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IPO COMMITTEE NEWSLETTER April 2012

Written by Members of the IPO Patent Law and Practice (International)

Committee

Chair: Larry Welch, Eli Lilly Vice Chair: Samson Helfgott, Katten Muchin Rosenman LLP

Board Liaison: Daniel J. Staudt, Siemens

With contributions from the European Practice Committee

Chair: Filip DeCorte, Cargill Vice Chair: Jean-Jacques Canonici, Procter & Gamble

Vice Chair: Hans Prins, Arnold & Siedsma

CONTENTS Canadian Patent Office Allows Amazon.com “1-Click” Patent Philip Mendes da Costa, Bereskin & Parr, LLP, Toronto, Canada Personalized Medicine Patents Rejected By U.S. Supreme Court Robert Smyth, Morgan, Lewis & Bockius, LLP, Washington, D.C. Coming-Up Amendments to German IP Law Dr. Aloys Hüttermann, Michalski Hüttermann & Partner, Düsseldorf/Munich, Germany Broken Promises – Canadian Patent Claims Don’t Fly Santosh Chari and Anthony Prenol, Blake, Cassels & Graydon LLP, Toronto, Canada Practice Tips For Patent Prosecution In Brazil Claudio M. Szabas, ASPEBY · SZABAS, Rio de Janeiro – Brazil

Raising The Bar Of Patentability In Australia

David Miles PhD, Pizzeys, Brisbane, Australia The Absurdity of the Unauthorised Disclosure Provisions in Australia Vaughan Barlow, Pizzeys, Brisbane, Australia ***This paper was created by the authors for the Intellectual Property Owners Association all of whom are members of the Patent Law and Practice (International) Committee, with contributions by the European Practice Committee, to provide background to IPO members. It should not be construed as providing legal advice or as representing the views of IPO.***

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CANADIAN PATENT OFFICE ALLOWS AMAZON.COM

“1-CLICK” PATENT

Philip Mendes da Costa Bereskin & Parr, LLP,

Toronto, Canada

In a surprising twist, the Canadian Intellectual Property Office (CIPO) has now allowed the Amazon.com “1-Click” patent application, directed toward what is, in essence, an improved remotely-accessible virtual checkout kiosk. The allowance appears to signal the end of a drawn-out legal battle for Amazon.com, and comes less than a month after the Canadian Federal Court of Appeal (FCA) remanded the application to the Commissioner of Patents for further examination.

The “1-Click” application was

initially refused by the Commissioner on several grounds relating to patent- eligible subject matter. Among the reasons for refusal was the assertion that Amazon.com’s claims were for “business methods,” and that business methods were inherently excluded from patent eligibility under the definition of invention in section 2 of the Patent Act. In the appeal to the Federal Court (FC), Amazon was the clear victor with virtually every aspect of CIPO’s refusal criticized by Justice Phelan. The FCA was more circumspect, but found that the lower court decision was correct in respect of the law and that its explanation of the test for patentable subject matter was correct. As did the FC, the FCA rejected the Commissioner’s argument for a determination of the “actual invention” independent of the invention as claimed. CIPO’s “technological” and “change in physical character or condition of a physical object” tests were similarly

rejected as being without basis in law. The courts confirmed that interpretation of patent claims is always, and only, by purposive construction as required by binding Supreme Court of Canada (SCC) precedent.

However, in a move that many

patent practitioners in Canada found odd, especially since purposive construction is a matter of law routinely decided in the FC, the FCA ruled that the lower court had overreached in attempting to make its own purposive construction of the claims. It felt the lower court lacked the necessary expert knowledge regarding the state of the computer arts. This was a particularly curious finding given that the rejection originally appealed by the Applicant concerned mainly subject matter under section 2 of the Patent Act: an issue of validity, not interpretation. The SCC has been clear that patent construction precedes assessment of validity, and recourse to extrinsic evidence in interpreting patent claims is generally not permitted.1

In other words, there should be no need for additional expert evidence on the state of the art when the courts are asked to make a patent construction. Nonetheless, in the Appeal Court’s view, there was insufficient evidence before the FCA to determine whether the claims were directed toward patentable subject matter. Accordingly, the FCA allowed the appeal, and directed CIPO to re-examine the “1-Click” application on an expedited basis in accordance with the Court’s reasons.

1 Beecham Canada Ltd. v. Procter & Gamble Co. (1982),

61 C.P.R. (2d) 1 (FCA): “[I]n construing the claims in a patent recourse to the remainder of the specification is (a) permissible only to assist in understanding terms used in the claims; (b) unnecessary where the words of a claim are plain and unambiguous; and (c) improper to vary the scope or ambit of the claims.”

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Perhaps the most interesting twist in the long story of the Amazon.com “1-Click” application came less than a month after the FCA decision. Despite having won the appeal, CIPO quickly allowed Amazon’s application without requiring any changes to the claims. That is, CIPO allowed the very same claims it had appealed to avoid allowing.

Many observers had anticipated a

further appeal to the Supreme Court of Canada to resolve these outstanding uncertainties in the law and in the FCA decision. The unexpected allowance now deprives patent users in Canada the opportunity to see the law corrected and clarified in an area that is of significant commercial and technological importance.

The allowance is certainly a

positive outcome for Amazon.com. For others seeking patent protection for software and business methods, it is mixed news. The FCA has maintained an emphasis on a "physicality" requirement, whose origin in Canadian law appears to lie in obiter musings concerning, among other things, the determination of whether certain real estate was a capital asset or inventory for the purposes of the Income Tax Act.2

2 Lawson v. Canada (Commissioner of Patents) (1970), 62

CPR 101, at 111- 112.

Further, without defining the term "business method," the FCA suggests for the “1-Click” case that the business method “is an abstract idea [that] is realized by programming it into a computer by means of a formula or algorithm, which is also an abstract idea.” According to the FCA neither “business methods” (however defined), nor software programmed onto a computer is, by itself, patentable in Canada unless part of a larger combination that includes something else that is an essential, and apparently

non-obvious, element meeting the physicality requirement. Finally, the FCA appeared to suggest that purposive construction of the claims might lead to the conclusion that the “1-Click” method is not the whole invention but only one of a number of essential elements in a novel combination and that the purposive construction of the claims should be undertaken anew by the Commissioner with a “mind open to the possibility that a novel business method may be an essential element of a valid patent claim.” This is curious, as it is well established in law that patent construction is to be undertaken independent of issues of any validity assessment (i.e., novelty is an element of the validity assessment).

While the allowance indicates that

CIPO may continue to grant patents for at least some inventions with computer-based elements, the FCA decision appears to have done little to aid in correcting or clarifying the law, and the actual boundaries of what constitutes patentable subject matter may remain uncertain for some time to come. An opportunity has been lost.

Paul Horbal, B.A.Sc., M.Sc. (Elec.

Eng.), J.D., is an associate lawyer with Bereskin & Parr LLP’s Software & High Technology practice group. He can be reached in Toronto at 416.957.1664 or phorbal@bereskinparr.com.

Stephen M. Beney, B.Sc. (Physics), is a partner in Bereskin & Parr LLP’s Software & High Technology practice group. He can be reached in Mississauga at 905.817.6102 or sbeney@bereskinparr.com.

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PERSONALIZED MEDICINE PATENTS REJECTED BY U.S.

SUPREME COURT

Robert Smyth Morgan, Lewis & Bockius, LLP,

Washington, D.C. In Mayo Collaborative Services v. Prometheus Laboratories, Inc., U.S., No. 10-1150, an opinion authored by Justice Stephen Breyer, the U.S. Supreme Court unanimously ruled that method claims directed to the personalized use of medicines are not patentable subject matter under 35 U.S.C. Section 101. The claims at issue, which were directed to adjusting the administered dose of a drug after determining the levels of metabolites of that drug in a patient, were deemed to be effectively a law of nature and thus represent nonpatentable subject matter. Prometheus originally sued Mayo on the basis that Mayo's diagnostic kit allegedly infringed Prometheus's exclusively licensed patents directed to a method of adjusting doses of a drug providing a thiopurine metabolite based on the detected levels of the metabolite in a patient (U.S. Patents 6,355,623 and 6,680,302). The method claims involved the three steps of (1) administering a drug providing a thiopurine metabolite to a patient, (2) determining the level of the thiopurine metabolite in the patient, and (3) a wherein step informing the doctor that metabolite concentrations above or below the claim thresholds "indicate a need" to decrease or increase (respectively) the drug dosage. The trial court determined that the claims relied on a law of nature. The U.S. Court of Appeals for the Federal Circuit reversed, deciding that the treatment satisfied the "machine or transformation" test. The Supreme

Court remanded the case in view of the decision in Bilski v. Kappos, 130 S. Ct. 3218 (2010), that the “machine or transformation” test is not the sole or definitive test to determine if a process is patent eligible. The Federal Circuit then reaffirmed its original decision. The Court first ruled that Prometheus's claims involved a law of nature in the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage will be ineffective or toxic. The Court then stated that the issue was whether the claims add enough to the correlations described to qualify as a patent-eligible process that applies natural laws. Precedential cases, such as Diamond v. Diehr, 450 U.S. 1981 (1981), and Parker v. Flook, 437 U.S. 584 (1978), had qualified that application of a law of nature or a mathematical formula in a novel and useful structure or process may be patentable. The Supreme Court distinguished Prometheus's claims from the precedential cases on the basis that Prometheus merely used what was already known and easily understood to apply a law of nature. The Court found that administering the drug only established the relevant audience and that the "wherein" clause recited the law of nature. The Court ruled that determining the metabolite levels was a well-understood conventional activity and that this step could potentially be performed without transforming the patient's blood. In examining the claimed process as a whole, the Court found that the step of determining the metabolite levels added nothing significant beyond the sum of the parts taken separately. The Court further noted that while the laws of nature at issue were relatively narrow, the claims still tie up the use of the law of nature and foreclose the

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development of a more refined treatment. The Court also stated that application of a natural law to a known structure may still be patentable, but the application must be significant and include additional inventive concepts separate from the natural law without being so broad that it preempts the use of the law. Language used in making this decision may signal a shift in how U.S. patent law treats medicine-related claims. Countries such as Japan, India and Brazil, as well as the European countries, have historically expressed reluctance to award patents that are directed toward affecting human health. This reluctance stems from the ethical concerns regarding the possibility of preventing a person from access to treatment. In this unanimous decision, the Supreme Court expressed concern that allowing such a patent to stand, the potential to stop physicians from being able to treat a patient may exist, thus echoing the reasoning many other countries have used to deny such patents. COMING-UP AMENDMENTS TO

GERMAN IP LAW

Dr. Aloys Hüttermann Michalski · Hüttermann & Partner

Düsseldorf/Munich, Germany The German ministry of Law has announced a draft for a “Patent Modernization Act” which would amend not only Patent Law but also Design and Trademark Law as well. Although said Act has not been passed, it is to be expected that as with previous drafts the Act will be passed soon with no or only little changes made by parliament.

The draft is quite long and involves the change of more than thirty paragraphs of the existing patent, utility model, design and trademark law. When going through the draft, one can feel in a sense an intention of “cleaning-up” or “tidying”. Quite a number of adaptations were made in order to change the law in order to cope with the newly-introduced electronic file (i.e. that a passage is going to be introduced into all German IP laws that insight into the register may be possible via internet). Many other passages involve the deletion of rules and regulations which were hardly used at all, i.e. that the so-called “Zusatzpatent” (= “addition patent”) of which less than 20 applications were filed each year is deleted or that it is not possible for a third party any more to request a search to an application, which has been used in less than 30 cases per year, too. 3

Significant changes for applicants and users of the system seem to be the following:

Patent Law: Most changes affect Patent Law. The most important amendments seem, in decreasing order of importance: 1) The period for filing an opposition is doubled to six months from three months as it is now. This is undoubtedly good news for anyone who intends to file oppositions since the existing three-months was considered by many to be quite short and, too short for many cases to file a well-reasoned opposition statement. Up to now it used to be common practice that a “pro forma” opposition was filed and the real opposition

3 Please do not confuse this with the very important

possibility for a third party to request substantive examination of a patent application; this is very commonly used and will not be changed.

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statement was introduced at some point during the opposition proceedings. 2) With the new patent law coming into force it will be possible to request an Oral hearing to take place in a mandatory fashion, similar as with the EPO. This is a significant change in German juridical tradition and jurisdiction, which has always (cf the famous “Aluminiumtrihydroxid”-case4

3) Costs for a patent search are raised from €250 to €300. However, taking into account that this is still a very moderate fee, most applicants can surely live with that. It should be noted that once the fee is raised, it is only €50 more (= €350) for a full-scale examination request. Therefore it can be expected that more applicants will file a request for examination immediately rather than filing a request for a search - and this may result in either an increase of the workload of the GPTO or of the examination fee.

) highly emphasized that procedures before the GPTO are of administrative nature, where Oral hearings cannot be imperatively requested. However, since it has been possible since a few years to demand oral hearings to be held in opposition proceedings before the GPTO, the possibility to request oral hearings also during patent prosecution is consequent. As a result, this will help both applicants as well as the GPTO and make German patent prosecution more straight-forward and quick.

4) When conducting a search, in case of non-unity the GPTO may limit the search to the first invention. Given the experience that the GPTO is not very particular about non-unity as compared with EPO, this is something that applicants may live with. 5) Already now applicants have the possibility to file applications in any language and then submit a translation 4 BGH X ZB 11/92, GRUR 1995, 333, 337 - Aluminium-

Trihydroxid

within a three-months deadline.5

This liberal procedure has been even more liberalized in that in case the application is in English or French, the deadline is extended to twelve months.

Design Law: In Germany it is possible to file a collective application of designs under the proviso that all designs belonged to the same Locarno-class. This provision will be lifted, which means that in Germany it will be possible to file up to 100 designs in a single collective application, no matter what class they belong to. Conclusion As an overall conclusion the draft for a “Patent Modernization Act” seems in its majority well-written as well intended and should be passed as soon as possible. Whether it will increase the number of national applications filed in Germany remains open and it seems doubtful to me that the draft was written in this intention - although an increase of filing numbers would surely not be lamented both by the GPTO as well as the German government and the amendments will surely not frighten off applicants.

BROKEN PROMISES – CANADIAN PATENT CLAIMS

DON’T FLY

Santosh Chari and Anthony Prenol Blake, Cassels & Graydon LLP

Toronto, Canada A recent Canadian decision has invalidated most of the claims of a patent for failure to meet the promised 5 This goes only for filed applications with the GPTO,

unfortunately not for nationalizations of PCT-applications where a full translation must still be filed within the 30-months deadline.

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utility. The decision has also effectively introduced into Canadian law the concept of enhanced damages for willful infringement. A number of recent decisions by Canadian courts have highlighted the importance of meeting the utility requirement imposed under the Canadian Patent Act. Although many of these decisions have focused on pharmaceutical inventions, the decision of the Federal Court (the Court) in Eurocopter v. Bell Helicopter Textron Canada emphasizes the need to satisfy the utility requirement in mechanical cases as well. In addition, while Canadian law does not provide for treble damage awards for willful infringement as in the U.S., the decision serves as a strong warning to businesses that infringement of a patent may, in certain circumstances, result in the imposition of punitive damages. Eurocopter sued Bell for patent infringement. Bell counterclaimed that it did not infringe the patent and that the patent was invalid on various grounds. As discussed below, the Court found all but one of the claims of the patent to be invalid for lack of utility. The remaining claim was held valid and infringed. Bell’s conduct was also found to be willful and egregious, thereby warranting an award of punitive damages. The Patent The patent relates to an improved landing gear for helicopters and contains 16 claims. The landing gear comprises a pair of skis or skids connected by front and rear cross bars. The front cross bar was the primary focus of the invention. The prior art taught landing gears having a front cross bar that is mounted behind the ski tips. Through various studies, the inventors developed the “Moustache” landing gear, which had a sleigh-

shaped design comprising a front cross bar that was integrally formed with the front ends of the skis and which was bent upwards to lie above the plane of the skis. The patent describes in particular two embodiments of the landing gear, where the front cross bar is inclined either forwardly or rearwardly of the front ends of the skis. The patent describes the invention as an improvement over the prior art by providing a landing gear that offers at least three specific advantages, namely, an improved stress response to load factors upon landing; an improved frequency adaptation to minimize the ground resonance phenomenon; and reduced weight. All these improvements were construed by the Court to form the “promise”, or promised utility of the invention. Claim 1 of the patent recites the various elements of the Moustache landing gear. Claim 15 depends from claim 1 and specifies the forward incline of the front cross bar. Claim 16 depends from claim 1 and specifies that the front cross bar has a backward incline. Bell ’s Activities Bell began developing a new helicopter landing gear after grant of the patent. In the course of its development program, Bell leased a helicopter having the Moustache landing gear and developed its “Legacy” landing gear. Eurocopter commenced its infringement action in 2008 shortly after becoming aware of the Legacy landing gear. Bell then redesigned the Legacy landing gear to create the “Production” gear. Infringement The Court first construed the claims of the patent. It then considered the infringement allegations and found that

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Bell’s Legacy landing gear infringed most of the claims of the patent including, in particular, claims 1 and 15. The Court found that the Production gear developed by Bell after commencement of Eurocopter’s action did not infringe any of the claims. Failed Promise – Court’s Findings Bell challenged the validity of the patent on various grounds: anticipation, obviousness, insufficiency of disclosure and lack of utility. All these challenges were considered and dismissed by the Court with the exception of the allegation of lack of utility. The Court held all but claim 15 invalid for not meeting the utility requirement. In assessing utility, the Court examined the patent to determine whether the promised utility was either demonstrated or reasonably predicted as of the filing date of the patent. With regard to the latter, the Court reiterated the test for supporting a reasonable prediction, namely, that: •there must be a factual basis for the prediction; •there must be a sound line of reasoning for inferring the prediction from the factual basis; and •there must be proper disclosure in the patent. In its analysis, the Court first focused on claim 15 and determined that the utility promised by the patent was demonstrated by the claimed forwardly inclined front cross bar. Specifically, the Court noted that as of the filing date, the inventors had sufficient evidence to show that the embodiment of claim 15 had the three advantages promised in the patent, in particular, the minimization of ground resonance. Therefore, claim 15 was held valid.

The Court then turned to claim 16, which covered the embodiment in which the front cross bar was rearwardly inclined. The Court noted that such embodiment was only illustrated in one figure and that it was only briefly described in the patent as having the same benefits as other embodiments. The Court found that as of the filing date, there was no evidence that the rearwardly inclined embodiment of claim 16 would have the promised ground resonance behaviour. The Court also found that the patent did not contain any factual basis from which such utility could be reasonably predicted. On this basis, claim 16 was held invalid for failing to meet the utility requirement. Next, in reviewing claim 1, the Court found that, by not specifying the incline position of the front cross bar, the claim necessarily included all orientations, including the embodiment of claim 16. Therefore, for the same reasons as claim 16, claim 1 was also held invalid for failing to meet the utility requirement. Failed Promise – Lessons Learned The decision offers a few important lessons with respect to the promised utility of an invention. Firstly, the decision clearly highlights the importance of ensuring that the utility of all claims of a patent application is either demonstrated as of the filing date or can be reasonably predicted from a factual basis. In the event that a claim is to rely on predicted utility, both the factual basis and the reasoning applied by the inventors to arrive at the claimed invention should be clearly described in the specification. Indeed, even in the case of demonstrated utility, it is very important to include supporting data in the patent specification or at least include a

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reference to experiments or studies done that support the described utility. Secondly, it is also very important to ensure that the promised utility of a claimed invention is properly defined in the specification when the patent application is being drafted. Broad statements in an application that may be construed to be promised utility may later prove problematic should the claimed invention be found not to have one or more of the promised advantages. Thus, it is important to carefully frame the promised utility of a claimed invention. Willful Infringement – Court’s Findings Having held that one of the claims of the patent was both valid and infringed, the Court determined that Eurocopter was entitled to an award of damages (although not the right to elect, in the alternative, an accounting of Bell’s profits) and a permanent injunction prohibiting further acts of infringement during the maintaining term of the patent. The Court next turned to Eurocopter’s argument that it was entitled to an award of punitive damages in light of Bell’s conduct. In particular, Eurocopter argued that: • Bell knowingly and maliciously infringed the patent; and • Bell’s conduct caused damages that cannot be corrected by merely an award of damages. The Court held that an award of punitive damages was appropriate in the circumstances. As with the award of general damages, the Court determined that the quantum of punitive damages was best left to be determined at a later hearing after the exhaustion of all appeals on the issue of liability.

In Canada, punitive damages may be awarded when a party’s conduct has been malicious, oppressive and high-handed or otherwise offends the court’s sense of decency or represents a marked departure from ordinary standards of decent behaviour. The Federal Court of Appeal, in its 1996 decision in Lubrizol Corp. v. Imperial Oil Ltd., acknowledged that there was no reason why punitive damages could not be awarded in the appropriate circumstances in an intellectual property case. Despite this ruling, however, punitive damages have been awarded very infrequently in intellectual property cases in the 15 years since the Lubrizol decision. In fact, a commonly held view prior to the Eurocopter decision was that, in the absence of a finding that the defendant has breached a court order or otherwise done something to frustrate the court process, punitive damages are unlikely to be awarded for patent infringement. Mere infringement, no matter how willful, would not be enough to justify an award of punitive damages. For this reason, the decision in Eurocopter to award punitive damages can rightly be seen as groundbreaking. In assessing whether to award punitive damages, the Court in Eurocopter was influenced by the following factors. First, the Court found that Bell’s assertion that it had no knowledge of the patent prior to the commencement of the litigation was not plausible and, indeed, was contrary to the evidence. In this regard, the Court concluded that Bell had corporate knowledge of the patent even if the individuals who testified on its behalf at trial did not have such knowledge. The Court was influenced by the fact that, at the time of infringement, Bell had a policy manual and guidelines with respect to intellectual property matters, including measures to avoid infringing valid

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intellectual property rights held by others. Bell’s technical resource specialists were given responsibility for maintaining knowledge of competitive patents and advising leaders of Bell’s integrated product teams of any concern regarding potential infringement that might occur during new product development. The Court was also concerned about Bell’s failure to lead testimony at trial from representatives of the company who had responsibility for verifying possible infringements. The Court noted that Bell had cited privilege in refusing to respond to requests for copies of infringement opinions or had otherwise been evasive on the subject. In view of the foregoing, the Court decided to draw an adverse inference that Bell’s omissions were attributable to the fact that such evidence would not have been favourable to its case. Second, the Court was influenced by its finding that the infringing Legacy landing gear used by Bell was “no more than a slavish copy of the patented Moustache landing gear”. Third, the Court held that there was clear evidence of bad faith and egregious conduct on the part of Bell in that its infringement was not small, trivial or isolated; nor was it a case where the defendant was unsophisticated or ignorant. On this front, the Court found that Bell and its parent company are sophisticated entities employing thousands of engineers and that its infringement was attributable either to willful blindness or “intentional and planned misappropriation of the claimed invention”. Fourth, the Court noted that Bell had not shown any remorse for its activities or offered any excuse. Fifth, the Court took into account Bell’s activities in promoting its Legacy landing gear. More particularly, the Court was influenced

by the fact that Bell had concealed from the public that it had copied Eurocopter’s patented landing gear. The Court also appeared to be concerned by Bell promoting its Legacy landing gear as being innovative when, in reality, the unique advantages being promoted by Bell had already been disclosed in the patent. Sixth, the Court held that an award of punitive damages was necessary not only to punish Bell but also to deter others from acting in a similar manner. Punitive Damages – Lessons learned Several lessons may be learned from the Court’s decision on the issue of punitive damages in Eurocopter. As a starting point, any business would be well advised to obtain a freedom-to-operate opinion from Canadian counsel before taking any action that could expose the business to liability for infringement of a Canadian patent. In the event that the business is subsequently sued for patent infringement, it could introduce the opinion into evidence at trial as a defence to a claim for punitive damages. If sued, a business should also give some thought to the evidence that it wishes to adduce at trial regarding the development of its product. To the extent this evidence shows that the business did something other than merely “slavishly copy” the patented product, it could be helpful. A business should also consider how it promotes its products in Canada lest its activities be interpreted by a court as justifying an award of punitive damages. For example, promotional activities that go beyond merely marketing a product that turns out to be infringing and cross the line into appropriating the patented technology by, for example, suggesting that the defendant and not the patentee is the

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true innovator, are to be discouraged. Lastly, a business should give careful thought to the manner in which it defends a patent infringement claim. Obviously, mounting a thorough and vigorous defence is always the primary objective. However, one must also bear in mind that taking unreasonable positions during the litigation that have no possibility of success, such as denying infringement of certain claims in circumstances where infringement is clear, can expose the defendant to an award of punitive damages. For further information, please contact: santosh.chari@blakes.com or ap@blakes.com

PRACTICE TIPS FOR PATENT PROSECUTION IN BRAZIL

Claudio M. Szabas

ASPEBY · SZABAS Rio de Janeiro – Brazil

Among the questions that were raised by the editor of a well known IP magazine for the AIPLA Daily Report referring to the ppt. presentation on Practice Tips for Prosecution, Incoming and Outgoing on Brazil during the last Association’s annual meeting I would like to draw your attention to the following ones:

1. The pitfalls that foreign associates face when filing an application, during its prosecution and remedies; and

2. Any important changes to the

IP laws or ground breaking judicial decisions in the last 12 months, respectively. (Hot topic!)

Both the questions and answers could be equated to an attempt of pointing out the metes and bounds of the granting system which are commented as reference without constituting legal advice or legal opinion. Pitfalls, remedies and changes Turning to the first question the most well known pitfalls to US and European instructors are the deadly time limits and in turn those related to the type of evidence of force majeure reasons that must be provided for saving the case within the remedies offered by the BPTO when a not extendable statutory time limit has not been met. The Brazilian Law does not contain provisions for the extension of the statutory time limits on account of applicant’s decision or due to lack of instructions. There is no “time to buy” out of what is provided for in Art. 5 bis of the Paris Convention and the current BPTO rules and which are now being reviewed. Some pitfalls by way of example:

- The BR national phase entry is not accomplished within the 30-month term;

- No reply within the 90-day

term to office actions stemming from substantive examination;

- No reply within the 60-day

term to a sole office action issued to patent application that were filed during the 2000 – 2010 period by which applicants are now required to answer YES or NO if the subject matter of the application derives from a sample having its origin in the

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Brazilian flora. If the answer is YES the grant and maintenance of said patent shall be conditioned to the obtainment of the so called access authorization to genetic resources and associated traditional knowledge. Not reasonable while legally based.

- No reply within the 60-day

term to office actions issued by ANVISA (National Health Surveillance Agency) during a second examination on pharmaceutical related patent applications which have already been submitted to a substantive examination and passed to allowance by the Brazilian PTO. Not TRIPS Compliant!

Reinstatement of applications under the above noted situations is possible by submitting strong evidence of force majeure reasons for not having complied with the prescribed term action. Should the force majeure reasons not convince the officers the PCT application designation for Brazil will be deemed to be withdrawn with the right to appeal. However in the cases of the office actions failing to reply will entail the definitive shelving of the application without right to appeal. In view of long years experience in scrutinizing evidence (mainly since 1997) any allegations lacking clear technical evidence might be refused. Clear facts and duty of care will be decisive. A piece of evidence that appears to be accepted is the event tracker or event log which e-mail providers have readily available or the air way bill (AWB) showing that the courier went astray.

In the opinion of the BPTO as to whether the filing of a non-convention application on the basis of the 12-month grace period provision would be a valid substitution to a missed deadline of a BR national phase entry the answer, although arguable, is NO, at least by now. Aside of the aforesaid legal remedies it is apparent that in the absence of client’s instructions to a reply to an office action the only course of action is to file on your own responsibility and at low cost a reply thereby securing the right to appeal!!! Keep your client’s case alive. Other pitfalls mainly of concern to instructors of Utility Model or petty patent applications are hidden in the Brazilian Utility Model (Gebrauchsmuster) Patent protection. Differently from other jurisdictions in Brazil Utility Model Applications are submitted to a substantive examination and for the time being the granting process can take as many years as a patent of invention application. Brazilian Utility Model patents contain one main claim with few dependent claims and are intended to protect a new embodiment or any new combination of known components or devices which result in a functional improvement in its use or manufacture. “Branch off” or “split off” of a utility model application from a pending application or a PCT national phase entry is not allowed. Simultaneous protection by PI and MU is not allowed. No registration but a delayed examination due to some “uncertainty” as to the examination on non-obviousness but for the time being since specific examination guidelines

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are being discussed to cut down its backlog. Where is currently the “utility” of the Utility Model Protection in Brazil? It resides in the strategy to save a Patent of Invention Application against a final rejection or risking an appeal with poor likelihood of success by converting into a Utility Model Application. I recall a patent application for a sanitary napkin to which some unfavourable opinions were issued challenging inventiveness for which I obtained a 15-year Utility Model patent protection with this strategy.

Another pitfall which turned to be one of the most controversial issues is the refusal or reluctance in accepting during examination new claims with new definitions and/or new classes of claims. The same applies to divisionals in view of a legal opinion No.8/2010 issued by the BPTO’s Attorney General even if the new claims are clearly backed with the specification as initially filed!!

Conclusions on pitfalls, remedies, changes, new rules: Except the latter issue the aforesaid situations have created some conflict with the changes in the PCT rules over years and the duties of the Brazilian Patent Office itself in its capacity of an International Searching and Preliminary Examining Authority. In July 2011 officers of the BPTO represented by the Head of the Patent Division and members of the patent committee of the Brazilian IP Association started to discuss and propose new BPTO rules with the purpose to prevent the loss of rights by the current rules while aiming at a streamlining prosecution of patent

applications which backlog is of about 130.000 patents. More specifically the proposals for new rules focus on: - Acceptance of PCT National Entry with set of claims in a foreign language; - Reinstatement of the National Phase Entry out of the 30 month term according to PCT rule 49.6; - The IPRP should be considered for the first office action; - To include in the first substantive

office action the question as to the possible use of samples of the Brazilian flora instead of issuing a sole office action which answer might not be always so easy to obtain within the 60-day term;

- Examination guidelines that are specific to utility models and expedited allowance; - Existent expedited examination requirements among other issues. Any important changes to the IP laws or ground breaking judicial decisions in the last 12 months? YES! The end of the two-tier examination in virtue of the final decision rendered by the Federal Attorney General of January 24, 2011 against the interference or the final approval by ANVISA (the National Health Surveillance Agency acting as a second and final “patent examination division”) or to deny the grant of a patent to an application on pharmaceutical products and processes that passed to allowance by the BPTO examination.

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ANVISA was empowered by Law No. 10.196 of February 2001 to interfere for political reasons in the grant of patents related to pharmaceuticals with the purpose of precluding patent protection for certain drugs such as antiretrovirals but also other drugs and that would in turn be manufactured as “generic drugs”. It is worth to say that BPTO examiners have not and do not give support to ANVISA’s interference and that Brazil has a pre-grant opposition system that allows every interested party to challenge the fulfillment by the applicant of enablement, novelty and non-obviousness requirements. Another controversial issue between BPTO Examiners and ANVISA’s Examiners are the second and further medical indication (“swiss type” claims) patent applications. In view of the Federal Attorney General decision the “tide” might change. ANVISA interference did not represent only a flagrant violation to TRIPS. It also ignored the well-known premise that a specific teaching is not directly and unambiguously derivable from a general teaching. For example by second medical indication it should be evidenced by the applicant a different group of subjects, a different mode of administration, and a different technical effect to distinguish the invention from the state of the art. There should be no reason then to preclude the grant of a patent to such invention or “package leaflet protection claims”!!!. Despite the Federal Attorney General decision of January 24, 2011 the Brazilian PTO shall continue to transfer the file to ANVISA as provided for in law.

However it is expected that ANVISA will raise objections if any with perhaps little to no patentable weight and not challenging BPTO’s decision to grant a patent. In a very recent office action issued by ANVISA the examiner required the correction of some typos and to restrict a Markush claim to read the groups of atoms that are “sufficiently” described in the description by excluding those he believes are not. Neither novelty nor non-obviousness was objected. To the examiner of the BPTO the invention was sufficiently described to show that the applicant was in possession of the claimed invention but to the examiner of ANVISA some groups in the Markush claims seem not to be based on the description and raised the objection based on Section 25. It is still too soon to look back and give further comments on this ground breaking decision. Nevertheless it is part of a change that includes new BPTO rules and the goal to cut down the backlog and pendency times.

RAISING THE BAR OF PATENTABILITY IN AUSTRALIA

David Miles PhD6

Pizzeys, Australia

Introduction

The Australian government in recent years has been working toward making numerous and substantive reforms to the Australian Intellectual Property system in the intent that such reforms

6 Dr David Miles, Associate, is a registered patent

attorneys in Australia with Pizzeys Patent and Trade Mark Attorneys in the Chemical and Life Sciences Group of the Brisbane Office. Pizzeys Patant and Trade Mark Attorneys are located on Level 20, ANZ Centre, 324 Queen Street, Brisbane QLD 4000. David can be reached by telephone on 61 7 3221 9955.

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would better support innovation and encourage investment in research and technology in Australia. The reforms have now become law with the passing of The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 on 15 April 2012. Changes have not been this substantive since the enactment of the Patents Act of 1990. It is clear from the reading of the Act that the focus is on reforming the patent system and to achieve the above-mentioned aims through raising the bar (standards) against which IP rights, particularly patent rights, are assessed. Most provisions in the Act which relate to raising the patentability standards come into effect on 15 April 2013. The Act also introduces exemptions for researchers and regulatory use of non-pharmaceuticals which apply now. This article discusses infringement exemptions for researchers and regulatory use of non-pharmaceuticals as well as highlights the more relevant reforms in raising the standards of patentability for relevant patent applications.

Infringement Exemption for Researchers

There has been discussion for many years to place patent infringement exemptions for researchers into law. The intent is to put to bed any uncertainty under common law regarding possible exemptions that relate solely to academic, non-commercial activities of patented inventions. The Act is to trigger law that is consistent with the “policy objective of freeing researchers to

innovate” (Explanatory Memorandum as issued by Parliament of Australia). In the new Act, the exception to patent infringement for “experimental uses” is captured in the following (non-exhaustive) examples of exempted research activities:

• determining the properties of the invention;

• determining the scope of a claim relating to the invention;

• improving or modifying the invention;

• determining the validity of the patent or of a claim relating to the invention;

• determining whether the patent for the invention has been infringed.

The above applies to any patent claim, whether granted now or before this Act came into effect. We believe this exception to infringement is intended to closely track that in effect in Europe, but we will have to wait for judicial interpretation to fully understand its scope.

Infringement Exemption for Regulatory Approval

Another immediate reform is in the broadening of exceptions to infringement for doing acts in support of obtaining regulatory approval. The intent of the new provision is to allow a party to use a patented invention for purposes connected with obtaining an approval required by the law of the Commonwealth, or the State or Territory, or for purposes connected with obtaining a similar approval overseas. The provision specifically excludes pharmaceutical patents because the Patents Act 1990 already covers exemptions for acts solely related to

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obtain regulatory approval for pharmaceutical entities. In other words, the new exemption applies to all technologies for which regulatory approval must be obtained prior to release, such as veterinary and agricultural products, medical and electrical devices. Both provisions, nevertheless, make clear that the exempted “use” must be “solely” for obtaining regulatory approval. This wording prevents for example the act of stockpiling a patented product for later sale or manufacture for export markets.

Raising the Bar for Patentability

The most significant reforms to the patent system which come into effect on 15 April 2013 include:

• A broadening of the prior art base for inventive step.

• The elimination of the option of modified examination.

• The effective prohibition of omnibus claims.

• Stricter requirements for disclosure, support and utility.

• A more restrictive amendment practice.

The above reforms mean that stricter tests for patentability are on the horizon. In essence, the more stringent tests for patentability will apply for any application which has a request for examination filed on or after 15 April 2013. For the above reasons, we recommend that examination be requested for any Australian patent application prior to 15 April 2013. We discuss some of the above-mentioned reforms below.

A broadening of the prior art base for inventive step

Currently, an invention under Australian law is taken to involve an inventive step when compared with the prior art, unless the invention would have been obvious to a person skilled in the art in light of the common general knowledge as it existed in the patent area, but only if, that person, could be reasonably expected to have ascertained, understood, and regarded the prior art as relevant to the invention. In other words, there is a ‘filter’ as to what documents could be considered in assessing inventive step under Australian law. Now, an invention is taken to involve an inventive step when compared with the prior art, unless the invention would have been obvious to a person skilled in the art in light of the common general knowledge. There are no further restrictions or filters. So, the Act has removed the local restriction on the person skilled in the art, bringing the test on inventiveness in Australia closer to those of the USA and Europe. Practically speaking, the change will make it easier for Patent Office examiners to maintain inventive step objections.

Disclosure

It is apparent from the published explanatory memorandum by the Australian government that the disclosure requirement for complete applications will be amended to be substantially similar to the corresponding United Kingdom provision. The provision states that the complete specification must "disclose the invention in a manner which is clear enough and complete enough for an invention to be performed by a person skilled in the relevant art". This could be interpreted has an enablement type

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requirement which until now was non-existent under Australian law. Previous indications by the government suggest that the subject matter of a claim should be enabled across its "whole width". However, this is subject to interpretation to the Australian courts.

Support

Support as it currently stands is couched in terms of claimed subject matter ‘being fairly based’ on the description of the specification. In the Act, the purpose of the new support requirement is two fold, one being that there must be basis in the description for each claim and the other being that the scope of the claims must not be broader than is justified by the extent of the description, drawings and contribution to the art. This second aspect of the new support requirement appears to be intended to provide a means for rejecting claims that are considered unduly speculative in nature. In addition, the new support provision in the Act has consequences to the level of support as provided in a priority document. For a claim to be entitled to a priority dated based on a provisional application or other basic application(s), the subject matter of the claim must be supported by that application. This amendment substantially raises the level of disclosure required to support a priority claim in Australia.

Summary

The effect of the Act clearly raises the standard for patentability in Australia, although it is arguable that the resultant standard has reached the standards currently in place for the US and Europe. Time will tell.

To discuss the content of this article, please contact Dr David Miles at dmiles@pizzeys.com.au.

THE ABSURDITY OF THE

UNAUTHORISED DISCLOSURE PROVISIONS IN AUSTRALIA

Vaughan Barlow7

PIZZEYS

Canberra, Australia

Introduction

In Australia there are legislative provisions that allow for unauthorised disclosures to be disregarded for prior art purposes. While these provisions can effectively combat unauthorised disclosure of non-patent literature, they can also result in clear absurdities when the unauthorised disclosure occurs in patent literature. This article briefly describes the unauthorised disclosure provisions under the Patents Act 1990, then follows several case studies to illustrate how the provisions can lead to absurd results where the unauthorised disclosure occurs in a patent document that is cited as “novelty-only” prior art.

“Unauthorised disclosure” provisions in Australia

The unauthorised prior disclosure of information that is then legitimately included in a later-filed patent 7 Vaughan is a legal practitioner admitted to the Supreme

Court of New South Wales and a patent attorney registered to practice before the Australian Patent Office and the Intellectual Property Office of New Zealand. Vaughan is also a trade marks attorney registered to practice before the Australian Trade Marks Office. Vaughan practices with Pizzeys Patent and Trade Mark Attorneys: www.pizzeys.com.au.

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application can be highly problematic for the patent applicant. In such circumstances, the unauthorised prior disclosure can be cited as prior art against the invention that is being claimed in the patent application, thereby supporting objections such as lack of novelty and/or lack of inventive step during patent prosecution. Even if the unauthorised prior disclosure is not cited as prior art during prosecution, it may nevertheless represent a permanent weakness for any patent granted, given that under Australian law there is no presumption of validity 8

. Indeed, any invalidity actions that are commenced either through opposition or revocation proceedings are reviewed by the patent office or the courts de novo.

In order to ameliorate the problems for patent applicants that can be created by unauthorised disclosure, the Australian Patents Act 1990 allows for prior art to be disregarded if that art was made publicly available without the authority of the patent applicant. The relevant provision is section 24(1)(b) which reads as follows: Section 24: Validity not affected by certain publication or use (1) For the purpose of deciding whether an invention is novel or involves an inventive step or an innovative step, the person making the decision must disregard: (a) .... (b) any information made publicly available without the consent of the nominated person or patentee, through any publication or use of the invention by another person who derived the information from the nominated person

8 Section 20 Patents Act 1990.

or patentee or from the predecessor in title of the nominated person or patentee; but only if a complete patent application for the invention is made within the prescribed period 9

.

The “prescribed period” mentioned at the end of Section 24 is set out under Regulation 2.3 (2) as follows: For the purposes of subsection 24 (1) of the Act, in the case of information of the kind referred to in paragraph 24 (1) (b) of the Act, the prescribed period is 12 months from the day when the information referred to in that paragraph became publicly available. Because Section 24(1)(b) relates to disclosures made by “another person”, it is distinct from the 12 month “grace period” relating to self-publication provided under Section 24(1)(a), whereby a complete Australian patent application filed within 12 months after a self-publication will be immune from that self-publication 10

.

Similar to the grace period provision of Section 24(1)(a), the effect of the unauthorised disclosure provision under Section 24(1)(b) means that any complete Australian patent application 11

9 Note that the marked portion shows changes

introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012, passed on 15 April 2012. The changes do not resolve the issues discussed in this article.

filed within 12 months after an unauthorised public disclosure will be immune from that disclosure. This

10 Section 24(1)(a) Patents Act 1990. Note also that Section 88 deems that a PCT application designating Australia be treated as a complete Australian application (whether or not Australian national phase was entered from the PCT application). Accordingly, the 12 month grace period runs from the date of disclosure to the date of filing either an Australian complete application or a PCT application designating Australia.

11 Or a PCT application designating Australia, per Section 88 Patents Act 1990.

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provision can therefore provide relief against the effects of unauthorised disclosure of non-patent literature. However, what if the unauthorised disclosure is incorporated into a patent application that is filed prior to the authorised patent application, but only becomes published after the filing of the authorised patent application? Under Australian law, such an earlier filed complete Australian patent application 12 can qualify as prior art for the purposes of novelty, even if it was not published when the later patent application was filed 13

. This is similar to a “novelty-only” citation available under the European Patent Convention (EPC). Under Australian law, this form of prior art objection is known as a “whole of contents” objection. Similar to the EPC, it may be used only to support a novelty objection, and not an inventive step (or obviousness) objection.

Hence, as shown in the diagram below, a patent application that contains an unauthorised disclosure may be classified as a “novelty only” citation if the unauthorised patent application was earlier filed but was not published at the time when a subsequent (authorised) patent application was filed containing the same information. The absurdity comes about because the authorised patent application was filed before publication of the unauthorised patent application, but Section 24(1)(b) only applies if the authorised patent application is filed within 12 months after

12 Or a PCT application designating Australia, per

Section 88 Patents Act 1990.

the unauthorised disclosure. The result is absurd not only because it means there is no ability for the legitimate patent applicant to overcome the novelty objection based on citation of the unauthorised disclosure in the

13 Section 7(1)(c) Patents Act 1990.

earlier filed patent application, but also because, if the legitimate patent applicant had waited and filed the authorised patent application later, that is, after publication of the unauthorised disclosure, then Section 24(1)(b) could be invoked, thereby allowing the unauthorised disclosure to be disregarded.

Unfortunately, the above scenario is not merely a theoretical possibility, but has in fact occurred. Set out below are two brief case studies demonstrating how absurd results have occurred based on the shortcomings of Section 24(1)(b).

Case Study 1: Thomson CSF v Schlumberger Holdings Limited

Section 24(1)(b) was applied in the decision in Thomson CSF v Schlumberger Holdings Limited [2001] APO 11 (5 March 2001) which concerned citation of a PCT application against AU 53305/98 during prosecution. The sequence of filings was as follows:

In this case, as summarized by the hearing officer, “the … applicant was seeking a finding on the facts that would exclude the [prior filed] application from the prior art base for the purpose of its own application ... That is, the intention was to enliven the provisions of Section 24(1)(b) on the

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basis of a[n unauthorized] disclosure …”. The disclosure in the prior filed patent application was established on the facts as being unauthorized. Due to the sequence of filings, the prior filed PCT patent application was cited in support of a novelty-only “whole of contents” objection. Notably, AU 53305/98 was effectively filed after

publication of the cited patent application.

In considering the issues under section 24(1)(b), the hearing officer stated that: “It would seem that having filed its PCT application on 19 December 1997 designating Australia, SHL has filed a patent application that may satisfy the provisions of Section 24(1)(b) and Regulation 2.3(2). That is, it was an application for a standard patent filed within 12 months of the publication of the current application on 21 August 1997. Section 24 provides that any information made publicly available in those circumstance must be disregarded for deciding if an invention is novel or involves an inventive step if it was made available without the consent of the nominated person or patentee or predecessor in title.” Accordingly, and as would be expected, it was held that section 24(1)(b) should apply in order to protect the patent applicant’s rights against the unauthorized disclosure in the prior filed and prior published PCT application. In considering this decision, it is important to recall that under Australian law, a novelty-only “whole of contents” objection can only be supported by a prior filed complete Australian patent application, but that a PCT application designating Australia is regarded as a complete Australian

patent application 14

. Hence, the cited PCT application which designated Australia qualified to support the novelty-only “whole of contents” objection.

Case Study 2: Australian patent application no. 2006236453

During prosecution of Australian patent application no. 2006236453, the examiner alleged that various claims lacked novelty in light of a PCT application. The cited art published after the earliest claimed priority date of AU 2006236453, but because the cited art nevertheless claimed an even earlier priority date, it was cited on the basis of a novelty-only “whole of contents” objection. The sequence of filings was as follows:

It was established that the cited art, insofar as it was relevant to support the novelty objection, constituted an unauthorised disclosure. Indeed, declaratory evidence was provided by the applicant of the cited PCT application confirming that the disclosure was unauthorised. It would therefore appear logical that the unauthorised disclosure provisions should also apply in this case. The only substantive difference between Thomson CSF v Schlumberger Holdings Limited and this case was that AU 2006236453 was filed before publication of the cited patent application rather than after

publication.

14 Section 88 Patents Act 1990.

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Understandably, however, the examiner did not apply Section 24(1)(b) and the cited art could not be disregarded. Absurdly, if the patent applicant had waited and filed its application later, that is, after publication of the unauthorised disclosure in the cited PCT application, then Section 24(1)(b) would have been invoked, allowing the unauthorised disclosure to be disregarded. Ultimately, using an unusual filing strategy peculiar to Australia, AU 2006236453 was retrospectively converted to a divisional / continuation application of the cited application, thereby allowing the novelty-only “whole of contents” objection to be circumvented15

.

Conclusion

The Australian Acts Interpretation Act (1901) requires that legislation be interpreted “in a manner that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not)” and in manner that would avoid a manifestly absurd or unreasonable result. However, the effect of Section 24(1)(b) means that there is no ability for a legitimate patent applicant to overcome citation of an unauthorised prior disclosure occurring in a patent document that is cited in support of a novelty-only “whole of contents” objection. This absurdity is compounded by the fact that, in such circumstances, had the legitimate patent applicant waited and filed its patent application after publication of the earlier filed application containing the unauthorised disclosure, then Section 24(1)(b) would apply.

15 Note also that cited patent literature containing an

unauthorised disclosure may give rise to a claim of inventorship and applicant status by the true owner, and hence its citation against a later filed authorised application may be overcome by obtaining a declaration of entitlement under Section 36 of the Patents Act 1990, and/or by a Commissioner’s determination under Section 32 of the Patents Act 1990.

There are no other provisions under the Australian Patents Act that allow for unauthorised publication of patent literature to be disregarded for the purposes of considering novelty, where such publication occurs after filing of the application at issue16

16 Note that, depending on circumstances, such an

objection may be circumvented by obtaining ownership of the cited patent, as per the reference above. However, this often provides further difficulties, for example, in relation to adopting the cited specification and needing to satisfy other patentability criteria such as claim support.

. Accordingly, there is an urgent need for the unauthorised disclosure provisions in the Australian Patents Act 1990 to be amended in order to avoid the absurd results to date. In this regard, it is unfortunate that the recently enacted Intellectual Property Laws Amendment (Raising the Bar) Act 2012 does not resolve the issues discussed in this article.