The phase out of Australia’s innovation patent system caused a flurry of filing activity in 2021, so what are your options if you identify an innovation patent that affects your freedom to operate?

There was a spike in filing activity as part of the phase out of Australia’s innovation patent system, with over 2,700 innovation patents filed in August 2021 alone. With so many recently filed innovation patent cases, it is a good time to consider the available options if you identify an innovation patent that might affect your freedom to operate.

First, is there really a problem?

If you are worried about an innovation patent, it can be useful to get some early advice on the potential scope of the patent rights and, if necessary, the prospects for challenging validity. You may find that the patent claims do not cover your proposed commercial activities. Alternatively, you might get some clarity around a potential problem so that you can start developing a strategy to address it.

Tailor your strategy

If you identify a problematic innovation patent, it might be worthwhile to challenge that validity of it and we touch on some of the available options below. However, in some cases, you may prefer to negotiate with the patentee in order to reach a mutually beneficial commercial solution (e.g. licensing or assignment of the patent rights). Sometimes a validity challenge can be used strategically to encourage the patentee to come to the negotiating table, or to shift the balance in your favour during negotiations.

There is no single strategy that is appropriate in all circumstances. The best course of action for you will depend on your commercial goals and individual circumstances. The Griffith Hack team can assist you with developing a tailored strategy: feel free to contact us if you would like to discuss your options.

A granted (innovation) patent doesn’t always mean much

It is important to remember that innovation patent applications proceed to grant after only a formalities check. However, they do not become enforceable until they have completed substantive examination and been certified. If you are concerned that infringement proceedings might be commenced against you once an innovation patent has been certified, it may be beneficial to consider pre-certification options.

How likely is invalidity?

Requesting substantive examination of an innovation patent is voluntary. As a result, applicants sometimes take an “optimistic” approach to the subject matter being pursued. This may be done by some foreign applicants to take advantage of financial incentives in their country of origin. Alternatively, the underlying strategy may be for the granted (but uncertified) innovation patent to act as a deterrent to competitors, who might not go the additional step of seeking advice on whether the innovation patent is likely to stand up to scrutiny.

China’s utility model is a similar second-tier of patent protection to the innovation patent. Recent figures indicate that patent invalidation proceedings in China have been successful in a significant proportion of cases. Of the concluded invalidation proceedings for utility model patents in 2020, 39.2% of cases were invalidated entirely, 18.2% were invalidated partially, and only 42.6% of the challenged utility models were maintained.

Much is made of innovation patents being harder to invalidate due to the innovative step being a lower threshold than the inventive step requirement of standard patents. While it is true that the innovative step threshold is lower, it is not a free pass to validity. For example, it is important to bear in mind that innovation patents must meet the same validity requirements as standard patent cases for the level of disclosure in the patent specification. Recent case law indicates Australian patent specifications must now meet a higher standard, more aligned with UK and European requirements. With these recent developments in mind, it is wise not to take an innovation patent (especially an uncertified one!) on its face.

Pre-certification options

Third-Party Examination Requests

Sometimes the simplest way of dealing with a problematic case is to ask the Patent Office to look at it. Substantive examination of innovation patents is voluntary, but third parties can request that an innovation patent be examined. This can be done anonymously or by ‘strawman’. Both the third party and the patentee must pay an examination fee in relation to the third party’s examination request. If the patentee fails to pay this fee, the patent will cease. For patentees who filed an innovation patent with no real intention of having it certified, being asked to pay the examination fee may be enough to cause them to abandon the case.

Notice of Matters Affecting Validity

If you would like to enhance the likelihood of objections in examination, you can give the Patent Office a bit of help. It is possible to file a Notice of Matters Affecting Validity (NMAV). The NMAV can provide submissions (and supporting material) asserting that the claimed invention lacks novelty and/or an innovative step. The Patent Office is required to consider the NMAV when the innovation patent is examined (irrespective of who made the examination request).

You can file an NMAV at any time from when the complete specification for the patent becomes open to public inspection to immediately before the Commissioner decides to certify the patent. Again, this can be done anonymously or by ‘strawman’.

Post-certification options

After certification, a patentee can commence enforcement proceedings to assert their patent rights. Accordingly, it is important to consider the risk of the patentee commencing infringement proceedings when contemplating a post-certification challenge to the validity of an innovation. There are a number of different options available, and we recommend consulting with an IP professional to develop a strategy suited to your circumstances.

Re-examination

If the innovation patent has been examined and certified, that does not have to be the end of the matter. If you still have validity concerns, you can ask the Patent Office to re-examine the innovation patent. Again, this can be done anonymously or by ‘strawman’. Re-examination requests can address more grounds than an NMAV including written description requirements.

Re-examination can be considered a “passive” approach in that you provide information to the Patent Office and hope that they will use it wisely. If the Patent Office raises objections in the light of the re-examination request, the patentee will be given the opportunity to respond to the objections, but the party requesting re-examination does not have a formal opportunity to contest the patentee’s response. Re-examination can be a cost-effective option in circumstances where there are clear invalidity grounds.

Opposition

Alternatively, if it is strategically beneficial to take a more active approach to contesting the validity of an innovation patent, you can commence opposition proceedings before the Patent Office. In opposition proceedings, both the opponent and the patentee are given the opportunity to file evidence and make submissions in support of their respective cases. The opposition can proceed to a formal hearing, where each party can be heard and a hearing officer from the Patent Office will prepare a formal decision on the opposition. The grounds of opposition include the same grounds as re-examination.

Revocation

There is also the option of commencing revocation proceedings before the Federal Court. We do not suggest litigation lightly, but in some circumstances revocation proceedings can be the best approach. The grounds of revocation generally include the same grounds as for oppositions.

If you are dealing with nuanced technical issues or a complicated case, it may be beneficial to actively contest the validity of the innovation patent in opposition or revocation proceedings. As noted above, the best strategy will depend on the specific circumstances of any matter.

How we can help

Griffith Hack is a full-service specialist IP firm. We combine a highly experienced and technically diverse patents team with a legal team with a strong track record. At Griffith Hack, our attorneys and lawyers work together to provide you with commercially astute advice and execute a strategy tailored to your needs.

To discuss the available options, please contact a member of our team.

Griffith Hack is proud to announce that Amanda Stark, Principal and Practice Group Leader of our ChemLife team, has received the Client Choice Award – IP Patent Agents and Attorneys, Australia at the 2021 Lexology Client Choice Awards.

Established in 2005, Client Choice recognises individuals around the world who stand apart for the excellent client care they provide and the quality of their service.

The criteria for this award focuses on the ability to add real value to clients’ business; above and beyond the other players in the market. Uniquely, nominees can be submitted only by corporate counsel, with this year’s winners chosen from a pool of more than 2,000 individual client assessments.

What clients said about Amanda

“Amanda is easy to get on with, picks up the issues & technology quickly and provides clear advice, good availability, good communication.”

“Amanda is an exceptional patent attorney with extensive expertise in managing biotech patent matters.”

“Amanda is always, responsive, patient, professional, extremely knowledgeable and works hard to achieve the best outcome for her clients.

“In all my interactions with Amanda, she has been an excellent communicator and consistently provided invaluable advice on patent strategy.“

“Amanda demonstrates a critical commercial perspective. Her outstanding advice has greatly increased our value.”

“Amanda has provided strategic guidance on options to minimise costs while maximising outcomes.”

About Amanda

Amanda is one of the leading practitioners in the Australian biotechnology space. She is a key member of Griffith Hack’s leadership team, heading up the ChemLife practice group and leading the International Business Development and Foreign Associate Relationship program.

Amanda has a reputation for grasping complex legal and technical issues and developing creative solutions to achieve targeted results. Known in the industry for her tenacity and lateral thinking, clients transfer their work to Amanda when issues arise that most attorneys cannot resolve. A key strength of Amanda’s is IP strategy formulation and she is often called upon to develop IP strategies for companies looking for investment.

The draft version of legislation to strengthen the existing unfair contract term protections in the Australian Consumer Law (ACL) was recently released for public consultation, giving us a peek into what is to come. The proposed changes are significant, including potential penalties of AU$10 million, and businesses trading in Australia will likely need to review their contract terms. 

The current unfair contract term protections under the ACL have sometimes been described as a “toothless tiger”. Currently, the protections are quite limited in application and where a term is found to be an “unfair contract term”, it is simply void. Only parties who prove to a court that they have suffered loss or damage as a result of the unfair term can be compensated. No penalties currently apply.

This is set to change and businesses trading in Australia will need to prepare.

In August 2021, the Exposure Draft Legislation and accompanying Explanatory Materials were released for public consultation. The changes proposed are intended to provide fairer allocation of risk in standard form contracts and improve consumer and small business confidence when entering into such contracts. We provide a summary of the changes proposed in the Draft Legislation below.

Increased scope of application to larger businesses and no limit on contract value

The scope of application of unfair contract term laws will likely be broadened. It will continue to apply to standard form contracts which are “consumer contracts” or “small business contracts”, but those definitions would be expanded.

Currently, one of the requirements for a contract to be a “small business contract” is that at least one party to the contract is a business employing fewer than 20 persons. The Draft Legislation increases this to either 100 employees or alternatively, for the company to have an annual turnover threshold of less than $10 million.

Also, the requirement that the upfront payable price of the contract must be below a certain threshold is to be removed. This brings many more companies within the ambit of the legislation. 

We can also expect some increased clarity around the definition of a “standard form contract”. The Draft Legislation specifies that courts must not take into account opportunities to negotiate minor or insubstantial changes to the terms of the contract, opportunities to select a term from a range of options, and the extent to which parties to another separate (but perhaps similar) contract were given opportunity to negotiate its terms. This further solidifies the need to provide the other party with an effective opportunity to negotiate the contract if the unfair contract term provisions are to be avoided.

Terms declared by court to be unfair cannot be used

The Draft Legislation provides that if a term has been declared by a court to be unfair, there will be a presumption in subsequent proceedings that terms which are the same or have a substantially similar effect will also be unfair. This will require businesses to stay abreast of changes to the law in this area by actively reviewing and amending the terms in their standard form contracts in accordance with the court’s decisions.

Growing “teeth” – significant civil penalties and potential remedies

There are currently no penalties for parties using unfair contract terms in their standard form contracts. The Draft Legislation would introduce penalties not only for proposing an unfair term but also for relying on the term. Further, it creates separate contraventions for each term which is unfair. This means that a business may breach the prohibition multiple times in a single contract (and therefore, attract multiple penalties), when they propose the term and again when they rely on it.

For a company, the maximum amount of the penalty will be the greater of: AU$10 million; three (3) times the value of the benefit the company obtained from the breach of the law (if that can be determined; or, if the court cannot determine the value of that benefit, 10% of the company’s annual turnover.

The Draft Legislation also introduces some new remedies specifically for unfair contract terms. A court can now make orders to void, vary or refuse to enforce part or all of a contract if the court thinks this is appropriate to prevent or reduce loss or damage that may be caused (or to remedy loss or damage that has occurred). Unlike other orders the court can make under the ACL, there is no need to show that loss or damage has occurred, only that it may

A court can also make some new special orders on the application of the regulator, including orders injuncting the offending party from using an unfair term (or terms similar to it) in any future contracts. These orders can be made up to six (6) years after the court declares a term is unfair. This gives the regulator significant power to crack down on unfair terms on an ongoing basis.

Other proposed changes

  • It would be expressly stated that remedies for the breach of unfair contract term provisions are also available to non-parties to the contract, and regardless of their status as a consumer or small business.
  • The Draft Legislation would also clarify that if a law of the Commonwealth, State or Territory requires or reads in certain terms into a standard form consumer or small business contract, even if the law does not require or expressly permit those terms per se, it still cannot be considered an unfair contract term under the ACL.

Key takeaways for businesses

With the upcoming changes, business should prepare to review their standard form agreements (under the new definition) for use in Australia and remove or amend any unfair terms. For example, terms of sale or terms of use agreements, licensing agreements, distribution agreements, and service agreements (such as SaaS agreements), are all examples of agreements which may be considered “standard form agreements” depending on the relevant circumstances and may contain “unfair terms”.

If you’d like our assistance with conducting a review of your standard form agreements, please contact us.

Australia and the United Kingdom recently agreed to the broad terms of a Free Trade Agreement, part of which seeks to enhance design rights. As a result, Australia has (finally!) agreed in principle to join the Hague Agreement on Industrial Designs.

What is the Hague Agreement?

The Hague Agreement establishes an international system (the Hague System) administered by the World Intellectual Property Organization (WIPO) which allows designers to seek design protection in many countries at once, with fees paid in one currency, through a single international application. For those familiar with trade marks, the Hague System for Industrial Designs provides a similar procedure to the Madrid Protocol. That is, a single international application applied through WIPO enables applicants to secure rights in multiple participating countries.

How can designers benefit from the Hague System?

Centralised Management of Design Portfolios

Under the current system, Australians can apply for registered designs in Australia and overseas. However, for overseas protection, applicants need to engage in each country of interest a local agent and file a registration application through the relevant national IP administration office . Unsurprisingly, this can be an expensive endeavour, incurring costs for official fees, red tape costs at filing, translations (for non-English speaking countries) and substantive examination, all required for each country.

The Hague System enables designers to file a single design application through WIPO that can protect their designs in (currently) 92 countries simultaneously. Advantageously, this mitigates some of the costs associated with separate national filings by replacing multiple applications (and procedures and formalities) with a single application that only requires a single translation be provided with an application. This can be particularly advantageous for applicants filing designs into multiple non-English speaking countries.

There may be less of a need to involve local attorneys, but a local attorney may be required when an adverse official report issues in connection with a design in a specific country. One drawback in filing a single design application through the Hague System is that the design application may not meet the specific design registration requirements in a specific country. For example, China and the US have very particular design drawing requirements that could normally be addressed prior to filing after consultation with a local attorney.

A Single Application with Simultaneous International Design Rights

The Hague System allows designers to access some of Australia’s key international trading partners. For example, Australian designers planning to launch their designs into the global export market can utilise the Hague System to secure rights in the United States of America, United Kingdom and Canada. Additionally, designers looking to manufacture their products overseas can access design rights in Viet Nam, Japan and Korea. A full list of the contracting parties is available here.

An Option to Defer Publication

The Hague System allows applicants to defer publication of their international design applications. Advantageously, Australian designers can utilise this provision of the Hague System to keep their designs secret for up to 30-months after filing. On the international stage, this may stand as a strategic advantage for some Australian applicants. For example, registered designs can be selectively published according to e.g. a product release schedule or ‘roadmap’. In this way, an applicant can be agile with their product portfolio, publishing their registered designs when most suitable, or in alignment with a broader marketing strategy.

Term of Protection

In joining the Hague System, Australia will need to extend the term of protection from 10 years to a minimum of 15 years. Currently, in Australia, designs proceed directly to registration with only a formalities check. There is no need to undergo a substantive examination process unless the design owner wants to enforce the design. It is likely that the Australian Designs Act will be revised to not only cater for the longer term of protection, but also provide an opposition system given the increase term of protection.

Partial Designs and Graphical User Interfaces

Australian designers will also see the introduction of protection for partial designs and virtual designs in the coming years as the UK-Australia Free Trade Agreement takes shape. For those unfamiliar with partial designs and virtual designs:

a partial design registration will allow an applicant to protect a part, i.e. a ‘signature feature’ of their whole design (or product); and

a virtual design registration will allow an applicant to protect screen displays, graphical user interfaces (GUIs) and screen icons.

The Hague System includes protection for partial designs and virtual designs. IP Australia deferred introducing protection for these types of design registrations in the recent round of Design Law reforms which will come into effect in March 2022. Although not part of the current program of reforms, movement towards the Hague System will force the Australian Government to afford protection to these types of designs in order to align with other jurisdictions such as the European Union, United Kingdom and United States of America.

What can Australian Designers expect from the UK-Australia Free Trade Agreement?

As a part of the UK-Australia Free Trade Agreement, Australia has committed to make all reasonable efforts to join the UK as a member of the multilateral Hague Agreement on Industrial Designs.

While an ‘Agreement in Principle’ was announced on 15 June 2021, the Free Trade Agreement is not expected to come into effect until at least 2022, allowing for final negotiations to be made and the required legislation passed by both Australian and UK Parliaments.

In the years to come, leading to the finalisation of the Free Trade Agreement, designers can expect to see further changes to design rights in Australia. Royal assent to the current reforms to the design rights system was given on 10 September 2021 and thus will come into force on 10 March 2022 for the substantive law changes. While it is unclear how the Hague System reforms will materialise in Australia at this stage, some of the current reforms are consistent with the provisions of the Hague System. For example, the reforms introduce a 12-month grace period for design registrations in Australia which will come into effect March 2022.

The legislative and system changes associated with these reforms will benefit designers looking to maximise protection in international markets and lead Australia to the international partnership of the Hague System.

The Designs Amendment Bill 2020 has passed through Parliament ushering in a wave of reform in Australia. Jennifer Wyndham-Wheeler looks at the changes and what they mean for you. 

The Designs Amendment (Advisory Council on Intellectual Property Response) bill 2020 (‘the Designs Bill’) was passed by both houses of Federal Parliament on 30 August 2021, ushering in a wave of reform in Australia. 

Initiated by a comprehensive review in 2019, the Designs Bill enacts the following changes as recommended by the Advisory Council on Intellectual Property and public consultation:

  • A 12-month grace period. The grace period will protect designers against inadvertent self-disclosure (i.e., publication or use) prior to filing a registered design. This provides flexibility for designers starting out with new products who are unfamiliar with the design system. Designers will no longer lose the ability to register a design for a product that they have self-disclosed within the preceding year. Another benefit may be to allow designers to test products in the market before filing designs and make more informed and strategic design filing decisions.

  • Infringement exemption for prior use. Third parties who start using a design before it is published on the designs register – i.e., during the grace period – are exempt from infringement. This change balances the rights of designers with third parties. Once a design is registered and published, then third parties are considered put on notice of those exclusive rights. Prior to that it seems unfair to punish third parties who have started using an identical or similar product to the design that they may very well have created independently. The third party is able to continue using, making, importing and selling products which are identical or similar to the design.

  • Registration of designs and removal of the publication option. The registration process is now simplified and more streamlined. A request for registration of the design may be made at filing or within 6 months from filing. If a request for registration is not made within the 6-month time period, then the design will automatically proceed to registration. Once the design is registered, publication occurs within a few weeks. The option to publish the design without registering it has been removed. For overseas applicants filing design applications into Australia (i.e., up to six months after an original (Convention priority) filing), the six-month period will have already elapsed and the design will register and publish shortly after filing.

  • Relief from infringement before registration. This reform is an extension of the current innocent infringer defence which prevents third parties infringing a design that they do not know is registered.  The extension also applies the innocent infringer defence to the time period between filing and registration which as previously mentioned can be a time period of up to 6-months. This reform is consistent with the policy of balancing the rights of designers and third parties. Again, where a design is not published on the Register then the competitor could not have known about the existing exclusive rights.

  • Formal requirements. Formal requirements are directed to rules regarding drawing requirements, the specification and information that may (or may not) be included in an application, such as scandalous material. Moving the formal requirements to a non-legislative instrument allows for greater flexibility in updating these requirements with changing technology.

  • Changes to the ‘informed user’ standard. The legal standard of the ‘informed user’ is used to assess the validity (i.e., newness and distinctiveness) of registered designs and the infringement of registered designs. The primary change is that the ‘informed user’ no longer needs to be a user of the product.

Now that the Designs Bill has been passed, it will be provided to the Governor-General for Royal Assent (which typically occurs quickly). Once Royal Assent is provided, some changes including the legal standard will have immediate effect, and some changes, most notably the grace period, will commence 6 months after Royal Assent.

Of the changes to design law summarised above, the introduction of the grace period will have real tangible benefit for designers by providing flexibility for inadvertent self-disclosure. In the longer term, IP Australia intends to explore further reform measures of the design rights system to better support innovation in Australia.

How can we help

If you have any queries as to how these changes may affect your own situation, do not hesitate to get in touch with Jennifer Wyndham-Wheeler, or your usual Griffith Hack contact. 

Cytec Industries Inc. v Nalco Company [2021] FCA 970

In a recent opposition appeal decision of the Federal Court of Australia, Nalco Company’s Australian patent application no. 2012220990 was found invalid for lack of support and lack of clear enough and complete enough disclosure (sufficiency).1

The decision highlights the Court’s approach in considering the meaning of claim terms that might on first glance be considered conventional, and emphasises the need to consider whether the claims are commensurate with the technical contribution provided by the specification. Toby ThompsonKathryn Morris, and Tim Fyfe discuss.

The technology

The technology of the application related to the “Bayer process”, an industrial process used to extract alumina from bauxite. Precipitation of aluminosilicate scale can occur during the process, forming obstructions and affecting efficiency. The patent application was directed to methods for reducing scale during the Bayer process, involving use of additive compositions containing certain small molecules.

Support and sufficiency

A key issue in the proceedings was the requirement in claim 1 for:

“a composition comprising at least one small molecule selected from the group consisting of compounds (I)…(LX) within a product mixture formed from the reaction of…”

The judge first decided that the language of claim 1 encompassed a composition made up of a single type of small molecule, alongside encompassing mixtures of small molecules. Such a finding is uncontroversial, and most practitioners would agree that it is common when drafting to use “at least one” to cover situations where either a single component or multiple components are to be protected.

Having arrived at that construction, the judge went on to hold that the claims lacked support as a result. The specification described the small molecules as being produced by the reaction of three components, which resulted in the production of complex mixtures of small molecules. However, there was no disclosure regarding how to produce a single small molecule, or how to separate components of the product mixture. Whilst embodiments of claim 1 involving mixtures of small molecules were supported, embodiments involving only a single type of small molecule were not.2

For similar reasons, the judge also found that the specification did not disclose the claimed invention in a clear and complete enough manner for it to be performed by a person skilled in the art (insufficient). Insofar as the claims included a product mixture made up of a single type of small molecule, undue experimentation was required to perform the invention.3

Vulnerability of claims containing conventional terms

The decision in Cytec v Nalco follows on the heels of MSD v Wyeth last year, where use of an apparently conventional drafting term also resulted in invalidity (see our article here). In that case, the term “comprising” resulted in claims directed to vaccine compositions being held to lack support, insofar as the claims encompassed vaccines having additional polypeptide-protein conjugates beyond the thirteen specified.4 The decision in MSD v Wyeth also cemented that evaluation of compliance with Australian support provisions involves assessment of the technical contribution to the art disclosed by the specification, and requires that the breadth of the monopoly claimed must be justified by that technical contribution.5

On the face of it, these decisions might cause concern that other patents containing similar commonly used claim terms might also be vulnerable. However, in both MSD v Wyeth and Cytec v Nalco, the decisions were heavily dependent on the facts. As discussed above, in Cytec v Nalco there was a lack of disclosure in the specification relating to production or isolation of single small molecule products. The expert evidence further indicated that a skilled person would not have known how to obtain a single small molecule. In MSD v Wyeth, the evidence supported that the selection of additional serotypes beyond the 13 specified in the claims would be a complex and difficult process. Given that, it should not be assumed that all Australian patents using terms such as “at least one” or “comprising” are likely to be considered to lack support or be insufficient.

However, these decisions highlight the approach of the Australian courts, not only in carefully considering the language of the claims, but in also evaluating whether all embodiments falling within the claims can be obtained based on the specification and the common general knowledge. We can also expect that challengers will continue to raise lack of support and insufficiency attacks in invalidity proceedings. As a result, particularly for cases where litigation may be anticipated, patentees should consider whether the claims of their patents reflect the technical contribution to the art.

Grace period applicable to “novelty-only” patent publications

An unsuccessful lack of novelty attack was also made by Cytec based on an earlier filed-later published “whole of contents” Nalco publication “WO 873”. In confirming that the Australian grace period provisions are applicable to such documents, the judge confirmed the position taken by the Australian Patent Office in recent years,6 providing additional clarity in this area.

The judge disagreed with the Opponent’s view that the 12-month grace period only applied to prior art documents which had already been published by the priority date of the claim, holding that a reading down of the words “publicly available” in section 24 of the Patents Act to exclude prior unpublished patent specifications from the grace period provisions, was unwarranted.

For more information regarding this case, or if you have questions regarding how to navigate Australia’s support and sufficiency requirements, please get in touch with a member of our team.


1Cytec Industries Inc. v Nalco Company [2021] FCA 970.

2Cytec Industries Inc. v Nalco Company [2021] FCA 970, [129]-[133].

3Cytec Industries Inc. v Nalco Company [2021] FCA 970, [149].

4Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477;

5Merck Sharp & Dohme Corporation v Wyeth LLC (No 3) [2020] FCA 1477, [547].

6Biogen Idec MA Inc. [2014] APO 25; Rozenberg & Co Pty Ltd. v Velin-Pharma A/S [2017] APO 61

As foreshadowed in our recent article on Ono Pharmaceutical Co, Ltd v Commissioner of Patents [2021] FCA 643 (Ono), the Federal Court of Australia has issued Merck Sharp & Dohme Corp. v Sandoz Pty Ltd [2021] FCA 947 (MSD), a further decision regarding patent term extension (PTE).

Whereas Ono considered PTE in the context of a pharmaceutical substance listed on the Australian Register of Therapeutic Goods (ARTG) by a third party prior to the patentee’s ARTG listing, MSD relates to PTE in the context of a patent that covers two or more pharmaceutical substances listed on the ARTG by the patentee or a related entity.

MSD had two pharmaceutical substances listed on the ARTG, both covered by claims of the one patent. Based on the pharmaceutical substance first listed on the ARTG, the patent was ineligible for PTE, because 5 years had not elapsed between the effective filing date of the patent and listing of the first pharmaceutical substance on the ARTG. However, based on the second pharmaceutical substance with the later listing on the ARTG, the patent was granted PTE, because greater than 5 years had elapsed between the effective filing date of the patent and that listing on the ARTG.

Merck Sharp & Dohme Corp. (MSD) initiated proceedings against Sandoz Pty Ltd (Sandoz) alleging threatened infringement during the PTE period. In response, Sandoz cross-claimed that the PTE based on the second pharmaceutical substance was erroneous and sought rectification of the patent register to indicate that the patent expired 20 years after its effective filing date.

MSD proposed a construction on the calculation of the extension of term with reference to Ono, effectively by replacing recitation of “s70(2)” in s77 with “s70(3)”. At [49], Jagot J noted that “MSD relies heavily on Ono at [118] and [144].” However, Jagot J was not swayed, not least in noting at [53] that:

All of the above paragraphs from Ono [relevant to MSD’s construction] are obiter dicta. The ratio of the case is confined to the answer Beach J gave to the issue of construction with which he was dealing, namely, as identified at [27]:

…whether an application for an extension must be filed within 6 months of the first inclusion in the ARTG of goods containing or consisting of any pharmaceutical substance falling with the claims of the patent:

  1. where the goods were those of the patentee (the applicants’ position); or
  2. irrespective of whether the goods were those of the patentee, that is, they could be the goods of a third party that had nothing to do with the patentee and, moreover, might be a competitor (the Commissioner’s position).

In short, Jagot J held that recitation of “earliest” in s77 relating to calculation of PTE duration meant exactly what is said. Therefore, the duration of PTE was to be calculated using the date of listing the pharmaceutical substance listed first on the ARTG, not the pharmaceutical substance listed second (or subsequently) on the ARTG. It followed that the term of the patent should not have been extended, or technically, the PTE should have been calculated as zero days.

Consequently, it remains best practice to pursue each pharmaceutical substance likely to be listed on the ARTG in a separate divisional application.

For more information, please contact Malcolm Lyons.

In a recent decision of the Australian Patent Office, Cytec Industries Inc. successfully defended its Australian Patent Application No. 2014370386 against all grounds of opposition.1 The decision highlights some key aspects of Australian patent oppositions, including the emphasis placed on expert evidence by the Patent Office when deciding on grounds such as inventive step, and the importance of formulating a clear position supported by the evidence in hearing submissions.

Griffith Hack were involved in the latter stages of CSIRO v Cytec, handling preparation of submissions and hearing strategy on behalf of Cytec.

Technology

The patent application concerned the production of polyacrylonitrile (PAN) polymer suitable for use in producing carbon fibre and having particular properties, including a requirement for high molecular weight and narrow polydispersity index. Claims were directed to a multi-step process for producing the polymer including the use of reversible addition/fragmentation chain transfer (RAFT) agents, and also to processes for producing carbon fibre from the polymer.

Straw Man Opponent

Any person can oppose grant of a patent application in Australia, and in CSIRO v Cytec the opposition was originally filed by a ‘straw man’ opponent. A so-called ‘straw man’ opposition usually involves an attorney or attorney firm opposing on behalf of somebody else – to conceal the identity of the true opponent. Opponent status was transferred to CSIRO late in the proceedings, after questions were raised about a possible association between some of the expert witnesses and the true opponent.

Expert Evidence

In Australian patent oppositions, providing strong expert evidence on matters such as common general knowledge or steps that a person skilled in the art (PSA) would have taken is often critical. The hearing officer will generally rely on such evidence rather than their own technical expertise. It is also preferable to involve independent experts where possible.

In CSIRO v Cytec the Delegate considered that, whilst one of the opponent’s expert witnesses had considerable expertise in RAFT polymerisation and a high level of inventive capacity, they were not truly representative of a polymer scientist of ordinary skill. Whilst the evidence was not excluded, consideration was given as to whether it went to the issue of what the common general knowledge was and what a PSA would do, rather than what the witness themselves knew.2

Two expert witnesses emerged as being employees of the true opponent, and a third was a director of a joint venture set up by the opponent. Concerns over the identity of the true opponent not being disclosed earlier in the process, and its impact on the value of the evidence, were also addressed by the Delegate.

He emphasised that the witnesses were provided with the Federal Court’s Expert Evidence Practice Note, and were aware of their role in providing relevant and unbiased evidence, and so their evidence was not disregarded.

However, it was also noted that at times declarants went beyond the role of providing evidence on technical issues. The Delegate further commented that, whilst witnesses will understandably disagree with each other, and may express those differences in strong terms, such statements can indicate a lack of objectivity or suggest that the witness is acting as an advocate. As a result, some of the evidence was approached with caution.3

Inventive Step

Alongside preparation of evidence, a key facet of opposition practice is the ability to set out a party’s case strongly in written and oral submissions, and to anticipate and respond to arguments made by the other side.

The main ground of opposition pressed at the hearing in CSIRO v Cytec was lack of inventive step. The Delegate agreed with Cytec’s position that the problem solved by the invention was the provision of PAN polymer suitable for use in producing carbon fibre, and having a low polydispersity and high molecular weight, preferring that to the opponent’s alternative problem of producing PAN polymer with low polydispersity.4

Further, Cytec’s position was preferred on a number of key issues, supported by their expert evidence, including that:

  • it was not common general knowledge that RAFT could be used to prepare PAN copolymers; and
  • there was a technical prejudice in the art that RAFT presented challenges in achieving the appropriate properties for PAN copolymers, namely achieving both high molecular weight and low polydispersity.5

Attention was also drawn to a contemporaneous paper published by CSIRO authors. The parties presented differing views as to what the paper taught, but ultimately the Delegate held that the document indicated that the manufacture of PAN polymers having high molecular weight and low polydispersity suitable for production of high quality carbon fibre presented challenges.6

Against that background, the claims were held to be inventive, both in the light of the common general knowledge alone, and the common general knowledge together with the cited prior art documents.

Final Thoughts

Since the Raising The Bar Amendments to the Patents Act 1990 came into force a number of years ago, Australia has become a more challenging jurisdiction for patent applicants requiring greater consideration of strategy than in the past. An opponent now only needs to prove their case on the balance of probabilities rather than demonstrating that the application is clearly invalid, and there are increased support and sufficiency requirements intended to align with UK and European provisions.

Whether an owner or a challenger, careful preparation of evidence and submissions is a key aspect of opposition practice. Factors important for success in Australian oppositions also include an understanding of the scientific and legal issues, developing an effective opposition strategy, and evolving that strategy as necessary as the opposition progresses.

When faced with an opposition, patentees should consider whether they have the best team to successfully defend the patent application. Transfer of the representative on an opposed application is allowable, and may be preferable for some high value cases and situations where opposition experience is essential.

How we can help

Griffith Hack has a patent attorney and legal team with a strong track record, not only in defending patent applications where we have been responsible for prosecution, but also in getting across the scientific and legal issues quickly, and delivering results when we are brought in specifically to handle the opposition.

To discuss patent oppositions further with a member of our team, click on their profile below.


Commonwealth Scientific and Industrial Research Organisation v. Cytec Industries Inc. [2021] APO 27.
2 Ibid, [36]. 
3 Ibid, [37]-[39].
4 Ibid, [63].
5 Ibid, [85}, [91].
6 Ibid, [100].

With Australia’s innovation patent system set to end later this month, pre-grant opposition proceedings will likely play a significant role in the strategies of challengers going forward – and owners will want to be prepared. Gavin AdkinsDr Toby Thompson and Amanda Stark discuss. 

Australia’s innovation patent system is ending soon. As a result, Australia’s pre‑grant opposition proceedings will likely play a more significant role in the strategies of patentees and challengers in the future.

Innovation patents are subject to a different ‘post-grant’ opposition procedure to standard patents that is stayed by the commencement of court proceedings. As a result, divisional innovation patents are sometimes used as a litigation tool in order to, among other things, short circuit the enforcement delay associated with the pre‑grant opposition procedure for standard patents. As the innovation patent system is phased out, this tactic will fall away.

Australia’s pre-grant patent opposition procedure is long-standing but has undergone some important changes in recent years that will become critical in the future.  These changes include higher requirements for several grounds of opposition, resulting in a less pro-patentee opposition regime than was previously the case.   

Lower burden of proof

Previously, in order to succeed in opposing grant of an Australian patent it was necessary for an opponent to establish that the patent, if granted, would be clearly invalid.

Now an opponent need only satisfy the Hearing Officer on the balance of probabilities that a ground of opposition to the grant of the standard patent is made out.

Stronger grounds for opposition

In respect of standard patent applications which are filed on or after 15 April 2013, or for which examination is requested after this date, there are four substantive changes that strengthen the grounds for challenging validity:

1. Broader prior art base for inventive step (obviousness)

Firstly, the background “common general knowledge” is no longer confined to that which existed in the art in Australia. In practice, this removes the need to use local Australian experts or otherwise prepare evidence in order to establish that the relevant art is ‘international’ in nature.

Secondly, in order for prior art to be eligible for assessing inventive step it is no longer necessary to establish that it must be “information that a skilled person […] could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant”. This removes another evidentiary obligation from an opponent and broadens the prior art base substantially.

2. US utility requirement

An express utility requirement was inserted to align with the US position such that “a specific, substantial and credible use for the invention (so far as claimed) is disclosed in the complete specification”. This is in addition to the pre-existing requirement for the invention itself to be useful.

3. UK/European enablement and support requirements

The disclosure requirement for complete applications has been amended to conform substantially to the corresponding UK provision, such that the complete specification must “disclose the invention in a manner which is clear enough and complete enough for an invention to be performed by a person skilled in the relevant art”.

Further, the ‘old test’ for fair basis has been replaced with a requirement based on UK/European law that that the claims are “supported by” the description. The ‘old test’ for fair basis was essentially limited to a textual comparison between the claims and the body of the specification or priority document that did not involve any inquiry into ‘technical contribution to the art’.

4. Tighter restrictions on amendments

While not a ground for invalidity, patent applicants are not allowed to add matter that goes beyond the disclosure contained in the specification at its filing date, except to correct a clerical error or obvious mistake.

Strict time-frames for evidence

In the past, patent opposition proceedings in Australia often became protracted due to generous provisions relating to extensions of time for lodging evidence. This is no longer the case.

Evidentiary time periods are still extendable, but the regulations relating to extensions of time for evidentiary periods are now reasonably onerous and strictly applied by IP Australia. Unless a party can show that they acted promptly and diligently and made all reasonable efforts to file the evidence in time, an extension will not be granted.

The procedure from filing the Notice of Opposition to the issuance of a written decision on validity can now be completed within about 18 months, although extensions of time (where allowed), amendments and procedural disputes can extend this time-frame.

Use all available options

It is currently still possible to file new applications for innovation patents in Australia, until 25 August 2021. Even after that date, it will still be possible to file applications for innovations which are divisionals of existing applications filed before that date.  As a result, if your invention is of significant commercial value and is likely to be commercialised in the short to medium term, an 8-year term innovation patent may still be a useful option.

How we can help

Facing a pre-grant opposition in Australian is often a new experience for many patent owners, and opponents also.  Opposition practice is a specialised area of Australian patent law, particularly with regard to areas such as preparation of expert evidence, hearing preparation, dealing with procedural aspects such as amendment requests and extensions, and extending into commercial aspects such as settlement negotiations and licensing.

Griffith Hack’s experts have extensive experience in handling Australian patent oppositions. Our combined patent attorney and legal team provides integrated scientific and legal expertise, together with strategic, commercially-relevant insight, and has a proven track record in delivering results.

To discuss patent oppositions further with a member of our team, click on their profiles below. 

AusBiotech has released a draft strategic roadmap for a new regenerative medicine Catalyst, and is now seeking sector feedback from those interested in the future of regenerative medicine in Australia.

On 29 July 2021, AusBiotech released for comment a draft roadmap for Australian regenerative medicine (RM), with the aim of developing strategic goals, objectives and priority actions for a national RM sector ‘catalyst” collaboration body, the Catalyst Body.

We welcome the impetus of the seven consortium members of the Regenerative Medicine Catalyst Project in seeking to advance the development and earlier access to ground-breaking regenerative medicine therapies for Australian patients.

The draft roadmap states:

“Our vision is that Australian patients have access to world-class regenerative medicine therapies sustained by a thriving Australian RM industry. 

Our mission is to create an end-to-end world-class value chain that can discover, develop, and distribute regenerative medicine, while creating jobs, commercialising research, and exporting Australian therapies to the world.

An excellent summary of the strategic plan is provided in Figure 1 on page 8 of the draft roadmap, outlining priority actions to build stakeholder engagement and encourage investment within the sector, establish forward-looking regulatory pathways, and develop the requisite manufacturing capability needed to accelerate growth in regenerative medicine therapies.

The underlying theme of the draft roadmap is that the vision and mission will only be achieved through collaboration, with a call for greater coordination and cooperation concluding the draft roadmap.

The Australian RM sector is invited to comment on the draft roadmap by Friday, 13 August 2021 by providing feedback to Camille Shanahan, National Projects Manager – Regenerative Medicine.

We look forward the RM sector’s input on this important initiative.