Between August and November 2017, IP Australia sought public comment on several Government-supported IP policies, including:
– the introduction of an objects clause into the Patents Act; and
– amending the inventive step requirements for Australian patents.
Now, IP Australia’s response to the public consultation process has been released and the news does not appear to be optimistic for innovators.
In this first of two “patentable subject matter” articles, I will consider IP Australia’s proposals in relation to the introduction of an objects clause and its seemingly significant potential impact on Australia’s patent eligibility threshold.
At the end of 2017, the Government supported a recommendation by the Productivity Commission to introduce an objects clause into the Patents Act – a clear statement of intent for the guidance of courts in the interpretation of the Act. The Productivity Commission Report specifically stated that “[a]n objects clause could be useful in underpinning decisions on whether to grant a patent” and “would influence the granting of patents through the interpretation of the patent criteria, including manner of manufacture” (“manner of manufacture” being Australia’s patentable subject matter threshold). Thus, clearly a Patents Act objects clause will play a role in determining the validity of patents/applications.
The public consultation
A total of 14 submissions provided comments in relation to the proposed introduction of an objects clause. Significantly, by almost a two-to-one majority, the submissions opposed the proposal to introduce an objections clause into the Patents Act.
Those opposed to the introduction of an objects clause raised concerns including that:
- its purpose would be inconsistent with the TRIPS agreement, which guarantees minimum standards of protection for IP rights;
- it would introduce doubt into well understood and applied jurisprudence developed over many years; and
- it would be likely to cause confusion and uncertainty for users of the patents system, and that these would be long-term issues.
Comments were also submitted that there was no evidence that Australian Courts are importing objectives for the Patents Act that are inconsistent with the public interest. For this reason alone, the necessity of a controversial objects clause must be seriously questioned.
The proposed objects clause
Notwithstanding the well-reasoned concerns and criticisms set forth in the majority of public submissions, IP Australia nevertheless, and seemingly without explanation, proposed the following wording for the Australian Patents Act objects clause.
The purpose of this Act is to provide a patent system in Australia that enhances the wellbeing of society by promoting economic wellbeing through technological innovation and the transfer and dissemination of technology. In so doing, the patent system should balance over time the interests of producers, owners, users of technology, and the public.
A major concern of this proposed objects clause, and one that was raised during the public consultation process, is the reference to the term “technological innovation”. This term alone has the potential to erode over 50 years of jurisprudence set down by a celebrated High Court decision that underpins Australia’s current patentable subject matter threshold.
Technological innovation and the patentable subject matter threshold
The proposed objects clause set out in the Productivity Commission Draft Report referred simply to “innovation”. However, based on a submission by a single economist, Dr Hazel Moir, the final report included a revised objects clause referring to “technological innovation”. Specifically, Dr Moir’s submission was critical of Australia’s patentability threshold stating that “currently, a patentable invention in Australia is simply something artificial from which an economic return can be made” and that “this (patentability threshold) radically extends the boundaries of the patent system beyond technology”.
Relevantly, Dr Moir concedes in a paper prepared in relation to trade treaties and patent policy that “courts and patent offices have laboured over definitions of “technological” and “technical” with poor results”. For this reason, she set out subject matter that she considers should not be covered by the term “technological innovation”. Specifically, it is stated:
…the broad exceptions to what constitutes a technological invention need to be spelled out in patent statutes. However, in the interests of remaining flexible for unknown future technologies it is preferable that the boundaries to what is a patentable (technological) invention are spelled out in terms of the kinds of things excluded. Patentable inventions should not include:
- Discoveries – things that are not markedly different from things found in nature;
- Methods of medical treatment including diagnostic, therapeutic and surgical methods of treatment; and
- Computer software, which was never intended by any parliament or government to be patentable and must be clearly and absolutely excluded.
Dr Moir has also been critical of the Judiciary for its seemingly pro-patent stance, explaining that the reason why an objects clause is needed in the Patents Act is that it will assist in ending “economically dysfunctional decisions”.
IP Australia’s position
IP Australia in their response to the objects clause consultation, attempted to quell the controversy in relation to the term “technological innovation”, by stating that the objects clause is not, in and of itself, intended to provide grounds for challenging the subject matter of a patent, nor to override existing Australian jurisprudence on patentable subject matter. This seems to be in complete conflict with Hazel Moir’s strident position on the role of an objects clause and Australia patent eligibility threshold.
Significantly, however, IP Australia also states that the Productivity Commission considered an objects clause would better balance the patent rights of software and business methods innovators and users and help alleviate its concerns regarding the quality of software patents. This clearly suggests that an objects clause would be used to determine validity based on patent eligible subject matter.
Implementation of the objects clause
In addition to the lack of clarity regarding the term “technological innovation” and its impact on Australia’s patent eligibility threshold, at this stage, it is also unclear if and how patented inventions will be assessed for their capacity to “enhance the wellbeing of society by promoting economic wellbeing”. For example, it is not clear whether an invention’s economic significance will be assessed during examination and/or revocation proceedings. If so, the objects clause would introduce an additional avenue upon which to submit evidence during litigation and this would undoubtedly add to the complexity and cost of patent litigation.
Of further concern is the ambiguity concerning the precise meaning of the phrase “economic wellbeing of society”. The Productivity Commission made their view clear – the patent system should promote the well being of Australians. The proposed objects clause, however, does not limit economic wellbeing to Australian society. Thus, a patent that promotes “economic wellbeing” in a foreign country rather than Australia, could be considered satisfying the purpose of the proposed objects clause. This is contrary to the view expressed by the Productivity Commission.
The next stage in the introduction of an objects clause into the Australian Patent Act will be the preparation of an exposure draft of the legislative amendments together with a draft explanatory memorandum on the intended purpose and interpretation of the objects clause. Given the current substantial uncertainty that exists regarding how the proposed objects clause will be implemented, this draft legislation will be keenly anticipated and Shelston IP will keep you advised of developments.
 National Research Development Corporation v Commissioner of Patents (‘NRDC’)  HCA 67
 Trade treaties and patent policy: searching for a balanced approach 15th International Schumpter Society Conference, Jena Germany, revised 12 November 2014
 Response to IP Australia’s “Consultation on an objects clause and an exclusion from patentability”, July 2013 Dr Hazel V J Moir
Authored by Paul Harrison