Yearbook

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Latest developments in Australia and New Zealand

Yearbook

Matt Adams, Brendan Nugent and Jo Shaw

AJ Park

2017

Building IP value in the 21st century

Latest developments in Australia and New Zealand

Matt Adams, Brendan Nugent and Jo Shaw

AJ Park


WANT TO BE

ON TOP

DOWN UNDER?

WORK WITH

THE BEST

For further information, please contact:

Dr Jo Shaw

Director

+61 2 9235 7632

jo.shaw@ajpark.com

Matt Adams

Partner

+64 4 498 3454

matt.adams@ajpark.com


AJ Park | Australia and New Zealand

Latest developments in

Australia and New Zealand

By Matt Adams, Brendan Nugent and Jo Shaw, AJ Park

Australia’s Productivity Commission

recommends sweeping changes

Australia’s Productivity Commission issued a

draft report in May 2016 recommending sweeping

changes to the patent system, as well as to the

systems for protecting trademarks, copyright, plant

varieties and designs in Australia.

A key theme of the report is that IP arrangements

should balance the interests of rights holders and

users. IP arrangements should encourage investment

in intellectual property that would not otherwise

occur and resist impeding follow-on innovation.

The recommendations for change to the patent

system include the following:

• abolishing Australia’s second-tier innovation

patent system;

• excluding business methods and software from

being patentable subject matter;

• raising the inventive step threshold for patents;

• changing the extension of term regime for

pharmaceutical patents; and

• altering the structure of patent fees.

Many other changes are suggested, including:

• reducing the term of copyright protection;

• introducing a fair use exception to copyright

infringement;

• amending the Copyright Act to make clear

that it is not an infringement for consumers to

circumvent geo-blocking technology;

• removing restrictions on parallel importation of

books;

• changing the court system to improve dispute

resolution;

• not joining the Hague Agreement until an

evidence-based case is made;

• abolishing defensive trademarks;

• amending the Plant Breeders’ Rights Act to

enable essentially derived variety declarations to

be made in respect of any variety; and

• introducing an open access policy for publicly

funded research.

Patents

The commission found that Australia’s patent

system grants protection too easily, resulting in

a “proliferation of low-quality patents” which

impede innovation and stymie competition.

A key recommendation is to raise the inventive

step threshold by amending Sections 7(2) and

7(3) of the Patents Act 1990 (Cth), such that an

invention is considered to involve an inventive

step if, having regard to the prior art base, it is

not obvious to a person skilled in the art. The

test should be applied by asking whether a course

of action required to arrive at the invention or

solution to the problem would have been obvious

for a person skilled in the art to try with a

reasonable expectation of success.

The commission recommends introducing an

objects clause into the Patents Act. The objects

clause should describe the purposes of the legislation

as being to enhance the wellbeing of Australians

by providing patent protection to socially valuable

innovations that would not otherwise have occurred

and to promote the dissemination of technology.

This reflects the view of the commission that the

patent system should balance the interests of patent

applicants and patent owners, users of technology

– including follow-on innovators and researchers –

and Australian society as a whole.

The commission recommends the abolition

of the innovation patent system, suggesting that

it makes it harder for small and medium-sized

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enterprises to innovate and that mere reform of the

system would be insufficient.

An amendment to the Patents Act to exclude

business methods and software from being

patentable subject matter is proposed. The

commission found that the protection afforded to

business method and software patents has been

“excessive, ineffective and not in the interests of

the community”.

The report suggests that IP Australia should

increase the cost of patent renewal fees later in

the life of a standard patent and make greater use

of excess claim fees to limit the breadth of patent

protection.

The report also seeks information as to whether

the patent application process should be amended

to elicit better information from applicants, such

as by requiring them to set out how their invention

improves on the current state of technology or

to explain why their invention is not obvious.

Likewise, information is sought as to whether

there should be a broader exception from patent

infringement for experimental activities.

Pharmaceutical patents

Specifically for pharmaceutical patents, the

commission recommends that extensions of term

be calculated based on the time taken for regulatory

approval by the Therapeutic Goods Administration

over and above one year. The commission also

recommended that manufacture for export be

permitted during the extension period.

The commission recommends that there be

no extension of the period of data protection for

data submitted in support of regulatory approval

processes, including that applicable to biologics.

The commission has also found that there is a

case for making the data more widely available

and suggests that the Australian government

should work with other nations for a system of

publication of trial data in exchange for statutory

data protection.

The establishment of a reporting and monitoring

system to detect any pay-for-delay settlements

between originator and generic pharmaceutical

companies is also recommended.

International treaties

The report acknowledges the benefits of increasing

harmonisation though international agreements

and treaties, but indicates that these agreements

constrain domestic IP policy flexibility. As the

country is a net importer of technology, the report

considers the “overly generous” system of IP rights

to be “costly for Australia” and examines measures

that Australia should take to redress this situation.

Next steps

The draft report will be finalised following public

hearings and a consideration of the submissions

that have been made. This is likely by mid-August

2016. The final report will then be tabled in the

Parliament. The government must make a formal

response to the report within 25 sitting days, but at

this stage there is no indication what that might be.

IPONZ issues first software patent under

new law

One of the hotly debated topics during New

Zealand’s patent law reform was the extent to

which patent protection should be available for

computer-implemented inventions. There is a

widely held belief that there is now a ban on

Matt Adams

Partner

matt.adams@ajpark.com

Matt Adams is a partner in AJ Park’s engineering and

information and communications technology team.

He specialises in protecting, registering and licensing

patents in the computer and IT fields. He is also a

copyright specialist.

Mr Adams has been involved in a number of

high-profile cases, including obtaining international

patent protection and licensing for medical imaging

equipment and software-based diagnostic systems

developed in New Zealand. He has also helped a

number of large international computer companies to

secure significant international patent portfolios and

to protect ground-breaking new business intelligence

solutions.

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AJ Park | Australia and New Zealand

software patents. So how did the Intellectual

Property Office of New Zealand (IPONZ) issue a

software patent under the new law that bans them?

Current law

An invention is patentable if it is a “manner of

manufacture”, is novel and involves an inventive

step. Section 11 of the Patents Act 2013 excludes

computer programs “as such” from the definition

of ‘invention’.

The exclusion is there as a result of submissions

to the parliamentary Commerce Select Committee

from the New Zealand Open Source Society

(NZOSS) and its supporters. Many submitters

urged a consistency of approach with other

markets. The NZOSS, for example, suggested that

“New Zealand could follow the European lead in

patent law”.

The minister responsible for the new legislation

gave a clear direction to the commissioner

of patents and the New Zealand courts to

seek guidance from the English courts when

considering computer programs “as such”. A claim

in a patent or an application relates to a computer

program as such if the actual contribution made

by the alleged invention lies solely in it being a

computer program.

Which begs the question: when does an actual

contribution lie solely in a computer program? We

don’t quite have an answer to that; but we are one

step closer.

Radio receiver design

New Zealand Patent 702006 discloses a

method and system to analyse the interference

susceptibility of a radio receiver design. Radio

frequency (RF) receivers suffer performance

degradation caused by transmissions from nearby

Brendan Nugent

Consultant

brendan.nugent@ajpark.com

A consultant in AJ Park’s Australian chemistry and

life sciences patent team, Brendan Nugent has over

25 years’ experience in intellectual property. He

specialises in patents in the fields of pharmaceuticals

and pharmacology, molecular biology, genetics and

genomics, biochemistry, food science, cell biology

and stem cells.

In 2013, Mr Nugent was appointed by the minister

for industry to the professional standards board

for patent and trademark attorneys. The board

administers the educational and disciplinary regimes

for patent and trademark attorneys in Australia.

Jo Shaw

Director

jo.shaw@ajpark.com

Jo Shaw heads AJ Park’s chemistry and life sciences

patent team in Australia.

Dr Shaw is a chemical patent expert who works

for clients in the pharmaceutical, biotechnological,

food and natural products industries. She advises

on patent strategies and commercialisation of these

technologies in Australia and New Zealand, travelling

regularly between the two countries.

Dr Shaw is a registered patent attorney in Australia

and New Zealand, and a solicitor of the Supreme

Court of New South Wales and the High Court of the

New Zealand.

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Australia and New Zealand | AJ Park

transmitters. These negative effects have previously

been simulated in the lab through a costly designbuild-test-modify

process.

The invention provides software code that

permits a user to predict, analyse or simulate the

interference susceptibility of a receiver before any

hardware is actually manufactured. The software

runs on a general-purpose computer – for example,

a desktop, laptop or tablet. The output is a graph

showing transmit power levels that result in

performance degradation.

So how can software running on a generalpurpose

computer qualify for patent protection

under a law that bans software patents?

Applying the law

IPONZ initially objected that the claimed

invention was directed to a computer program as

such. IPONZ said that the actual contribution

appeared to be no more than a plot or graph based

on calculated values, these being determined

transmit power levels.

The applicant successfully argued that the

claimed invention was directed to simulating

interference susceptibility performance of a radio

receiver design, which had real-world, practical

applications. The invention enabled receiver

performance to be assessed without requiring the

receiver to be actually built.

The claimed invention was a computerimplemented

method for evaluating interference

susceptibility performance of a radio receiver

design, rather than a computer program as such.

A technical problem

A few years ago, the English High Court dealt

with the same misconception that computerimplemented

inventions are by definition excluded

from patent protection. In Re Halliburton Energy

Services Inc [2011] EWHC 2508 (Pat) (05

“When assessing a patent

application involving computer

programs, it is not a question

of whether the invention is a

software patent; the question

is whether it lies in a patenteligible

field”

October 2011) the court allowed a patent for an

invention concerned with improving the design of

roller cone drill bits for drilling oil wells.

The intention was to increase the drilling

efficiency and the operational life of drill bits.

The invention used a computer simulation of the

interaction of the drill bit with the material being

drilled to optimise various design features of the

drill bits. The use of computer simulation reduced

or eliminated extensive field testing.

The court observed that designing drill bits is

obviously a highly technical process, capable of

industrial application. Drill bit designers are highly

skilled engineers. The detailed problems to be

solved with wear and the ability to cut rock and so

on are technical problems with technical solutions.

Therefore, finding a better way of designing

drilling bits is itself a technical problem.

The claimed invention was a computerimplemented

method of designing drill bits, rather

than a computer program as such.

Conclusion

It was accepted that a process for evaluating

interference susceptibility performance of a

radio receiver design is a patentable invention.

Computer implementation of this process avoided

a costly design-build-test-modify process by

enabling a simulation without requiring a receiver

to be built.

It is good to see IPONZ follow the European

lead in patent law. When assessing a patent

application involving computer programs, it is not

a question of whether the invention is a software

patent; the question is whether it lies in a patenteligible

field. If so, then it does not matter whether

it is implemented in software.

TPPA will align New Zealand’s IP laws further

with Australia’s

Possibly unsurprisingly, and whether intentional

or not, the changes to New Zealand’s IP laws

required by the Trans-Pacific Partnership

Agreement (TPPA) will bring them further into

line with existing law in Australia.

Australia and New Zealand were early

signatories to the talks, with other countries

entering over the years of negotiation. IP

provisions made up a small proportion of the

issues negotiated, but were among the most

significant for New Zealand, which already has

relatively low import tariffs. Apart from concerns

that the government’s pharmaceutical purchasing

agency Pharmac would be compromised, proposed

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AJ Park | Australia and New Zealand

changes to the patent system led many to expect a

rise in pharmaceutical costs under the TPPA.

Similar concerns were raised in Australia, which

spearheaded opposition to proposed increases in

data exclusivity periods.

However, Australia’s IP legislation is already

consistent with the TPPA requirements.

Australia’s five years of data protection for

biological medicines will remain unchanged and

pharmaceutical patent term extensions are already

available.

On patent term extension, the New Zealand

government release said that New Zealand

“will have to extend the term of a particular

pharmaceutical patent if there are unreasonable

delays in examining the patent or getting

regulatory approval. New Zealand’s processes

are efficient, though, so very few patent term

extensions are expected, based on current

practice, and only in exceptional circumstances”.

Although it may rarely be used, this is a potentially

important change for holders of New Zealand

patents. Data exclusivity (currently five years in

New Zealand) seems unaffected.

Australia already has a copyright term of life of

the author plus 70 years. The extension of New

Zealand’s copyright term from 50 to 70 years

will purportedly cost the country NZ$55 million

a year in the long term, but that figure seems

high. Few copyright works are still being heavily

commercialised in New Zealand 50 years after the

author’s death.

AJ Park

Level 14, 111 Elizabeth Street

Sydney NSW 2000

Australia

Tel +61 2 9235 7600

Level 22, 1 Willis Street

Wellington 6011

New Zealand

Tel +64 4 473 8278

Web www.ajpark.com

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