Business method patents: Federal Court retreating?

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Emmett J has dismissed Research Associates’ appeal from the Commissioner’s rejection of an attempt to patent a method for calculating an Index for using in financial investing.

Claim 1 was for:

A computer-implemented method for generating an index, the method including steps of:

(a) accessing data relating to a plurality of assets;

(b) 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;

(c) accessing a weighting function configured to weight the selected assets;

(d) 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 the index.

Emmett J held that this was not a manner of manufacture as required by s 18(1)(a) of the Patents Act 1990.

His Honour appears to have rejected this on a number of bases. First, his Honour appears to have characterised the claim as akin to a mere scheme, abstract idea or mere information and not resulting in a physical effect or physical effect of the right kind:

65. A mere scheme, abstract idea, or mere information, is not, of itself, patentable. Some physical effect is required. Thus, where the representation of a curve, or the representation of Chinese language characters, or the writing of information to a smart card, is produced by a computer, there is a component physically affected or a change in state in a part of a machine, which makes the invention patentable.

66. Research Affiliates accepts that the only physical result generated by the method of the claimed invention is a computer file containing the index. That is because the method is implemented by means of a computer. Research Affiliates places significance on the fact that the result of the claimed method is the generation of the index by a computer.

67. However, the index generated is nothing more than a set of data. The index is simply information: it is a set of numbers. It is no more a manner of manufacture than a bank balance, whether represented as data in a bank’s computer, written on a piece of paper or kept in a person’s memory. While it is true that the index may be stored in the computer’s RAM, or on a memory device, or can be transmitted, that can be said of any data generated by a computer. If that were sufficient to satisfy the requirement of an artificially created state of affairs, any computer-implemented scheme would be patentable, merely by reason of the fact that it happens to be implemented by a computer. (emphasis supplied)

Secondly, in what might be a foreshadowing of the Raising the Bar amendments about to come into force, Emmett J was highly critical of the level of disclosure of how to implement the alleged invention:

68. While the Specification appears to be intended to create the impression of detailed computer implementation, the Specification says almost nothing about how that is to be done. The reliance placed on the Colonial Index embodiment is a good example of what is not in the Specification. The discussion in the Specification provides no substantive detail regarding the implementation of the claimed method. The upshot of the discussion is merely that the method is implemented by a computer, but there is no disclosure of how that is to be done.

….

70. The method of the claimed invention does not involve a specific effect being generated by the computer. The mere use of a computer necessarily carries with it the writing of information into the computer’s memory. There is a stark contrast between a computer-generated curve, or a representation of Chinese characters, or the writing of particular information on a smart card, on the one hand, and the quite unspecific index, on the other. There is no practical application in the method of the claimed invention for the improved use of computers. The effect of the implementation of the method is not to improve the operation of or effect of the use of the computer. There is nothing in the Specification or claim 1 that discloses how to produce the index. Thus, there is nothing in the Specification or claim 1 to indicate:

  • how data is accessed in step 1;
  • the nature of the processing undertaken in step 2 to identify the selection of assets;
  • how the weighting function is accessed in step 3;
  • how the relevant measure of scale is chosen in step 4; or
  • how the weighting function is applied in step 4 to assign a weighting to each asset.

71. The case propounded by Research Affiliates depends upon the proposition that information of economic significance, once entered into or produced by means of a computer, becomes an economically valuable artificially created state of affairs, and thus patentable. That proposition must be rejected.

Thirdly, Emmett J found that the alleged invention lacked the necessary quality of “newness” or “inventiveness” on the face of the Specification:

72. The implementation of the method of the claimed invention by means of a computer, at the level articulated in claim 1, is no more than the modern equivalent of writing down the index on pieces of paper. On the face of the Specification, there is no patentable invention in the fact that the claimed method is implemented by means of a computer. The Specification asserts a patentable invention, not in the use of the computer, but in the particular series of steps that give rise to the generation of the index. Those steps could readily have been carried out manually. The aspect of computer implementation is nothing more than the use of a computer for a purpose for which it is suitable. That does not confer patentability.

This suggests a considerable broadening of what constitutes the “face of the Specification” as comprehended in, for example, Bristol-Myers Squibb v Faulding‘s attempted reconciliation of Ramset and Mirabella. Emmett J concluded with what might, with respect, be thought to be an unobjectionable proposition:

73. The enquiry into what constitutes a patentable invention is still evolving. It is not to be tied to particular notions of what was understood to be a manufacture at any particular point in time. However, while new developments in technology might be seen to 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 any broadening of the concept of a patentable invention.

On this approach, perhaps, the Court, or the Commissioner, could have concluded readily that the alleged invention, as characterised by Emmett J would fail the inventive step requirement in s 18(1)(b)(ii) without resort to the manner of manufacture “threshold”.

Research Affiliates LLC v Commissioner of Patents [2013] FCA 71

Dr Summerfield, over at Patentology, explores matters in detail.

Business method patents: Federal Court retreating? Read More »

Property in the proceeds of infringement

1 Comment / Copyright, Enforcement, Patents, Trade marks / / / , , , , , , ,

In a decision which no doubt has some further distance to run, Newey J (sitting in the Chancery Division of the High Court in England) has ruled that the owner of copyright does not have a proprietary interest in the proceeds (read profits) made by an infringer of the copyright.

Harris et al. are alleged to be the person (or persons) behind the Newzbin file sharing sites which, amongst other things, have been found to infringe the movie studios’ copyrights in a range of films (here and here, where Arnold J ordered the ISPs to block access).

In December last year, the Newzbin sites appear to have closed down, claiming they had run out of money.

Having obtained freezing orders (formerly called Mareva injunctions) against the assets of the defendants (such as the house in which Mr Harris lives and the Maclaren car he parks in its driveway), the movie studios sought “proprietary injunctions” over the assets as well. This seems to involve a court determination that the assets in question were the property of the movie studios rather than the defendants. For example, Newey J explained the difference between the (already in place) freezing order and the injunctions now sought by reference to Millett LJ’s description:

“The courts have always recognised a clear distinction between the ordinary Mareva jurisdiction and proprietary claims. The ordinary Mareva injunction restricts a defendant from dealing with his own assets. An injunction of the present kind, at least in part, restrains the defendants from dealing with assets to which the plaintiff asserts title. It is not designed merely to preserve the defendant’s assets so as to be available to meet a judgment; it is designed to protect the plaintiff from having its property expended for the defendant’s purposes”.

The movie studios based their argument on observations in the Spycatcher cases that Peter Wright may have held the rights in Spycatcher on constructive trust for the Crown in view of his breaches of duties of confidence and fidelity.

Newey J seems to have rejected this claim partly on the basis that there were cases binding on him (albeit apparently disapproved by the Privy Council) ruling that there was no such proprietary interest and partly on the basis that s 18 of the Copyright Act 1956 had expressly deemed the copyright owner to be the owner of infringing copies and provided remedies in conversion and detention. That remedy, however, had been repealed by the Copyright Design and Patents Act 1988 as unjust and unfair.

There are some interesting issues for Australians.

First, the conversion/detention remedy on the basis of deemed ownership has not been repealed (but is now discretionary) – see s 116 (but the Full Court may not be too keen on the remedy – see [94] of French and Kiefel JJ (as their Honours then were).

Secondly, in Lenah Game Meats, Gummow and Hayne JJ did say at [102]:

A cinematograph film may have been made, as in Lincoln Hunt, in circumstances involving the invasion of the legal or equitable rights of the plaintiff or a breach of the obligations of the maker to the plaintiff. It may then be inequitable and against good conscience for the maker to assert ownership of the copyright against the plaintiff and to broadcast the film. The maker may be regarded as a constructive trustee of an item of personal (albeit intangible) property, namely the copyright conferred by s 98 of the Copyright Act[96]. In such circumstances, the plaintiff may obtain a declaration as to the subsistence of the trust and a mandatory order requiring an assignment by the defendant of the legal (ie statutory) title to the intellectual property rights in question[97]. Section 196(3) of the Copyright Act provides that an assignment of copyright does not have effect unless it is in writing signed by or on behalf of the assignor.

Gaudron and Callinan JJ also agreed.

Newey J considered, however, that:

i) The point under consideration (viz. whether copyright in a film made unlawfully was subject to a trust) was rather different to that with which I am concerned (viz. whether a copyright owner has a proprietary claim to the fruits of infringement); and

ii) The Australian approach to constructive trusts is by no means the same as that in this jurisdiction. In particular, as the Full Court of the Federal Court of Australia noted in Grimaldi v Chameleon Mining NL (No. 2) [2012] FCAFC 6 (in paragraph 574)

His Lordship’s second point may be thought to be a second factor why an Australian court might take a different approach to his Lordship’s conclusion.

As to the first point, one might well think, if such a constructive trust arose, that the trustee would have to account for the fruits of the use of the trust property and possibly even handover such fruits as were still in his possession.

Finally, the Privy Council’s rejection of the authority binding on Newey J (and the determination of the movie studios) may well indicate that Newey J’s decision is just the first step in the war.

Twentieth Century Fox Film Corporation v Harris [2013] EWHC 159

Lid dip: Fiona Phillips

Property in the proceeds of infringement Read More »

Google not liable for sponsored links

1 Comment / Internet / / / , , , , ,

The High Court has unanimously allowed Google’s appeal from the Full Federal Court’s ruling that Google was liable for misleading or deceptive statements in sponsored links.

According to the Court’s summary (pdf):

The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

French CJ, Crennan and Kiefel JJ delivered the principal judgment, Hayne J and Heydon J each delivered separate concurring opinions.

Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

Not a bad way to start off the legal year!

Google not liable for sponsored links Read More »

Trade mark oppositions (Australia)

Leave a Comment / Trade marks / / / , ,

Andrew Sykes, a barrister and trade marks attorney, has started a new trade mark resource: Australian Trade Mark Opposition Law.

According to the website:

The purpose of this site is to provide quick, reliable answers to practitioners working with trade mark oppositions and appeals. Therefore the aim is to keep excessive academic discussion to a minimum and make good use of relevant and helpful citation to authorities. ….

The website is a work in progress with additional details and material dealing with further grounds and links to be added. Based on what is up already, however, Andrew has some interesting ideas.

Check it out!

Trade mark oppositions (Australia) Read More »

auDRP review

Leave a Comment / Domain names / / / , , , , ,

auda is conducting a review of the auDRP – the dispute resolution policy covering domain names registered in the .au domain name space.

The auDRP was derived from the UDRP, so many of the principles worked out under the latter are equally applicable under the auDRP. Two of the main differences, however, are that under the auDRP:

  • a complainant may have rights sufficient to found a complaint “in a name”, not just a trade mark; and
  • the auDRP requires a complaint to show only registration in bad faith or use in bad faith, it is not necessary to show both bad faith requirements have been satisfied.

auda published an issues paper (pdf).

There is some interesting information about how many disputes there have been and which service providers have been providing the dispute resolution services – in recent years it has been WIPO and LEADR. There is also a breakdown of fees charged by various bodies for dispute resolution under the UDRP.

One question posed is whether auda should put the fees charged for dispute resolution up. Other issues on which submissions are invited were identified by ICANN in Annex 2 to its Final Issues Report (pdf) in 2011 on the UDRP. They include:

Policy/Process Issue

 page3image4352

Description

Safe Harbors

Policy should include clear safe harbors, such as to protect free speech and fair use or other non-commercial rights of registrants

Appeals

page3image8608

No appeals of process in policy itself– two options appeal of decision or trial de novo

Establish an internal appeals process to ensure implementation of fair trial requirements

Statute of Limitations

There should be an express time limitation for claims brought under the policy

Reverse Domain Name Hijacking/
Uniform Procedures for Transfers

page3image15752

A finding of reverse domain name hijacking is rarely found, and panelists should be encouraged to make this finding when appropriate

No specified timeframe for implementing transfers

Business Constituency

Delays often experienced in implementation of decisions by Registrars

Loser Pays Nothing

Losing Respondent should pay filing fees and attorney’s fees

However, I am coming to this late: submissions, if any, are supposed to be in by 31 January 2013.

auDRP review Read More »

Kim Dotcom

Leave a Comment / Copyright / /

TVNZ has a video report on the launch of Kim Dotcom’s Mega 2.0 on the anniversary of that raid.

The report includes Clive Elliott‘s view on the copyright significance of the encryption arrangements. Unlike Dropbox et al., only the user/uploader has the encryption keys for the files they upload.

As Clive pointed out, there are already players in the user-encrypted field: e.g. SpiderOak, Wuala (which don’t come with quite the same notoriety, but do have their own challenges from a user’s point of view).

The new user encryption arrangements, however, may well not save Mega 2.0 if there is other evidence of Mega 2.0 employees inciting or being involved in infringing activity: cf. e.g. Roadshow at [101] or Kazaa.

Kim Dotcom Read More »

Raising the Bar update

Leave a Comment / Copyright, Designs, IP generally, Patents, Trade marks / / / , , , , , , ,

Following the conclusion of consultations about the draft Intellectual Property Legislation Amendment Regulations (the regulations to implement the “Raising the Bar” amendments), IP Australia has published a document outlining the outcomes of the consultation process.

The document outlines what IP Australia is proposing to do/implement in relation to:

 

Schedule 1

 

  • preliminary search and opinion
  • search fee
  • priority date
  • other things

 

Schedule 3

 

  • filing of evidence in oppositions
  • extensions of time to file evidence
  • confidentiality
  • fees for notice of intention to defenddefence (TM oppositions) (lid dip: Andrew Sykes)
  • cooling off period for patent oppositions (not in the public interest)
  • dismissing trade mark oppositions for inadequately particularised grounds
  • document service
  • no changes to basis for adding grounds / particulars to a notice of opposition
  • no change to costs provisions

 

Schedule 4

 

  • suspension regime for patent / trade mark attorneys will be retained

 

Schedule 5

 

  • customs seizure: regulations will be amended to require importers to provide full name, telephone number and address for service in ‘claim for release’ forms
  • email address will not be made mandatory

 

Schedule 6

 

  • applicants for patents will have 2 months to respond to a direction to request examination after examination has been deferred
  • acceptance period after 1st report on patent application has been issued will be reduced to 12 months
  • “IP Australia will not require a statement of entitlement at filing for standard patents (or at national phase entry for PCT applications). Instead, the statement will be required when the applicant requests examination, as part of the approved form.” Applicants for an innovation patent will still need to provide the statement when filing the application
  • The Commissioner / Registrar will retain discretion to decide whether hearings should be decided on the papers without oral presentation
  • Apparently, there are technical corrections that will be implemented to

Links to:

 

Public Consultation Update papers

IP Australia’s Press Release

 

 

IP Australia’s helicopter summary of Raising the Bar, more links and IP Australia’s summaries for patents, copyright, trade marks and designs.

Patentology looks at the good news for SMEs and some of the things rejected, here.

Raising the Bar update Read More »

Productivity Commission on Compulsory Licensing: Draft Report

Leave a Comment / Patents / / / , , , , , ,

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.

Productivity Commission on Compulsory Licensing: Draft Report Read More »

Parmaceutical Patents Review

Leave a Comment / Patents / / / , , , ,

Last month, the Parliamentary Secretary for Industry and Innovation, Mark Dreyfus, has appointed a panel to review the patenting of pharmaceuticals in Australia.

Now the Panel have published a Background and Issues Paper.

The Panel’s initial impressions of key issues include:

  • a number of concerns have been raised about the length and breadth of protection provided by the extension of term provisions, that is, the duration of the extension and the types of pharmaceutical patents eligible.
  • Are the recent amendments to increase the thresholds for the grant of an Australia patent appropriate in the context of pharmaceuticals? If not, why not and what further changes are necessary?
  • Do the systems for opposition and re-examination provide appropriate avenues for challenging the granting and validity of a pharmaceutical patent?
  • Do interlocutory injunctions, as the law is currently applied, provide appropriate relief in cases involving pharmaceuticals?
  • Is Australian law on contributory infringement appropriate in relation to pharmaceuticals?
  • Are follow-on patents being used to inappropriately extend protection for pharmaceuticals? If so, how? And, if they are, is this sound policy and what changes, if any, are needed?
  • should the period of data exclusivity be extended in line with the patent term
  • patent certificates: a generic company must provide a certificate stating that it believes that it is not marketing, and does not propose to market, the therapeutic goods in a way that would infringe a valid patent, or that the generic company has given the patent owner notice of the application
  • the mess arising from copyright in product information documents

Be warned: submissions are due by 21 January 2013, hearings are proposed for February 2013, a draft report in March 2013 and the final report in April 2013.

They also have a blog – don’t forget to bookmark it!

Parmaceutical Patents Review Read More »

New Judges

Leave a Comment / Because I felt like it / /

The Constitution requires that Justice Heydon retires from the High Court by 1 March 2013.

The Attorney General today announced that Justice Keane, currently the Chief Justice of the Federal Court, will be replacing him.

In addition, Justice Allsop, who is currently President of the NSW Court of Appeal, will be taking up appointment as Chief Justice of the Federal Court. Before he went to the Court of Appeal, Allsop J sat in a number of IP matters when he was a Federal Court justice.

The Attorney General’s Media Release.

Lid dip: Peter A P Clarke

New Judges Read More »

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