June 2014

1. Patents

South Africa

False Declarations Sufficient Ground for Revocation in South Africa
In Gallagher Group Ltd v IO Tech Manufacturing (Pty) Ltd the South African Court of the Commissioner of Patents revoked a patent on the basis that the applications associated declaration contained a false statement.
South African patent applications require a declaration to be filed within 6-months of the application (although extensions of time are possible). The declaration contains the following text:
“to the best of my/our knowledge and belief, if a patent is granted on the application, there will be no lawful ground for the revocation of the patent”.
Section 61(1)(g) of the South African Patents Act 1978 specifically provides that a patent may be revoked on the ground that:
“the prescribed declaration … contains a false statement or representation which is material and which the patentee knew or ought reasonably to have known was false at the time when the statement or representation was made”.
The acting Commissioner held that the falsity of any statement is fixed at the date when the statement or representation was made and cannot be undone by subsequent amendment.
Commentators have contended that this decision could negatively affect many patents. In particular, it is contended that findings of false declarations could be made in respect of applications that contain impermissible claim format or unaddressed invalidity issues revealed in the PCT international phase or corresponding applications.
It is not clear that a similar finding could apply in New Zealand. While Forms 1 and 2 contain an essentially similar declaration there is no direct equivalent of section 61(1)(g). The closest appears to be section 41(1)(j), which allows for revocation on the basis:
(j) That the patent was obtained on a false suggestion or representation:
However, false suggestion seems to have only been argued in respect of the promise outlined in the complete specification rather than to the contents of forms accompanying the complete specification.

United States of America

US Sureme Court makes Indefiniteness Easier to Establish
In Nautilus Inc v Biosig Instruments Inc the Supreme Court recently established a test for indefiniteness that will make a finding of indefiniteness easier to establish. Amongst other things section 112 of the US patent law requires the specification to be clear, concise and enabling for the person skilled in the art.
Prior to the Supreme Court’s decision, the Court of Appeals for the Federal Circuit (CAFC) had for a long time held that a finding of indefiniteness required that the specification was “insolubly ambiguous”. However, the Supreme Court held that “the Federal Circuit’s formulation, which tolerates some ambiguous claims but not others, does not satisfy the statute’s definiteness requirement.” In its unanimous judgment the Supreme Court considered that the ‘insolubly ambiguous’ test was at risk of incorrectly mapping the statutory prescription.
Instead of the ‘insolubly ambiguous’ test, the Supreme Court held that “a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.”
It was stressed that finding definiteness must focus “on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc.” It was also stated that the updated standard is important for maintaining the public-notice function of the patent system and for reducing uncertainty.
The Supreme Court remanded the case back to CAFC to apply the new test to the facts of the case. In particular, the CAFC will need to determine whether claims concerning mounted electrodes containing the phrase “in spaced relationship with each other” are invalid for indefiniteness.

US Supreme Court Restores Traditional Approach to Induced Infringement
In Limelight Networks Inc v Akamai Technologies Inc the Supreme Court unanimously held that a defendant cannot be held to have induced infringement of a patent unless there has been an act of direct infringement. This reversed the fractured ruling by the Court of Appeals for the Federal Circuit in Akamai Technologies Inc v Limelight Networks Inc that a defendant could be liable for inducing infringement if they carry out some steps and encourage others to carry out the remaining steps. The 6-5 majority decision by the CAFC was noteworthy for being composed of 10 judgements given that the Judges could not agree on the reasons for why they individually concluded whether induced infringement does or does not require direct infringement by a single entity. However, the upshot of the majority decisions was that there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement. Some Judges also held that inducement does not require the induced party to be an agent of the inducer or be acting under the inducer’s direction or control to the extent that the act of the induced party can be attributed to the inducer. It is enough that the inducer causes, urges, encourages, or aids the infringing conduct and that the induced conduct is carried out. The majority decision made a significant change of principle and was countenanced by strongly worded dissenting judgements.
The Supreme Court used the Federal Circuit holding in Muniauction Inc v Thomson Corp to find that direct infringement did not occur. In that case it was held that direct infringement requires a single party to perform every step of a claimed method. However, this requirement is also satisfied even though the steps are actually undertaken by multiple parties if a single defendant “exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party.” On the facts, as in Muniauction v Thomson, Limelight was not such a controlling party. The patent at issue involved a method of delivering electronic data. Limelight, the accused infringer, performed all of the steps claimed in Akamai’s patent, except ‘tagging’ which is performed by Limelight’s customers.
The Supreme Court criticized the approach of the majority in Akamai v Limelight as it would lead to uncertainty about when infringement can be said to have been induced by an inducing party. This could also lead to an unwarranted extension of a patentee’s monopoly. The Supreme Court acknowledged that on its construction a would-be infringer could evade liability by dividing performance of a method patent’s steps with another whom the defendant neither directs nor controls. However, it held that the existence of this loophole did not justify altering the rules of inducement liability. By reversing, the Supreme Court restored induced infringement law to its traditional state of requiring a predicate act of direct infringement.

US Supreme Court Provides Two-Step Test for Patent Eligibility of Computer Implemented Inventions
In Alice Corporation Pty Ltd v CLS Bank International the US Supreme Court has provided a ruling on the patent eligibility of computer implemented inventions. At issue were method and system claims to a computerized scheme for mitigating ‘settlement risk’ by facilitating the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.
For similar reasons to the Supreme Court’s 2010 judgment in Bilski v Kappos the Supreme Court held the method claims to be patent ineligible. Whereas in Bilski v Kappos the claims were directed to the abstract idea of hedging against financial risk, in the current case the claims are directed to the abstract idea of intermediated settlement.
The Supreme Court, though, acknowledged that claims directed to an abstract idea can be transformed into patent eligible subject matter if they contain a sufficiently strong ‘inventive concept’. However, as in several other cases before it, the Supreme Court ruled that the use of a generic computer was insufficient to transform the patent-ineligible abstract idea into a patent-eligible invention. If a patent’s recitation of a computer amounts to a mere instruction to implement an abstract idea on a computer, that addition cannot impart patent eligibility.
The Supreme Court also found the system claims to be patent ineligible. In particular, in this case the system and method claims are no different in substance, since the specified hardware was merely generic computer components.
Subsequent to the Supreme Court’s judgment the USPTO has issued a practice note to assist in the examination of whether claims are directed to an abstract idea and if so whether they embody sufficient inventive concept to make the claims patent eligible.

2. Trade Marks

General

Google Allows Advertisers to Use Third Party Trade Marks if in line with Honest Commercial Practices
Google will soon change its practice in Australia and New Zealand relating to its policing of online advertisements that use third-party trade marks. Until now the owners of the trade marks could request Google to remove such advertisements. However, from the 28th July 2014 Google’s policy in Australia and New Zealand will be brought in line with other major English speaking countries by allowing exceptions for the use of a third-parties trade mark that is in line with honest commercial practices. In particular, resellers of goods, sellers who offer compatible components or parts, and advertisers who provide information about goods and services will be able to use third-party trade marks in the text of their advertisements.