Australia

Business method patents before the Commissioner

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Patent Baristas has a guest post from Bill Bennett at Pizzeys considering the Deputy Commissioner’s recent rejection of the “Iowa Lottery” patent application.

1. A prize pool for a lottery game played among a plurality of member lotteries, at least two of which are from diverse jurisdictions, the prize pool comprising:

a system of prize levels including a jackpot prize and at least first and second subordinate prizes;

a super pool of accumulated funds that is used to pay the jackpot prize and inflate the second subordinate prize; and

wherein, in a drawing having a jackpot prize winner in at least one jurisdiction, a member lottery in a jurisdiction without a jackpot prize winner pays out of its own funds the first subordinate prizes and contributes money to the jackpot winner and second subordinate prize winners in each jurisdiction having a jackpot winner, and

wherein one or more of the jurisdictions sets a jackpot prize limit such that money in the super pool in excess of the jackpot prize limit is awarded as second subordinate prizes.”

The third independent claim, claim 12 for a method added in (at least) using a computing device to calculate the allocations to the different prize pools.

In a world where Tattslotto and Powerball have existed for donkey years, apparently, the “exciting” element in this claimed invention was the ability of lottery operators in different states to combine.

The Deputy Commissioner appears to have considered that the claim was just to a mere scheme:

  1. I consider that the same can also be said in relation to all the subject matter of the present application. What is claimed, in whatever guise, is a scheme and not an artificially created state of affairs within the principles articulated in the NRDC decision. In considering the applicant’s submissions I note that in relation to claims 1-2 and 17 it is argued that Grant is distinguished because what is claimed is not a method and more significantly that the claimed prize pool is an artificially created state of affairs whose significance is economic. While clearly of economic significance and a creation of human activity, I however consider the prize pool to be merely information (ie the size of a potential future payment) generated in or reflective of the operation of the scheme defined in the claims. Information even if represented in a physical way has never been considered sufficient for patentability save for some material advantage or mechanical effect in the arrangement of the information. See for example Re Cooper’s Application for a Patent (1901) 19 RPC 53 and Re Virginia-Carolina Chemical Corporation’s Application (1958) RPC 35).
  2. I further do not consider the claiming of a product characterised by the features of a scheme by which it is produced or is affected, even if a real, physical thing, fundamentally alters the question of patentability over the claiming of the scheme as a method. Clearly Mr Grant would have had no better success had he claimed a house characterised by his asset protection scheme. As observed in the Virginia-Carolina decision care should be taken not to allow the form of words use to claim an alleged invention to cloud the real issues of manner of manufacture and it should not be the case that:

“claiming clauses ostensibly directed towards a manner of manufacture cloak the real nature of the applicant’s disclosure”

The Deputy Commissioner went on to reject another set of claims on the grounds that:

15 Obviously a financial transaction, or otherwise, the legal transfer of an asset, is not the sort of physical or observable effect that the Court [in Grant’s case] was referring to, and this is apparent from its reference to the situation in Welcome Real-Time v Catuity Inc [2002] FCA 445 finding at [30] that Mr Grant’s method [was not patentable]

The Deputy Commissioner did not think that reciting in a computer to do all the calculations helped. The change in state or information in the computer was not sufficiently substantial to secure a patent. In this connection, at Patent Baristas, Mr Bennett is concerned by the Deputy Commissioner’s statement in [17] that:

…. As I indicated in my decision in Invention Pathways Pty Ltd [2010] APO 10 I do not believe there is any authority in Australian law for the proposition that the mere identification of a physical effect is sufficient for patentability. It must in my view be an effect “…of such substance or quality that the method considered as a whole is “proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies” ”.

Iowa Lottery [2010] APO 25

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On the Contour of things

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Further to my earlier post, Amanda Scardamaglia has a detailed consideration of the issues raised by Coca Cola’s pleading in the battle of the bottle shapes against Pepsi.

On the Contour of things Read More »

DFAT ACTA information sessions

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DFAT is holding “information sessions” on the published ACTA text:

  • on 12 November in Canberra
  • on 18 November in Sydney
  • on 24 November in Melbourne.

For the email link to RSVP and further details, including a pdf of the Consolidated Text, go here.

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A case of (un) parallel imports

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BTB holds a licence to make and sell “Greg Norman” branded clothing in India from Greg Norman Collection Inc (GNC). GNC is the “head licensor” of the “Greg Norman” trade marks registered in, amongst other places, India and Australia.

By clause 2.4 of the licence agreement, BTB agreed not to sell the branded clothing it made outside India without GNC’s consent:

LICENSEE acknowledges that this License is limited to the TERRITORY defined herein, and agrees not to sell LICENSED PRODUCTS to anyone other than its regular retail customers in the TERRITORY in the normal course of trading, and further agrees that it will not sell LICENSED PRODUCTS destined directly or indirectly for sale outside the TERRITORY without the prior written approval of GNC.

Sunsport operates mainly in Pakistan, but also has a representative in Singapore, Mr Wadhwani. Mr Wadhwani also operates a business, PT International which, amongst other things, supplies product to the second respondent in Australia.

Sunsport told Mr Wadhwani that it could source genuine Greg Norman branded merchandise from BTB. Mr Wadhwani told the principal of the second respondent, Mr Dwyer, this. Mr Dwyer checked out GNC’s website and established that BTB was an authorised licensee of GNC and placed an order with Mr Wadhwani from BTB’s catalogue.

Sunsport placed an order with BTB for a shipment of clothing, apparently to be delivered to Pakistan via Singapore. When the shipment reached Singapore, however, PT International on sold the goods to Mr Dwyer’s company, which imported them into Australia.

Nicholas J has found that in doing so Mr Dwyer’s company infringed the “Greg Norman” trade marks.

One particularly interesting issue is why Mr Dwyer’s company was unable to rely on s 123 of the Trade Marks Act 1995: while BTB was in fact a licensee of the relevant trade marks, Nicholas J still found that the trade marks had not been applied to the particular goods with the trade mark owner’s consent. The main reason for this conclusion was that BTB’s licence was limited to India. Although BTB made and marked the goods in India where it did have a licence, it had no licence to sell “Greg Norman” merchandise outside India. At [78] his Honour said:

Where a registered owner consents to another person applying the registered mark to goods on condition that the goods must not to be supplied outside a designated territory, the registered owner would not usually be regarded as having consented to the application of the mark to goods which the other person knows at the time he or she applies the mark are to be supplied by him or her outside the territory.

However, there may be more to it than that. It would appear that BTB made a special batch of the merchandise to fill the order from Sunsport. Also, the evidence showed that BTB did not include the sale in its royalty reports to GNC. While strictly obiter, his Honour went on to note at [89]:

I would not be prepared to infer that products manufactured by BTB in respect of which GNC had received royalty payments were products to which the second applicant’s marks had been applied without the second applicant’s consent in the absence of convincing evidence to that effect. Of course, as I have previously found, royalties were not paid on the products shipped to Sunsports. ….

and went on to reject an argument that the goods imported were of an inferior quality.

If nothing else, this decision shows just how high the hurdle may be for someone who want to engage in parallel importing. On the other hand, if the receipt of royalties has the significance identified at [89], trade mark owners will need to scrutinise statements from their licensees very carefully to ensure that they are not “implicitly” licensing a parallel importer. The implicit licence, or licence by acquiescence, however,  might seem very hard in cases where royalty reports don’t come in for several months (or longer) unless, perhaps, there be a pattern of acquiescing.

A second interesting point lies in his Honour’s comments on the Champagne Hiedsieck case. In that case, Clauson J had held that there is no use of a trade mark as a trade mark by someone when the goods in question are goods to which the trade mark owner had actually applied the mark. That ruling has been upheld and applied many times.

I had thought the High Court’s references to Champagne Hiedsieck in its Gallo ruling showed its continuing relevance.

Nicholas J points out, however, that the High Court stated that s 123 embodies the principle in Champagne Hiedsieck. As a consequence, applying conventional principles of statutory interpretation, his Honour concluded that the enactment of s 123 has operated as a kind of statutory repeal or displacement of Champagne Hiedsieck. His Honour explained:

[98] The question whether a person who sells goods to which a trade mark has been applied with the consent of the owner of the mark uses the mark as a trade mark was recently left open by the High Court: E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 265 ALR 645 at [53].

[99] The respondents’ argument before me was that, independently of the question of trade mark use by them (which was, as I have said, conceded by them to have occurred), the applicants were also required to establish that the respondents had engaged in “infringing use” and, for that purpose, had to establish that the marks on the relevant goods had not been applied by or with the licence of their owner. I do not think this is correct. There is no justification for implying any such additional requirement. If the circumstances referred to in s 123 are shown to exist then the respondents will not have infringed the registered trade marks, not because of any additional requirement of the kind now postulated but by operation of s 123 itself. The High Court observed in E & J Gallo Winery at [34] that s 123 reflects the principle established by Champagne Heidsieck.
[100] As a matter of statutory construction, s 123 of the Act, in form and substance, creates an exception to infringement which, in accordance with the relevant principles of statutory construction, leads to the conclusion that it is the person who invokes the section who carries the onus of proof: Avel Pty Ltd v Multicoin Amusements Pty Ltd [1990] HCA 58; (1990) 171 CLR 88 at 119; Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 at 519.

(Nicholas J did go on to note how lightly the burden on a respondent might shift.)

Arguably, the point was not strictly before his Honour as Mr Dwyer’s company conceded it was using the Greg Norman trade marks “as trade marks”. If right, however, there would appear to have been a significant narrowing of defendants’ “wriggle room”.

Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) [2010] FCA 1162

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Coke, Pepsi and the shape of the bottle

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Newspaper reports that Coca Cola has sued Pepsico and its Australian licensee, Schweppes, over the shape of the new Pepsi bottle.

The print edition had a photo, but not online. You can go down to your local 7 Eleven or compare for yourself:

Coke 'contour' and Pepsi's new bottle

The press report doesn’t say whether the action is over a registered “shape” trade mark, passing off/TPA or both. But, we know Coke has them:

TM 877676

So, if it goes to trial we may well find out what you can do with a shape trade mark.

The newspaper report quotes Matthew Hall asking who is going to buy a bottle of Pepsi in mistake for a Coke.

Fair question but, if there is a registered trade mark for the shape (without Coke plastered all over it, unlike e.g. TM 1057210) and the bottle itself is used as a trade mark, the presence of the Pepsi logo should be irrelevant.

Further, what role will “intention” play here? In particular, why did Pepsi change the shape of their bottle?

Pepsi apparently introduced the new bottle shape in May this year. Here’s an interesting mash-up which shows you the “old” bottle’s silhouette compared to the Coke bottle.

Here’s what the Full Court had to say in the All-fect case:

25 The confectionary has three features that are not descriptive of the goods. They are the silhouette, the fluting at the top and bottom, and the label band. It is not necessary for the respondent to adopt any of those features in order to inform consumers that its product is a cola flavoured sweet. It could do so by using the cola colour, the word COLA and the shape of an ordinary straight-walled bottle. The silhouette, fluting and band are striking features of the confectionary, and are apt to distinguish it from the goods of other traders. The primary function performed by these features is to distinguish the goods from others. That is to use those features as a mark. It is true, as the respondent said, that the fact that a feature is not descriptive of goods does not necessarily establish that it is used to distinguish or differentiate them. But in the present case we are compelled to the conclusion that the non-descriptive features have been put there to make the goods more arresting of appearance and more attractive, and thus to distinguish them from the goods of other traders.

While that was observed in the context of “contour” bottle shaped confectionery, things could get a bit sticky for Pepsi here.

As a side note: an interesting timeline comparing the Pepsi word and logo marks against the Coke history.

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Upholding a patent opposition on appeal

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Adrian Crooks, at IPnow, provides his summary of Besanko J’s ruling in Aspirating IP v Vision Systems [2010] FCA 1061.

Upholding a patent opposition on appeal Read More »

Patents and ‘abusive’ divisionals

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While we’re on the subject of raising patent standards, the Commissioner has also introduced new rules for divisional applications.

IPNow and Patentology explore what it all means for those of you filing patent applications.

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Obvious to try (typos corrected)

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IP Australia (for present purposes, the Commissioner of Patents) has been exploring ways to improve the quality of patents by, amongst other things, raising the threshold of inventiveness. (Consultation Paper, November 2009 (pdf) see section 1.2ff).

One might have thought that this would require legislative reform given the extremely strict approach to common general knowledge and, for that matter, s 7(3) taken in Australia.

Perhaps because the election so indecisively intervened, however, and professedly because the submissions agreed, IP Australia now appears to believe it can resolve our problems by simply adopting a new approach at the examination stage, so that legislation is no longer required. As from 1 August 2010, therefore, IP Australia has amended its approach to examining applications:

The Patent Manual of Practice and Procedure was amended on 1 August to indicate that where the application relates to the solving of a problem, being either a problem that is recognised in the art or a problem that is reasonably inferred from the specification, it is appropriate for examiners to consider the question:
Would the person skilled in the art (in all the circumstances) directly be led as a matter of course to try the claimed invention in the expectation that it might well produce a solution to the problem?

Patentology points out the way the Courts have been approaching this may not sit too well with the Commissioner’s idea.

Now, it is true that the majority in Alphapharm did say:

[52]  …. Thirdly, in a case such as the present, the relevant question was that posed in the first part of the passage. Were the experiments “part of” that inventive step claimed in the Patent or were they “of a routine character” to be tried “as a matter of course”? If the latter be attributable to the hypothetical addressee of the Patent, such a finding would support a holding of obviousness.

[53]  That way of approaching the matter has an affinity with the reformulation of the “Cripps question” by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd[57]. This Court had been referred to Olin in the argument in Wellcome Foundation[58]. Graham J had posed the question[59]:

“Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of chlorpromazine, directly be led as a matter of course to try the -CF3 substitution in the ‘2’ position in place of the -C1 atom in chlorpromazine or in any other body which, apart from the -CF3 substitution, has the other characteristics of the formula of claim 1, in the expectation that it might well produce a useful alternative to or better drug than chlorpromazine or a body useful for any other purpose?” (emphasis added)

That approach should be accepted.

The first thing to note about this proposition is that it is introduced by “thirdly”. There are a few hurdles to get over before one gets to the reformulated Cripps question.

One of the hurdles, recognised in the Commissioner’s Official Notice, is that one first has to be able to posit that the patent is attempting to propose a solution to some identified or identifiable problem. In the Lockwood (No. 2), however, the High Court made it very plain at [63] – [65] that may not always be appropriate.

Another hurdle expressed by the majority in Alphapharm were repeated doubts that “obvious to try” could be applied, if at all, to anything other than a simple step from the prior art to the claimed invention rather than, as in that case, a combination patent. In such cases, the majority rejected the approach of more recent English cases in favour of US cases such as In re O’Farrell

The admonition that ‘obvious to try’ is not the standard under §103 has been directed mainly at two kinds of error. In some cases, what would have been ‘obvious to try’ would have been to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful. … In others, what was ‘obvious to try’ was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it.

More generally, one may wonder how well the Commissioner’s attempt to use administrative procedural reform to obviate perceived deficiencies in the High Court’s interpretation of the legal meaning of the terms used in the Act will work. Given what the High Court has repeatedly said “common general knowledge” means and the limitations written into s 7(3), how would a Court on appeal deal with the Commissioner’s rejection of a patent application on the Commissioner’s new approach?

As the High Court itself made plain in Alphapharm, the divergence between Australian law and UK and for that matter US law lies in the prior art that may be used to found an attack on obvousiousness. Thus

in [43]:

…. The holding for which Minnesota Mining is celebrated is the rejection, as inapplicable to the terms of the 1952 Act, of the reasoning in certain English decisions. This might have permitted the basing of an argument of obviousness upon prior publicly available publications, without evidence that they had become part of the common general knowledge at the priority date. ….

and in [44]:

…. obviousness was not determined by asking whether a diligent searcher might have selected the elements of the claimed invention by taking pieces from those prior publications and putting them together…

and in [49]:

The result in Britain of the shift in grundnorm is exemplified in the observation by Laddie J[53] that the skilled worker (identified in s 3 of the 1977 UK Act):

“is assumed to have read and understood all the available prior art”. (High Court’s emphasis)

The treatment of the point by Aickin J in Minnesota Mining, as indicated above, expressly rejected any assumption as to what in such a way may be expected of and attributed to the hypothetical addressee. ….

If that is the foundation of the problem, it seems very hard to see how anything but a legislative solution will suffice for, as the High Court also made very plain, it is the function of the legislature to set (and if thought appropriate) change the parameters.

Official Notice (with link to Manual)

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Talk on keywords, adwords and trade marks

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For anyone who may find some value in them, I have posted the slides from my IPSANZ talk ‘Of Keywords, Adwords and Trade Mark Infringers at Slideshare.

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No copyright in newspaper headlines

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Bennett J’s reasons for ruling that Fairfax does not hold copyright in the Australian Financial Review’s headlines have now been published.

In conclusion, Bennett J stated:

159 As to the subsistence of copyright in the contended works, I have reached the following conclusions:

  • None of the ten selected headlines are capable of being literary works in which copyright can subsist.
  • Fairfax has failed to prove that any of the ten selected Article/Headline Combination is a discrete work of joint authorship in which copyright can subsist.
  • Copyright subsists in the Article Compilation and the Edition Work in each of the June and November editions as original literary works and this copyright is owned by Fairfax.
160 Reed takes the whole of each headline. As to whether Reed, in reproducing and communicating headlines of the AFR as part of the Abstracts, takes a substantial part of any of the contended works:
  • Even if the Article/Headline Combination constitutes a copyright work, Reed does not take a substantial part of such a work.
  • Reed does not take a substantial part of either the Article Compilation or the Edition Work.
161 Although it is not necessary to decide whether Reed is entitled to rely on the defences claimed, I nonetheless consider that:
  • Reed’s conduct in reproducing and communicating the AFR headlines as part of the Abstracts is a fair dealing for the purpose of reporting news such that Reed’s conduct would not constitute an infringement of copyright by reason of s 42(1)(b) of the Act;
  • Fairfax is not estopped from asserting that Reed’s reproduction and communication of AFR headlines in the Abstracts as part of the ABIX service amounts to infringement of its copyright in the contended works.
162 It follows that Fairfax’s application should be dismissed.

[160] is strikingly reminiscent of her Honour’s ruling at first instance in IceTV. As you will see from [161], her Honour also addressed the fair dealing defence and rejected Reed’s argument that Fairfax was estopped.

While the courts have been careful not to say there can never be copyright in film titles and the like, one wonders, if there wasn’t copyright in The Man Who Broke The Bank at Monte Carlo, whatever were they thinking?

The Australian (rather ironically given News Corp’s campaign) has some fun at Fairfax’ expense picking out some key points and repeats Alan Kohler’s question what would they have achieved commercially even if they succeeded?

Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984

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