Concluded CPTPP Negotiations Require Little IP Legislative Changes
Negotiations on the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) concluded on the 23rd January 2018 and the parties are expected to sign it on 8th March 2018, following which it will come into effect once half of the signatories have ratified its provisions into their legislation.
An official consolidated CPTPP text has yet to be released, however it will consist of the Trans-Pacific Partnership (TPP) text, but with some provisions suspended. Amongst the suspended provisions are the following IP provisions from chapter 18 of the TPP:
- Patentable Subject Matter - Articles 18.37.2 and 18.37.4 (Second Sentence). Article 18.37.2 required patent protection for at least one of the following: new uses of a known product, new methods of using a known product, or new processes of using a known product. The second sentence of article 18.37.4 required patent protection for plants.
- Patent Term Adjustment for Unreasonable Granting Authority Delays - Article 18.46 11.
- Patent Term Adjustment for Unreasonable Curtailment – Article 18.48 12.
- Protection of Undisclosed Test or Other Data- Article 18.50 13.
- Biologics - Article 18.51 14.
- Term of Protection for Copyright and Related Rights - Article 18.63 15.
- Technological Protection Measures (TPMs) - Article 18.68 16.
- Rights Management Information (RMI) - Article 18.69
Other IP-related obligations will remain in the CPTPP, including those relating to:
- the expansion in scope of Customs border-enforcement powers to include goods for export and ex officio seizure powers;
- protection for performers property and moral rights; and
- expanded remedies for trade mark infringement.
Hence, in its soon to be finalized form the CPTPP will involve little effective change to New Zealand’s or Australia’s IP laws and practices.
Implied Licence Safe Harbour Clarified
In Seiko Epson Corporation v Calidad Pty Ltd the Judge held that Calidad did not in-general infringe Seiko’s patent on account of having an implied licence to re-use Seiko’s printer cartridges – although infringement was found for some of the printer cartridges since the refurbishment fell outside the scope of any implied licence.
While the fact scenario is essentially the same as applied in the recently reported US Supreme Court decision of Impression Products Inc v Lexmark International Inc, the determination was made by applying different principles. The US Supreme Court held that upon the first sale (anywhere in the world) patent rights are exhausted and so cannot be used to control future uses of the sold patented product, although breach of contract can play a more limited role in controlling downstream use.
However, in the current case, the Judge was bound by Privy Council precedent, which held that the patentee’s statutory monopoly allows them to impose restrictive conditions on the post-sale use of patented products, but only if the purchaser is explicitly made aware of such restrictive conditions at or before the time of purchase. In the absence of such notification it is presumed that patented goods are sold without limitations on use, including for subsequent owners of those goods unless they are properly put on notice, and any subsequent attempt to impose restrictions on use will have no legal basis. This equally applies even when the goods are first sold outside Australia.
Seiko argued for an implied limitation on the implied licence on account of the technological features which restricted subsequent owners from modifying the cartridges. However, the Judge cast doubt on the ability of such restrictions to explicitly convey a limitation on the implied licence, and in any case would not be conveyed at the time of purchase. The Judge also noted that purchasers of printer cartridges would have an expectation that such goods are capable of re-use, and that any attempt to not allow that needs to be clearly expressed.
“A court would be slow to infer an intention to restrict a subsequent owner of the product from re-using it and slow to find that notice is adequately given to purchasers where the patentee did not attempt to do so in express terms.”
A further factor was that modifications had been made to the printer cartridges, which Seiko argued involved actions outside the scope of the implied licence, and cited the principle that a purchaser can prolong the life of a licensed product, but they cannot make a new one under the cover of repair. The Judge noted that no cases have directly addressed the question of at what point has an owner of a product made changes to it such that the implied licence arising from a restricted use sale been extinguished. The Judge held that the assessment of whether or not the implied licence continues after modifications are made requires consideration of the significance of modification work done on a product and how the modifications in question relate to the features of the patented product that are defined by the claims. It is only in as much as the modified product represents an embodiment of the claimed features that the patentee can limit use of the patented product.
The Judge found that the cartridges Calidad sold before April 2016 involved material modifications of hardware (memory chip, interface pattern, integrated circuit assembly) that was central to the claims, and so fell outside the scope of the implied licence. However, the cartridges sold after April 2016 only involved modifications to data on the original memory chip, which is not part of the claimed subject matter, and so fell within the scope of the implied licence.
Disclosure Grace Period Held to Cover Post-Filing 'Whole of Contents' Disclosures
In Rozenberg & Co Pty Ltd v Velin-Pharma A/S the Delegate held that a post-filing publication of the same applicant can be covered by the grace period provisions, and so could be disregarded for novelty and inventive step purposes as a ‘whole of contents’ prior art base document.
Velin’s Australian national phase application has an effective filing date of 10th September 2010, and claims priority from a European application made on 10th September 2009. Velin had also previously filed a closely related PCT application (which also entered Australian national phase) that was published on 21st October 2010. Rozenberg argued that the earlier PCT application qualified as prior art on a whole of contents basis since although it was published after the subsequent applications filing date it contained subject matter that could provide the basis for equivalent claims while having an earlier priority date. Further, it was argued that the 21st October 2010 publication of Velin’s earlier PCT application fell outside of the 12-month grace period available for disclosures by the applicant.
The pre-Raising the Bar patents legislation applied and the relevant grace period provisions were given by regulations 2.2(1A) and 2.3(1A). Regulation 2.2(1A) provided a grace period for publication or use of the invention within 12-months before the filing date of the complete application. Regulation 2.3(1A) provided a grace period of 12 months after the information was first made publicly available.
Prior to this decision these grace period provisions had been understood as each being restricted to a 12-month time frame. However, the Delegate held that each grace period could apply to disclosures over more than a 12-month period. In particular, regulation 2.2(1A) was interpreted as setting a start date but not a finish date such that the grace period starts 12-months before the filing date and can extend beyond the filing date. Similarly, regulation 2.3(1A) was interpreted as setting a final deadline, but not a start date such that the grace period can extend into the period before the information was first made publicly available.
Criteria for Allowability of Undisclosed Disclaimers Elucidated
In G 1/16 the EPO Enlarged Board of Appeal has clarified that the allowability of a disclaimer is determined by different tests, depending upon whether the disclaimer is an undisclosed disclaimer or a disclosed disclaimer.
An undisclosed disclaimer is a disclaimer that either disclaims earlier disclosed but unpublished subject matter that the applicant could not have been aware of at the filing date or disclaims subject matter that could not be claimed for non-technical reasons – such as unpatentable subject matter. By contrast, a disclosed disclaimer removes subject matter disclosed in the application – such as a possible embodiment.
In decision G 1/03 the Enlarged Board ruled that undisclosed disclaimers are permissible if they remove only what is necessary to restore novelty or disclaim the subject matter that is excluded from patentability and such disclaimers must not be relevant to the assessment of inventive step or sufficiency. Decision G 2/10 held that for a disclosed disclaimer to be permissible a skilled person using common general knowledge up to the filing date would need to directly and unambiguously derive disclosure of the subject matter as amended in the specification as filed.
The G 1/03 criteria are more lenient since it exempts such disclaimers from needing to be derived from the application as filed in order to comply with the requirements of Article 123(2) of the EPC. Due to their nature it is very difficult for an undisclosed disclaimer to meet the ‘gold standard’ criteria set in G 2/10. However, some judicial decisions applied the G 2/10 criteria to undisclosed disclaimers. This eventually led to the referral of questions to the Enlarged Board regarding the correct criteria for assessing the allowability of an undisclosed disclaimer.
The Enlarged Board clarified that G 1/03 gives the appropriate criteria for undisclosed disclaimers. In further elucidating the G 1/03 criteria the Enlarged Board held that an undisclosed disclaimer:
• Restore novelty by delimiting a claim against unpublished state of the art found in earlier European patent applications; or
• Restore novelty by delimiting a claim against anticipation by published state of the art that is so unrelated to and remote from the claimed invention that the person skilled in the art would never have taken it into consideration when making the invention; or
• Disclaim subject-matter which is excluded from patentability for non-technical reasons;
- An undisclosed disclaimer may not provide a technical contribution to the subject-matter disclosed in the application as filed, especially nothing which is or may become relevant for the assessment of inventive step or for the question of sufficiency of disclosure; and
- An undisclosed disclaimer may not remove more than necessary either to restore novelty or to disclaim subject-matter excluded from patentability for non-technical reasons.
Third Party Option Held Not to Invalidate Exclusive Licence
In Oxford Nanopore Technologies Ltd v Pacific Biosciences of California Inc it was held that a licence was an exclusive licence for the purposes of the Patents Act even though a third party had an option to take a licence under the patent but had not yet done so.
Harvard College are the registered proprietor of an EP (UK) patent and they granted Oxford Nanopore a worldwide exclusive licence. However, it subsequently came to Harvard College’s attention that they had previously agreed to, upon request, grant a non-exclusive licence to a third party that collaborated with them in developing the technology. That third party, though, had yet to exercise its option to licence the technology. In consequence of this the exclusive licence agreement was amended so as to be subject to the third party’s right to exercise its option to licence the technology. In responding to infringement proceedings, Pacific Biosciences argued that the third party’s option to licence the technology meant that Oxford Nanopore did not qualify as an exclusive licensee as their licence was not to the exclusion of all other persons with the consequence that Oxford Nanopore could not bring or be part of proceedings against Pacific Biosciences.
There were found to be no precedential decisions covering the specific scenario. However, the Judge found the following propositions regarding exclusive licensing arrangements to be established by various authorities:
- Whether or not a licence is an exclusive licence for the purposes of section 67(1) of the Patents Act is a matter for English law;
- A licence which purports to be an exclusive licence may not necessarily be so. Identifying an exclusive licence depends on a proper construction of the document or documents. An exclusive licence will be expressly so: circumstances in which an exclusive licence will be implied will be rare, if they exist at all;
- It is for the party asserting that it is an exclusive licensee to demonstrate that it is;
- The assessment of whether or not a licence is exclusive is not a “once and for all assessment”. An exclusive licence may confer upon the patentee a power to convert the licence into a non-exclusive licence;
- The “essential element” of an exclusive licence is that is it a licence to the exclusion of all other persons, including the patentee or applicant;
- It is possible to have a plurality of exclusive licences in respect of any one patent;
- But each exclusive licence may only be granted to one person – a licence will not be exclusive if granted to a number of entities, even if they are under the same control;
- An exclusive licensee may grant sub-licences to “persons authorised by him”;
- There is a distinction to be drawn between a licence and an equitable right to call for a licence; and
- Where an equitable right to call for a licence is conditional the otherwise exclusive licence will remain exclusive unless and until the contractual conditions are fulfilled that enable the grant of the licence.
The case concerning proposition 10 has the most similarities to the current case, although it also involved the satisfaction of one of two conditions before requesting the option to be exercised, whereas the current case simply involved the unfettered right to request the option to be exercised. Nonetheless, even though there was no effective hurdle to the exercise of the option in the current case, the Judge held that there was insufficient basis to distinguish it from the earlier case, which itself involved a low hurdle, and so held that the exclusive licence remained exclusive until the option was exercised. The persistence of an exclusive licence in the scenario where a third party has an option to a licence does not depend upon the difficulty of the hurdle for the third party to exercise that option. Rather, until the option is exercised, the exclusive licence remains in effect, meaning that the third party would infringe if it tried to practice the patent without first effecting its option.