inadequate to guide the skilled person to success and provided no real practical assistance beyond the teaching of the prior art and the common general knowledge. The specification contains no more than a very broad indication of the components of the formulation and, as the judge found, it is not a sufficient description to enable the skilled person to arrive at formulations across the breadth of the claims without undue effort.

One illustration of the problem with the 564 patent was set out earlier at [83]:

The disclosure in relation to solvents and co-solvents is something the judge also had well in mind, as is clear from [66]-[67]. Here he referred to the dielectric constant ranges which the solvent and co-solvent must meet, and that the co-solvent must have a boiling point below 100°C. He also referred to the lists of suitable solvents and co-solvents. This information would not, however, be of any practical use to the formulator who, as Dr Walters explained, would have to fall back on his general knowledge of solvents and techniques for enhancing spreading and skin penetration in order to decide on the appropriate solvent system to use.

Neither the Court of Appeal nor Floyd J at first instance set out at length the legal principles underlying insufficiency for these purposes. However, Floyd J had earlier set out his understanding of ‘classical insufficiency’, Biogen insufficiency and ‘insufficiency through ambiguity’ at [361] – [454] in Zipher.

Omnipharm Ltd v Merial [2013] EWCA Civ 2 via IPKat

ps.: those who attended David Brennan’s talk last year will find his ‘Monash paper’ in 38(1) Monash University Law Review 78.

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The Commonwealth Government’s Pharmaceutical Patents Review has published a draft report.

The draft Report is some 200 or so pages long; contains 4 draft findings and 15 draft recommendations (although recommendation 5 relating to the extension of term regime proposes 2 different alternatives).

There appears to be considerable, fascinating data reported. The scope and detail of the draft report will plainly require much further consideration.

At the policy level, the draft report considers there has been a significant failure of co-ordination between the various regulatory bodies that deal with issues relating to pharmaceuticals and patent protections:

Draft recommendation 10.1: The Government should establish a non-statutory Pharmaceutical System Coordinating Committee (PSCC) that reports to Parliament on an annual basis on the success and effectiveness of the patent, marketing approval and PBS systems, particularly where these interface. The PSCC should ensure there is sufficient engagement and coordination between the relevant agencies and take account of costs to government, efficiency of registration and approval processes and respond to issues raised by industry. The PSCC should comprise senior officials from at least DIICCSRTE, IP Australia, DoHA (Pharmaceutical Benefits Division and TGA), DFAT, Finance and Treasury (as chair).

This appears to reflect a general concern with the need for greater policy and practical concern throughout the report. See e.g. draft recommendation 7.2 (calling for an external (to IP Australia) patent oversight committee) and draft recommendation 3.2.

Recommendation 6.1 proposes retaining extension of term just for pharmaceutical products and not extending it to methods of use or manufacture. The bipolar recommendations 5.1 and 5.2, however, explore different ways of prescribing the term of the extension.

Other topics addressed in the draft report include: the impact of international agreements on Australia’s welfare, evergreening and follow-on patents, data protection

Comments on the draft report are required to be submitted by 30 April 2013.

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The Productivity Commission has released its draft Report on Compulsory Licensing of  Patents.

There are 10 chapters and 4 appendices.

The main (draft) recommendations at this stage are the repeal of s 133(2)(b), 135 and 136 of the Patents Act. The Productivity Commission also in substance renews the call to repeal s 51(3) of the Competition and Consumer Act.

The primary object to these recommendations is to make the avenue for relief against the restrictive trade practices (antitrust conduct) of a patentee the Competition and Consumer Act 2010 (Cth). The Productivity Commission also recommends that the Competition and Consumer Act 2010 be amended “to explicitly recognise compulsory licensing of a patent as a remedy under that Act.

The Productivity Commission considers that the current requirements under s 135 requiring demonstration that the reasonable requirements of the public are not being met and consideration of the interests of Australian industry to be inconsistent with promoting community-wide welfare.

In its place, the Productivity Commission proposes that a new test be introduced into the Competition and Consumer Act making a compulsory licence available where:

(a) Australian demand for a product or service is not being met on reasonable terms, and access to the patented invention is essential for meeting this demand.

(b) The applicant has tried for a reasonable period, but without success, to obtain access from the patentee on reasonable terms and conditions.

(c) There is a public interest in providing access to the applicant, having regard to:

• costs to the patentee from granting access to the patented invention

• benefits to consumers and the licensee from the licensee’s access to the invention

• longer-term impacts on community wellbeing.

(d) The terms of any compulsory licence order are consistent with public interest, having regard to:

• the right of the patentee to obtain a return on investment commensurate with the regulatory and commercial risks involved

• the right of the public to the efficient exploitation of the invention.

Bearing in mind that there have been very few private actions based on the antitrust or restrictive trade practices provisions and even fewer successful actions (and, for that matter, very few, if any, applications for a compulsory licence under the Patents Act), this new test plainly has the potential to significantly change the nature of a patentee’s rights. That could be very well affected by the interpretation applied to “being met on reasonable terms” in para (a) and “long term impact on community wellbeing” in para (c) and the extent, if any, that the proposed test is applied based on incentives to innovate before the invention is made (ex ante) or after the invention has already been made (ex post).

A change in this balance would appear to be intended as the Productivity Commission is concerned that the existing competition test in s 133 of the Patents Act is triggered only by anti-competitive behaviour where what is needed, according to the Productivity Commission, is a test based on enhancing competition.

If you wish to make a submission, it should be submitted by 8 February 2013 as the Final Report is due to be submitted to Government by 29 March 2013.

So far, there have been 35 submissions.

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Dr Summerfield has updated his marked up version of the reg.s to reflect the second tranche of the exposure draft regulations, here.

He also draws attention to the shortening time frames the exposure draft regulations will introduce.

You still need to get your comments in by 21 November 2012.

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Judge Posner, one of the authors of the leading modern text on the economics of intellectual property (amongst many other things), has published a controversial blog post questioning whether patents and copyright law, but particularly patents, are granting excessive protection.

Judge Posner accepts that patents for pharmaceuticals are the “poster child for patent protection”, but contrasts that to patents for computer software.

The IPKat explores some aspects of this part of Judge Posner’s critique.

In his judicial capacity, Judge Posner recently dismissed both Apple’s and Motorola Mobility’s attempts to use their respective patent portfolios to extract injunctions and damages from the other (pdf of the Opinion).

On copyright, Judge Posner is particularly concerned about the term of protection: currently (i.e., until Mickey Mouse next nears expiry) 70 years after the death of the author(s) for published works and the very restrictive approach to “fair use”. Amongst other things, Judge Posner refers to the music companies’ practice of requiring licences for “samples”.

Wonder what he would make of the Kookaburra that scotched Men at Work?

The 1709 blog delves into this part of his Honour’s views.

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IP Australia is seeking comments on how the innovation patent system is working.

Since 2001, Australia grants 2 types of patent: the standard patent with a normal term of 20 years and an innovation patent with a term up to 8 years.

Ann innovation patent need show only an innovative step over the prior art to be valid. According to the Full Court in Delnorth, this requires a difference that the person skilled in the art would understand makes a substantialmaterial contribution to how the product / method works. As the Full Court acknowledged, this is nothing like the inventive step requirement for a standard patent.  See also the SNF case.

According to IP Australia’s website:

Since the Delnorth (2009) decision in the Federal Court, relatively obvious minor improvements to inventions have been patentable.  There has been an unusual growth of innovation patent applications for certain technologies. There is some evidence that larger companies might be using the innovation patent system to extend the life of their patents and deliberately targeting competitors.

ACIP is already undertaking a review into the innovation patent system as a whole. The consultation paper for this (IP Australia’s) review explains:

The Advisory Council on Intellectual Property is presently conducting a review of the Innovation Patent system as a whole. In the mid term, this will provide valuable insights and recommendations for improvements.

In the short term, however, there is a pressing need to address emerging risks of the Innovation Patent system being used in ways which would lead to undue costs to consumers and to businesses that compete with owners of Innovation Patents. For example, there is a need to ensure that Innovation Patents do not inappropriately extend the life of pharmaceutical patents and delay the introduction of less expensive generic medicines, leading to increased costs to consumers and an increase in government expenditure through the Pharmaceutical Benefits Scheme.

As a result, the Government proposes to amend the Patents Act 1990 to raise the threshold for inventiveness to the same level as for Standard Patents (Attachment A refers). This approach is consistent with the second tier patent systems operating in countries such as Germany and Japan.

Comments are requested by 25 October 2012.

You can download the consultation paper, Innovation Patents – Raising the Step (sic), via this page.

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Last week, the US Supreme Court unanimously rejected the patentability of Prometheus’ “diagnostic”, characterising it as an impermissible attempt to patent a law of nature.

Claim 1 of the Patent was:

A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

“(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

“(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

“wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently admin istered to said subject and

“wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently ad ministered to said subject.”

The Supreme Court characterised that part of the claims dealing with the relationship between concentrations of certain metabolites in the blood with the effectiveness of particular dosages as a law of nature, which was unpatentable. The additional features did not overcome that exclusion as they were in effect already well-known and practised. In his Honour’s overview, Breyer J explained the rationale:

[The cases] warn us against up holding patents that claim processes that too broadly preempt the use of a natural law. Morse, supra, at 112– 120; Benson, supra, at 71–72. And they insist that a process that focuses upon the use of a natural law also contain other elements or a combination of elements, sometimes referred to as an “inventive concept,” sufficient to ensure that the patent in practice amounts to signifi cantly more than a patent upon the natural law itself. ….

We find that the process claims at issue here do not satisfy these conditions. In particular, the steps in the claimed processes (apart from the natural laws them selves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field. At the same time, upholding the patents would risk dis proportionately tying up the use of the underlying nat- ural laws, inhibiting their use in the making of further discoveries.

Patently-O has a more substantive consideration: Natural Process + Known Elements = Normally No Patent. The Commissioner of Patents has issued new guidelines indicating his understanding here; and criticisms have been propounded here and here.

The Supreme Court subsequently remitted the Myriad “gene patent” case to the Federal Circuit and Patently-O thinks their patent is going down too.

Our law is in many respects rather different. Section 18(2) of the Patents Act contains an exclusion from patentability only for human beings and the processes for their generation. Under s 18(1) and (1A), however, a patentable invention must be a “manner of manufacture within the meaning of s 6 of the Statute of Monopolies”.

In the ‘watershed’ NRDC case, the High Court confirmed that a ‘mere’ discovery was not a manner of manufacture, but an application of a discovery in a field of economic endeavour would be. A ‘mere’ discovery being “some piece of abstract information without any suggestion of a practical application of it to a useful end” at [8].

On this approach, Prometheus’ patent appears to have moved beyond the ‘mere discovery’ stage. The question might be, therefore, whether the additional integers were obvious or, may be, we have moved into Microcell territory: nothing but “nothing but a claim for a new use of an old substance” (see NRDC at [7].

A role for that approach was preserved (reinstated?) under the 1990 Act by the High Court in Phillips v Mirabella. Now, given the overlap between the Mirabella court’s analysis and the statutory requirements for novelty and inventive step (or an innovative step), that raises a whole set of issues. First, there is a question whether Mirabella would be decided the same way given the High Court seemed to have cut the legs out from under it in Advanced Building Systems - although, as the Full Federal Court pointed out in BMS v Faulding, Advanced Buidling Systems was decided under the 1952 Act and distinguished Mirabella on the grounds that the 2 Acts were different.

In trying to make sense of that, the Full Court went on to find that the “lack of newness” must be apparent on the face of the specification. As that appears to depend on the text of the specification, the approach taken by the US Supreme Court might not be open: the Faulding court found the dosage type regime a manner of manufacture although, in the end, it failed the novelty test.

In Arrow v Merck, Gyles J struck down a dosage regime on the grounds that it lacked subject matter. On appeal, the Full Court upheld invalidity, but only on grounds of lack of novelty and inventive step. Subsequently, Gyles J also accepted that the lack of subject mater ground could not be made out if it was necessary to resort to extrinsic evidence.

I guess we’ll see where the Myriad litigation in Australia takes us in due course.

Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2012) (pdf)

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Dr Mark Summerfield has an interesting post demonstrating some work he and his colleagues have been doing modelling the ownership of patents in the smartphone space.

In their mobile technology landscape, or themescape, they seek to demonstrate pictorially:

• Samsung appears to own key hardware patents;
• Microsoft seems to own most software patents;
• but Apple seems to have highly strategic patents.

The themescape also seeks to demonstrate that Google was a long way behind, but may be catching up if it gets to acquire Motorola’s patents.

Dr Summerfield does express some frustration:

It is therefore ironic – and some might say more than a little unfair – that Apple should be in a position to frustrate Samsung’s attempts to compete against its iPhone and iPad products, while the FRAND obligations associated with Samsung’s much larger patent portfolio leave it in a strategically weakened position.

In this context, it is hardly surprising that Samsung is in the Federal Court of Australia arguing that it should not be barred from obtaining an injunction against the iPhone 4S on the basis of the FRAND status of the patents which it is asserting against Apple.

But one might equally wonder why Samsung should be allowed to get injunctions on the basis of its so-called FRAND patents (assuming the fair and reasonable royalty is forthcoming) when it apparently volunteered its patents for inclusion into various standards in return for FRAND obligations? This FRAND-type issue has been around since at least the 1980s and led to this basic position.

Foss Patents also has a relatively recent round up of where many of the litigations between the various smartphone manufacturers currently sit.

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