May 2014
1. General
New Zealand
Budget Provides Incentives for R&D
The May 2014 Budget has introduced several measures, expected to take effect from the 2015-2016 income year, that will provide greater incentives for businesses to undertake research and development.
One measure is giving qualifying businesses the ability to cash-out tax losses attributable to eligible research and development rather than having to carry it forward as a tax loss to be applied against future assessable income. The introduction of this measure will particularly benefit start-up businesses with a significant research and development focus. Such businesses are less likely to have near-term revenue streams that the tax loss can be applied against, and so may be at risk of failure before the tax loss can be utilized.
To qualify for the cash-out option the business must carry out eligible research and development and at least 20% of the businesses wage and salary expenditure must be attributable to such research and development.
Another measure seeks to address the current ‘black hole’ tax treatment of some research and development expenditure. Currently business expenditure that is not immediately tax deductible and is not part of the cost of a depreciable asset becomes ‘black hole’ expenditure. Research and development that turns out to be unsuccessful is a prime candidate for such ‘black hole’ expenditure and as such has acted as a disincentive for this type of business investment. The Budget seeks to address this by making capital expenditure relating to the creation of a broad range of intellectual property assets depreciable. This will give such intangible assets the same tax treatment as fixed assets.
2. Patents
Australia
Diligence and Public Interest Assist Extension of Time Applications
The ‘Raising the Bar’ amendments to the Australian Patent Act made the granting of extensions of time for filing evidence significantly harder. Determination of whether an extension of time can be granted involves the following criteria:
(1) Has the party (and their attorney or agent) made all reasonable efforts to comply with all relevant filing requirements?
(2) Was the failure to file the evidence in time despite the party acting promptly and diligently at all times to ensure the evidence is filed in time?
(3) Were there exceptional circumstances that warrant the extension?
Granting an extension of time requires either that (1) and (2) are answered ‘yes’ or that (3) is answered ‘yes’.
In Arch Wood Protection Pty Ltd v Osmose (Australia) Pty Ltd the ‘Raising the Bar’ amendments did not apply. At issue was whether a late discovered piece of prior art could be admitted as evidence. The delegate allowed the extension of time on the basis of public interest given that the prior art was particularly relevant. Another factor in allowing the extension was that the opponent was diligent in filing the request for an extension of time soon after the additional prior art was found.
General
Tegernsee Group Issue Report on Viability of Substantive Patent Law Harmonisation
The patent offices of Europe, Denmark, Germany, UK, Japan and USA formed what is known as the Tegernsee Group with a view to establishing greater substantive patent law harmonisation. They recently produced a report on the viability of achieving substantive harmonisation on the four key issues of grace periods; 18-month publication; treatment of conflicting applications and prior user rights.
The report concluded that harmonisation of grace periods was unlikely, with the majority from each region wanting to retain their current policy settings in this area. Whereas European countries and Japan prefer a 6-month grace period available for specific circumstances and requiring a mandatory declaration, the USA prefers a 12-month grace period covering a wider range of circumstances and no declaration.
Each of the offices currently practices publication at 18-months from the filing date or priority date if relevant, and the vast majority of responses were in favour of retaining that. The USA allows applicants to opt–out of automatic publication at 18-months. However, given the desire to have harmonisation around publication, the majority of respondents were not in favour of allowing an opt-out provision.
Regarding the possibility of conflict between earlier filed and later published applications (secret prior art), there are three different practices. In Europe secret prior art is relevant to the examination of novelty only, and there is no anti-self-collision clause. In the US, secret prior art is relevant to the examination of both novelty and inventive step, and anti-self-collision is provided for. In Japan secret prior art is relevant to the examination of “enlarged” novelty (which includes minor differences), but not to the examination of inventive step, and anti-self-collision also provided for. The vast majority of respondents considered harmonisation to be important, but respondents also considered that their current practice represented best practice.
The majority of respondents considered prior user rights should apply up until the filing (or priority) date and that there should be no exceptions to prior user rights being provided for. It was also agreed that mere prior knowledge should not be sufficient for prior user rights to exist.
New Zealand
Very Old Prior Art Held Available for Obviousness
In Johnson Electric SA v Emerson Electric Co an Assistant Commissioner held that a patent specification published more than 50-years before the filing date of a patent application and which a diligent searcher of the relevant art could find is available for obviousness purposes – although not by itself.
The relevant document (D1) was a US patent specification filed on 16th April 1856. Subparagraph 21(1)(e) of the Patents Act 1953 defines the types of publications that can be considered for establishing obviousness.
(e) That the invention, so far as claimed in any claim of the complete specification is obvious and clearly does not involve any inventive step having regard to matter published as mentioned in paragraph (b) of this subsection, or having regard to what was used in New Zealand before the priority date of the applicant's claim:
Subparagraph 21(1)(b) defines the types of publications that can be considered for establishing prior publication. For the purposes of considering D1 provision 21(1)(b)(ii) applies.
(b) That the invention, so far as claimed in any claim of the complete specification, has been published in New Zealand before the priority date of the claim -
(ii) In any other document (not being a document of any class described in subsection (1) of section 59 of this Act):
For the purposes of considering D1 the relevant provision of subsection 59(1) is subparagraph 59(1)(b):
(1) An invention claimed in a complete specification shall not be deemed to have been anticipated by reason only that the invention was published in New Zealand -
(b) In a specification describing the invention for the purposes of an application for protection in any country outside New Zealand made more than 50 years before that date;
The opponent’s referred to commentary on the equivalent section under the old UK Patents Act 1949 which put emphasis on the phrase “by reason only” in subsection 59(1). One way of understanding the significance of this phrase is to consider an alternative substitution. If the phrase “by reason only that” is replaced with “if”, then it would quickly follow that D1 is not available for consideration under obviousness. Namely: since D1 was published more than 50-years before the application date, it would satisfy subparagraph 59(1)(b) and so would not qualify as an anticipation for the opposed application. Consequently, D1 would not qualify as a document under provision 21(1)(b)(ii). Hence, D1 does not qualify as a document that can be considered under subparagraph 21(1)(e).
However, the earlier UK commentary argued that if a document does not qualify as anticipation on account of satisfying one of the subparagraphs of (the equivalent of) subsection 59(1), this does not mean that it can simply be disregarded. Rather, such documents are still part of the art, but cannot be singled out as disclosing the invention themselves. Since anticipation by publication requires disclosure in a single document such a document is thereby excluded for novelty purposes. However, for obviousness, such a document is still part of the art and can be mosaiced with other documents forming part of the common general knowledge for the purpose of establishing obviousness. The Commissioner accepted this argument, but ultimately held on the facts that obviousness was not established.
PCT
ePCT to be Expanded to Include National Phase Filings
WIPO’s PCT Working Group is proposing allowing national phase filings through the ePCT. Along with outlining how this might work in practice, the Working Group also proposes amendments to the PCT Rules required by such a system.
Since the IB already holds most of the documents and bibliographic data required by designated Offices for commencing national phase, applicants just need to add any outstanding documents and information before requesting national phase entry. Each participating designated office would then inform the applicant of specific requirements to be met for national phase entry: such as translation requirements; time limit for national phase; local agent address for service requirements and the required fee. Initially payment would still need to be made to each designated office, but this may be centralised at a later date. The international phase agent could give a local agent rights to access the ePCT application for the purpose of satisfying the requirements for national phase entry.
It is proposed to amend Rule 83.1bis(a) to offer the right to practice before the receiving Office of the International Bureau to any person who has the right to practice before the national Office of any PCT Contracting State (or a regional Office acting for any PCT Contracting State), irrespective of the nationality or residence of the applicant. If so appointed, such a person would, as at present, also have the right to act before any of the other Offices having functions in the international phase.
It is also proposed to amend Rule 90.5(d) so that an agent who has been appointed by a general power of attorney and who submits a notice of withdrawal to the International Bureau would be required to submit a copy of the general power of attorney to the International Bureau together with the notice of withdrawal. This would enable the International Bureau, in cases where it receives a notice of withdrawal together with a copy of the general power of attorney, to process the notice of withdrawal without requiring the agent to submit a separate power of attorney. The need for this amendment follows from the previous introduction of Rule 90.5(c) which allowed Offices and Authorities to waive the requirement to receive a copy of a general power of attorney. Consequently it is possible for the IB not to have a copy of the general power of attorney on file. Nor can the IB accept a copy of it, as current Rule 90.5(d) does not envisage the IB receiving such a copy from the applicant. In such cases the IB is required to invite the agent to submit a separate power of attorney to it.