Discussion Paper Released for Patents Accessibility Review
The Australian Government’s Department of Industry, Science, Energy and Resources has commissioned a Patents Accessibility Review with a view to ensuring that the standard patent system is as accessible as possible to Australia’s Small and Medium Sized Enterprises (SMEs).
As earlier reported the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 received Royal Assent on 26th February 2020. From the perspective of SME’s the provision of most relevance in that legislation was the initiation of the phasing out of innovation patents – with the last date for filing an innovation patent in the first instance being 25th August 2021. There were differing opinions as to whether the innovation patent system was overall beneficial for or detrimental to the ability of SMEs to innovate. In order to obtain sufficient support for the legislation the Government agreed to conduct a review into the accessibility of the standard patents system for SMEs.
Following direct consultation with specific SMEs, patent attorneys, IP lawyers, judges, finance consultants and brokers, the current consultation is focussed around the following questions, with responses required by 31st October 2020:
- Are the official fees set by IP Australia a barrier for SMEs?
- Are the professional fees for patent attorneys and IP lawyers a barrier for SMEs? Are professional fees good value for money?
- Are IP Australia’s processing times reasonable, noting that expedited examination is available?
- Is the support offered by the Australian Government on patents useful for SMEs? How can these resources better reach SMEs?
- Is the fear of litigation putting small businesses off patenting?
- Is the fear of litigation well founded? Is enforcement actually that difficult and expensive?
- How could enforcement be made more accessible? Is it possible for costs to be contained at certain points?
- How and when can SMEs best be encouraged to consider patents as part of their commercialisation and broader IP plans?
- Do you have any other comments on the issues raised in this paper, or on any other barriers that may hinder SMEs from accessing the patent system? Do you have any other suggestions for initiatives to improve accessibility?
Problem Found with Problem-Solution Approach to Claim Interpretation
In Choueifaty v Canada (Attorney General) 2020 FC 837 the Judge rejected the problem-solution approach to claim construction, finding that that interpretive framework can restrict the purposive construction of the claims.
Choueifaty’s patent application, titled Method and Systems for Provision of an Anti-Benchmark Portfolio, involves a computer implementation of a new method for selecting and weighing investment portfolio assets that minimizes risk without impacting returns. After the application was rejected by the examiner Choueifaty took it before the Patent Appeal Board (PAB) who considered two sets of proposed amendments, the first involving 27 claims and the second involving 63 claims. While Choueifaty argued that in the second set a computer was an essential element of the claims, the PAB found in both cases that the essential elements of the claims were directed to a scheme or rules involving mere calculations for weighing securities and involved no discernible physical effect. Consequently, on the recommendation of the PAB, the application was rejected by the Commissioner on account of being a mere plan and so not involving patentable subject matter.
In line with the Canadian Intellectual Property Office’s Manual of Patent Office Practice the purposive construction of the claims was made by identifying the problem and the solution and then determining which elements of the claims are essential to the solution provided. The Attorney General argued that this is the correct approach and arises logically from purposive construction on the basis that the purpose of the invention is to provide an operable solution to a practical problem. The Attorney General also argued that claim construction in relation to the determination of patentable subject matter is different to claim construction in relation to validity or infringement, particularly as in the latter cases the claim language has presumed validity on account of having successfully negotiated several hurdles.
However, Choueifaty argued that the problem-solution approach is not compatible with the approach to claim construction adopted in precedential Court decisions. In the Supreme Court of Canada decision Free World Trust v Électro Santé Inc, 2000 SCC 66 at  the test for determining whether an element of a claim is essential is whether that particular element was intended by the inventor to be essential, and whether that element could be substituted or removed without materially affecting function. In Halford v Seed Hawk Inc, 2006 FCA 275 the Federal Court of Appeal stated at :
An element may be found to be essential on the basis of the intent of the inventor as expressed or inferred from the claims, or on the basis of evidence as to whether it would have been obvious to a skilled worker at the time the patent was published that a variant of a particular element would make a difference to the way in which the invention works
In Distrimedic Inc v Dispill Inc, 2013 FC 1043 the Federal Court stated at  “everything that is claimed is presumed essential unless the patentee establishes otherwise or the claim language otherwise dictates”.
The Judge agreed with Choueifaty, finding that the Patent Office practice on purposive construction to be wrong in distinguishing between its application to patentable subject matter on one hand and validity and infringement on the other. The Judge noted that that approach was discredited in the Federal Court of Appeal decision Canada (Attorney General) v Amazon.com Inc, 2011 FCA 328 at  on the basis that in each case the focus is on the subject matter defined by the claims. The Judge further agreed that the problem-solution approach is akin to the ‘substance of the invention’ approach which was applied prior to the change to purposive construction following the UK House of Lords decision in Catnic Components Ltd v Hill & Smith Ltd,  RPC 183. Whereas the problem-solution approach is useful for determining whether an element could be substituted or removed without materially affecting function, it was found to ill-equipped for determining whether a particular element was intended by the inventor to be essential. As both of those aspects of the essentiality test need to be considered, the use of the problem-solution approach to claim construction is inappropriate.
The Judge referred the case back to the Patent Office for further examination taking into account the above findings as well as considering Choueifaty’s contention that one of the purposes of the invention was to improve computer processing.
As with the decision by a Delegate of the Australian Patent Office which we recently reported, this decision should give cause for hope for business software patentees and may well feature soon in decisions on the subject matter, not only in Canada but also in Australia and New Zealand.
USPTO Guidance Memo Clarifies Possible Use of Patent Specification in IPR
The USPTO Director-General has issued a guidance memorandum to standardise how the Patent Trial and Appeal Board (PTAB) will treat applicant admitted prior art (AAPA) in Inter Parties Review (IPR) proceedings.
In 2011 the Leahy-Smith America Invents Act (AIA) replaced inter-partes re-examination with inter-partes review so as to make the alternative to full litigation more streamlined and affordable – a change that was especially welcomed by non-US applicants and litigants including those from Australia and New Zealand. Under 35 USC § 311(b) an IPR party can challenge the validity of a patent and have input on its re-examination by the PTAB, but the grounds for re-examination are restricted to anticipation and obviousness and only in respect of patents and printed publications.
There has been variation in whether the PTAB treats statements in the applicant’s patent specification as qualifying as prior art. Some PTAB decisions have held that admissions made by the applicant in the specification about the state of the art fall within the ambit of § 311(b) as they are statements about the prior art and are in a patent. However, in accord with the majority of relevant PTAB decisions, the Director-General held that a patent cannot be prior art to itself and so cannot be the basis for an IPR as only qualifying prior art can form the basis of an IPR.
The Director-General, though, further clarified that while AAPA cannot form the basis of an IPR, it can still be used to supply legally relevant information about the common general knowledge of one skilled in the art. In particular, where a specification includes statements such as “It is well known that ...”, “It is well understood that ...”, “One of skill in the art would readily understand that ...”; or describes technology as “conventional”, or “well-known”, that can be used in conjunction with qualifying prior art to form an obviousness objection.
Provided it is used in conjunction with qualifying prior art, such AAPA can be used as evidence of the common general knowledge for the purpose of: (1) supplying missing claim limitations that were generally known in the art prior to the invention (for pre-AIA patents) or the effective filing date of the claimed invention (for post-AIA patents); (2) supporting a motivation to combine particular disclosures; or (3) demonstrating the knowledge of the ordinarily-skilled artisan at the time of the invention (for pre-AIA patents) or the effective filing date of the claimed invention (for post-AIA patents) for any other purpose related to patentability.
2. Trade Marks
Consultation on Options for Re-Purposing of Geographical Indications Legislation
The Australian Government has opened a new consultation in regards to its Geographical Indications (GIs) legislation in light of its on-going Free Trade Agreement negotiations with the EU, with responses sought by 30th November 2020.
Along with requesting Australia to agree to protect 236 spirit names and 172 agricultural and other names as GIs, the EU has requested Australia to change the way that GIs are protected and the scope of their protection.
Currently Australia does not have a unified GI protection regime. At a general level protection for GIs in relation to goods can be obtained by registering certification trade marks, which are used to show that the goods are certified as being of particular quality, characteristic, origin, material or mode of manufacture. Although protectable in this way, GIs for wine are also specifically provided for in the Wine Australia Act 2013. GI protection for spirits is available within the framework of the Australia New Zealand Food Standards Code.
Protection as a GI under these legislative provisions requires that the used sign identifies the relevant goods as originating in a particular country, region or locality and that those goods have a given quality, reputation or characteristic that is essentially attributable to that geographical origin. It also requires that the certifying entity deposits a set of rules outlining the criteria that needs to be met in order to make use of a GI. Those rules need to be approved both by the Australian Trade Marks Office and the Australian Competition and Consumer Commission.
If the EU geographical indication protection proposals are to be accommodated Australia would need to restructure its GI protection regime by creating a GI Right and this would most likely occur within the framework of the Trade Marks Act 1995.
While no decision has been made on whether to accommodate the EU proposals, the current consultation is focused around how an expanded GI regime could work best for Australian interests. Hence, the questions that the consultation raises are not limited to those arising in the EU proposals. Questions for consideration include:
- Whether only certain types of goods should be registerable as GIs;
- Whether an individual GI can only be registered in relation to one type of good or more than one;
- Whether any safeguards need to be built in, such as excluding common or generic product names;
- Whether and under what circumstances a new GI right can co-exist with a prior trade mark right;
- What level of detail is required for the conditions for use of a GI in respect of such things are production methods, boundaries and minimum local ingredients;
- Whether the current prohibition on using a GI term with a term such as ‘type’ or ‘style’ in relation to wines should also apply in respect of agricultural produce;
- Whether protection should automatically extend to translations of GI terms;
- Whether protection should extend to preventing the use of non-GI words or images that nonetheless evoke a GI, such as ‘glen’ for whiskey;
- Whether there should be any particular restrictions on the type of entity that can be the owner of a GI and what type of relationship they must have with the goods and region;
- Whether a third-party that meets the criteria automatically use a GI, or do they also need to get approval from the GI owner;
- Whether the bringing of an enforcement action can only be done by the GI owner or whether legitimate users of a GI right can too;
- Whether criminal penalties should be available as an enforcement remedy in respect of GIs.
IP Australia’s Smart Trade Mark Initiative for Combatting Counterfeiters
IP Australia has been trialling an Australian Government anti-counterfeiting initiative that allows consumers or other interested parties to check whether a website sells genuine branded products.
Counterfeiting is a recognised problem worldwide which not only negatively affects brand owners sales of their goods and their reputation in the marketplace, it also usually results in the purchasers of the counterfeit goods receiving inferior quality goods that are less durable and possibly even dangerous to use.
Under the “Smart Trade Mark” initiative owners of registered Australian trade marks provide details of websites through which their genuine goods are sold – which can be their own website and/or that of official re-sellers – and the relevant trade mark registrations. IP Australia stores those details and uses blockchain technology and application programming interfaces (APIs) to authenticate the trade mark by linking the details provided by the trade mark owner to the Australian Trade Marks Register. This then allows a Trust Badge or even numerous Trust Badges to be displayed on the relevant websites, which each link back to the relevant record on the Australian Trade Mark Register and provides details about the Smart Trade Mark program.
This initiative will eventually be opened up to all owners of registered Australian trade marks. It is not yet known whether IP Australia will charge for this service. However, IP Australia have indicated that they will release the Smart Trade Mark API to their platform, enabling users to integrate it directly with their business systems, so at least the DIY option will be free.
New Entrant Evades Opposition by Turning Up the Heat
The recent Assistant Commissioner’s decision Waiwera LLC v Savernake Holdings Ltd  NZIPOTM 16 involved actions against some of each side’s applications or registrations, with Savernake being successful in both respects despite being yet to trade.
Savernake is the IP holding company of a group of companies that have planned the development of premium health, fitness and aged care facilities, including the provision of aged care services. Savernake applied to register WAIWERA ONE for various goods and services related to the planned development, but faced opposition by Waiwera LLC and a related party (hereinafter Waiwera LLC) in relation to the health, fitness, retirement home and aged care services. In particular, Waiwera LLC relied upon the WAIWERA ARTESIAN device mark and the word mark WAIWERA for natural mineral water and drinking water; and the WAIWERA Est 1875 device mark for advertising and promotional activities.
Savernake applied to revoke the two device marks on the basis of non-use. On the basis of the evidence provided, and in line with the strict evidential requirement, the Assistant Commissioner readily found that the WAIWERA ARTESIAN device mark had not been used during the relevant 3-year non-use period. In the case of the WAIWERA Est 1875 device mark use was claimed on the basis of the mark being used on promotional t-shirts. However, the Assistant Commissioner rejected that, noting that use of a mark to promote goods does not constitute use for advertising and promotional services. Other promotional use was found to involve marks that differed from the mark as registered to an extent sufficient to not constitute use of the registered mark. Hence, given that no special circumstances were pleaded, both device marks were revoked for non-use.
Savernake applied to invalidate the word mark WAIWERA on various grounds that relate to the mark being a geographical signifier. A notable precursory issue was whether all those grounds were available given that the invalidity application was filed exactly 7-years from the deemed date of registration. Under section 75 of the Trade Marks Act 2002 a mark is deemed to be valid and subject to restricted grounds for invalidity after the expiration of 7-years from the deemed date of registration. The Assistant Commissioner readily found that section did not apply in this case as the invalidity application was not filed after the expiration of 7-years.
Waiwera LLC obtained registration of the mark on the basis of acquired distinctiveness. However, Savernake led evidence to the effect that Waiwera LLC misled the examiner into accepting the mark. Waiwera LLC claimed the mark had been continuously used by the various owners in relation to bottled water since 1875, but the evidence available showed that water bottling ceased in the early 1900’s and only resumed in 1992. Further, the prior owner of the thermal resort and pools complex who resumed water bottling in 1992 never used the mark WAIWERA on its own. Also, the aquifer that Waiwera LLC draws the water from is not exclusive to them and others who draw water from the aquifer also have rights to commercial use of that water. On the basis of this evidence the Assistant Commissioner held that the mark had been registered in bad faith given the misleading evidence of acquired distinctiveness and that given its geographical significance other traders would reasonably expect to be able to use the mark in relation to water.
Given the revocation and invalidity findings those registrations were not available for the purposes of Waiwera LLC’s opposition to Savernake’s accepted applications. Consequently, the relative ground of opposition under section 25(1)(b) could only rely on registrations for WAIWERA ARTESIAN SPRING in relation to amusement park services; amusement parks; animal parks and reserves (zoos); leisure park services; theme park services; and caravan parks. However, those services were found to be distinct to the services in Savernake’s applications and so the section 25(1)(b) ground failed.
For the absolute ground of opposition under section 17(1)(a) Waiwera LLC could also in principle rely on its unregistered marks, which included the marks Waiwera, WAIWERA and device marks in which WAIWERA is the predominant feature. However, the Assistant Commissioner found that only the WAIWERA mark in relation to bottled water met the threshold for awareness test as there was no evidence establishing that the other marks had a reputation in their own right as they were only shown in use with other marks. After finding WAIWERA and WAIWERA ONE to be phonetically and visually similar the Assistant Commissioner found bottled water to be complementary to health and fitness services, but not to retirement home services. However, in considering the surrounding circumstances of other traders rights to use WAIWERA, the Assistant Commissioner applied precedent to the effect that for a non-distinctive mark being used in relation to complementary goods or services is insufficient for establishing a real risk of confusion. Hence, the section 17(1)(a) ground failed, and consequently so did the Fair Trading Act, passing off and bad faith grounds.
In relation to the relative ground of opposition under section 25(1)(c) of using a mark that would be prejudicial to the interests of the owner of a well-known mark, the Assistant Commissioner noted that there was evidence of significant sales and spending on advertising. However, this was held to be insufficient to establish well-known status, and that further evidence such as market research or declarations from retailers may have assisted Waiwera LLC’s case in that respect.
The prior use ground also failed due to the low distinctiveness of the WAIWERA mark, which could not thereby count as prior use of WAIWERA ONE.