10 minute read

In Australia, there are different options to challenge the validity of a patent application or granted patent.  This can be of significant interest from a freedom to operate perspective when a business is planning to launch or commercialise a product or process, regardless of whether the product or process is covered by its own intellectual property.

Challenging a patent application or patent

(i)           Third party submissions

A patent application can be challenged pre-acceptance (prior to being allowed by the examiner during prosecution) by filing third party submissions.  Any party may file third party submissions up to three months following the date of advertised acceptance of a patent application in Australia.  The Notice is filed with any documents relevant to the assertion that the invention claimed is not novel and/or does not involve an inventive step. 

(ii)          Re-examination

It is also possible to request re-examination between acceptance and grant which is at the Commissioner’s discretion. 

On the other hand, if a third party requests re-examination following grant, re-examination must be conducted and either an adverse or non-adverse report must be issued.

During re-examination, an examination report will issue which outlines the examiner’s findings.  In the case of an adverse report, the patentee will be given the opportunity to respond with its own written submissions and/or amendments.  If the patentee cannot resolve outstanding issues encountered during re-examination, the Commissioner will typically set the matter for a hearing prior to revoking the patent either wholly or in so far as it relates to a particular claim if the patentee is unsuccessful.  

Hearings are typically rare during re-examination as most outstanding issues can be resolved by a patentee by filing written submissions or amendments in reply to a re-examination report.  The most common grounds which are difficult to resolve as they are subjective are issues relating to inventive step (obviousness) and patentable subject matter (such as manner of manufacture for software patents).

(iii)         Opposition proceedings

The validity of a patent application can also be challenged by commencing (pre-grant) opposition proceedings.  This involves filing a notice of opposition, which must be filed within three months of the date on which acceptance of the (opposed) application is advertised.

Opposition proceedings typically involve the preparation of expert evidence.

(iv)         Revocation

If a patent application proceeds to grant, a third party has the option of challenging the validity of the patent claims by commencing revocation proceedings before an Australian court or, alternatively, seeking revocation of the claims during infringement proceedings commenced by the patentee. 

Ex-parte

Under Australian practice, third party submissions and re-examination requests are ex-parte.  That is the requestor is not a party to the process and there is no opportunity for further iterations of evidence.

Re-examination considerations and advantages

In this article, we will focus on the advantages of filing a request for re-examination as a cheaper and more time efficient route to challenge validity of patent claims. 

Compared to opposition and revocation proceedings, re-examination can be orders of magnitude cheaper and generally issues can be resolved in a matter of months rather than years.  This can provide more clarity for a party’s commercial objectives in a shorter time frame which would otherwise delay product launches and commercial activities.

Traditionally, re-examination was a less popular route because prior to the commencement of the new Patents Act (Raising the Bar) which came into effect on April 2013, re-examination was limited only to the grounds of novelty and inventive step.  Unless a party had “knock-out” prior art for novelty purposes, challenging inventive step was notoriously difficult as assessing inventive step in Australia requires expert evidence from expert witnesses as discussed above and is highly subjective. 

Accordingly, most Australian attorneys would not recommend re-examination if the main ground of challenge was inventive step.  This is highlighted by the Merck & Cie decision below.

However, as a result of the changes to our law, the grounds which could be considered during re-examination were expanded to include full description (including best method of performance), clarity and succinctness, patentable subject matter and fair basis/support.  Usefulness is also considered, but in context of whether the claimed invention achieves the promised benefit. 

Difficulty with inventive step – Merck & Cie [2020] APO 45

A recent Patent Office decision (Merck & Cie) highlights the high bar demanded of third parties to invalidate a granted patent when requesting re-examination in relation to the ground of inventive step.  The Delegate dismissed the ground of inventive step after oral hearing proceedings on the basis that the Delegate could not be practically certain that the granted patent was invalid in view of the evidence provided despite issuance of three re-examination reports maintaining lack of inventive step during re-examination proceedings.

This decision reinforces the already accepted notion of the difficulty third parties face when relying on re-examination at the Patent Office to invalidate a granted patent in respect of inventive step.

The claims of the Australian Patent 2012200512 filed in the name of Merck & Cie (the Patentee) are directed to formulations of a specific polymorph of the compound (6R)-L-erythro-tetrahydrobiopterin dihydro-chloride (referred to as Form B).  The formulations comprise one, or both, of the pharmaceutical excipients polyvinylpyrrolidone (PVP) and/or dicalcium phosphate (DCP).

On 23 October 2017, a third party (the Requestor) filed a request for re-examination.  Objections were raised by the Examiner under the ground of inventive step.  Three rounds of submissions were filed by the Patentee to address the lack of inventive step objection, however, the submissions were not considered to be persuasive.  

As a result, the Examiner assigned the matter to a hearings officer to consider revocation and that the Patentee could request a hearing to contest the decision.  A hearing was requested by the Patentee.

(i)           The Arguments

The Requestor raised the following grounds for re-examination:

a)            the claimed invention lacked novelty;

b)            the claimed invention lacked an inventive step; and

c)            the claims are not fairly based on the disclosure of the specification.

Nine prior art documents were filed with the request including expert evidence in the form of declarations by three expert witnesses. 

The only ground raised in the re-examination reports by the Examiner was inventive step and was the primary ground during hearing.  Additional documents had been cited by the Examiner to support lack of inventive step.

The Examiner asserted that the claims lacked an inventive step because the polymorph Form B was known from the cited documents, and that its outstanding properties make it “especially feasible” for pharmaceutical application. 

Similarly, the Examiner considered that the use of active pharmaceutical ingredients in combination with excipients PVP and DCP (either alone or in combination) was routine based on the teachings of the cited art.  Accordingly, a person of ordinary skill would be expected to simply substitute the active pharmaceutical ingredients described in the cited art with the improved polymorphic Form B in combination with the excipients disclosed.

The major issue in determining whether the claimed invention had an inventive step was that the Examiner asserted that the specification did not describe a problem to be solved (namely stability).  The Examiner noted that the “specification does not appear to suggest any particular problem when formulating compositions of the polymorphic Form B, nor does it indicate that there is any particular difficulty in formulating Form B” and that as a consequence “there are no proposed solutions which have a need for invention when preparing a pharmaceutical composition” and therefore the claimed invention is obvious.

Similar issues had been raised during prosecution that the selection of polymorph Form B in combination with excipients PVP and DCP were routine.  However, the Patentee had drawn analogies to the circumstances of Bristol Myers Squibb v Apotex and argued that these excipients (either alone or in combination) provided improved hygroscopicity (absorption of moisture from surrounding atmosphere) that could not have been predicted.  The application was accepted in view of this argument.  However, the Examiner considered that the supplementary material provided by the Requestor established that the use of these ingredients was obvious. 

(ii)          The Decision

Despite the arguments raised by the Requestor and the Examiner that a specific problem was not identified by the specification and particularly not by any reformulation development around Form B with any advantageous excipients, the Delegate was satisfied that the problem to be solved, as provided by the Patentee, is the provision of a formulation of (6R)-L-erythro-tetrahydrobiopterin dihydrochloride that has high storage stability.

The evidence before the Delegate indicated that while (6R)-L-erythro-tetrahydrobiopterin dihydrochloride was known to exist as a white crystalline solid, this was the only crystal form described in the prior art.  The Delegate found that polymorphism requires at least two different crystal forms and it was only once the Patentee discovered different crystal forms that the white crystal of the prior art could be considered a polymorph (form B).  Polymorph forms was therefore not common general knowledge. 

No evidence was provided regarding the storage stability of (6R)-L-erythro-tetrahydrobiopterin dihydrochloride and that tablets comprising (6R)-L-erythro-tetrahydrobiopterin dihydrochloride together with PVP and/or DCP were known or even common general knowledge.

The Delegate found that the problem in the present case is the provision of a formulation of (6R)-L-erythro-tetrahydrobiopterin dihydrochloride that has high storage stability.  The Delegate noted that the claimed combination as a whole must be considered when considering inventiveness and not the individual features.

The evidence from the experts indicated that there were a number of alternative strategies that could be employed to formulate the active ingredient, and even if seeking an excipient to improve the stability of the formulation, there were a number of alternatives that could be employed. 

As a result, the Delegate found that on balance there was insufficient evidence to determine that the claims are invalid on the ground of lack of inventive step in view the cited art and the common general knowledge. 

Implications

This decision reinforces the understanding by practitioners that re-examination should be relied on as an alternative to opposition and revocation proceedings when the matters to be considered are relatively straightforward.  That is, the substantive grounds relied upon by a third party is inter alia novelty and support.

Reliance of re-examination proceedings are typically difficult when attempting to invalidate a patent based on the ground of inventive step. 

This difficulty was also noted by the Delegate which stated that “[t]he present determination has also not been helped by the evidentiary constraints of re-examination where the requestor is not a party to the process and there is no opportunity for further iterations of evidence or, in the case of post-grant court proceedings, cross examination to further explore the issues in contention”.[1] 

For matters relating to the ground of inventive step, it is recommended that invalidity be established by opposition proceedings (pre-grant) or revocation in Court (post-grant) proceedings as these are inter partes proceedings such that a third party can have the opportunity to heard in full.

Alternative grounds

Despite the high bar encountered during re-examination in the context of inventive step, re-examination can still be a useful and cost-effective tool when relying on the alternative expanded grounds as discussed above.

This was highlighted in an earlier Patent Office decision of Huping Hu (2014) APO 17.  Unusually in this case, the Commissioner exercised their discretion in requesting re-examination after grant compared to a request filed by a third party.  During re-examination, the Commissioner raised additional grounds relating to utility, patentable subject matter (lack of manner of manufacture) and full description.

In this decision, the Delegate found that the patent lacked utility, patentable subject matter and the specification did not fully describe the invention.

The Delegate revoked the patent as the Delegate considered that the deficiencies could not be addressed by amendment.

Recommendation

As a result of the expanded grounds, re-examination can be a useful tool to challenge validity.  If a potentially infringing commercial product relies only on a specific embodiment such as using specific chemical compositions, re-examination can be used to potentially force a patentee to amend the claims which may exclude a potential commercial product by relying on the grounds of support and disclosure for example.

For instance, if a patent application or patent has unduly broad claims potentially covering the embodiment but is arguably not supported or enabled by the description and examples (often observed in the Chemical and Life Sciences space), raising the ground of support can potentially force the patentee to amend claims by narrowing which are no longer covered by the scope of the amended claims and avoid potential infringement.

Since more grounds are now available under the post-Raising the Bar Act, the prospects for successfully challenging validity through re-examination have improved but the thresholds remain high and patentees are given ample opportunity to save their claims through amendment.  This can make a potential infringer’s position better from a freedom to operate perspective but worse from a revocation perspective.

If you are interested in requesting re-examination of a patent or would like further information, please contact one of our expert attorneys.


[1] Merck & Cie [2020] APO 45, [98].

Authored by David Hvasanov, PhD and Charles Tansey, PhD

4 min read

Official fees payable to IP Australia are changing as of 1 October 2020.  In this article, we cover off the changes in relation to patent fees only.  However, trade marks, designs and PBR fees will change also and will no doubt be the topic of other articles across our local industry.

Whereas the economic rationale for the increases appears sound, the timing of the changes is perhaps less than ideal.  That said, with a little forward thinking and proactive engagement from your patent attorney, the impact of the changes can perhaps be minimised.

Background

Following a fee structure review and public consultation in 2019 where over 80 submissions were made to IP Australia, a number of changes to official fees have made.  The fee changes are based on the feedback from public consultation and in accordance with the Australian Government Charging Framework and the relevant Productivity Commission recommendations.

An updated fee schedule will commence from 1 October 2020 affecting the gamut of Australian IP rights including patent, trade mark, design and plant breeder’s rights.  You can find the full list of changes to IP Australia’s fee schedule here.

The new fee schedule has been developed by IP Australia by considering at least the following factors:

  • Supporting innovators by balancing fees with costs of doing business;
  • Increasing flexibility and efficiency for IP Australia and stakeholders; and
  • Exploring the impact fees have on the quality of IP applications and competition in the marketplace.

The changes to fees will have the greatest impact on patent applicants.

Changes to patent fees

i) Excess claim fees

From 1 October 2020, excess claim fees will now be payable at acceptance at two tiers:

  • $125 for each excess claim greater than 20 and equal to or less than 30 claims; and
  • $250 for each excess claim greater than 30 claims.

Further, the official excess claim fee will be $250 for each additional new claim over 20 if the claims are added after acceptance (post-acceptance amendments).

These changes replace the previous excess claim fee of $110 for each excess claim over 20 which is an increase of over 200% in some cases.

The changes to excess claim fees are surprising only insofar as they have not closed off an exploitable (and indeed regularly exploited) loophole which allows for an applicant/attorney to rationalise the number of claims immediately prior to acceptance, thereby minimising the fee payable.  In an extreme situation (for instance, in the case of a large biotech specification) the Office may have to examine up to 200 claims, only to end up receiving payment for 20.  The economics of leaving this loophole open are a little puzzling – and we note that as recently as February 2020, the Intellectual Property Office of New Zealand (IPONZ) brought in a claim fees regime deliberately addressing this practice, whereby claim fees were made payable upon the maximum number of claims at any stage throughout prosecution.

ii) Renewal fees

While the majority of renewal fees will increase come 1 October 2020, the most significant hike will affect patents which have a pharmaceutical extension of term granted upon them (i.e., those extended beyond their regular 20-year term).

Pharmaceutical patent extended term

20th Year Renewal

21st Year Renewal

22nd Year Renewal

23rd Year Renewal

24th Year Renewal

Old fee*

$2,550

$2,550

$2,550

$2,550

$2,550

New fee*

$4,000

$5,000

$6,000

$7,000

$8,000

*online payment through IP Australia’s portal ($50 extra for other means of payment).

Again, the economic rationale behind these changes is understandable.  Any patent worth extending for up to five additional years should be able to readily absorb the increased annuities; this is, after all, the fabled “windfall” period of pharmaceutical patents. Of course, the increased fees can be avoided altogether by pre-paying all future annuities prior to 1 October 2020.

iii) Search fees

In good news for Australian innovators, IP Australia has significantly reduced the search fees for complete applications (patent voluntary preliminary search and opinion) from $2200 down to $950.

Commentary

As noted above, nobody appears to be questioning the need for IP Australia to better recover its overheads.  However, with the world in the grip of a pandemic, the timing of the changes may have raised one or two eyebrows.  That said, fee increases during times of COVID are not unprecedented, and it was only recently that the USPTO announced fee increases having effect from 2 October 2020.

Due to the significant impact the COVID-19 pandemic has had on business in Australia, it is not yet clear what impact these fee changes will have on Australian businesses in their IP strategy and management going forward.

Foreign applicants and instructors should look out for additional detail in otherwise “standard” letters being generated from Australian attorneys.  The new claim fees regime may take some getting used to at both your end and ours – and “claim-heavy” applications having an acceptance deadline in, say, October or November 2020 may require some proactive engagement and emergency surgery on your Australian attorney’s part.

If readers have any questions about the fee increases, please do not hesitate to contact any of our Shelston IP patent attorneys.

Authored by David Hvasanov, PhD and Gareth Dixon, PhD

7 min read

26 April is World Intellectual Property Day, WIPO’s annual celebration of all things IP.  This year, the theme is “innovate for a green future”.  WIPO’s website perhaps sums it up best: “World IP Day 2020 puts innovation – and the IP rights that support it – at the heart of efforts to create a green future. Why? Because the choices we make today will shape our tomorrow. The earth is our home. We need to care for it”.

Cleantech patents “101”

It is broadly accepted that climate change cannot be redressed by means of existing non-renewable technologies. Environmental consciousness – especially as it pertains to climate change is increasing exponentially throughout the world. Climate change has gained significant attention recently with Australia having recently endured its worst bushfire season on record.  “Cleantech” – technologies that may lessen, nullify or even reverse the environmental impact of an existing product or process is a thereby a buzzword in many aspects of society – including patent law.

In this article, we look at the patent system in general, cleantech patents in focus – and consider a few “tricks of the trade” particular to (although not unique to) cleantech patents.

The essential quid pro quo of the “patent bargain” is that in exchange for providing the public with a new invention, a patentee is afforded a twenty-year exclusive period in which to exploit it. Exclusive, in the context of patent law, refers to the exclusion of third parties from being able to use the patented technology. This is “IP101” – and history has generally shown it to be sufficient inducement with which to stimulate inventive activity.  This is especially true of the cleantech industry where the strategic management of IP is underpinning rapid growth throughout the sector.

Patent issues particular to cleantech

i)      Compatibility with the “patent bargain”

Whereas new inventions are typically patented with a view to profiting the patentee, there may be some cross-over into the realm of also providing a great benefit to the public. However, what happens when an invention is of such outstanding public benefit that the patentee’s right to exclude others is arguably contrary to the interests of society? In such circumstances, the patent bargain does not fit well with the advancement of the species and gives rise to a real tension between the two.  Indeed, we’ve seen this tension play out very recently in respect of the COVID-19 pandemic and proposed Crown use of patented inventions under the banner of “the public interest”.

Pharmaceutical patents are the “classic” example of the tension between private rights and public good – and this dovetails quite nicely into another salient COVID-19 issue: the search for a vaccine.  However, it can be argued that patent exclusivity for pharmaceuticals is a necessary evil given the enormity of both R&D and clinical trials costs associated with getting a product onto the market. Moreover, while the respective definitions of “happy” may be somewhat different, a lifesaving drug sold under patent generally makes for both a happy patentee and a happy consumer/patient.

Another example – one not quite so easily reconciled, is that of cleantech. For instance, a patent for a “cleaner” method of manufacturing cement or battery technology. Clearly, it is in a patentee’s best interests to exploit the exclusivity conferred by the patent in working or licensing the invention. On the other hand, it is in society’s best interests that such an invention is placed immediately in the public domain. To generalise (perhaps unfairly), cleantech doesn’t invite the same R&D costs as pharmaceuticals. As such, it could be argued that the case of cleantech, society’s need may actually be greater than the patentee’s right – which is, of course, completely at odds with the original patent bargain.

ii)    Patent versus publish

A feature of the cleantech sector (although by no means unique to it) is the high level of industry-academia collaboration when it comes to R&D.  As will be appreciated, academics are under publication pressure and are often required to produce x-number of publications (journal articles, abstracts, oral presentations) each year (“publish or perish”) as part of their performance review.  Industry, on the other hand, is driven more by the prospect of obtaining monopoly rights via the patent system to capitalise on profit growth.

“Patent versus publish” is an age-old conundrum which, in my experience, is not all that well understood.  Many think it’s necessarily a case of one or the other.  It’s not – you can have both – on the simple condition that filing a patent application comes first (even if by just one day).

Although some countries have idiosyncratic grace period provisions that may, under certain circumstances still allow a patent application to be filed validly, these vary greatly from country-to-country and require resource expenditure (time/money) that may be better allocated elsewhere.

In short, why take the risk?  File a patent application first before proceeding via the traditional publication route.

iii)   Expedited examination platforms for cleantech patents

The national patent offices of several major jurisdictions have facilitated the expedited examination of applications relating to cleantech. For instance, the USPTO, UKIPO and IP Australia, among others, each now offer (or have offered) such a scheme. While these programs each have subtle differences, the fundamental principle is that a cleantech patentee has means to jump the queue with respect to “unclean” applications. In the case of small or start-up patentees, expedited examination may be attractive such that a granted patent is often required in order to attract investment. On the other hand, the associated legal costs may not have been budgeted for so early in the lifecycle of the patent. Moreover, the many companies who file patents for defensive reasons generally have less motivation to proceed via this route.

Expedited examination is an option, although not essential, for cleantech patentees.  As always, a decision to proceed or not to proceed should be based on a thorough consideration of all commercial/legal factors, made in conjunction with the best professional advice.

iv)   Other issues

There have been other recent developments toward establishing a more efficient cleantech community within the existing patent system. For instance, in 2010, WIPO launched the IPC Green Inventory – an online tool intended to assist users in identifying existing and emerging cleantech, as well as isolating potential commercial partners. The most recent iteration is simply named WIPO Green.

Further, certain other measures may be adaptable to cleantech. For example, a fair dealing defence, perhaps analogous to that found in copyright law is largely self-explanatory. However, it is worthwhile noting that the judicial parameters of “fair” would possibly invite a significant amount of otherwise-avoidable litigation.

Next, the patent pools model purports to facilitate the efficient trading of patent rights. In this respect, a significant impediment to any potential developer of cleantech has been the emergence of patent thickets which cover every foreseeable twist and turn along the path to a new technology; such thickets have arisen in respect of fuel cells, wind energy, and carbon sequestration technologies, to name but a few. Accordingly, money initially earmarked for cleantech R&D risks being siphoned off to pay for infringement opinions and cross-licensing arrangements.  Significantly, however, the various competition authorities have placed stringent conditions on such patent pools in recent years, which may have restricted their uptake and appeal.

Bringing all the pieces together

The intrinsic nature of cleantech means that whilst patenting is essential, it is nonetheless a somewhat imperfect fit.  During the initial R&D phase, IP will often be a cleantech company’s most valuable asset. Moreover, patenting creates opportunities for cross-licensing deals and strategic use to negotiate joint venture arrangements. Finally, patents can be instrumental in a cleantech company’s exit strategy, by way of going public or being acquired.

That said, the somewhat uneasy marriage between cleantech and the patent system has never been better reflected than in 2009, when patents (in combination with the closely related field of technology transfer) effectively torpedoed a global climate treaty being agreed at the United Nations Climate Change Conference (COP15) in Copenhagen.  Cleantech and patents need to be linked, but do not mesh easily.

The above discussion represents what is likely only the opening stanza in what is sure to be a fascinating period in patent law. Cleantech will continue to poke and prod the patent system in ways that were probably never envisaged – and it will be interesting to see if, when and how any changes eventuate so as to better accommodate “public” clean technologies within the “private” patent system. While the cynic may suggest that an agreement in Copenhagen would have materialised if the climate change issue was perceived as real, the pragmatist would likely counter that if a genuine fix was apparent from within a short, 1500-word article, it would have been adopted long before now.

Three takeaway tips

  • Interpret “cleantech” broadly. A “dirty” technology can still be “clean” if it’s cleaner than competitors’ existing technologies – it’s all relative.
  • To expedite or not to expedite (examination). There are pros and cons depending upon where a cleantech organisation is at legally, financially and commercially – one size certainly doesn’t fit all.
  • Patent versus publish. You can have both, provided filing a patent comes first (even by one day).

2020 – A World IP Day with a difference

In light of the coronavirus pandemic, and the need to keep everyone safe and well, WIPO will not organise any physical events this year, and encourages the World IP Day community to move celebrations to virtual channels – something most of us have had to get used to very quickly over the past few weeks.

David Hvasanov, PhD and Gareth Dixon, PhD

2 min read

The critical dates are now known in respect of the Australian Government’s abolition of the second-tier “innovation patent” system: new applications must be filed before 26 August 2021, and all innovation patents will have expired by 26 August 2029.  Significantly, existing innovation patent rights (and those applied for over the next 18 months) will not be affected.

The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 finally passed through Australia’s Federal Parliament earlier this month.  Our feature article can be found here.  The Bill received Royal Assent on 26 February 2020, which in turn establishes two future dates of critical importance.  Such dates are the subject of this update.

Giving effect to the Transitional Provisions

The Transitional Provisions allow for the filing of new innovation patents for a further 18 months, and exploitation of the innovation patent system for the best part of the next decade.  The Transitional Provisions are broadly summarised as follows:

  1. The legislation was passed into law (i.e., received the required Royal Assent) on “Date-X” (26 February 2020). For the purposes of filing new innovation patents, it takes effect from “Date-Y” (26 August 2021), which is 18 months from Date-X.
  2. At any time prior to Date-Y (i.e., before until 26 August 2021), new innovation patent applications can be filed. In other words, nothing changes until the legislation takes effect on 26 August 2021.
  3. As of Date-Y (26 August 2021), no new innovation patent applications can be validly granted. However, an existing and pending standard patent application (i.e. having a filing date prior to Date-Y) can still be converted into an innovation patent, or can have a divisional innovation patent filed from it.
  4. With innovation patents having an 8-year term, it will be appreciated that all innovation patents will have expired by “Date-Z” (effectively, Date-Y+8 years, i.e., 26 August 2029).

It’s probably simpler by way of a timeline

Innovation patent system timeline

“Abolition” versus “phasing out”

“Abolish” is probably too strong a term to describe the changes.  Rather, as shown above, the innovation patent system is to be “phased out” over the best part of the next decade.  The Government’s original proposal had been for a 12-month commencement window, but this was changed to 18-months in part-exchange for the Opposition’s support in passing the legislation.

Need more information about innovation patents?

A few months back, we published a SWOT analysis of Australia’s innovation patent.  Our conclusion was that the “punishment” (abolition/phasing out) should fit the “crime” (three principal failings, two of which were readily correctable).  We think it’s a bit like imposing the death penalty for jaywalking.  The Government, accepting the views of the Productivity Commission, clearly saw things the other way!

Next steps?

Now that we know our “Date-X” (26 February 2020), “Date-Y” (26 August 2021) and sunset “Date-Z” (26 August 2029), it’s simply a matter of business-as-usual, subject to the Transitional Provisions summarised above.

“Innovation patent” is thereby destined to remain part of the Australian patent lexicon for the best part of the next decade.  The innovation patent system has been fated to die a slow, painful death which, in fairness to the Government, was probably the only equitable way to “abolish” it, once it was established that this was the path it wished to go down.

Authored by Gareth Dixon, PhD and David Hvasanov, PhD

7 min read

On 13 February 2020, the Intellectual Property Office of New Zealand (IPONZ) will increase many of its fees – and add several new ones.  As with any fee hike, some are justified more easily than others, some are “idiosyncratic” – and importantly, within the context of this article, some are avoidable altogether.

Specifically, if Applicants request voluntary examination prior to 13 February 2020, two of the changes, potentially amounting to several hundreds of dollars in additional fees, can be dodged:

  • The increase in examination fees (currently NZ$500, increasing to NZ$750); and
  • The new and unlikely-to-be-popular claim fees (NZ$120 per bank of 5 claims in excess of 25).

There is a narrow window within which to act – and it will soon slam shut.  We encourage clients to take proactive steps for the reasons provided below.

It’s not just cost reduction, it’s also “best practice”

The notion of what constitutes “best practice” when it comes to prosecuting a New Zealand patent application has always been somewhat subjective.  For every move that seems like a good idea, there’s usually a decent counterpoint.  However, we have recently attempted to reconcile all the pros and cons – and came to the conclusion that requesting early examination was as close to “best practice” as you were going to get.

Around the same time – more by coincidence than design, IPONZ announced some (fairly modest) increases in official fees, along with some new fees altogether.  In combination, these stand as further drivers toward requesting early examination.

Why again was early examination thought to be “best practice”?

It’s all to do with managing the 5-year statutory bar on requesting examination of a new Act (Patents Act 2013) case.  Beyond five years of its filing date, a request for examination cannot validly be made.  This, of course, creates all sorts of headaches when it comes to potential divisional applications (which can be filed, but not examined; the “zombie divisional” scenario).  Throw in the fact that IPONZ presently has a large backlog of cases awaiting examination, and an Applicant risks having the 5-year bar expire on them before such time as they know where they stand on the divisional issue.  Applicants can either guess – and file a precautionary divisional that may never be needed, or else run the gauntlet and risk missing out altogether in the event that unity is later raised during prosecution (after the 5-year bar), or the application cannot be placed in condition for acceptance prior to expiry of the 12-month acceptance deadline (in cases where difficult prosecution is encountered).

This is all a bit messy.

Accordingly, “best practice”, according to us, was to request examination of a New Zealand application as early as possible following filing in IPONZ (as a Convention or National Phase application).  That way, by the time a first report issues, the Applicant will still have plenty of time up their sleeve when it comes to the 5-year bar.  If a divisional is required, the Applicant is thereby enabled to make an informed decision as to whether to proceed.  This can be particularly important as a peculiarity of New Zealand patent practice is that divisional applications must be filed before the parent is accepted.

Better still, in our recent experience, Applicants seem generally happy to accept this advice.  This, of course, avoids attorneys later having to write “awkward” letters in the event that the divisional route turns out to be unavailable.  Again, this is important because due to its backlog, IPONZ is not presently issuing directions to request examination.

So, what does this have to do with IPONZ’ fee increases?

For existing Applicants (or Applicants filing in IPONZ within the next few months), requesting examination before 13 February 2020 avoids two further fees – one increased, and one new.

Increased fee for requesting examination

The official fee for requesting examination prior to 13 February 2020 is NZ$500 (about US$315, €290, RMB2300, or ¥34,000).  If requesting examination on or after this date, the fee rises by 50% to NZ$750.

The justification for the fee increase is the labour-intensity of conducting examination under the Patents Act 2013.  However, it also makes a New Zealand application costlier to examine than its Australian counterpart.

Keeping the magnitude of the increase in perspective, it will be appreciated that the increase in official fee provides a mild driver for Applicants to consider early examination as a means of avoiding it.

New fee for “excess” claims (30 or more)

Again, requesting examination before 13 February 2020 avoids this new fee entirely.  Requesting examination on or after this date means that the fee becomes payable if, at any stage during examination, the specification contains 30 or more claims.

The new fee will be payable following acceptance of a New Zealand application (i.e., payment is necessary before an accepted application moves to grant) and is levied at NZ$120 for each 5th claim in excess of 25 (e.g., 30 claims = NZ$120; 56 claims = NZ$720, etc.).  Importantly though, the fee is payable based upon the maximum number of claims on file during examination.  Reducing the number of claims immediately prior to acceptance (as we do, routinely, under Australian practice) does not avoid or lessen the fee.

Under certain circumstances, the advent of claim fees may necessitate filing a voluntary amendment to reduce the total number of claims at the time of requesting examination.

Because IPONZ has never previously levied a “claims fee” of any type, we’ve never had to worry about the number of claims on file at any stage during prosecution.  The new fee will thereby precipitate a slight change in practice amongst New Zealand attorneys – best request examination early (prior to 13 February 2020) and avoid it altogether.

The solution

Requesting early examination not only ensures that the divisional route remains available, it also minimises the official fees payable to IPONZ.  However, the only way to effectively achieve both outcomes is for an attorney to be both vigilant and proactive in managing it.  As such, the suggested action is clear: request examination as soon as possible upon NZ national phase entry.  This maximises the chances that an Applicant will have, at least, a first examination report prior to expiry of the statutory bar – and as such, will have at least a pointer as to where they may stand in relation to a potential divisional application.

In fact, if an Applicant requests voluntary examination upon entering the NZ national phase, there is probably sufficient time (without rushing unduly) to begin prosecuting a second-generation divisional prior to expiry of the statutory bar.

NZ chart Jan 20

Are there any reasons why early examination may not be “best” practice?

Perhaps the most significant downside to early examination is that post-acceptance amendments in New Zealand remain heavily restricted.  Aside from correcting obvious mistakes, an Applicant can generally only amend down (i.e., narrow) an accepted claim – you can’t broaden, and you can’t move sideways should a killer piece of prior art emerge after an application has been accepted.

Although readers will appreciate that this is, of itself, a good reason to delay (rather than expedite) examination in New Zealand, it should be tempered with the observations that: a) international phase searching is generally fairly comprehensive, especially when conducted in one of the larger, better-resourced offices; b) IPONZ only rarely uncovers new prior art itself; and c) with the majority of New Zealand applications coming by way of the US or Europe, additional high-quality searching will usually have been completed well before the counterpart New Zealand case is due for acceptance – even if examination is brought forward, as suggested.

The other main drawback to requesting early examination is that it brings forward costs that may not have been budgeted for so soon after the significant expense of a foreign filing campaign.

Conclusion – what is current New Zealand examination “best practice”?

With so many moving pieces to consider, the notion of “best” practice is perhaps a little subjective.  Rather, let’s only make the claim that we’re suggesting “good” practice.  To this end, even though such pieces will probably never synchronise, a proactive attorney can effectively manage the 5-year absolute bar for requesting examination and with it, mitigate any attendant risks (and minimise official fees payable to IPONZ) by:

  • Reviewing international phase/EPO/USPTO prosecution histories shortly (g., 2-3 months) following NZ national phase entry.
  • Incorporating any potential issues that may give an applicant cause to want/need to file a divisional into early advice following NZ national phase entry.
  • Assuming it is in an applicant’s best interests, counsel them to request examination sooner, rather than later.
  • Proactively managing IPONZ’ new response deadline (this action is largely self-regulating; IPONZ sets the deadline and attorneys/applicants need to comply).
  • Avoiding, to the extent possible, applications going “down to the wire” in terms of the 12-month acceptance deadline. Rather, address the Examiner’s objections as soon as possible and if necessary or advisable, maintain the postponement of acceptance.
  • Maintaining postponement of acceptance until such time as the applicant has made an informed decision regarding a divisional (remembering that acceptance of a NZ application triggers an unextendible bar on filing a divisional from it).
  • Being cognisant of the restrictions on post-acceptance amendments under New Zealand practice – what are the chances of close prior art surfacing after the case has been accepted?
  • Whilst juggling each of these seven balls, keep the closest eye on the 5-year statutory bar deadline – and remember it’s not just for filing a (or all) divisional application/s – it’s for requesting examination of any such application/s.

To conclude, if there’s one thing to take away from this article, it’s that these considerations are perfectly manageable – both individually and in sum.  However, it requires an attorney who is in sync with the requirements and their limitations working in combination with an Applicant who is prepared to prioritise – at least during the initial stages, a filing in what is likely one of the smaller jurisdictions in which they have elected to pursue.  Whereas our general preference is to request examination at the time of entering the NZ national phase, this must be offset against incurring costs that can always be deferred.  As always, it’s a case-by-case, client-by-client proposition – but it is eminently manageable.

Which other fees will increase on 13 February 2020?

The fact this this is hidden at the back end of this article reflects its secondary importance relative to the notion of New Zealand best practice.  In general, the cost of the more labour-intensive tasks (re-examination, assessing applications for restoration, etc.) has been increased, and the cost of annuity fees brought into closer conformity with those levied in Australia.

Patent fee changes

Renewals

Note: the period for payment of renewal fees commences three months before the anniversary of the filing date of the complete specification and ends at the close of the anniversary date.

1

Filing and examination fee changes

2

Excess claims fees

3

Amendment fees

4

Restoration fees

5

Trade mark fee changes

Renewals

6

Application fees

7

Search and preliminary advice fees

8

If readers have any questions about the fee increases, please do not hesitate to contact any of our Shelston IP patent or trade mark attorneys.

Authored by Gareth Dixon, PhD and David Hvasanov, PhD