Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.

Friday, February 22, 2013

A step forward for patentable subject matter

By Senior Associate Tom Reid

In a widely-anticipated decision that will be seen as a win for biotech innovators, the Federal Court has confirmed the patentability of genetic materials in their isolated form.

The decision of Justice Nicholas in Cancer Voices v Myriad Genetics is among a recent spate of Australian and overseas cases considering the issue of patentable subject matter, including Research Affiliates (see our post on that case) and the pending decision in RPL Central v Myall Australia, and in the US, Bilski v Kappos, Mayo v Prometheus, and most relevantly, the parallel case of Association for Molecular Pathology v Myriad Genetics, scheduled for an April hearing in the United States Supreme Court.

At a very basic level, a gene is a segment of a nucleic acid molecule (DNA or RNA), and is comprised of four different repeating units called nucleotides. The sequence of those nucleotides 'encodes' (carries a chemical template for) a particular protein. DNA and RNA molecules, and parts of them, may be extracted from cells and isolated in the laboratory, and DNA may also be artificially synthesised from isolated RNA.

Occasionally, there may be a mutation in the sequence of nucleotides in a gene, resulting in a change to the encoded protein. Myriad had found that certain mutations in a particular gene, named BRCA1, were linked to a predisposition to breast and ovarian cancers. The Myriad patent at issue claimed isolated nucleic acids having those mutations, and claimed use of the isolated nucleic acids in tests for predisposition to breast and ovarian cancers.

Justice Nicholas had to consider whether such isolated nucleic acids are a patentable 'manner of manufacture' as required by the Patents Act 1990. Applying the High Court's decision in the NRDC case, his Honour held that they are, inasmuch as they consist of 'an artificial state of affairs, that has some discernible effect, and that is of utility in a field of economic endeavour' (at [101]). Important to that finding was that the three challenged claims of Myriad's patent were to isolated nucleic acids. By contrast, nucleic acids in their natural state, in the form of DNA and RNA in human cells, are not (and have never been) patentable. Justice Nicholas noted that NRDC does not require the court to ask whether a composition of matter is a 'product of nature' for the purpose of deciding whether or not it constitutes patentable subject matter (at [103]).

To be patentable, however, an isolated nucleic acid or any other biological material must also meet the other patentability thresholds of novelty, inventive step and usefulness.

The topic of 'gene patenting' has been an ongoing subject of public debate and government inquiry, even though genes in their natural state are not patentable. Justice Nicholas referred (at [118]) to the lapsing of a Private Members' Bill that would have excluded from patentability 'biological materials (expressly including DNA and RNA) including their components and derivatives, whether isolated or purified or not and however made, which are identical or substantially identical to such materials as they exist in nature'. Justice Nicholas also noted (at [119]) that the Federal Government's November 2011 response to three inquiries into gene patenting had accepted an Australian Law Reform Commission recommendation that genetic materials and technologies not be excluded from patentability (reported in our Focus). 

Finally, his Honour noted that while some have expressed concerns that gene patents will inhibit future research and the development of new therapies, the experimental use exemption introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (reported in our Focus) goes at least some way towards addressing any such concerns.

For more of Allens' comprehensive coverage of the Myriad decision, listen to Allens Partner, Dr Trevor Davies, discuss the decision on BRR Media or keep an eye on the Allens website for a forthcoming Focus publication analysing the reasoning in more detail.

Thursday, February 21, 2013

AFL TV Now! (for a fee)

By Lawyer Rob Clark

The decision by Telstra to sell an app that provides mobile broadcasts of AFL games live to mobile devices demonstrates the value of the rights that Telstra fought to defend against Optus in the TV Now litigation. But the question that remains is whether customers will be willing to pay for such services when their use may lead to eye-popping mobile phone bills.

Readers may remember the Optus TV Now service, which was shut down last year following a decision of the Full Federal Court and the subsequent refusal for leave to appeal by the High Court. Background is provided here and here and here.

In essence, Optus offered a service whereby users could record free-to-air television shows and then play them back on their mobile or other Internet-connected devices. In the case of iOS devices (for example, iPhones and iPads) users could play back television shows mere minutes after recording began, creating a near-live mobile television service. Telstra, along with the NRL and AFL, sued Optus for copyright infringement. While the first instance decision found that Optus did not infringe, the result of the Full Federal Court decision and refusal to allow appeal to the High Court was that Optus did infringe, and the TV Now service was shut down by Optus.

Telstra was a key player in the litigation, as it had recently paid $153 million for the digital rights to AFL broadcasts, giving it the exclusive right to provide AFL live matches online. Optus' offering, which was free and for which Optus did not pay Telstra anything, was a threat to this investment.

Interestingly, Telstra has now opened up their AFL mobile service to all mobile users, not only their customers, allowing Optus, Vodafone and other carrier customers to watch the AFL on their mobile devices after downloading a dedicated app. The key difference with the Optus TV Now service, apart from the broadcast being live rather than near live, is that the service will come at a significant price - $15 for a monthly pass and $90 for a season pass. 

While others can access the service, there remain benefits for customers of Telstra, in that they will not use up their monthly mobile data allowance watching AFL games. Optus offered a similar benefit with its TV Now service to its subscribers. Given the amount of bandwidth that video uses, this is an extremely important consideration for the viability of services like Telstra's AFL app. If customers may baulk at $15 a month, they'll certainly baulk at the bill from their carrier when they exceed their monthly data cap. Realistically, if customers of Optus, Vodafone and others really want to take advantage of Telstra's offering, they'll probably have to confine their watching to when they are connected to their home WiFi, or other free WiFi, which rather undermines the point of the 'mobile' service.

Telstra presumably believes that it can make more money out of offering this service to all mobile phone owners, rather than just its customers. It remains to be seen whether Australians are willing to pay $15 for a service which, if they are not on the Telstra network, is unlikely to be able to be used much outside their own homes (where they could watch it for free anyway via broadcast television) due to the high cost of mobile data. 

What the Optus TV Now litigation last year and this recent move by Telstra does show is that mobile television services, while not necessarily a replacement for free-to-air or pay television, are an increasingly lucrative means for delivering sports and other content, especially following the rollout of 4G networks. The question is whether the long term viability of mobile as a platform is being held back by the data charges of the very carriers that stand to benefit from the sale of such services.

Wednesday, February 20, 2013

Scintilla Soundbite: Isolation of biological material meets 'manner of manufacture' test

The Federal Court has confirmed that an isolated nucleic acid encoding a human gene is patentable subject matter.

Allens Partner Dr Trevor Davies joined BRR Media to discuss the decision.

Monday, February 18, 2013

Rembrandts in the attic?

By Partner Chris Bird

A patent-holding company, Rembrandt Social Media, working with the family of a Dutch computer programmer, has sued Facebook for infringing two US patents relating to an 'online diary' program, asking for unspecified royalties. The complaint was lodged in the Eastern District of Virginia, one of the fastest patent dockets in the country.

According to the complaint filed, Joannes Jozef Everardus Van Der Meer was a pioneer in the development of user-friendly web technologies, and created the concept of a diary on the Internet. Van Der Meer passed away in June 2004, before he could commercialise his 'Surfbook' ideas, shortly after Facebook appeared on the scene.

In addition to the similarities between the functional methodology, one of the patents specifically describes and claims powering the system by advertising revenue, reflecting the way Facebook's business model has indeed developed. Further, the complaint argues that one of the patents covers the idea of allowing moving of third-party content from other websites to its own via a 'share' or 'like' button, just as Facebook does.

US infringement suits filed against big companies in Internet or software industries by non-practising patent holding companies are now very common. Fish & Richardson, the firm which filed the suit, claims that Rembrandt is committed to finding independent inventors with a compelling story to tell, and a patent which is central to some widely used technology.

Founded in 2004, Rembrandt has been a very successful patent-holding company. In 2008 it secured a $41 million verdict from Ciba Vision around silicon hydrogel contact lenses. In the same year, Rembrandt claimed to have patent rights on both the digital TV broadcasting standard and the widely used cable modem standard, DOCSIS.

Friday, February 15, 2013

Patents for financial methods

By Senior Associate Anthony Selleck

For the first time since 2006, the Federal Court of Australia has considered the issue of patentability of business methods.

Judgement in Research Affiliates LLC v Commissioners of Patents was delivered on 13 February 2013, with Justice Emmett dismissing Research Affiliate's appeal against the rejection of its patent application on the ground that it was not directed to patentable subject matter.

The court decided that the particular method in issue – which involved a 'valuation-indifferent' methodology for constructing an index of securities – was not patentable subject matter, because it produced nothing more than mere information (albeit information of economic significance).  However, the judge's discussion in the decision confirmed that inventions which involve algorithms, mathematical formulae and laws of nature may certainly be patentable in Australia.

To fall on the right side of the line between being patentable and not, the algorithm, formula or law of nature must be applied to produce a product in which a commercially useful effect can be observed. Applications of novel algorithms in many fields of computer science, including graphics, imaging, data compression, data analytics, telecommunications, search engines and user interfaces, will fall comfortably on the right side of the line.

An important lesson that arises from the decision is the necessity to include extensive technical disclosure in patent specifications in the software and business method arenas. In this regard, the judge noted that although the index construction methodology was professed to be a computer-implemented process, there was nothing in the patent specification detailing exactly how computers were actually used to select the securities and construct the index. These deficiencies could not be remedied by the provision of expert evidence at trial.

Wednesday, February 13, 2013

170 million people, one trade mark

Russia, Belarus, and Kazakhstan have moved to introduce a unified trade mark system.

The three Eurasian nations already work co-operatively on customs procedures to crack down on the importation and movement of counterfeit goods between the nations. The move toward a unified trade mark system has been outlined in a draft report issued by the EurAsian Economic Commission (EACC), which administers the current co-operative customs arrangements. The EACC has yet to provide an expected timeline for the implementation of the unified system.

Watch this space.

Tuesday, February 12, 2013

This shop is not a front, it's a trade mark!

Apple registers its 'Apple Store' layout as a trade mark in the United States, but fails to do so in Australia.  In this post by Trade Marks Attorney Dan Wilson, we explore the concept of a trade mark for a store layout and offer some more practical alternative protections.

As has been reported in the news, Apple Inc was recently successful in registering its (arguably) iconic shopfront and store layout as a trade mark in the United States for retail store services. Interestingly, the trade mark does not feature any 'brand' in the traditional sense. There is no wording 'APPLE' and no big shiny Apple logo to be found in the trade mark; just a three-dimensional technical drawing of a glass shopfront and inside various pieces of furniture, namely:
  • a panelled facade consisting of large, opaque rectangular horizontal panels over the top of the glass front, and two narrower opaque panels stacked on either side of the storefront;
  • two parallel rectangular recessed lighting units traversing the length of the store's ceiling;
  • cantilevered shelves below recessed display spaces along the side walls;
  • two parallel lines of rectangular tables in the middle of the store parallel to the walls and extending from the storefront to the back of the store; and
  • multi-tiered shelving part-way along the side walls, and an oblong table with stools located at the back of the store, set below video screens flush mounted on the back wall.

Australian refusal

What has not been widely reported though, is that this trade mark was the subject of an international trade mark application under the Madrid system and Australia was one of the jurisdictions which Apple nominated for protection of its store layout trade mark.

The application was refused trade mark protection in Australia.

Presumably, the trade mark was refused on the grounds outlined in section 41 of the Trade Marks Act 1995 (Cth), that the trade mark was not capable of distinguishing the services covered by the application from the services of other traders.

Apple did not lodge a response to the initial refusal. However, it was an option for Apple to submit evidence of use demonstrating that the trade mark has acquired the necessary capacity to distinguish the services covered by the application.

Trade mark enforcement

If Apple had been granted protection of its trade mark for the layout of its store in Australia, what would the real world implications have been when it came to enforcing the trade mark? The main issue for any allegation of infringement that Apple might have been able to bring (based on an Australian trade mark registration) would have centred around the substantial identity or deceptive similarity of the alleged infringing store layout.

Although issues have never been tested in Australia in relation to a shape trade mark for store layout, given the detail in the trade mark application, anything short of an identical copy (as we saw in China in 2011) would most likely fall short of being considered as substantially identical to the trade mark.

Turing to deceptive similarity, Australian case law is clear that in order to make a finding of deceptive similarity it is necessary to show a real tangible danger of deception or confusion occurring and that the context in which the goods or services are traded is all important. In this light, would it be likely that a finding of deceptively similarity would be made?

In short, even with a registered Australian shape trade mark for a store layout design, which would be difficult to obtain, enforcement of that trade mark may be even more difficult.

Practical alternatives

Apple, and everyone else, has more practical and well-tested alternatives available to it to protect the layout and design, or get-up, of stores in Australia.

If a trader were able to prove that another trader's actions, including but, of course, not limited to, the get-up of its stores, was likely to lead to a consumer being misled or deceived within the meaning of section 18 of schedule 2 of the Consumer and Competition Act 2010 (Cth), that trader would be able to take action against the other trader to cause the cessation of the misleading or deceptive actions.

Alternatively, the tort of passing off has been successfully used to prevent other traders from making misrepresentations by which the goodwill of one trader is used to benefit another with likely damage to the initial trader's business. For example, Clark Rubber was able to prevent another trader from using a similar colour scheme to its own on a shopfront.

The draw back to these remedies, as opposed to an action of trade mark infringement, are the relatively high thresholds of proof that are required. For example, proof of reputation, proof of misrepresentation, and proof of likely damage, must all be demonstrated to succeed in a passing off action.

If Apple could show that the shop was constructed in a kit and the shop qualified as a product, the shop could be registered as a design. Registered designs are a useful way of protecting products whose visual features are new and distinctive, the term for which in Australia extends for ten years.

Scintilla soundbite

Shape trade marks are a legitimate form of IP protection in Australia. There are more than 750 registered Australian shape trade marks and this number is growing all the time. However, when it comes to store design and layout, you may be better off looking to some of the more established legal remedies for protection.

Monday, February 11, 2013

Google wins High Court case

The battle between Google and the ACCC over Google's AdWords service is over. The High Court unanimously held that Google did not engage in misleading and deceptive conduct by displaying advertisements in the form of 'sponsored links'.

How does it affect you?
  • You are still responsible for the content of your own advertisements, whether on- or off-line. 
  • In-house counsel should monitor any use of competitors' trade marks, including as AdWords, and make marketing departments and external ad agencies aware of the boundaries of lawful use. 
  • For companies that facilitate the publication or dissemination of information, whether over the internet or otherwise, this decision provides some reassurance as to the level of responsibility for third-party advertising and other content. 
  • Companies should continue to take care with information disseminated to the public over internet platforms, Facebook or Twitter, whether posted by themselves or others, and take prompt action once complaints are received.
Partner Carolyn Oddie and Special Counsel Rebecca Sadleir have written a full analysis of the decision.

Tuesday, February 5, 2013

Prostrate punnet patent punches through

If a patent for a tree punnet falls, and no one is around to watch for its revival, does it ever really die? Senior Associate Lester Miller reports.

recent case tells a story of an Australian patent that ceased but was revived to maintain a monopoly just as effectively as it did before the cessation period - even arguably during the cessation period.
Garden City Planters' Australian Patent no 769039, directed to improvements to a sapling punnet, ceased in February 2008 due to failure to pay a renewal fee. The patent was revived in September 2009, 19 months later, through an application for an extension of time.
After the patent's revival, Vivre Veritas Pty Ltd applied to the Australian Patent Office for a licence to make the improved punnet, saying that it had been making the punnets during the cessation period. Section 223(9) of the Patents Act 1990 provides protection or compensation for actions taken during a cessation period. Garden City opposed the licence application.

Garden City make about 10 million of the patented punnets per year. Vivre Veritas said it received enquiries to make the punnets in 2008, and tried various apparently unsuccessful workarounds. Luckily, though, during 2009, Vivre Veritas discovered that the patent had ceased.
The hearing
The bar is set high for licence applicants under s223(9). Bennett J in Law v Razer Industries found that even though the regulation associated with s223(9) doesn't refer to it, the applicant for the licence must be more than 'lucky' to be making products which are the subject of a ceased patent. There must be a link between the fact that a patent has ceased and the reliance on that fact by the person seeking to obtain the licence. In other words, Vivre Veritas had to prove it exploited the patent because of its ceased status.
The evidence presented by Vivre Veritas was patchy, but there were indications that it had made prototypes and commenced sales of punnets. The Hearing Officer ultimately found that, at least, Vivre Veritas had ordered tooling moulds for some punnets, supplied samples to customers and had some discussions with potential buyers to buy punnets. Unfortunately, the exact shape and features of those punnets was unclear. 
Evidence regarding the products sold was in the form of variously redacted invoices for punnets 'as per drawings' and subsequent payments of those invoices, as well as product codes. Even though the product codes were copied from Garden City's catalogue, none of the drawings mentioned was in evidence. 
The Hearing Officer was satisfied that Vivre Veritas was aware during the ceased period that the patent had ceased. Unfortunately for Vivre Veritas, there was not sufficient evidence provided  for the Hearing Officer to determine whether the patent's exploitation was commercial or not, or whether there was a link between the patent's exploitation and the ceased status of the patent.
Instead, the Hearing Officer found that the evidence did not show any link between any punnets which may have been commercially produced by Vivre Veritas and the claims of the patent. 
The Hearing Officer rejected the licence application.
Take home
  • Ceased patents can be revived even after what seems like a significant time. 
  • Monitor the status of a ceased patent of commercial interest to determine whether the patentee attempts to revive the patent through extension of time provisions. 
  • Even if a person had taken steps to exploit a (later) revived patent during the period it was ceased, they must be able to show that they made the decision to exploit the patent because of the ceased status.
  • In a licence application under s223(9) it must be shown that the product produced actually falls within the scope of the claims of the revived patent.