The Hague Agreement: a cost benefit analysis

IP Australia has published a cost benefit analysis for Australia joining the Hague Agreement for registration of designs.

You are no doubt thinking that sounds very exciting (not). But, even if you are not into registered designs, you SHOULD READ IT. This is the Government’s first attempt at applying the Productivity Commission’s call for any proposals to reform intellectual property laws to be economically justified. As the Report says in the first paragraph of the Executive Summary:

The report assesses the impacts [i.e., the costs and benefits to Australia of joining the Hague Agreement] with reference to the Productivity Commission’s (PC) guiding principles of effectiveness, efficiency, adaptability and accountability. This report is intended to form part of the evidence base in relation to whether Australia should join the Hague Agreement.

So, unless it involves an acronym that is like TPP, this could well be a harbinger of things to come.

And what does it conclude find:

  • IP Australia’s best estimate of the net benefit for Australian designers is $1.7 million;[1]
  • IP Australia’s best estimate of the net cost to Australian consumers from higher prices resulting from the longer term of design protection is $58 million;[2]
  • to add a little bit more spice to the debate, IP Australia’s best estimate of the net cost to Australian IP professionals is $2.5 million;[3] and
  • IP Australia’s best estimate of the net cost to the Australian government of implementing new systems etc. to comply with Hague is $2.8 million.[4]

The big question IP Australia is asking you is how realistic are these estimates?

Now, in arriving at these numbers, the Report does include quite a lot of hard data.
For example, most Australians who file designs overseas do so in the EU, the USA, NZ and China. On the other side of the coin, most incoming design registrations were from the USA, the EU, Japan, NZ, Switzerland and China.[5]

On the other hand, the Productivity Commission reported that less than 20% of registered designs are renewed beyond the first 5 year term.[6] According to IP Australia, however, approximately half of all design registrations are renewed for the second 5 year term and non-residents are more likely to renew than Australians.[7]

Will we become better at designing if we “stick” with our current settings – 19th out of the top 40[8] – or should we “twist” and sign up? Of course, there is an anterior question: do we even care about good design in the first place?

IP Australia is seeking feedback on its cost-benefit analysis and its proposed methodology to elicit additional evidence and views with the aim of finalising the analysis in 2018. You should get your say in by 31 May 2018.

The Hague Agreement Concerning the International Registration of Industrial Designs: A cost-benefit analysis for Australia March 2018


  1. This represents the costs savings from the simplified application procedure and the increased profits from taking new designs overseas. IP Australia estimates the range of benefit is from $0.03 million to $6 million.  ?
  2. This represents how much Australian consumers would pay to overseas owners of registered designs if the term of a registered design was extended from 10 years (currently) to the minimum 15 years required under Hague. IP Australia estimates a resulting range of net outflows from $23 million to $114 million.  ?
  3. IP Australia anticipates that “IP professionals” will garner some extra work at the examination stage but will lose work at the filing stage as the Hague Agreement provides for one central application to WIPO rather than multiple individual application to each separate jurisdiction. IP Australia estimates a range from a benefit of $0.3 million to a cost of $12 million.  ?
  4. The Government (presumably that means IP Australia) will incur costs between $2.3 and $3.4 million in upgrading its IT systems.  ?
  5. Report p. 10. It’s not clear from this part of the Report whether Australian applicants filed in all, some or only one of those destinations.  ?
  6. Productivity Commission, Intellectual Property Arrangements: Final Report, p. 337. These were the figures from ACIP as at 2013.  ?
  7. Report p. 11. In 2010, 66% of non-residents renewed. How the discrepancy between the Productivity Commission’s figures (i.e.,
    ACIP’s figures) came about is not clear.  ?
  8. Report Appendix 3 table 4.1.  ?

Widespread dissatisfaction in US with Supreme Court’s patentable subject matter tests

The USPTO has published a report on its public review of the rules patent eligible subject matter under US law – what we would call a “manner of manufacture”.[1]

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.

  1. Some submissions called for a legislative requirement only that the claim be for a technological or useful art, without a requirement for “newness”.
  2. Some submitted that the requirement should be something having a practical application.
  3. Some submissions argued that express legislated exceptions should replace the Supreme Court’s common law exceptions. AIPLA for example contended for an exception:

    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.

  4. Some submissions called for the legislation to make it clear that patent eligibility is a separate requirement to the other requirements such as novelty and obviousness, and to be considered separately from those requirements.
  5. Several commentators thought that the problem of “pre-emption”[2] could be addressed by introducing a specific exemption from infringement for research.

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

Patent Eligible Subject Matter: Report on Views and Recommendations from the Public (pdf)[3]


  1. Patents Act 1990 s 18(1)(a)  ?
  2. That is, “concerns that patents on foundational technological tools may stifle scientific progress by tying up the basic building blocks of human ingenuity”.  ?
  3. For a rather more humorous take, see IP Musings.  ?

100 blogs about IP

Not quite 100 flowers, but Feedspot has posted a listing of 100 IP blogs from around the world.

Some of them, I subscribe to myself.

You may find some interesting too!

US Supreme Court adopts international exhaustion for patents

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.

There is lots of analysis already, including Patently-O and Scotusblog, so this will be brief:

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.[1]

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[2] 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.

Ginsburg J dissented

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:[3]

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.

What’s the position in Australia?

Until the High Court makes another one of its ex cathedra policy declarations,[4] 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.[5] 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.[6] 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.[7]

Impression Products Inc v Lexmark International Inc (30 May 2017)


  1. Lexmark had previously failed to stop these types of practices using the anti-circumvention provisions of the Digital Millennium Copyright Act.  ?
  2. Ginsburg J dissented from that part of the Court’s ruling relating to international exhaustion.  ?
  3. In International Parcel Express v Time Life, the High Court considered that copyright law involved different considerations to patent law and distinguished the patent law treatment in the context of parallel importing of books.  ?
  4. See for example iceTV and D’Arcy v Myriad.  ?
  5. The Time Life decision affirmed the continuing validity of National Phonograph v Menck, albeit in dicta.  ?
  6. Betts v Wilmott (1871) LR 6 Ch App 239.  ?
  7. Société Anonyme des Manufacturers de Glaces v Tilghman’s Patent Sand Blast Co Ltd (1883) 25 Ch D 1.  ?

Selected links,from last week

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Remedies

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Google Books = fair use in USA

Just in time for the 2015 Copyright Symposium, the Second Circuit Court of Appeals has ruled that the Google Books Project is “fair use” of copyright and so not infringing.

Judgment here (pdf). Opinion authored by Circuit Judge Leval.

Eleanora of the IPkats first look here; Rebecca Tushnet focuses on the fourth factor discussion here. The “four factors” from §107 are:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Before responsibility for copyright was transferred to the Department of Communications and the Arts, the Commonwealth Attorney-General had commissioned a study of the economic effects of the ALRC’s recommendation to introduce “fair use” into Australian copyright law.

The Authors Guild v Google Inc. (CA2 Oct 16. 2015 13-4829-cv)

Is there a case for fair use? Lessons from the US – Seminar

Monash is holding a seminar on fair use: ‘Is there a case for fair use? Lessons from the US’, with the lead presenter being Prof. Geoffrey Scott from Penn State’s School of Law.

Date: 2 July 25 June at 5:15pm. (Lid dip: Gerard Dalton)

Venue: Monash University Law Chambers, Melbourne.

Details and registration via here.

Software patents in the USA

Yesterday, the US Supreme Court heard oral argument on the question of the patentability of Alice Corporation’s software system for a method of payment, in denying the validity of which 10 judges of the Federal Circuit famously came up with 7 different opinions.

Several patents and claims are in issue, all relating to a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate “counterparty” or “settlement” risk.

The question presented:

Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

As petitioner, the patentee (Alice Corp) will argue first. Respondent’s time will be split between CLS Bank and the US Government who has filed an amicus brief highlighting a misguided argument that “the abstract idea exception is patent law’s sole mechanism for excluding claims directed to manipulation of non-technological concepts and relationships.”

Transcript here. Some extracts here

One interesting point: the questioning of the advocates about which of the competing options proposed by the amici they preferred as solutions to the issue.

Summary of briefs with links to the briefs

Washington Post preview

Our own battles in this front are still proceeding with a decision awaited in the Research Affiliates appeal and RPL Central.

Meanwhile the USPTO has issued revised guidelines: 2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving
Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products
.

Alice corp

The Full Federal Court has reserved its decision in Research Affiliates’ appeal; the Commissioner’s appeal in RPL Central is still pending.[1]

In the USA, Alice Corp. had a patent for a computerised method of reducing “settlement risk”, a type of escrow arrangement: the 10 judges in the Federal Circuit Court of Appeals came up with 5 different opinions of which Justice Newman memorably said:

[The 5 judgments have] propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation. With today’s judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.

Now, the US Supreme Court has agreed to try to sort it out.

ALICE CORPORATION PTY. LTD. V. CLS BANK INTERNATIONAL, ET AL., Docket No. 13–298 (Supreme Court 2013) via Patently-O


  1. The Full Court has also reserved in Cancer Voices re isolated DNA (although one might think there’s little scope for that to get up after Apotex v Sanofi.  ?

Apple and that ITC ban

Well written piece in The New Yorker outlining the role of the US International Trade Commission in patent disputes and President Obama’s veto of the ITC’s order to block imports of “older” Apple products.

Mind you, make sure you are not eating your cornflakes over breakfast or sipping your decaf skinny latte when you get to the paragraph:

Samsung’s lawyers may take their talents to Seoul, Tokyo, London, or other venues in which home-court advantage is increasingly important ….

Prof. Wegner apparently saw it differently.

Lid dip: Miguel Belmar