Pfizer suffered a setback last week in its Australian battle to protect ENBREL (etanercept), when its preliminary discovery application against Sandoz was dismissed by Justice Burley in the Federal Court. The reasons for the dismissal are not yet public, subject to the parties seeking suppression orders over any confidential information contained in them, but are likely to be released in coming days.

ENBREL is Pfizer’s blockbuster autoimmune disorder therapy, used to treat various chronic diseases including rheumatoid arthritis. Commercially available in Australia since 2003, ENBREL was the only etanercept product registered on the Australian Register of Therapeutic Goods until 2016 when Samsung Bioepis registered BRENZYS, followed by Sandoz’s registration of ERELZI in 2017.

Given ENBREL’s success it is not surprising that patents covering the product are also being litigated elsewhere. In the United States, where Amgen holds the patent rights, ENBREL is its top selling product. The US Federal Appeal Court recently issued its judgment upholding the validity of the ENBREL patents and restraining Sandoz from entering the market there.  Amgen has also filed proceedings against Samsung Bioepis in the US, where Samsung’s ETICOVO is not yet on the market pending the outcome of that litigation.

In Australia, Pfizer launched its preliminary discovery application against Sandoz in November 2019, after winning a similar application against Samsung Bioepis in late 2017. In the Samsung case, Pfizer sought discovery of documents submitted to the Therapeutic Goods Administration in order to ascertain whether BRENZYS infringed three patents covering methods of producing polypeptides and/or proteins in the upstream bioprocessing phase.

The relevant Australian rules provide that preliminary discovery can be sought before a substantive proceeding is commenced, for discovery of documents directly relevant to the question of whether the applicant has a right to obtain relief from the Court. It is necessary to show that the applicant reasonably believes that they may have a right to such relief and that, after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding to obtain that relief. The Court has a discretion as to whether it makes a preliminary discovery order.

The key issue in the Samsung case was whether Pfizer had the requisite belief that it may have a right to obtain substantive relief; that is, in this case, a belief that Samsung was infringing its patents. The parties filed extensive affidavit evidence, including from experts on this topic. Pfizer advanced six contentions which it argued supported its reasonable belief, including the fact that BRENZYS had been registered on the basis of its biosimilarity with ENBREL, that specific characteristics of BRENZYS were similar to ENBREL, in particular it had similar glycosylation profiles, and that since ENBREL fell within the scope of the relevant patent claims, so must BRENZYS. Considering these arguments in detail, and noting that he had not had the benefit of cross examination of the witnesses, Justice Burley ultimately found that he was not convinced that there was a “reasonable basis” for Pfizer’s belief of patent infringement, as opposed to a mere suspicion (see Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285). However, an appeal by Pfizer to the Full Federal Court was upheld (see Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCFCA 193). The Full Court emphasized that the inquiry was not to determine the dispute between the experts, or who was more persuasive, but rather whether Pfizer had a reasonable basis for a belief that it may have a right to obtain relief. Noting the very substantial evidence filed on the application, Allsop CJ emphasised that “these are summary applications not mini-trials”. The High Court subsequently refused special leave for a further appeal. After the matter was remitted to the primary judge to determine the final form of orders, those orders were made in May 2019 and the proceeding still continues after orders were made earlier this year for any application for further discovery to be filed.

In light of the more generous approach to preliminary discovery applied by the Full Court in the Samsung case, it will be interesting to see the reasons for Justice Burley’s decision in the Sandoz case. It certainly seems plausible that another appeal to the Full Court is on the horizon. More generally, we expect to see more preliminary discovery applications in patent disputes in years to come, given the increasing significance in Australia (as elsewhere) of biosimilar patent litigation. In that sphere, patents covering manufacturing processes are likely to assume greater importance in light of the additional complexities at play in claiming active biological molecules per se, and the significance of specific manufacturing processes in the production of biologics. Given the likely lack of available information as to a competitor’s manufacturing processes, preliminary discovery may be an essential weapon in many such cases. It also remains to be seen whether we will see more applications to be released from the general undertaking only to use information obtained in an Australian proceeding for the purpose of that proceeding, in order to allow, for example, preliminary discovery obtained in Australia at an early stage to be used for the purpose of corresponding US proceedings.

We look forward to providing a further update when the judgment is released in this case.

Authored by Katrina Crooks

Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477

Summary

Australia’s Federal Court has delivered judgment in a dispute concerning patents covering improvements in vaccines against Streptococcus pneumoniae, a leading cause of serious infections, particularly in children.  The judgment provides the first detailed analysis by a Federal Court judge of the Raising the Bar reforms to Australian patent law concerning sufficiency and support.  The decision demonstrates the profound implications of those reforms for permissible claim breadth in Australian patents.

Key takeaways

  • Australian patent law concerning sufficiency of description and support for claims underwent significant changes in 2012 as a result of the Raising the Bar amendments to the Patents Act 1990 (Cth) (Patents Act).
  • Due to generous transitional provisions, the amended law is only now coming before Australia’s Federal Court for interpretation and application.
  • European and UK authorities provide guidance on how the amended provisions of Australia’s Patents Act are likely to be interpreted and applied. In some cases, the amendments will result in a reduction in permissible claim breadth for Australian patents.
  • As a result of the transitional arrangements, many Australian patent disputes between now and least 2033 are likely to involve both patents subject to the pre-Raising the Bar law and patents subject the post-Raising the Bar Amendments may be required to avoid the latter patents being held invalid under the new, more stringent standards of sufficiency and support.

On 14 October 2020, Justice Stephen Burley delivered the judgment of the Federal Court of Australia in Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477.  The case concerned three patents owned by Wyeth LLC (Wyeth) relating to improvements in immunisation against infection by Streptococcus pneumoniae, a bacterium responsible for meningitis, pneumonia and other serious illnesses, especially in children.

Justice Burley’s decision provides the first detailed analysis by the Federal Court of Australia concerning amendments made in 2012 to Australian patent law on the topics of sufficiency of description and support for claims.  The decision highlights the significant implications of those amendments for patent validity and claim scope.

The technology

Streptococcus pneumoniae (also referred to as “pneumococcus”) has an outer capsule that incorporates complex sugars known as polysaccharides.  Differences in capsular polysaccharides distinguish variants of pneumococcus, called “serotypes”.  More than 90 distinct serotypes have been described.  A more limited group of virulent serotypes are responsible for most serious pneumococcal infections.

The antibody response to capsular polysaccharides is generally poor in young children.  As a result, they are particularly susceptible to pneumococcal infections, which globally account for around 1 to 2 million childhood deaths each year.

To address this problem, “polysaccharide-protein conjugate vaccines” were developed with the aim of stimulating immunity against serotypes of pneumococcus known to be responsible for a high proportion of human infections.  In such vaccines, capsular polysaccharides are joined (“conjugated”) to a carrier protein, leading to a stronger antibody response than is achievable with vaccines based on capsular polysaccharides alone.

A polysaccharide-protein conjugate vaccine against pneumococcus developed by Wyeth, known as Prevnar 7®, was in clinical use before the priority date of the Composition Patents.  That product is a “7-valent” vaccine.  It comprises capsular polysaccharides from 7 different pneumococcus serotypes, in each case conjugated to a single protein (known as “CRM197”).  Evidence led in the case indicated that, before the priority date, steps had been taken to develop 9-valent and 11-valent polysaccharide-protein conjugate vaccines against pneumococcus, but no such products had yet been licensed or launched.

The patents

Three patents were at issue in this proceeding.  Two of them, referred to by Burley J as the “Composition Patents”, were related members of the same patent family.  The more senior family member (referred to here as the “Parent Composition Patent”) was subject to the provisions of Australia’s Patents Act as they stood prior to the Raising the Bar amendments.  The more junior family member (referred to here as the “Child Composition Patent”) was subject to the post-Raising the Bar Patents Act.  The body of the specification was substantially the same in the parent and child patents.  It described multivalent immunogenic compositions (that is, vaccines) comprising 13 distinct polysaccharide-protein conjugates, thereby providing increased coverage of pneumococcal serotypes compared to the existing Prevnar 7® vaccine.

A third patent asserted by Wyeth in the proceeding, referred to by Burley J as the “Container Patent”, disclosed siliconized container means for the stabilization of polysaccharide conjugates.  The issues raised in the proceeding in relation to the Container Patent are not discussed here.

The proceedings

Merck Sharp & Dohme (MSD) sought revocation of Wyeth’s Composition Patents on a variety of grounds, including lack of novelty, lack of inventive step (i.e., obviousness), false suggestion, lack of clarity, lack of fair basis (in relation to the pre-Raising the Bar Parent patent) and lack of support (in relation to the post-Raising the Bar Child patent).

By a cross-claim, Wyeth alleged that a 15-valent pneumococcal vaccine which MSD proposed to launch and market in Australia would infringe selected claims of all three of the asserted patents.

Wyeth’s allegation that the Composition Patents would be infringed by marketing of MSD’s 15-valent vaccine in Australia gave rise to a critical issue of claim construction in the proceeding, namely, whether the claims of those patents were limited to 13-valent vaccines (as MSD contended) or extended to vaccines covering 13 or more serotypes (as Wyeth submitted).

The construction issue

Claim 1 of the Parent Composition Patent was in the following terms:

A multivalent immunogenic composition, comprising: 13 distinct polysaccharide-protein conjugates, together with a physiologically acceptable vehicle, wherein each of the conjugates comprises a capsular polysaccharide from a different serotype of Streptococcus pneumoniae conjugated to a carrier protein, and the capsular polysaccharides are prepared from serotypes 1, 3, 4, 5, 6A, 6B, 7F, 9V, 14, 18C, 19A, 19F and 23F and wherein said carrier protein is CRM197.

Insofar as is presently relevant, claim 1 of the Child Composition Patent was in similar (although not identical) terms.

The specification of each of the Composition Patents included text (standard in Australian patents) indicating that “comprising” is used in an inclusive sense (“including”) rather than an exhaustive sense (“consisting of”).  That text provided the basis for Wyeth’s submission that, because MSD’s 15-valent vaccine included the 13 serotypes identified in the claims of the Composition Patents, it fell within those claims.  On Wyeth’s construction, the presence of two additional serotypes in MSD’s 15-valent vaccine was irrelevant to infringement.

Arguing to the contrary, MSD submitted that its construction (limiting the claims to 13-valent vaccines) was the only construction consistent with the description of Wyeth’s invention in the specification taken as a whole.  A corresponding submission, based on similar (but not identical) claim language, had been accepted in related UK proceedings between MSD and Wyeth (see Merck Sharp & Dohme Limited v Wyeth LLC [2020] EWHC 2636 (Pat) at [251]-[270]).

However, on this key issue, Burley J preferred Wyeth’s construction.  In his Honour’s analysis, the inclusive definition of “comprising” was decisive.  Provided that a vaccine included each integer of Wyeth’s claims (including, relevantly, the 13 specified serotypes), it would infringe – a conclusion not altered by the presence in the infringing product of additional serotypes.

What is notable for present purposes is the very substantial breadth given to Wyeth’s claims on the construction adopted by Burley J.  On that construction, the range of valences covered by Wyeth’s claim would appear to have no upper bound.

Unsurprisingly, in view of this broad construction, a question arose as to whether the claims were fairly based on, or supported by, the disclosure contained in the body of the Composition Patent specification.  On that legal issue, the Raising the Bar amendments have brought about a profound shift in Australian law, as Burley J’s judgment demonstrates.

Raising the Bar reforms

The Raising the Bar reforms were introduced to address concerns that Australia’s patent standards were lower than those of its major trading partners, causing Australia’s innovation landscape to become cluttered with unduly broad patents.  The amendments were expressly directed at aligning key aspects of Australian patent law, including on sufficiency of disclosure and support for claims, with the standards applied by UK courts and the European Patent Office (EPO) Boards of Appeal.

Although the Raising the Bar amendments were enacted in April 2012, lengthy transitional provisions mean that many of the key reforms, including those concerning sufficiency and support, are only now coming before the courts for interpretation and application.

The law pre-Raising the Bar

Prior to the Raising the Bar reforms, the relationship between the disclosure in the body of a patent specification and the breadth of the claims was governed by the legal requirement for “fair basis”.  The leading authority on that requirement (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274) established that fair basis does not turn on any inquiry into the patentee’s “technical contribution to the art”, but rather on whether each claim corresponds textually with what the patentee has described as their invention in the body of the patent specification.

The practical effect of Lockwood’s permissive interpretation of the fair basis requirement was amplified by the equally permissive interpretation of the sufficiency requirement given in the leading authority pre-Raising the Bar (Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1).  That case stands as authority for the proposition that a patent specification will have adequately described the invention if it would enable a person skilled in the relevant art to produce “something” falling within each claim (referred to colloquially as the “one way rule”).

That body of law is of continuing relevance for Australian standard and innovation patents for which examination was requested before 15 April 2013.  In the present case, that “old” body of law applied to the Parent Composition Patent.

Applying those authorities, Burley J found little difficulty in concluding that, notwithstanding his Honour’s broad interpretation of the claims of the Parent Composition Patent, those claims were fairly based.  Reflecting the essentially textual nature of the pre-Raising the Bar test for fair basis, that conclusion followed from the fact that the description of the invention in the body of the Parent Composition Patent employed the same inclusive language (“comprising”) as appeared in the claims.

The law post-Raising the Bar

Following the Raising the Bar amendments, the provisions of Australia’s Patents Act dealing with sufficiency and support are in substantially the same terms as the corresponding provisions of the European Patent Convention and the United Kingdom’s Patents Act 1977.  Parliamentary records make clear that those provisions were intended to have substantially the same effect as their European and UK counterparts, and that Australia courts are expected to have regard to decisions of the EPO Boards of Appeal and of UK courts in interpreting those provisions.

Burley J reviewed a number of EPO and UK authorities, including the recent decision of the UK Supreme Court in Regeneron Pharmaceuticals Inc v Kymab Ltd [2020] UKSC 27, to interpret the post-Raising the Bar requirement that the claims be “supported by matter disclosed in the specification”.

Referring to the landmark decision of the House of Lords in Biogen Inc v Medeva Plc [1997] RPC 1, Burley J observed that the claim support obligation has come to be understood as falling “under the umbrella of the requirement that the patent specification contain an enabling disclosure”.  His Honour noted that, although the requirement for sufficient description is directed to the specification as a whole, while the requirement for support is directed specifically to the claims, both requirements serve to ensure that a person skilled in the relevant art, armed with the patentee’s specification, is enabled to perform the invention over the whole area claimed without undue burden.

Referring to the decision of the EPO Board of Appeal in Exxon/Fuel Oils (T 409/91) [1994] EPOR 149, Burley J noted that the requirement for enablement across the full claim scope has been recognised as reflecting the general legal principle that the scope of a patent monopoly, as defined by the claims, should correspond to the patentee’s technical contribution to the art, as disclosed in their specification.

Applying those authorities, Burley J concluded that the claims of the Child Composition Patent were not supported by the matter disclosed in the specification.  On the construction advanced by Wyeth and accepted by His Honour, those claims encompassed any polysaccharide-protein conjugate pneumococcal vaccine comprising 13 or more serotypes (provided the other claim integers were satisfied).  While there was no dispute that the specification of the Composition Patents would enable a skilled person to make and use a 13-valent vaccine, uncontested evidence established that the disclosure of the specification could not be extrapolated to vaccines containing other, additional serotypes.  Manufacture of polysaccharide-protein conjugate vaccines comprising more than 13 serotypes was not enabled.

In the result, the asserted claims of the Parent Composition Patent were held to be valid and infringed, while the asserted claims of the Child Composition Patent were held invalid for lack of support.

Significance of the judgment

The disparate conclusions reached in this case concerning the Parent and Child Composition Patents serve to illustrate the profound changes to Australian law brought about by the Raising the Bar reforms.

Observers in other jurisdictions may find it curious that such starkly different findings could be made on the basis of very closely similar patent specifications.  The principle upon which the Child Composition Patent was held invalid (i.e., the requirement that claim breadth correspond to the patentee’s technical contribution to the art) is said to reflect the “essential patent bargain” whereby the patent holder is granted a time-limited monopoly in return for disclosing their invention in terms sufficiently clear and complete for it to be performed by those skilled in the art.  The fact that this requirement did not apply to the Parent Composition Patent serves to illustrate the extent to which, in the pre-Raising the Bar era, Australian patent law had diverged from the law applied by its major trading partners.

Such disparate outcomes are likely to remain a feature of Australian patent disputes for some years to come.  Australian patents subject to the pre-Raising the Bar law are expected to remain in force until at least 2033.

This decision also demonstrates that the post-Raising the Bar incarnations of Australia’s written disclosure requirements in s 40 of the Patents Act 1990 (Cth) can be a much more powerful weapon in the arsenal of a party seeking to revoke an Australian patent.  Historically, the low thresholds for fair basis and sufficiency have provided relatively wide scope for Australian patentees in advancing positions on claim construction to capture alleged infringements.  This main constraint for patentees in advancing claim construction under the pre-Raising the Bar body of law has been (and will remain) potential novelty and inventive step consequences arising from constructions being so broad as to capture prior art or common general knowledge.  The onerous post-Raising the Bar support and sufficiency requirements will add an extra dimension to these construction “squeezes” and another powerful validity ground which must be fended off.

Furthermore, notwithstanding parliament’s intention that the post-Raising the Bar provisions concerning sufficiency of description and claim support be interpreted so as to have substantially the same effect as the corresponding provisions of European and UK law, lingering disparities between the law of those jurisdictions and the terms of Australia’s Patents Act mean that some independent development of Australian law on sufficiency and support appears inevitable.  Two examples may be noted.

First, under the UK’s Patents Act 1977, although both sufficiency and support are requirements for a valid patent application, only lack of sufficiency is available as a ground of revocation for granted patents.  UK courts have remedied that “logical gap” by recognising both requirements as aspects of a single unifying requirement for an enabling disclosure.  No such logical gap exists in Australia’s Patents Act, where both lack of sufficiency and lack of support are available as grounds for revocation.  Whether this difference will lead Australian courts to seek to disentangle the threads of sufficiency and support in the UK authorities remains to be seen.

Secondly, by contrast to the requirements of European and UK law, Australia’s post-Raising the Bar Patents Act continues to impose a requirement to disclose the “best method”.  European and UK authorities provide no guidance on how that requirement is to be accommodated with the law regarding sufficiency and support.  For such guidance, it may be necessary for Australian courts to look to United States authorities.  Whether they will choose to do so remains to be seen.

Given the significant commercial interests at stake, and the complexity of the legal and factual issues raised by the Prevnar® case, the likelihood of an appeal appears reasonably high.  Whether any appeal judgment casts further light on Australian patent law post-Raising the Bar is likely to depend upon whether the appeal court upholds the broad construction of Wyeth’s Composition Patent claims that was accepted by Burley J.

Authored by Andrew Rankine, Charles Tansey, PhD, Duncan Longstaff

Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 (16 September 2020)

Background

Australia’s Patents Act provides a patent term extension (PTE) to account for the delays that can occur when obtaining regulatory approval for a pharmaceutical substance.   The extension can last for up to five years and is available when the following requirements are met:

  • the patent, in substance, discloses and claims a pharmaceutical substance per se, or a pharmaceutical substance when produced by recombinant DNA technology;
  • goods containing or consisting of the pharmaceutical substance are included in the Australian Register of Therapeutic Goods (ARTG); and
  • the first regulatory approval for the pharmaceutical substance occurred more than five years after the filing date of the patent.

The length of a patent term extension is equal to the period between the filing date of the patent and the date of the earliest first regulatory approval, reduced by five years.

The decision

Ono Pharmaceutical Co., Ltd. et al [2020] APO 43 concerned a request to extend the term of a patent covering anti-PD-1 antibodies.  The patent included claims for two blockbuster drugs; Merck Sharp & Dohme’s KEYTRUDA and the patentee’s OPDIVO, both of which received regulatory approval in Australia, but on different dates.  The question at issue, then, was which regulatory approval date was relevant for deciding the patentee’s PTE request.

The patentee hedged its bet, filing two PTE requests; one based on KEYTRUDA, which received regulatory approval on 16 April 2015, and another based on OPDIVO, which received regulatory approval on 11 January 2016.  From the patentee’s perspective, the request based on OPDIVO was preferred as it would result in a longer extended term (an additional 8 months, 26 days).  However, the Patent Office refused that request, finding that KEYTRUDA was included on the ARTG first and therefore should form the basis of the request.  The patentee disagreed and requested to be heard.

In the hearing, the patentee submitted that the “first regulatory approval date” should be the approval date of their own product, OPDIVO.  This, they argued, was consistent the purpose of the extension of term provisions, that being to restore the time lost by patentees in gaining marketing approval, and to compensate the patentee for the additional time, expense and difficulty in developing and commercialising a new drug.

The patentee argued that the reference to “first” regulatory approval in the Act was only important when multiple regulatory approval dates existed for the same substance, such as for different delivery forms (e.g. capsules, gel capsules, tablets, slow-release, different amounts, etc) that manifested in different ARTG registrations.  According to the patentee, it was only logical, given that the regime is intended to be beneficial and remedial, that it can only be about rewarding patentees for their work and, by implication, not the work of others.  If not, the patentee would not receive the full extension of term for their product.

The Delegate accepted that the PTE regime was designed to encourage the development of new drugs, but rejected the patentee’s broader purposive construction of the Act.  Such a construction, the Delegate noted, would encourage companies to develop a substance that is not new and seek regulatory approval as late as possible, secure in the knowledge that a PTE will be granted for the (not new) substance.  According to the Delegate, this type of scheme would not incentivise new drugs. Rather, it would incentivise new extension applications.

The Delegate acknowledged that there is some ambiguity in the words of the Act insofar as they do not say one way or the other whether the relevant pharmaceutical substance is only that belonging to the patentee, or whether it includes other, equivalent substances owned by third parties.  But the Delegate also noted that this ambiguity had been dealt with previously by the Patent Office in G.D. Searle LLC [2008] APO 31.  In that case, the Patent Office held that an application for PTE must be based on the earliest inclusion on the ARTG of a pharmaceutical substance falling within the scope of the claims, irrespective of the sponsor of the goods.  Moreover, in Pfizer Corp v Commissioner of Patents (No 2) [2006] FCA 1176, the Federal Court of Appeals held that “the term of the extension is based on the earliest inclusion, regardless of the identity of the sponsor. It is not open to the Commissioner to calculate the term of the extension only on the basis of goods sponsored by the Patentee.”

The Delegate therefore found that the substance with the earliest regulatory approval date for the purpose of the PTE request was KEYTRUDA, not OPDIVO.  As such, the patentee’s request for a PTE based on OPDIVO was refused.

Conclusion

In circumstances where a patent claims more than one registered pharmaceutical substance, this decision confirms that the earliest registered substance will be used to determine eligibility for a PTE and to calculate the length of the extension, irrespective of whether the registered substance is owned by the patentee or by a third party.  Patentees should therefore be aware of all pharmaceutical substances covered by their claims, not just those they are seeking to commercialise. If a patent application covers more than one pharmaceutical substance, an applicant may be well-advised to file one or more divisional applications to ensure that each registered substance is quarantined within its own patent, thus enabling maximum extensions to be sought for each patent separately.

Authored by Ean Blackwell and Katrina Crooks

Sovereign Hydroseal Pty Ltd v Steynberg [2020] FCA 1084

An application for preliminary discovery of documents relating to the constituents of a ‘sealing composition’ and methods of using it to seal passages was granted in circumstances where an exclusive licensee of the asserted patent suspected infringement by a third party based on past employment, access to confidential information, information from a private investigator, and the similarities of the processes being carried out by both parties. The scope of the discovery order was limited due to the financial circumstances of the respondent.

Background

Sovereign Hydroseal Pty Ltd (Sovereign) is the exclusive licensee of Australian Patent No. 2012216392 (392 Patent) which relates to a method and composition for sealing passages such as cracks, joints and voids in concrete structures and geological formations using a sealing composition. The sealing composition, which includes a mix of latex and additional components, is delivered into a passage under pressure in order to seal the structure from water ingress.

Together with the joint patentees, Relborgn Pty Ltd and Triomviri Pty Ltd, Sovereign sought an order for preliminary discovery of documents to be produced by Mr Johannes Steynberg (Steynberg), a former employee of Sovereign operating a business called ‘H2O Seal’, pursuant to which a process was being used for sealing cracks and joints involving a ‘liquid rubbery substance’ injected by pumps. Sovereign contended that it required production of these documents on the basis that it did not have sufficient information to decide whether to start a proceeding against Steynberg in respect of causes of action for patent infringement, breach of confidence, breach of contract, and contempt.

During the period July 2008 to June 2009, when Steynberg was employed by Sovereign, he had received training on how to seal a passage in a body such as a geological formation with a seal composition, including insight into types of equipment as well as details of the materials and compositions used. For the purposes of his work, Steynberg had access to Sovereign’s confidential information including details of product specifications and formulations, processes involving those products, customer records and customer information.

Since cessation of his employment by Sovereign in 2009, Steynberg had held multiple business interests in Queensland in relation to waterproofing and water sealing. On two separate occasions in 2009 and 2011, Steynberg established businesses which were subsequently deregistered after settlements with Sovereign. On both occasions, Steynberg was alleged to have infringed on the intellectual property of Sovereign, which he denied. Justice McKerracher declined to take into account material from these previous disputes, other than in a general sense by way of common background. However, his Honour noted that it was relevant to showing that Steynberg had some opportunity to acquire relevant information.

In September 2019, Sovereign became aware of Steynberg’s involvement in H2O Seal by way of a ‘flyer’ on the H2O Seal business, internet-based searches, and enquiries made by a private investigator. The investigator obtained information that indicated Steynberg was using a product called ‘N-LICS’, and that H2O Seal used ‘a natural nano-technology rubber grout injected under pressure into the voids sealing cracks and joints’. Concerned that Steynberg was using at least one method of sealing cracks and joints that infringes the method claimed in the 392 Patent, Sovereign applied for preliminary discovery under Rule 7.23 of the Federal Court Rules 2011 (Cth). Other related issues included Steynberg’s alleged contraventions of contractual obligations and injunctive orders entered, as part of earlier proceedings in 2011.

Arguments

Steynberg did not contest that Sovereign subjectively believed that it may have a right to obtain relief, but argued that the belief was not reasonably held. Steynberg argued against Sovereign’s allegations as follows.

  1. The photos on the flyer did not ‘reveal any confidential information of Sovereign’ and ‘it would be difficult to conclude that [Sovereign] has a reasonable belief’ based on them.
  2. The material filed by Sovereign included evidence of Steynberg employing a blend of rubber emulsions injected under pressure into a passage, which convert from liquid to solid via coagulation, but did not reveal whether Steynberg was using the same formula as Sovereign. Accordingly, Steynberg argued, the evidence and Sovereign’s contentions were insufficient to ground a reasonable belief as defined in subrules 7.23(1)(c) that he may be using the same method, process or composition as Sovereign such that a potential patent infringement claim may arise.
  3. Steynberg further alleged that Sovereign had engaged in misleading or deceptive conduct by accusing him of using ‘very similar chemicals and methods’ previously used in his H2O Control Systems business, but that the present proceedings had not revealed he had been doing so.
  4. Finally, Steynberg pressed the point that Sovereign’s right to discovery under Rule 7.23 needs to be weighed against Steynberg’s interest in protecting his own intellectual property rights with respect to the methods he had developed and was using from disclosure to Sovereign (his competitor).

Decision

In considering subrule 7.23(1)(a) and (c), the Court found that the evidence established the following.

  1. Even though none of the information provided by Sovereign proved that Steynberg was employing the same method or chemical compositions, the processes being carried out by both parties appeared on their face to be very similar.
  2. It was not clear how more detailed information regarding the precise constituent element of Steynberg’s sealing composition could be obtained outside of the preliminary discovery orders sought, and therefore Sovereign was entitled to test that composition.
  3. Neither a lack of awareness of the 392 Patent, nor the fact that others were apparently using the same process in the market, provided an adequate response to Sovereign’s patent infringement allegation or an answer to Sovereign’s discovery orders.
  4. Steynberg held documents regarding the methods and chemical compositions he used to seal passages which were directly relevant and could help Sovereign in deciding whether to seek relief.

Justice McKerracher concluded that Sovereign had established an adequate foundation for a ‘reasonable belief’ that it may have had the right to obtain relief from Steynberg, and that Steynberg may have had documents directly relevant to that question. In relation to subrule 7.23(b), the Court ruled that in combination with prior enquiries including web-based searches and an investigation, the contested discovery notice served by Sovereign to Steynberg constituted a sufficiently reasonable enquiry.

Considering the requirements for an order to be fulfilled, McKerracher J allowed Sovereign’s application for preliminary discovery subject to the provision of security for the costs of compliance. The order to provide security for costs was made in response to the expansive terms of discovery sought by Sovereign, taking into account concerns regarding Steynberg’s financial capacity to comply.

Significance

This case highlights how preliminary discovery applications can be used by a patentee or exclusive licensee to inform its decision-making in relation to whether to commence a proceeding in respect of potential patent infringement.

The case also confirms the observations made by the Full Court in Pfizer Ireland Pharmaceuticals v Samsung Bioepis Au Pty Ltd (2017) 257 FCR 62 (which we previously analysed here). In terms of subrule 7.23(1)(a), the main point of consideration when granting preliminary discovery orders is not whether the belief in the applicant’s rights to relief is based on speculation, but rather whether the belief resulting from that speculation is a reasonable one. Potential applicants should bear in mind, however, that the scope of discovery sought can be restricted as a result of factors such as the financial capacity of the third party to comply with the order.

This decision is another illustration of the relatively low thresholds for obtaining preliminary discovery in connection with suspected infringement of an Australian patent, particularly for patents that claims compositions or manufacturing processes that cannot otherwise be readily discerned from public information or inspection of product samples (even if such samples can be obtained).

Authored by Chris Byrnes and Duncan Longstaff

Australia’s Full Federal Court recently delivered judgment in an appeal in a significant patent case: Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116.  The case concerned three patents relevant to Mylan’s oral lipid-lowering agent, Lipidil® (fenofibrate).

An enlarged Full Court bench comprising 5 judges (Middleton, Jagot, Yates, Beach and Moshinsky JJ) was appointed to hear and decide Mylan’s appeal.  This was because Mylan sought to clarify the Full Court’s previous statement in Merck & Co Inc v Arrow Pharmaceuticals Ltd [2006] FCAFC 91; 154 FCR 31 that the characterisation of an alleged anticipation as a “suggestion” in relation to the invention, is “not necessarily fatal to a novelty argument”.  Mylan submitted this statement by the Full Court did not countenance “mere speculation” or “the presentation of no more than a reasoned hypothesis” as an anticipatory disclosure.  On this basis, Mylan submitted to the Full Court (unsuccessfully, as explained below) that the trial judge (Nicholas J) had erred in finding that a hypothesis stated in a prior art document relating to a clinical study deprived methods of treatment claims of novelty.

The Full Court’s decision also provided important guidance in relation to the approach taken by Australian courts in considering obviousness, the construction and infringement of ‘Swiss-style’ claims under Australian patent law and the extent to which consistory clauses alone can provide fair basis for a claim.

Method of treatment and Swiss-Style claims lack novelty in light of clinical trial protocol

The Full Court considered whether method of treatment and Swiss-style claims could be anticipated by prior art comprising a protocol for a clinical trial of the claimed method.

Mylan argued that such a protocol could not be novelty-defeating, because at most it identified a hypothesis that required testing, and could not be understood as teaching or recommending that the claimed method be put to clinical use.  The Full Court rejected that analysis and upheld the trial judge’s finding that Mylan’s method of treatment and Swiss-style claims lacked novelty.

The Full Court held that, in assessing novelty, the key question is whether the information disclosed in the prior art is sufficiently specific and complete to be equal to the invention that is later claimed.  If so, then even a protocol for a trial to test the claimed method could be novelty-defeating.  The Full Court acknowledged that, in this respect, Australia’s law on novelty differs from the law applied by UK courts in cases such as Regeneron Pharmaceuticals Inc v Genentech Inc [2012] EWHC 657 (Pat) and Hospira UK Limited v Genentech Inc [2015] EWHC 1796 (Pat), which hold that the prior art must disclose actual achievement of the relevant therapeutic effect to be novelty-defeating.

This aspect of the Full Court’s decision arguably fails to give due consideration to the proper meaning and importance of words such as “treat” and “prevent” in method of treatment and Swiss-style claims.  As Mylan contended, at the stage of disclosing the protocol for a clinical trial, it is not known whether the product or method under consideration does in fact “treat” or “prevent” the particular condition or illness of interest, and there is a significant prospect that it will later prove ineffective or unsafe.  The approach of the Full Court and the primary judge makes clear that the nature and extent of the prior-published clinical trial protocol or other document will be critical in each case.  Those case-specific factual issues will be especially important in future cases, as it would seem a harsh outcome for patentees for statements of unproven hypotheses, theories, ideas or suggestions to anticipate and invalidate (for lack of novelty, putting aside considerations of obviousness which depend on the common general knowledge and availability of prior art) claims to a method that the patentee has subsequently proven effective and safe in “treating” or “preventing” the particular condition or illness.

Obviousness of formulation and method of treatment claims

Australian Courts generally assess obviousness by asking whether, before the priority date, a skilled person presented with the same problem as the patent owner would have been “directly led to try the claimed subject matter with a reasonable expectation of success” (referred to as the “modified Cripps question”).  Historically, that test has been applied in a strict manner by Australian courts, leading a number of patents to be upheld in Australia that have been invalidated on obviousness grounds in other jurisdictions.

Recently, however, Australian courts have adopted a more flexible interpretation of the Cripps test.  This Mylan case continues that trend.  The trial judge held two of Mylan’s patents (one relating to nanoparticulate formulations of fenofibrate, the other relating to methods of preventing or treating retinal damage associated with diabetes by administering fenofibrate) invalid on obviousness grounds, and the Full Court upheld those findings.

The following aspects of the Court’s obviousness analysis are notable:

  • Mylan’s patent for a nanoparticle formulation of fenofibrate included claims which required the use of specified surface stablizers.  The trial judge did not find that the skilled person would have been directly led to select those specific stabilizers with an expectation that they would be effective. Rather, he found that the claimed stabilizers were logical to try and that routine, trial-and-error testing would have demonstrated their suitability.  The Full Court agreed this was sufficient to support an obviousness finding.
  • In relation to Mylan’s method of treatment patent, an expert gave evidence that, before the priority date, his expectation of success with the claimed method would have been less than 50%.  The trial judge held that evidence was not inconsistent with a finding of obviousness, because the Cripps test does not require a numerical assessment.  Again, the Full Court agreed with that analysis.

The test for obviousness applied by Australian courts remains more demanding upon the party seeking revocation than the approach taken by (for example) the European Patent Office or the UK courts.  However, the Mylan decision continues a trend in Australian patent cases towards a more flexible application of the obviousness test that is somewhat closer to the approach taken by the European Patent Office and UK courts.  This serves to emphasise the importance of careful preparation of the obviousness defence in close collaboration with inventors and key expert witnesses.

Defining the scope of Swiss-style claims

The claims asserted by Mylan included Swiss-style claims.  Swiss-style claims are typically drafted in the form “Use of [active ingredient] in the manufacture of a medicament for the treatment of [disease or disorder]”.  They came about from the need to satisfy particular requirements for patentability which formerly applied under the European Patent Convention.  Although these requirements do not exist in Australia, Swiss-style claims are routinely included in Australian patents as their scope is different from that of method of treatment claims, which are also permitted under Australian law.

The Full Court in this Mylan case examined the interpretation of Mylan’s Swiss-style claims, having regard to the decision of the UK Supreme Court in Generics (UK) v Warner-Lambert [2018] RPC 2, and provided guidance on determining the scope of such claims under Australian law.

One of the Swiss-style claims asserted by Mylan recites:

 “Use of fenofibrate or a derivative thereof for the manufacture of a medicament for the prevention and/or treatment of retinopathy, in particular diabetic retinopathy”.

The Full Court confirmed that the claim, if valid, conferred a monopoly in respect of the method or process of making the medicament, and that the method or process is complete upon manufacture.  The monopoly did not extend to a method of treatment – that being the province of method of treatment claims.  The Full Court also confirmed that Swiss-style claims are purpose-limited in the sense that the medicament resulting from the method or process is characterised by the therapeutic purpose for which it is manufactured, as specified in the claim.  The Full Court rejected the “outward presentation” test that was favoured by Lords Sumption and Reed in the UK Warner-Lambert case.

In the first instance decision, the primary judge said that the the crucial question concerning the infringement of a Swiss-style claim was whether the manufacturer had made or will make the medicament with the intention that it be used in the treatment of the designated condition.  On this basis, to prove infringement of a Swiss-style claim, it would not be enough to show that it was “reasonably foreseeable” that a generic product would be put to the use referred to in those claims (although foreseeability could be relevant in the overall analysis).  The trial judge held that, to prove infringement of Swiss-type claims, it would be necessary to show that the generic intended that its product be put to the use referred to in the Swiss-style claims.

The Full Court disagreed with this approach, instead finding that infringement of a Swiss-style claim is concerned with what the allegedly infringing manufacturer has done, not what it intended to do.  That is, not what a generic manufacturer intended, but what the generic product is for.  According to the Full Court, a single factual question arises when considering infringement:  as the product of the claimed method or process, is the medicament for the specified therapeutic purpose?  The question, the Full Court said, is answered having regard to “all the circumstances of the case”.

The Full Court pointed to several such “circumstances” that will be relevant in determining the therapeutic purpose of the medicament as defined by a Swiss-style claim.  First, the court noted that the physical characteristics of the medicament as it emerges as a product of the manufacturing process, including its formulation and dosage, packaging and labelling, and its patient information, will be an important consideration.  So too will evidence of the manufacturer’s actual intention in making the medicament, where such evidence is available.  Both factors are relevant considerations, but neither is determinative.

On the facts of this case (which included “skinny labelling” confining the approved indications of the generic product to indications outside the conditions within Mylan’s method of treatment claims), the Full Court held that Mylan had not proved that Sun’s fenofibrate products were “for” the second medical use covered by Mylan’s Swiss-type claims.

The Full Court also gave consideration to the reasonably foreseeable use or uses to which the medicament would be put after manufacture.  But while a reasonably foreseeable use may be relevant in deciding the therapeutic purpose of a medicament, it is also not determinative:  it might be reasonably foreseeable that a product might be put to a particular use, but it does not necessarily follow that the product, as manufactured, is for that use.

The Full Court agreed with the primary judge that mere suitability of a medicament for a claimed purpose cannot be determinative of the question of infringement of a Swiss-style claim.  The fact that the patent has been granted on the basis of a second medical use means that there are multiple uses to which the medicament could be put.  Evidence of suitability for use was therefore considered ambiguous and could not alone answer the question whether the medicament, as manufactured, is one for the specified therapeutic purpose.

Ultimately, the Full Court found that the Swiss-style claims, if valid, would not have been infringed by the manufacture of Sun’s competing product.  Of particular relevance to the Full Court’s decision was the fact that the competing product could be used in a large number of diseases other than retinopathy.

The decision validates the importance of including both Swiss-style claims and method of treatment claims when protecting a therapeutic use in Australia.  Both types of claim are permitted in Australia, and although their scope is limited to the specified therapeutic use, each will directly capture a different infringer.  In particular, Swiss-style claims provide a more direct avenue than method of treatment claims for pursuing manufacturers of competitive pharmaceutical products, rather than the medical practitioners who perform the treatment.

Consistory clauses may not provide fair basis if too broad 

Mylan’s third patent, relating to an immediate-release micronized formulation of fenofibrate, was found by both the primary judge and the Full Court to be invalid for lack of fair basis.  The Full Court endorsed the primary judge’s reasoning that the disclosure elsewhere in Mylan’s patent specification made clear that the invention was to the immediate release fenofibrate composition and a method for preparing it, whereas Mylan had advanced a construction of a consistory clause and corresponding claims to the effect that the invention extended to any composition of fenofibrate which satisfies the specified dissolution profile.  The Full Court affirmed that, as Sun Pharma had submitted, this is “a paradigm example of claims which travel beyond the matter disclosed in the specification”, amounting to invalidity for lack of fair basis.

The fair basis test considered in this case still applies to Australian patents for which examination was requested prior to 15 April 2013, when the “Raising the Bar” amendments came into effect.  The ‘fair basis’ requirement is generally considered to be a lower standard for patentees than the ‘support’ requirement that replaced it from 15 April 2013, which Australian Parliament expressly intended to align more closely with requirements under European law.  Therefore, if a consistory clause alone will not necessarily provide fair basis, that risk is likely to be even more significant for more recent patents and pending future patent applications required to meet the higher standard of support (such as an “enabling disclosure”).

Authored by Duncan Longstaff and Michael Christie, PhD

Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778

Aristocrat Technologies Australia Pty Limited (ATA) appealed to the Federal Court from an Australian Patent Office decision that four of its innovation patents (the Patents) for electronic gaming machines (EGMs) should be revoked to failing to define patentable subject matter.  The Federal Court allowed the appeal, finding that the EGMs were patentable subject matter.

Background

EGMs, also called “slot machines”, are a combination of hardware and software components.  The hardware includes cabinets with video display screens, a “slot” or other vending device to receive money or other forms of credit, and various internal electronics, including an internal computer to operate software to operate the EGM.  The internal computer, commonly called a “game controller”, runs software to visually display reels with symbols on the screen and simulate movement of the reels, in order to play a game based on the displayed symbols.  Typically, a person makes a wager or monetary bet via the vending device to play the game on the EGM.  In this case, the novel and innovative features of the Patents lay in the aspects of the game played on the EGM, as controlled by the computer, and not in any aspect of the hardware (which was essentially generic for EGMs).

ATA had filed the Patents and requested examination of each one before the Australian Patent Office.  The Patents each defined in their respective independent claims an EGM comprising various hardware components and the steps performed by the game controller to execute the game.  During examination, the Patents were each objected to for failing to define patentable subject matter (known as “manner of manufacture” under the Australian Patents Act 1990 (Cth)).  The basis of the objection was that the substance of the invention was in the rules or procedure for playing the game, and so was a mere scheme that was unpatentable.  ATA requested a hearing before a Delegate of the Commissioner of Patents to decide the issue.  The Delegate agreed with the examiner and held that the Patents did not define patentable subject matter, finding that the hardware components of the claimed EGM did not add anything of substance to the “inventive concept”, being the game. ATA appealed the Delegate’s decision regarding each of the Patents to the Federal Court.

Decision

In the Federal Court appeal, Burley J reviewed the authorities on patentable subject matter and found that in determining whether a patent defined patentable subject matter, there was a two-step test.  The first step was to consider whether the invention related to a mere scheme or business method.  If so, the second step was to consider whether the invention is in the computerisation of the scheme or business method.

Expert evidence

In deciding the issue, Burley J followed the recent Full Federal Court decision in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, where it was held that expert evidence on patentable subject matter was of limited use.  As such, the extensive expert evidence filed by both parties during trial before the Rokt decision issued was mostly ignored.  However, Burley J did rely on expert evidence as to the highly regulated nature of EGMs in Australia as an indication that EGMs must have a particular construction and are built for a specific (and limited) purpose.

Are inventions relating to EGMs a mere scheme?

In applying the two-step approach, Burley J found that the invention claimed by each of the Patents was not simply a mere scheme or business method.  Rather, Burley J construed each of the claimed inventions as a “mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way”.  As the initial question was answered in favour of patentability (ie, not a mere scheme), it was not necessary to answer the second question (ie, whether the invention lay in the computerisation).

In support of his finding, Burley J pointed out specific hardware components of an EGM, including the display for displaying the virtual reels, credit input mechanism (vending device), game play mechanism (buttons) and the game controller that are characteristic of EGMs.  Also, due to the highly regulated environment in Australia in which EGMs can be operated, these factors demonstrated that the invention is a machine specifically designed to provide a specific gaming function.  Accordingly, the combination of the physical hardware components and the virtual software components (being the virtual reels and displayed symbols) produced the “invention”.  Thus, the invention had a specific character and a single purpose – to enable a person to play a game.

The fact that the hardware components were agreed by both ATA and the Commissioner to be part of the common general knowledge in the art did not detract from this finding.

Mechanical equivalent

It was also noted by Burley J that the Commissioner of Patents had conceded that a traditional gaming machine comprised solely of hardware and mechanical components that implemented the same game without any software would have been patentable subject matter.  To Burley J, this concession was inconsistent with the Commissioner’s position that effectively separated the game rules or procedure from the hardware in an EGM only because of its electronic nature.

Comment

It seems that the particular construction of EGMs and their highly regulated nature influenced Burley J’s assessment of whether the claims of the Patents defined patentable subject matter.  Despite the agreement of both parties that the hardware components were conventional in the art of gaming machines, the specific function and purpose of those hardware components, compared to generic computer or processor parts typically found in other computer-implemented inventions, led to the finding that the invention was not simply a scheme or business method, and so was decisive.

While this reasoning seems logical to some extent, the test for when hardware forms part of the invention appears to remain somewhat arbitrary. It could be said that hardware components of EGMs are just as “generic” or “conventional” within the EGM field as general computer elements, like a processor or memory.

Justice Burley J relied upon previous Federal Court decisions in which EGMs were found to be patentable subject matter: Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd (2002) 58 IPR 93 at [15] and [101] (Dowsett J) and Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited (2015) 114 IPR 28 at [60] (Nicholas J). However, each of those previous decisions was decided prior to keyFull Federal Court decisions confirming the current principles for determining the patentability of computer-implemented inventions, particularly Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 and Rokt.

While this decision is of benefit to EGM manufacturers, it should be noted that the claims are limited to those hardware components.  As such, the claims are of limited scope to physical EGMs and thus online gaming platforms, mobile devices and even desktop computers appear to be free to simulate the same game the subject of these claims without fear of infringing the claims if they do not also provide the hardware components defined by the claims of the Patents.

Significance

The decision provides some guidance on the patentabilty of computer-implemented inventions that employ specific and not generic hardware.  Where a computer-implemented invention employs hardware components are specific to the invention or purpose-built, then the invention will be patentable, even if those hardware components are well-known in the technical field.

However, due to this requirement for specific or purpose-built hardware, the decision has limited application to the patentability of computer-implemented inventions in general, such as those found to be unpatentable in previous Federal Court decisions.  In particular, many computer-implemented inventions are specifically, and advantageously, designed to be “hardware-neutral” so they can efficiently leverage a wide variety of computer technologies (such as personal computers, smartphones, physical and wireless internet networks, satellites, etc).  This recent decision does not provide any additional hope for companies seeking patent protection in Australia for such inventions.

Accordingly, in the appropriate circumstances, patent applicants should carefully draft their patent applications to emphasise the combination of hardware and software in achieving a computer-implemented invention, and especially whether the hardware components are specific to a particular technical field or serve a particular purpose, and are not simply generic computer components applicable to all fields of computer technology.

Authored by Andrew Lowe and Duncan Longstaff

During the past decade, the patent-eligibility of computer-implemented methods has been a particularly vexing focal point for Australian patent law and practice. With computer technologies now ubiquitous and relatively mature, applying the centuries-old “manner of manufacture” test in a way that is practical and predictable in the eyes of practitioners and their clients has proven somewhat elusive for examiners and hearing officers of the Australian Patent Office and judges of the Federal Court at both first instance and on appeal.

In many ways, this Australian experience has mirrored the challenges faced by US patent practitioners seeking consistency in application of the principles set down by the Supreme Court in Alice Corporation Pty Ltd v CLS Bank International (2014) 134 S Ct 2347 and by UK and European practitioners in grappling with legislative exclusions of computer-implemented schemes and presentations and statements of principle in cases such as Aerotel Ltd v Telco Holdings Ltd (and others) and Macrossan’s Application [2006] EWCA Civ 1371.

The decision in late 2019 of an expanded 5-member bench of the Full Court of the Federal Court of Australia in Encompass Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 has provided additional clarity on where Australian law draws the line between unpatentable schemes or ideas with incidental computer-implementation and patentable inventions involving technical applications of ideas or improvements in how computers operate. The principles and approach endorsed in the Encompass decision were followed by another Full Court in last week’s long-awaited decision in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86. Other recent decisions of the Australian Patent Office and Federal Court of Australia have produced outcomes that are generally consistent with the principles articulated in Encompass and applied in Rokt, in finding both for and against patent-eligibility in different cases.

Accordingly, Australian practitioners are now better-placed to advise their clients on the likely strength of “manner of manufacture” issues and grounds relating to methods involving some element of computerisation, both during drafting and prosecution of patent applications, and in connection with both enforcing and seeking to revoke granted patents. In this article, we provide commentary on these recent developments and practical guidance on the new best practice with respect to Australian patents with computer-implemented aspects.

The Encompass Case

Background

The Encompass case concerned two similar innovation patents relating to a method of displaying information related to “entities” (such as individuals and corporations) and the connections between those entities so as to provide business intelligence. The claimed method would allow a user to generate and display a “network representation” by querying remote data sources. The claimed method would then allow the user to select a node (representing an entity) on the network representation, perform further searches to retrieve information related to the selected node and provide the retrieved information to the user – such as by updating the network representation to display further nodes, from which further searches could be performed, and so on.

Encompass’s innovation patents in suit referred in the body of their specifications to each specific function of the claimed method being realised “in a number of ways, depending on the preferred implementation”. The patents did not stipulate any specific hardware, programming or software to perform the invention. Indeed, the specifications repeatedly emphasised that the steps of the claimed method “may be achieved in any suitable manner” or “using any other suitable technique” or “mechanism”.

First Instance Decision

At first instance in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421, Perram J found all claims of both of Encompass’s innovation patents invalid for failing to meet the manner of manufacture requirement. His Honour also found some claims (those which lacked a “purchasing step”, which was held to contribute substantially to the working of the invention) invalid for lacking innovative step in light of a prior art platform known as “They Rule”, and otherwise dismissed InfoTrack’s other challenges to validity based on novelty and innovative step in light of prior art, alleged self-anticipation, secret use and section 40 (clarity, support and sufficiency).

Expanded Full Court Appeal Decision

An expanded Full Court of five Judges (Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ) heard the appeal by Encompass and its exclusive licensee SAI Global. The Commissioner of Patents also exercised her right to appear and make submissions, which were broadly aligned with those of InfoTrack in arguing the Encompass Patents did not satisfy the manner of manufacture test. The Institute of Patent and Trade Mark Attorneys (IPTA) also sought, and ultimately was granted, leave to make written submissions in the appeal as amicus curiae, which were broadly aligned with those of Encompass and SAI Global in arguing the Encompass Patents should qualify as patent-eligible computer-implemented methods.

The Full Court essentially upheld all of the findings of the primary judge, finding all of the claims of both of Encompass’s patents invalid for failing to meet the manner of manufacture test and the claims that lacked the “purchase step” (claims 1 and 3-5 of the 164 Patent) invalid for lack of innovative step.

Generic computer implementation

The Full Court confirmed that where, as a matter of substance, there is “no more than an instruction to apply an abstract idea [or scheme] (the steps of the method) using generic computer technology”, there will be no patentable subject matter. It is not enough that an “uncharacterised electronic processing device (for example, a computer) is employed as an intermediary to carry out the method steps”. An “idea for a computer program” where it is “left…to the user to carry out that idea in an electronic processing device…which itself is not characterised” is not patentable subject matter. The Full Court upheld the primary judge’s findings that Encompass’s innovation patents fell into this category and accordingly failed to claim (or even disclose) any patentable subject matter.

The role of Prior Art in the “manner of manufacture” assessment

An issue raised before the Full Court by IPTA as an intervener was the trend in examination practice before the Australian Patent Office of considering prior art in assessing patentability. The Full Court emphasised the caution expressed in previous judgments against importing concepts of novelty and obviousness in the assessment of manner of manufacture, but declined to comment on the examination practices of the Commissioner of Patents in unrelated matters.

In a seminar delivered in November 2019, the Patent Office stated that to identify the substance of the claim and what is the alleged or actual contribution, the need to understand “inventiveness” may include a consideration of prior art. This approach has attracted criticism from members of the profession. The Full Court in Encompass did not provide any firm guidance as to the approach adopted by the Commissioner. It is important to refer to the Patent Office Manual of Practice and Procedure at 2.9.2.2 identifying the current practice:

In order to determine the substance [of a claim]…. consideration should be given to the claimed invention and the contribution that it makes to the art. Logically this consideration may take into account the prior art at the priority date rather than merely common general knowledge.

As outlined below, the Full Court’s comments in the very recent Rokt decision suggest this approach may no longer be followed.

In any event, there are a number of ramifications to the consideration of prior art in assessing patentable subject matter, which have not yet been tested. Of particular concern is Section 24 of the Patents Act 1990 (Cth), which provides a grace period in which authorised or unauthorised publication or use of the invention in certain prescribed circumstances is disregarded for the purposes of novelty and inventive/innovative step. However, this provision does not exclude such disclosures from being considered for the purposes of manner of manufacture. It is currently unclear if, when utilising these grace period provisions, disclosure of the invention before the priority date could prevent a patentee from obtaining a valid patent on the basis of patentable subject matter.

Related Patent Office Opposition Decision

InfoTrack subsequently succeeded in its opposition to the grant of Encompass’ Australian Standard Patent Application No. 2013201921, the parent application of the two innovation patents in suit in the Federal Court proceedings described above: InfoTrack Pty Limited v Encompass Corporation Pty Ltd [2019] APO 48 (31 October 2019). The Delegate followed the reasoning of the Full Court in finding that standard patent application invalid for lack of manner of manufacture, despite some of its claims including more specific steps relating to techniques for disambiguation, and also found the claims to be obvious in light of the They Rule prior art.

The Rokt Case

Background

The case involved a patent application entitled “A digital advertising system and method” belonging to tech company, Rokt Pte Ltd. The application related to a computer implemented system and method that linked users to online advertising by presenting an “engagement offer” when a user accessed a website. The engagement offer was targeted based on a user’s previous interactions. It provided a context-based advertising system in which users who were more likely to engage with advertising were shown specific offers to increase engagement over traditional methods of digital advertising.

Patent Office and First Instance Appeal Decisions

In 2017, an unsuccessful hearing decision issued in which the Delegate of the Commissioner of Patents decided that the application was not patentable on the basis that it was not a “manner of manufacture”. In 2018, Rokt successfully appealed the outcome of the hearing decision to the Federal Court, in which the primary judge (Robertson J) ruled that the invention of the application was directed to patentable subject matter. Disagreeing with the Federal Court’s judgement, the Commissioner of Patents appealed the Federal Court’s decision to the Full Federal Court.

Full Court Appeal Decision

Overturning the primary judge

The judgement of the Full Court (Rares, Nicholas and Burley JJ) closely followed the guidance of the expanded Full Court’s earlier decision in Encompass in assessing patentable subject matter by focusing on the disclosure and detail provided by the specification, assessing whether the invention is a scheme, and then considering the implementation of the scheme in the computer.

The Full Court found that the primary judge erred in his findings in the original decision by relying too heavily on the opinion of Professor Verspoor, Rokt’s technical expert, in adopting her answers to the questions which characterised the substance of the invention. The primary judge was also found to have relied on the technical problem and solution identified in the specification, without addressing the question of whether the technical solution was actually claimed.

The Full Court found that the primary judge did not engage in any analysis of the central question of whether invention was found to lie in the implementation, or whether it amounted to simply “an instruction to ‘put’ the scheme into computer technology.” Their Honours emphasised the danger in adopting an expert’s opinion without additional legal analysis, noting the importance of the legal approach to understand the invention under assessment of manner of manufacture.

Limiting the use of common general knowledge to construing the claims and specification

The Full Court’s decision emphasised that consideration of the common general knowledge should be used only for construing the specification, and not to provide characterisation or evidence of what constituted ’generic software’ or the use of computers for their ‘well known’ purpose. The approach endorsed by their Honours was to carefully review the specification to ascertain whether the computer technology is being utilised for its basic, typical or well-known functions to implement anything more than a mere scheme.

Generic software

Following the decision in Encompass, their Honours considered the matter of whether the claimed method was implemented using generic software. The Full Court observed in Encompass that the claims of the invention did not define any particular software of programming to carry out the invention, and so it was left up to those using the method to implement a suitable computer program for the purpose of carrying out the method. Agreeing with that approach, the Full Court in the Rokt case identified the problem addressed by Rokt’s invention as enhancing consumer engagement levels. The solution was determined to be the provision of an intermediate “engagement offer” targeted to a user interacting with digital content.

A Marketing scheme

In light of these observations, the invention was classified as “a marketing scheme”. This gave rise to a key consideration in assessing patentable subject matter: whether the computer is a mere tool in which the invention is performed, or whether the invention lies in the computerisation. Following the approach laid out in Encompass, their Honours came to some strikingly similar conclusions regarding the detail in the specification:

in our view nothing about the way that the specification describes the computer hardware or software indicates that either is any more than a vehicle for implementing the scheme, using computers for their ordinary purposes

The specification does no more than describe the architecture of the hardware in a most general sense.

…the claim provides no content to suggest a different conclusion. Despite its length and detail, it contains no integer that serves to characterise the invention by reference to the implementation of the scheme beyond the most general application of computer technology utilised in an online environment.

Although it was determined that the specification represented a solution to problems in marketing, the lack of detailed description suggests that the scheme in which this solution was achieved did not involve the use of computer technology “other than as a vehicle to implement the scheme”.

In drawing a direct parallel between the position of the patentee in Encompass, their Honours concluded that the claimed invention amounts to an instruction to carry out the marketing scheme, and that the invention provides no more than a list of steps which may be implemented using computer technology for its well-known functionality.

At the time of publication of this article, Rokt still has the ability to seek special leave to appeal to the High Court of Australia.

Other Recent Federal Court and Patent Office Decisions

Technological Resources Pty Limited v Tettman [2019] FCA 1889 (2019)

The Federal Court of Australia recently overturned an Australian Patent Office (APO) opposition decision regarding the “manner of manufacture” requirement for patentable subject matter. In the Federal Court appeal, Jagot J found that the Delegate had mischaracterised the claimed invention and that the claimed invention was not analogous to those considered to be mere schemes.

Background

After Mr Tettman successfully opposed the grant of Australian Patent No. 2011261171 entitled “Separating mined material” (171 Application) before the Commissioner of Patents, Technological Resources Pty Limited filed an appeal to the Federal Court of Australia.

The 171 Application claims methods and apparatus for identifying and separating mined material on a bulk basis (a form of ore sorting in which a sensor is used to make an assessment of material on a bulk basis) and describes how low grade iron ore can be upgraded by implementing a system that assesses the grade of segments of ore and then separates the ore based on the assessed grade of segments of ore. The main ground of contention in the decision was that the claimed invention was not a manner of manufacture (i.e. not patentable subject matter) on the basis that what was claimed was a mere scheme, involved only mere working directions and was a mere collocation.

Arguments – mere collocation, mere scheme and working directions

Mr Tettman argued that the individual integers of the claimed method were known and the claimed invention involved the use of known systems to a purpose to which they were all well suited.

Technological Resources argued that the invention of its method claims was not a combination of parts at all, but rather a method comprising a series of steps undertaken in a sequential manner for the processing of ore, and does not proceed to the next step until it has completed the previous step. Accordingly, it was argued that the steps plainly have a working inter-relationship.

Mr Tettman relied upon the initial reasoning of the Delegate which found that the claimed invention did not involve a manner of manufacture since what was claimed was a mere scheme and mere working directions. Technological Resources argued that the 171 Application did not involve a business method or scheme and is distinct from gathering, processing or presentation of information in the fields of finance or business. The “…claimed invention resides in the field of mining or mineral processing, a technical field, and involves methods and apparatus for the processing of ore in a series of physical process steps to produce upgraded material, a physical and tangible result. So understood, the invention is a classic example of a manner of manufacture according to traditional principle”.

Decision

Justice Jagot found that the methods and apparatus claimed were in fact different to anything that formed part of the common general knowledge that had been supported by the parties’ expert evidence.

Justice Jagot also found that the claimed invention was not analogous to those considered to be mere schemes. Her Honour found that the Delegate’s reasoning involved a mischaracterisation of the claimed invention, which “involves physical steps carried out on a physical product using physical apparatus, to produce a physical and tangible result. It does not bear a resemblance to the cases on which the Delegate relied” Importantly, no meaningful analogy to Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 or Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 could be drawn.

Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956 (2019)

Two innovation patents directed to software inventions were revoked after the Court determined that a lack of technical detail in the specifications meant the patents were not patentable subject matter. The claimed inventions failed to provide sufficient technical detail to be considered more than mere generic computer implementation.

Background

Repipe Pty Ltd (Repipe) was the owner of two similar innovation patents, directed to methods of providing information to a portable user device to improve compliance by employees with field risk management procedures and requirements in industries such as construction and mining.

After three adverse examination reports issued in relation to each of the Patents, and an unsuccessful hearing in which a delegate of the Commissioner of Patents issued a decision (Repipe Pty Ltd [2018] APO 42), Repipe appealed that decision to the Federal Court. Both parties agreed that the only issue disputed was whether the Patents claimed inventions that were a manner of manufacture under s 18(1A)(a) of the Patents Act 1990 (Cth).

Arguments

Repipe submitted the substance of the invention claimed in the first patent was the combination of the server, communications network and a portable computing device configured and controlled in the specified way by a specific software application so the user can use and create an expanding collection of items to select from as each field worker completes his or her own risk management document. It was submitted that each of the inventions claimed in the Patents provided a technical solution to a technical problem.

The Commissioner argued that the substance of the invention in both Patents was a mere scheme for sharing and completing workplace health and safety documents, emphasising that there was a lack of any meaningful technical detail in the claims or the accompanying description of the specification. In particular, the claims recited ordinary computer functions without prescribing the technical means by which any such functions must be performed. The lack of detail left the selection of hardware and creation of software to implement the steps entirely up to the person skilled in the art.

Decision

The decision of the Court hinged on the question of whether or not the method of each invention merely required generic computer implementation of a scheme or abstract idea. Justice McKerracher determined that there was “no meaningful technical content” in either specification, despite providing detail as to the computing device functionality, and highlighted the absence of specific application software being claimed or even identified in any claim of the Patents, as well as drawing attention to the absence of computing programming logic or code being disclosed. In paragraph 93, His Honour noted:

To implement the scheme, a reader must use his/her own skill and knowledge to write an appropriate software application. No such application is disclosed in the Patents.

Justice McKerracher relied heavily on the authority of the recently issued expanded Full Federal Court decision in Encompass. His Honour found the claimed methods merely required generic computer implementation and therefore could not be a manner of manufacture.

Watson v Commissioner of Patents [2019] FCA 1015 (2019)

In this Federal Court of Australia decision, Mr Dale Watson appealed a decision by the Delegate of the Commissioner of Patents to revoke an innovation patent entitled “A Method of Innovation”.

Background

Mr Dale Watson was the owner of an innovation patent entitled “A Method of Innovation”. Method claim 1 of the innovation patent recited:

A method of innovation comprising the steps of an organisation engaging with an innovation services provider to innovate, said organisation disclosing aspects of the organisation to said innovation services provider and specifying a financial return to said innovation services provider for said innovation, wherein said innovation services provider describes or defines said innovation as a corresponding IP right prior to its disclosure to said organisation and the amount of said financial return is determined, at least partially, from the value or benefit or advantage of any sort or any other consideration or value of any kind to said organisation of said IP right.

During examination for certification of the innovation patent, five examination reports were issued, all of which concluded that the invention was directed to a business model, and therefore was a mere scheme and not a “manner of manufacture”. After the fifth examination report, a hearing was requested. In the resulting hearing decision, the Delegate of the Commissioner of Patents also concluded that the claims were directed to a business scheme or model. That decision of the Delegate was appealed to the Federal Court.

Arguments

Mr Watson submitted that a necessary step in the method of the claims was the definition of the innovation as a corresponding IP right (such as a patent, trade mark, design, plant breeder’s right or copyright). Mr Watson then contended that the product of the claimed invention was the IP right created by following the method of the invention, and as such the product consisted of an “artificial state of affairs”. Mr Watson argued that the invention claimed was patentable because it was “something that can be made by man… or at the least [was] some new mode of employing practically his art and skill”, thereby amounting to an observable phenomenon. Mr Watson further submitted that the IP right, as claimed in claim 1, was “a useful product” that was a “tangible, physical and observable effect”.

Decision

Justice Rares dismissed Mr Watson’s appeal, concluding that the claimed invention is directed to an abstract idea for a business scheme under which persons can agree to contract for intellectual property services, where those services might result in the creation of an IP right that might be useful and, if so, make an additional agreement as to a reward.

The claims were considered to involve a collocation or combination of well-known steps. The idea of providing remuneration on the basis of success and the calculation of a reward based on some relationship of the value of what is created for the engaging party was not considered to be new, nor was the combination of such a method of remuneration with the engagement of a professional. The claims were determined to amount to no more than assertions of a method that might produce a result.

Justice Rares noted that one would have to follow the claimed method in full before knowing whether or not the original engagement of the innovator fell inside or outside of the scope of the claims. As Rares J put it, “to allow such a… monopoly would have a chilling effect on all intellectual property professionals… because they would be at risk of infringing the patent if they followed the supposed method and succeeded in producing a useful result”. Consequently, his Honour concluded that the method was not considered to be patentable based on the claimed subject matter being a mere scheme or business model and the unsettling ramifications of allowing such subject matter to be deemed eligible for a patent.

Leave to Appeal Refused

An application by Mr Watson for leave to appeal was recently refused in Watson v Commissioner of Patents [2020] FCAFC 56. The Full Court refused leave to adduce fresh evidence to challenge the primary judge’s observations. Despite Mr Watson’s attempts to align the claims of the application to those of NRDC (National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252), the Full Court rejected this assertion and instead considered the claims to be more in line with the scheme of Grant (Grant v Commissioner of Patents (2006) 154 FCR 62), stating that “at most, the claimed invention is a business innovation, not a technological or technical innovation.” Ultimately, the Full Court confirmed the primary judge did not err in his findings, and concluded that the claim was “a description of an idea, said to be new, as to how parties might go about organising their affairs in relation to the creation of an intellectual property right and payment for it. There is no greater specificity or substance in the claim than that.”

Apple Inc. [2019] APO 32

An invention relating to computer user interfaces, and more specifically to context-specific user interfaces for indicating time, was found by the Patent Office to be a manner of manufacture. Whilst the original Examiner and the Delegate were divergent in their characterisation of the substance of the invention, it was ultimately found that the claimed invention of re-using animation sequences to produce user interface objects provided a technical advantage in reducing computational burden.

Background

Apple Inc (Apple) is the owner of Australian Patent Application 2015298710 (710 Application). The 710 Application was the subject of an earlier Patent Office decision, in which the Delegate remitted the application back to examination to determine the state of the art so that an informed decision could be made on whether the substance of the invention was a manner of manufacture.

Upon the application returning back to examination, the original Examiner maintained that “the substance of the alleged invention is a presentation of specific aesthetic content” and concluded that the invention as claimed was not a manner of manufacture. On 20 November 2018, Apple then filed a request to be heard a second time, which resulted in a further decision from the Australian Patent Office (the later decision)

Decision

During examination and in submissions for the hearing of the earlier decision, Apple argued that the substance of the invention lies in the re-use of animation sequences in order to generate varied presentations while using less memory to store the animations used as compared to individually storing each full presentation (and thus storing duplicated content multiple times). Apple disagreed with the Examiner’s characterisation, that the substance of the invention “is a presentation of specific aesthetic content” and submitted that instead, the characterisation set out in the earlier decision should be adopted.

In assessing manner of manufacture requirements, the Delegate referred to the principles set out in D’Arcy v Myriad Genetics Inc [2015] HCA 35, Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 and Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150.

The Delegate ultimately found that the claimed invention was directed towards a manner of manufacture. In particular, the Delegate was of the view that the specific manner in which the invention re-used animation sequences to produce user interface objects provided a contribution to the art. That contribution, which reduced computational burden in producing user interface objects, was technical in nature and therefore lies within established principles of what constitutes a patentable invention.

Facebook, Inc. [2020] APO 19

In this recent Patent Office decision, it was found that claims to a method that helps applications share information are directed to patentable subject matter based on the technical improvement provided by the invention, despite concluding that the claims only required generic computer implementation.

Background

The subject of the long-awaited decision is Australian Patent Application 2014209546 (546 Application) in the name of Facebook, Inc (Facebook). The 546 Application provides a method which enables applications to communicate with each other by accessing a shared memory. Most applications, when installed on a mobile device, are “sandboxed”, which means that application data and code execution are isolated from other applications. As such, the applications do not have the ability to communicate with each other. Facebook’s invention enabled data to be written to a shared memory location that is outside of the application’s sandbox, thereby allowing information to be shared.

Facebook requested the hearing back in August 2018, reaching an impasse with the Examiner after a fourth Examination Report was issued. The only matter under consideration was the outstanding patentable subject matter / manner of manufacture objection. After the initial hearing on 21 November 2018, Facebook was invited to file further submissions on three different occasions, including to make comments on a piece of prior art raised by the Delegate as evidence of the state of the art.

The Delegate’s Decision

The Delegate’s decision focused predominately on consideration of five questions taken from Aristocrat Technologies Australia Pty Limited [2016] APO 49 (Aristocrat). These questions included:

  • Is the contribution to the claimed invention technical in nature?
  • Is the computer merely the intermediary, configured to carry out the method, but adding nothing of the substance of the idea?
  • Does the claimed invention merely require generic computer implementation?
  • Does the invention result in an improvement in the functioning of the mobile device?
  • Does the claimed invention solve a technical problem in the functioning of the computer?

The Delegate considered that the substance of the invention lies in a series of steps where data is received, executed, an indication is stored and then the indication is transmitted through a different application along with user information. The claims allow for advertising attribution and conversion tracking, and the Delegate concluded that the conversion tracking was not technical in nature.

The Delegate accepted the use of the computer was intrinsic to the claimed method, as the invention operates entirely between a mobile device and an online system and therefore requires the use of a computer. However, he was not convinced that the steps of the claim (including executing data and installing an application) were more than generic computer implementation.

In considering whether the invention resulted in an improvement in the functioning of the mobile device, the Delegate agreed with Facebook that the claimed method appeared to be performing something new. There was enough detail to confirm that the method provides a technical improvement as “the device is now able to do something that it could not do previously”.

The Delegate also agreed that the “sandboxing” of native applications was a technical limitation faced by application developers. Interestingly, whilst it was recognised that “sandboxing” still exists in light of the method being utilised, the Delegate concluded that the invention works around the existing sandboxing, and therefore ruled that there was a technical improvement in the device.

After determining the substance of the invention to be a technical improvement in the functioning of the device, which worked around a technical limitation, the claims were found to be a manner of manufacture.

Implications, Commentary and Practical Guidance

Australia’s legal test for patent-eligibility of computer-implemented inventions

Australian patent law does not explicitly exclude software or computer-implemented inventions from patent-eligibility. Computer-implemented inventions may still be patentable in Australia on a case-by-case basis, particularly where they result in an improvement in computer technology. The scrutiny applied to computer-implemented inventions arises as computers can readily be programmed to perform all manner of schemes, tasks or ideas that might improve the human experience, but which are not themselves patentable subject matter.

Recent guidance in this area has made it easier to predict when inventions are likely, or unlikely, to meet the requirements for patentable subject matter, by considering whether the inventive concept of the invention lies in an idea or scheme which can be generically implemented using computers, or in a technical application which makes an improvement to computer technology or otherwise involves some physical effect or phenomenon.

Inventions involving physical steps carried out on a physical product using physical apparatus, to produce a physical and tangible result, remain patentable if they give rise to an artificially created state of affairs of utility in a field of economic endeavour (the useful arts), as established by the High Court of Australia in NRDC. Applications directed to abstract ideas, schemes and intellectual information have never been held to be patentable in Australia. The Patent Office remains poised to reject applications if they lack a useful physical result or technical effect, if they lack well-defined boundaries, or if granting the patent would be negative effects on innovation.

However, the implementation of an idea in a computer may be considered patentable if the invention lies in the computerisation. There is required some ingenuity in the way in which the computer is used, rather than simply using the computer for its well known or generic functions. Implementation of an abstract idea can be characterised as “generic” when an invention claimed is indifferent as to the particular device or lacks detail as to the particular means of implementation. Where the claims identify wholly generic or conventional means of carrying out some part of an abstract idea or scheme – any ingenuity is in the scheme and not in the computerisation or use of a computer. That is, the computer is considered as acting only as a tool for implementing the abstract idea.

As the Full Court in Encompass warned, a patent specification should not, “…having identified the cardinal steps of the exemplified method, [leave] it to the user to implement the method in the way he or she might choose to do so, assisted by broadly-expressed and non-limiting suggestions or possibilities.”

If the invention includes or uses more than generic software or hardware, this must be reflected in the claims and supported in the specification by meaningful technical detail. Claims reciting specific (non-generic) software or programming steps, rather than just the idea or information flow, may satisfy the manner of manufacture test.

Further, as demonstrated in Facebook, Inc., an invention which overcomes or circumvents a technical limitation by providing a technical improvement to how a device functions may still be considered patentable subject matter where the use of the computer is intrinsic to the method, even if the steps are themselves considered to be generic.

Practical guidance for drafting and prosecuting Australian patent applications for inventions with computer-implemented aspects

The recent decisions on computer-implemented inventions have provided practical guidance for drafting and prosecuting Australian patent applications in this space.

Many of the inventions which were the subject of recent decisions failed the patentable subject matter test based on a lack of technical detail as to the function, implementation and application of the software and hardware of the invention. The key takeaway is that technical detail within the specification is crucial to showing that the contribution of the invention is technical and provides an improvement to computer technology, or that the inventive concept lies in the computerisation of the method.

Accordingly, it is necessary to avoid using only functional language to describe the result or purpose of a step in an invention. An application should describe how the invention is actually performed and implemented, in a technical sense, rather than broadly describing an idea or information flow. Specifications should include sufficient technical detail on how any hardware, computer functions or software used for carrying out the invention actually perform their technical functions and improve computer technology. Describing the details of a particular algorithm or technical effect may reduce the risk of the invention being characterised as abstract or requiring mere generic computer implementation. Similarly, figures should have detail and support the technical description of the invention.

Broad, sweeping statements such as “any appropriate manner”, “any generic system” or “any suitable manner”, “mechanism” or “technique”, or “can be implemented in any manner, such as executed by a computer” should be avoided or at least minimised if the patentee wants to show that the computerisation is more than generic utilisation of a computer. Phrases such as these leave the details of the implementation up to the user, and during later prosecution, can give rise to difficulties in arguing that these are more than just generic steps. Similarly, generic figures or paragraphs which could appear in any patent application in the computer-implemented space can result in adversely diluting the technical effects and advantages of the invention. These may additionally give rise to potential section 40 support/enablement or sufficiency issues.

There should be a focus on understanding and describing the detail of how the computer-implemented invention works, rather than focusing solely on what it achieves or the end result. Engaging with the inventors and programmers or technical staff when having the application drafted is good practice as it provides good technical description as well as insight into the unique details of the inventiveness. This information can then be used to support arguments and assertions made by the patentee of the technical effects and advantages when prosecuting the applications.

Every application is examined on a case-by-case basis. Drawing analogies with other issued decisions or cases may not prove persuasive if there is not a significant overlap in the technology. However, arguments against patentable subject matter objections can ultimately be strengthened by technical detail disclosed in the specification.

Whilst the test of patent eligibility remains somewhat nebulous, and that is appropriate given there is a need to provide flexibility, it is becoming easier to predict which side of the line a purported invention is likely to fall by considering where the inventive concept lies: in the idea/scheme which can be routinely implemented using computers (unlikely to be patent-eligible), or in some technical application which either improves the use of the computer or otherwise involves some tangible product or effect beyond the idea (more likely to be patent-eligible).

Shelston’s deep expertise and experience with patents for computer-implemented inventions

Shelston’s team includes experienced ICT-focused patent attorneys who can consult as to relevant questions of patent drafting and patentable subject matter. Our expert litigators are very well-placed (particularly having represented clients in both the Encompass and Research Affiliates matters) to advise on enforcement or revocation strategy in this important and highly active area of patent law.

* The authors were engaged by InfoTrack in its successful challenge to the two Encompass innovation patents at first instance and before an expanded bench of five Judges in the Full Court of the Federal Court of Australia and its successful opposition to a related patent application in the Australian Patent Office.

Authored by Duncan Longstaff, Alana Gibson, Mark Vincent and Tam Huynh

Mr Vitaly Pilkin appealed from a Federal Court decision summarily dismissing his patent infringement proceedings against Sony Australia and refusing leave to serve Sony entities out of jurisdiction in the US and the UK (see our discussion of that earlier decision in our Best Patent Cases 2019 publication).  The Full Federal Court refused Mr Pilkin’s application for leave to appeal the decision, upholding the primary judge’s findings that due to a deferral in the patent priority date to the date of key amendments, the claimed invention could not be novel in light of prior art products.  The Full Court observed that Mr Pilkin had a substantial and contestable case in response to prior US patent publication considered by the primary judge to deprive the claimed invention of novelty, but noted that was to no avail because the appeal failed, and his infringement case should be summarily dismissed, on other grounds.

Background

Mr Pilkin (Pilkin) sued Sony Australia for infringing his innovation patent AU 2010101517 (the Patent), by its sale of the PS Vita, PS3 and PS4 consoles (the Consoles) in Australia since 22 February 2012.  Mr Pilkin also sought to serve proceedings on US and UK based Sony entities.  In response, Sony Australia and the Sony entities (the Sony parties) conceded that their consoles fell within the scope of the claim of the Patent but sought summary dismissal because the Patent had a later priority date than its claimed priority date, meaning that the sales of the Consoles anticipated the Patent, and that the Patent also lacked novelty over a US patent publication (the Case patent).

The Patent

The Patent was an innovation patent, converted from a national phase patent application of a PCT application, having a priority date of 5 October 2009.  The PCT application described the invention as an electronic device, with various options for the location of a touch pad and/or a joystick on the device.  The claims corresponded to this description, listing the possible locations of the touch pad and the joystick as alternatives.  The Patent was amended on 11 July 2014 to state only one claim, an electronic device having, inter alia, a front touch screen visual display, a rear touch pad and a joystick.  The possible locations of the joystick on the electronic device were omitted from the claim.

First Instance Decision

Priority Date

Justice Rares found that on a reading of the PCT application, he agreed with the Sony parties that the amendment was beyond the original disclosure in the PCT application.  It was clear that the location of the joystick on the device other than on the front surface was essential to the invention.  Hence, the omission of any particular location of the joystick in the claim of the Patent meant that the amendment was a broadening amendment, deferring the priority date of the Patent to 11 July 2014.

Novelty

The effect of the deferred priority date for the Patent meant that the sales of the Consoles anticipated the claim of the Patent as the sales occurred earlier, since at least 2012.  It was also held that the Case patent anticipated the claim of the Patent, as it described that a folded over laptop could include a joystick to control a cursor on the front screen display.

Summary dismissal

As there were no reasonable prospects of success in Mr Pilkin’s causes of action, in light of the novelty issues created by the deferred priority date of the patent, the patent infringement proceedings were dismissed.

Service out of jurisdiction

Justice Rares held that the facts pleaded by Mr Pilkin did not establish a prima facie case for relief to warrant service on the Sony entities in the US and the UK.  The US Sony entity was only incorporated in April 2016, and so did not exist at the time of first sales of the Consoles in 2012.  Also, the press release relied upon by Mr Pilkin did not establish that the US Sony entity had taken over manufacturing of the Consoles.  The failure of Mr Pilkin’s infringement claims also meant that there was no prima facie case against the UK based Sony entities.

Appeal Decision

Mr Pilkin sought leave to appeal on all grounds, repeating his submissions made in the first instance decision – that the amendment to the Patent only removed various alternatives listed in the PCT claims, and that the location of the joystick was not an essential integer to the invention.  Mr Pilkin further argued that the Case patent did not provide clear and unmistakable directions to all the features of the claim.

In a unanimous decision, the Full Federal Court refused Mr Pilkin leave to appeal, agreeing with Rares J’s reasons and findings on the deferred priority date for the Patent, its invalidity due to the sales of the Consoles and the lack of a prima facie case to warrant service out of jurisdiction.

However, the Full Federal Court considered that Mr Pilkin’s submissions on the Case patent were sufficiently reasonable to make that issue contestable.  The Full Court also noted that the central reason for the primary judge’s finding of lack of novelty was that a skilled person would have been able to produce the claimed device through trial and error experiments.  This central reason was not supported by evidence and related more to inventive step issues.  However, Mr Pilkin’s failure on his other grounds meant the issues relating to the Case patent were immaterial, because his application for leave to appeal was to be dismissed, and his infringement case was to be summarily dismissed, on the other grounds described above.

Significance

The decision illustrates the dangers in amending patent claims to remove integers asserted to be optional.  While the removal of optional integers may appear to narrow the scope of a claim, there could be an argument that this in effect broadens the scope of the claim beyond its original disclosure.  Patent applicants and patentees should exercise caution in amending the claims or drafting claims with too many alternative integers to avoid a potential loss of priority date and thus lose validity by reason of a later amendment.

The decision also highlights the need to clearly separate the criteria for novelty from the criteria for inventive step.  The basis for the finding on lack of novelty for the Case patent relied on matters relating to inventive step and unsupported by evidence.

Finally, the case emphasises the importance of accurately pleading consistent facts.  The contradiction between the dates of the alleged infringing conduct and the existence of the US Sony entity led to refusal of the application to serve out of jurisdiction.

Authored by Andrew Lowe and Mark Vincent

The long-awaited decision in the appeal of Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988 has finally been handed down, with the Full Federal Court finding the application to be “a marketing scheme”, and establishing that the claimed invention is not patentable subject matter.

The Full Federal Court has handed down their judgement in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, overturning the decision of the primary judge and establishing that the claims are not a “manner of manufacture” and therefore not patentable subject matter.

The case involved a patent application entitled “A digital advertising system and method” belonging to tech company, Rokt Pte Ltd. (Rokt). The application related to a computer implemented system and method that linked users to online advertising by presenting an “engagement offer” when a user accessed a website. The engagement offer was targeted based on a user’s previous interactions. It provided a context-based advertising system in which users who were more likely to engage with advertising were shown specific offers to increase engagement over traditional methods of digital advertising.

In 2017, an unsuccessful hearing decision issued in which the Delegate of the Commissioner of Patents decided that the application was not patentable on the basis that it was not a “manner of manufacture”. In 2018, Rokt successfully appealed the outcome of the hearing decision to the Federal Court, which ruled that the invention of the application was directed to patentable subject matter. Disagreeing with the Federal Court’s judgement, the Commissioner of Patents appealed the Federal Court’s decision to the Full Federal Court.

The judgement closely followed the guidance of the Full Court’s earlier decision of Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 (Encompass) (issued late last year) in assessing patentable subject matter by focusing on the disclosure and detail provided by the specification, assessing whether the invention is a scheme, and then considering the implementation of the scheme in the computer.

Overturning the primary judge

Ultimately, Rares, Nicholas and Burley JJ established that the primary judge erred in his findings in the original decision by relying too heavily on the opinion of Professor Verspoor, Rokt’s technical expert, in adopting her answers to the questions which characterised the substance of the invention. The primary judge was also found to have relied on the technical problem and solution identified in the specification, without addressing the question of whether the technical solution was actually claimed.[1]

They found that the primary judge did not engage in any analysis of the central question of whether invention was found to lie in the implementation, or whether it amounted to simply “an instruction to ‘put’ the scheme into computer technology.”[2] Their Honours emphasised the danger in adopting an expert’s opinion without additional legal analysis, noting the importance of the legal approach to understand the invention under assessment of manner of manufacture.[3]

Generic software

The decision emphasised that consideration of the common general knowledge should be used only for construing the specification, and not to provide characterisation or evidence of “’generic software’ or the use of computers for their ‘well known’ purpose.” Instead, they defined these terms as a reference to computer technology that is utilised for its basic, typical or well-known functions, rather than referring to common knowledge in the art.[4]

Following the decision of Encompass, their Honours considered the matter of whether the claimed method was implemented using generic software. The Full Court observed in Encompass that the claims of the invention did not define any particular software of programming to carry out the invention, and so it was left up to those using the method to implement a suitable computer program for the purpose of carrying out the method.[5]

Agreeing with this approach, the problem addressed by the invention was characterised as enhancing consumer engagement levels. The solution was thereby determined to be the provision of an intermediate “engagement offer” targeted to a user interacting with digital content.

A marketing scheme

In light of these observations, the invention was classified as “a marketing scheme”.[6] This gave rise to a key consideration in assessing patentable subject matter: whether the computer is a mere tool in which the invention is performed, or whether the invention lies in the computerisation.

Following the approach laid out in Encompass, their Honours came to some strikingly similar conclusions regarding the detail in the specification:

  • in our view nothing about the way that the specification describes the computer hardware or software indicates that either is any more than a vehicle for implementing the scheme, using computers for their ordinary purposes.”[7]
  • The specification does no more than describe the architecture of the hardware in a most general sense.”[8]
  • “…the claim provides no content to suggest a different conclusion. Despite its length and detail, it contains no integer that serves to characterise the invention by reference to the implementation of the scheme beyond the most general application of computer technology utilised in an online environment.”[9]

Although it was determined that the specification represented a solution to problems in marketing, the lack of detailed description suggest that the scheme in which this solution was achieved did not involve the use of computer technology “other than as a vehicle to implement the scheme”.[10]

In drawing a direct parallel between the position of Encompass, their Honours concluded that the claimed invention amounts to an instruction to carry out the marketing scheme, and that the invention provides no more than a list of steps which may be implemented using computer technology for its well-known functionality.[11]

The decision brings the case in line with recent decisions in the patentable subject matter arena, and leaves applicants with the often difficult task of determining whether the inventive concept lies in the idea, or in the implementation.

Rokt have until 18 June to appeal the decision.


[1] Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 at [95].

[2] Ibid [96].

[3] Ibid [98].

[4] Ibid [91].

[5] Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 at [100].

[6] Commissioner of Patents v Rokt Pte Ltd at [108]

[7] Ibid [109].

[8] Ibid [110].

[9] Ibid [111].

[10] Ibid [110].

[11] [115]

Authored by Alana Gibson and Peter Treloar

In Part 1 of this series (available here), we examined the impact of the proposal by Australia’s Therapeutic Goods Administration (TGA) to provide early confidential notification to innovators of applications under evaluation for generic and biosimilar product registration. In this Part 2, we focus on the TGA’s other proposed reform, the earlier publication of applications for marketing approval relating to major innovator prescription medicines. The TGA is currently seeking feedback on its Prescription Medicines Transparency Measures by 9 June 2020. The proposed reforms relating to publication of major innovator applications are aimed at providing better access to information on new prescription medicines for healthcare professionals and the general public, but will also have important implications for both innovators and the sponsors of generic and biosimilar medicines, including from a patent perspective.

In February 2019, the TGA released its initial consultation paper entitled Whether the TGA should publish that a prescription medicine is under evaluation, seeking feedback from industry and other interested parties on whether, and if so how, the TGA should disclose that an application for marketing approval for a prescription medicine has been accepted for evaluation. The submissions received showed a consensus of support for early publication of all prescription medicines being evaluated for marketing approval in Australia, with many submissions noting that Australia’s current approach is out of step with the practices of overseas regulators including Medsafe New Zealand, Health Canada and the European Medicines Agency (EMA), all of whom publish information on all prescription medicine applications accepted for evaluation.

Current practice

The longstanding practice of the TGA has been to treat the submission of an application for marketing approval for a prescription medicine as confidential unless and until the product has been approved and entered on the Australian Register of Therapeutic Goods (ARTG). In practice, this has meant that the TGA will only state that it can “neither confirm nor deny” receipt of an application for registration of a new prescription medicine, including for reasons of commercial confidentiality. Efforts to obtain access to information or documents from the TGA under the Freedom of Information Act 1982 (Cth) proved futile for a patent owner in Secretary Department of Health and Ageing v iNova Pharmaceuticals (Australia) Pty Limited [2010] FCA 1442 (21 December 2010). However, some exceptions to this general rule may apply in specific circumstances. For example:

  • The meeting agenda for Australia’s Pharmaceutical Benefits Advisory Committee (PBAC) is published 2-3 months ahead of each meeting. The meeting agenda may identify applications for marketing approval that are under evaluation by the TGA.
  • The TGA publishes the outcome of the process to designate orphan drug status or to determine a drug’s priority or provisional status, which occurs prior to the acceptance of the drug for evaluation.
  • Where the TGA and an overseas regulator are jointly conducting the review of a prescription medicine, the overseas regulator may publish that the drug is under active review.

Additionally, the sponsor of the innovator medicine retains the discretion to make public, at any time, that its application for marketing approval is being considered by the TGA.

The TGA’s proposal

Under the reforms proposed, commencing as early as June 2020, the TGA will publish information on the following application types:

  • Type A – new medicines (i.e., new active pharmaceutical ingredient (API));
  • Type B – new combinations of medicines (contains at least one new API); and
  • Type C – new indications for an existing approved medicine.

It is proposed that, within one month of the date that an application for marketing approval falling within one of the categories above has passed preliminary assessment, the TGA will publish the:

  • Sponsor name;
  • Product name;
  • API(s);
  • Proposed indication; and
  • Application type.

Implications for the pharmaceutical industry

Advance notice of applications for registration of a new drug or new indication for an approved drug will be valuable to generic and biosimilar sponsors, and competitor innovators, in some circumstances. Earlier notification of these products and indications may inform decision-making and planning by competitors with respect to their own products and timelines to market. This could impact competitors’ research and product development priorities, product identities and dosage forms, and strategies for potentially challenging an innovator’s patents (either proactively or defensively).

Innovators should also be mindful of the potential consequences of earlier publication for their patent portfolios. In particular, it will be increasingly important for innovators to ensure that relevant patent applications for specific indications, second medical uses or specific formulations, dosage forms or production processes are filed prior to the TGA publishing key details early in the process for obtaining regulatory approval. The early publication of key details such as the compound, dosage regimen and indications by foreign regulatory authorities, including the US Food and Drug Administration (FDA), have created novelty and inventive step issues for Australian patents relating to specific indications or second medical uses in several cases in recent years, which could not benefit from Australia’s “grace period” provisions.

If you are a sponsor of therapeutic goods in Australia and have questions on how these reforms may impact your business, please do not hesitate to contact us.

Authored by Dr Roshan Evans, Duncan Longstaff and Andrew Rankine