June 2019

1. General

New Zealand

Discussion Paper on Draft IP Omnibus Bill
The Ministry of Business, Innovation and Employment (MBIE) has released a Discussion Paper - Intellectual Property Laws Amendment Bill 2019.

The discussion paper proposes various options for amendments to the Patents Act 2013, the Trade Marks Act 2002 and the Designs Act 1953 as well as the possibility of using artificial intelligence in the examination process. The discussion paper characterises the proposals as being technical in nature, with the nature of the various proposed amendments being put into the following categories: Streamlining processes; Making criteria clearer; Getting up to speed with international developments; and Ensuring consistency with other IP Laws. However, some of the proposals would more accurately be characterised as making substantive changes. Submissions on the proposals are required by Friday 2nd August 2019. The proposals that MBIE favours are:

Patents:

• Making future divisional applications under the Patents Act 1953 have to meet the novelty, inventive step and support requirements of the Patents Act 2013 in order to be accepted for grant, with the determination of those tests being on a balance of probabilities basis.
• Eliminating the ‘daisy-chaining’ of divisional applications by only allowing divisionals to be filed from a parent application. All such divisionals would need to be in order for acceptance by the parent application ‘in order for acceptance’ deadline. Divisional applications would need to be accompanied by a request for examination and there would need to be a close off period ahead of the ‘in order for acceptance’ date after which no further divisionals can be filed.
• Even if the ‘daisy-chaining’ of divisional applications is not eliminated still requiring that divisional applications need to be accompanied by a request for examination.
• Clarifying that an application becomes abandoned if examination is not requested within 5-years of the application date.
• Providing an ‘anti-self-collision’ provision so that the ‘whole of contents’ approach to novelty does not result in the possibility of a poisonous divisional.
• Allowing an extension of time for putting an application in order for acceptance to be requested along with the request for a hearing.
• Not allowing the introduction of EPC 2000 second medical use claims, which have the format “Substance X for the treatment of medical condition Y in humans”.
• Specifying that patent rights in a particular product are exhausted when that product is sold anywhere in the world, meaning that patented articles could be parallel imported.
• Repeal sections 163 and 164 and clarify that the Attorney General has the right to challenge the validity of a patent under sections 92, 94 and 112.

Trade Marks:

• Removing the ability to file series marks.
• Allowing the Commissioner or the court to register a trade mark if the prior continuous use of the trade mark makes it proper for the trade mark to be registered.
• Allowing clarity objections to be raised in respect of Madrid Protocol applications that designate New Zealand.
• Clarifying that a trade mark can be declared invalid if it was registered in the name of a party who is not the true owner of the mark.
• Clarifying that the “contrary to New Zealand law” provision in section 17(1)(b) does not include the Trade Marks Act 2002.
• Allowing any person to apply to revoke or invalidate a registration
• Allowing for partial refusal of the specification for national applications so as to be in line with that which applies to partial refusals of Madrid Protocol applications that designate New Zealand.
• Automatically revoking trade marks that are not defended in non-use proceedings.

Designs:

• Allowing design applications to be assigned.
• Requiring information or documents required to be filed with the Commissioner under the Designs Act to be filed through the IPONZ Case Management Facility.

Artificial Intelligence (AI):
It is noted that other Intellectual Property Offices are using or developing AI for use in their operations, including such things as classification, prior art searching, figurative mark searching and machine translation of patent specifications. It is queried whether there is also a role for AI in discretionary decisions, and if so who should decide what discretionary decisions IPONZ should be allowed to delegate to an AI system.

2. Patents

Canada

Obviousness 'Reasonably Diligent Search' Test Held No Longer Relevant (at least for individual prior art)
In Aux Sable Liquid Products LP v JL Energy Transportation Inc the Judge rejected the ‘reasonably diligent search’ test for determining which prior art was available for obviousness purposes.

Claims 1 - 8 of the patent in issue concern a method of transporting natural gas by pipeline involving the addition of particular hydrocarbons with the resulting mixture being within given pressure and temperature ranges with no coherent liquid phase during transportation.

Claims 9 and 10 are to a gas mixture for use in a pipeline where the mixture is comprised of particular gases with each gas being within given percentage ranges by volume of the mixture with the resulting mixture being within given pressure and temperature ranges and having no coherent liquid phase.

Claims 1 – 8 were construed as requiring the intentional addition of particular hydrocarbons such that the mixture’s molecular weight (Mw) multiplied by it compressibility (z) is less than the product of those two factors (zMw) in the natural gas. The lower the zMw value the less energy that is required to transport a gas by pipeline. However, the construction of claims 9 and 10 were held not to include the elements of the intentional addition of particular hydrocarbons and the evaluation of zMw.

Given that construction claims 9 and 10 were held to be invalid on various grounds. Principally, for being overbroad as the claims are not limited to essential features of the invention; for lacking utility since efficient transportation of natural gas is the subject matter of the invention; and for being prior published by a Handbook that is a commonly referenced resource of the skilled person even though the elements of those claims were in different sections of the Handbook. Further, claims 9 and 10 were held invalid for unpatentable subject matter, since the absence of any evaluation of zMw in those claims means successful practice of those claims would require the skilled person to exercise professional skill and judgement. While the presence of professional judgment is what makes methods of medical treatment unpatentable, the Judge held that the principle also applies in other fields where successfully practising the claim involves the exercise of professional judgment.

The strongest argument against claims 1 – 8 was obviousness. However, the Judge held that one of the two pieces of prior art relied upon for obviousness would not have been found under the ‘reasonably diligent search’ test, even though it was presented at and appeared in the proceedings of an international conference. The Judge found that Aux Sable had not provided evidence of how that publication would be located on the basis of a reasonably diligent search. Nonetheless, Aux Sable argued that legislative changes brought into effect in 1996 meant that the test was no longer relevant. After the legislative changes the obviousness analysis was required to be conducted “…having regard to … information disclosed … in such a manner that the information became available to the public in Canada or elsewhere”. Aux Sable argued that both on its plain meaning and given its mirroring of the language used in the anticipation provision all publically disclosed prior art is now available for obviousness purposes and that the reasonably diligent search test has been displaced.

The Judge noted that many subsequent cases continued to apply the reasonably diligent search test. Only in some cases was its continued applicability put in issue, but it was not definitively ruled on. That said, the Judge agreed with a Federal Court decision that also noted the lack of definitive ruling, but which went on to state:

in order to obtain a valid patent, it is not enough for a skilled person simply to make an obvious change to what is known in the art. This principle should apply to any information that was available to the public, even if it would not have been located in a diligent search.

In the same paragraph that case went on to state:

The fact that a prior art reference would not have been located in a diligent search may be more relevant where the obviousness allegation combines two references, neither of which is part of the common general knowledge. In that event, it would be necessary for the party alleging obviousness to explain how a skilled person having one of the references would have been led directly and without difficulty to combine it with the other to arrive at the impugned invention.

JL Energy sought to use that against Aux Sable’s statutory interpretation argument on the basis that the legislative change made no reference to the number of pieces of prior art and so the relevance or not of the reasonably diligent search test should not depend upon it. However, the Judge agreed with Aux Sable’s contention that the reasonably diligent search test may only be relevant where obviousness is being established by combining multiple pieces of prior art, and even then only at step 4 of the Windsurfing / Pozzoli test.

Nonetheless, even after finding the prior art available for obviousness purposes, the Judge held that obviousness was not established, since the complex behaviour of the zMw product did not form part of the prior art or the common general knowledge and would not be obvious to the skilled person. While the zMw product is proportional to gas flow, nothing was found in the prior art to explain why the skilled person would be motivated to evaluate that product in connection with the addition of particular hydrocarbons, and attempts to do so involved impermissible use of hindsight.

3. Trade Marks

China

China Strengthening Protections Against Bad Faith Filings
From 1st November 2019 China’s Trademark Law will provide greater protection against bad faith filings, when amendments to the law made on 23rd April 2019 take effect. Collectively, the following amendments should result in a significant reduction in bad faith filings:

• Article 4 is amended to the effect that trade mark applications in bad faith which are not intended to be used are to be refused. Guidelines subsequently issued by the Beijing Higher People’s Court regarding this amendment indicate that it will be applied to applications that are identical or similar to well-known or highly distinctive marks in any class, as well as where a large number of applications are made without good reasons.
• Articles 33 and 44 is amended so as to allow any person to file an opposition or invalidation proceeding on the ground of bad faith. Previously a contesting party had to establish that they were an ‘interested person’, which proved to be too high a burden for foreign rights holders who had no rights or use in China to rely upon.
• Article 19 is amended to prohibit trade mark agents / agencies from filing marks for applicants where they know or should know that those marks will contravene Article 4.

Europe

Test for Acquired Distinctiveness of Extremely Simple Device Marks Clarified
In T 307-17 Adidas AG v EUIPO a General Court has upheld a finding of invalidity against Adidas’s registration of a three-striped device mark.

Adidas’s registration contained the following representation along with the following description: ‘The mark consists of three parallel equidistant stripes of identical width, applied on the product in any direction’. A subsequent invalidity action on the basis of lack of distinctiveness was granted by the Cancellation Division and that finding was upheld by a Board of Appeal of the EUIPO even though Adidas argued that the mark has acquired distinctiveness.

In the appeal of that case the General Court first confirmed that the date at which acquired distinctiveness is to be assessed is the date at which the invalidity action was filed, since it is possible for a mark that lacks distinctiveness when registered to subsequently acquire distinctiveness through use.

Even though the mark was registered as a figurative mark, Adidas sought to argue that the mark represents a ‘surface pattern’ that may be reproduced in different dimensions and proportions depending on the goods on which it is applied. In particular, that the three parallel equidistant stripes constituting the mark at issue could be extended or cut in different ways, including cut at a slanted angle. However, the General Court rejected that for several reasons: (i) once a trade mark is registered, the proprietor is not entitled to a broader protection than that afforded by that graphic representation; (ii) where a description is provided the protection accorded to a mark needs to be in line with that description; (iii) distinctiveness is examined in relation to the submitted graphic representation and description. The General Court noted that figurative marks are in principle registered in the proportions they are represented in and that the mark at issue is an ordinary figurative mark and not a pattern mark.

Adidas also argued that the Board of Appeal misapplied the ‘law of permissible variations’, which allows the use of a mark in a form differing in elements which do not alter the distinctive character of the registered mark to also be considered as use of that mark. The General Court held that the Board of Appeal had correctly applied the principle that for extremely simple marks even a slight variation can produce a significant alteration to the characteristics of the mark as registered, when it found that the uses relied upon amounted to significant and hence impermissible variations. In this case, given the extreme simplicity of the mark, even the inversion of the colour scheme was held to be an impermissible variation.

Adidas further argued that a global assessment of its large body of evidence establishes intensive use of the ‘mark with three parallel equidistant stripes’ as well as the recognition of that mark as the applicant’s by the relevant public. The General Court rejected that, holding in line with the previous point that only use in the registered or broadly equivalent form could qualify, and even then only if it is used in relation to the goods of interest. On that basis only a smaller body of evidence qualified, which was held to lack any indication of the scale and duration of that use or the impact of that use on the perception of the mark by the relevant public.

It was further held that Adidias’s evidence of use and acquired distinctiveness were insufficient to establish distinctiveness across the European Union. Given the unitary effect of an EU trade mark it needs to satisfy the distinctiveness criterion in every member state. It was found to lack inherent distinctiveness in all member states. The evidence of acquired distinctiveness only covered 5 member states and it was held that this could not be extrapolated across all member states.

United States of America

Supreme Court Finds Further Elements of Trademark Eligibility Criteria Unconstitutional
In 18-302 Iancu v Brunetti the Supreme Court has extended the degree to which section 2(a) of the Trademark Law is unconstitutional.

As previously noted the Court of Appeal for the Federal Circuit (CAFC) held that the disparagement provision of section 2(a) is unconstitutional on account of being a viewpoint discriminatory regulation of speech. The CAFC decision implied that there is scope for extending the finding of unconstitutionality to the immoral and scandalous provisions of section 2(a), but declined to rule upon it. That decision was subsequently upheld by the Supreme Court.

In light of these findings in the predecessor to the present case the CAFC held that the immoral and scandalous provisions of section 2(a) are unconstitutional on account of restricting free speech and so should not be used to prevent registration of the mark FUCT. In the USPTO’s appeal of that decision the Supreme Court was unanimous in upholding the unconstitutionality of the immoral provision, while the majority also upheld the unconstitutionality of the scandalous provision for being viewpoint based.

The majority of the Supreme Court declined the USPTO’s request to narrow the scope of those provisions by holding that section 2(a) applies in respect of obscene, vulgar, or profane marks, since it was considered that such a rewriting of the law is not supported by the statute’s current language.