Update on reforms to Australia's patent laws

Posted by Dennis Schubauer

Patent law has been the subject of a number of reports and proposals for reform, particularly in relation to gene technology, including:  

• the Senate Community Affairs References Committee's Gene Patents Report – calling for increased patentability standards, particularly regarding gene patents;
• the 2011 Advisory Council on Intellectual Property's Patentable Subject Matter Report (the ACIP Report) – recommending that, among other things, the Patents Act 1990 (Cth) is amended (i) to include a statement of objectives, (ii) to define the requirements for patentable subject matter; and (iii) to replace the current exclusions to patentability with a morality exclusion;
• the 2004 Australian Law Reform Commission's Report No 99, Genes and Ingenuity: Gene Patenting and Human Health (the ALRC Report) – calling for improved patent law and practice, and greater monitoring and education regarding gene patents and licensing; and
• IP Australia's review of the patent system.

In addition, there is currently before Parliament: 

• the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (the IP Bill); and
• the Patent Amendment (Human Genes and Biological Materials) Bill 2010 (the Genes Bill).

On 23 November 2011 the Australian Government issued a consolidated response to these reports, clarifying how it intends to deal with the various proposals.

In the Government's view, most of the recommendations are addressed by the IP Bill, which broadly seeks to:

• extend the information that can invalidate the inventiveness of a patent (eg. common general knowledge outside Australia is relevant if it would be 'understood and appreciated' as relevant (without the current 'ascertained' requirement));
• raise the standard of information a patent specification must include to support the invention;
• raise the burden of proof to a 'balance of probabilities' threshold for all patentability criteria; and
• expand the grounds on which the Commissioner can challenge a patent or patent application.

Significantly, the Government accepts that the Patents Act:

• in principle, should not be amended to exclude genetic material and technologies from patentable subject matter; and
• should not exclude methods of diagnostic, therapeutic or surgical treatment from patentable subject matter (Recommendations 7-1(a) and (b) of the ALRC Report).

Further, the Government accepts that patent applications directed to genetic materials and technologies should be assessed against the same criteria as patent applications in other fields (Recommendation 6-1 of the ALRC Report).  This indicates that the Government will not support those seeking to specifically excluded genes and genetic material from patentability, eg. the Genes Bill, which remains pending following an unfavourable Senate Inquiry.

The Government also commented favourably on initiatives by IP Australia to increase the transparency of the patent system (eg, improvements to the 'AusPat' search tool and the creation of the 'eDossier' tool which provides access to prosecution documents) and to improve the training of patent examiners (eg, spending $5,900 per examiner on training in 2010). These initiatives are viewed as reinforcing the objectives of the IP Bill and consistent with a number of the recommendations.

The only recommendations that require substantive further drafting are those of the ACIP Report noted above. While the ACIP Report proposed some straightforward drafting solutions, the Government's desire that the proposals receive a 'considered and comprehensive public consultation process' will likely mean that there are no conclusive developments in the near future.

In the meantime, the IP Bill has had its first reading in the Senate; and the Government's view that the IP Bill addresses a number of the calls for reform will likely assist the passage of the IP Bill through Parliament.

Partner: John Fairbairn

Copyright in pharma product information - revisited

On 18 November 2011 the Federal Court delivered a further judgment in the long running dispute between Sanofi-Aventis and Apotex relating to generic Arava® (leflunomide) (Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 4) [2011] FCA).  The dispute included an interesting application of the vexed dichotomy in copyright law between information and its embodiment, encapsulated in the maxim that copyright protects the form of expression of an idea or information and not the idea or information itself.

At key issue in dispute was the effect of the Therapeutic Good Legislation Amendment (Copyright) Act 2011 (Cth) (Amendment Act), which commenced May 2011.  Jagot J had previously found that Apotex had infringed copyright in Sanofi-Aventis' product information document (PI) by reproducing it in its PI for generic leflunomide-containing products: Sanofi-Aventis Australia Pty Ltd & Ors v Apotex Pty Ltd (2011) 92 IPR 320.

'Product information' is defined in the Therapeutic Goods Act 1989 (Cth) (TG Act) to mean 'information relating to the safe and effective use of goods, including information regarding the usefulness and limitations of goods'.  Generally, a PI must be submitted to the Therapeutic Goods Administration (TGA) before a new drug, or generic version thereof, is approved or can be lawfully marketed or supplied in Australia.

Litigation, document production and storing data in the cloud

Posted by Sandra Draganich

Image courtesy of lennysan

Litigation issues are often not given the consideration they deserve when negotiating the terms of cloud service provider agreements.  Perhaps this is because negotiation is often undertaken by commercial managers and technical staff to the exclusion of the legal team, or because no-one likes to think they'll end up in litigation.  Even when the legal team is involved, the focus tends to be on regulatory compliance, privacy and data security issues, rather than dispute resolution or litigation.

The recent introduction of civil dispute legislation at the Federal level (the Civil Dispute Resolution Act 2011 (Cth)) and Victoria (Civil Procedure Act 2010 (Vic))  - with similar legislation expected to be introduced in other Australian jurisdictions - provides a timely reminder of the importance of considering the impact that storing data in a cloud might have on any litigation in which the owner of the data is involved.

The legislation aims to encourage the early resolution of disputes and, to that end, the early identification of the real issues in dispute.

At the Federal level, the Civil Dispute Resolution Act obliges an applicant to inform the Court (via the filing of a 'genuine steps statement' when proceedings are issued) of the steps taken to resolve the dispute.   The Act provides, as an example of what might constitute a 'genuine step', the provision of documents to the other person to enable them to understand the issues involved and how the dispute might be resolved.

In Victoria, the Civil Procedure Act applies when proceedings are on foot, and obliges parties to a proceeding to comply with certain 'overarching obligations', including an obligation to disclose critical documents at the earliest reasonable time after the relevant party becomes aware of their existence.

What this means, on a practical level, is that a litigant needs to ensure that it has ready access to its documents, including those stored in the cloud: being able to access and retrieve data quickly and in an admissible form will best position a party to pursue, or defend, any claim, as well as meet any disclosure or discovery obligations it needs to meet should litigation ensue.

Of course, quick access to documents is generally desirable should a person be involved in litigation, irrespective of the application of the recent legislation. For example, notices to produce might be issued on short notice, or a party might be involved in litigation with an expedited timetable so that discovery might need to be completed within a short timeframe.   If documents are stored in the cloud, the party's ability to comply at short notice might be impeded, absent any contractual 'safeguards' with the cloud service provider.

Cloud computing arrangements, while various in nature, typically involve the cloud service provider receiving, processing, holding and storing client data at a location separate from the client (and sometimes overseas).   As the client generally does not have possession of the data or documents (but does have 'control' of the data or documents in the sense of a legally enforceable right to call for production), several key issues arise when litigation looms, including data access, retrieval and integrity.   These issues need to be carefully considered at the time of negotiating a cloud service provider agreement.

Data access and retrieval

The timely retrieval of data will be pivotal in determining a client's ability to pursue or defend any litigation, or comply with any subpoenas to produce (failing which the client will be in contempt of court).

For this reason, provider agreements should expressly address service levels, data availability and turnaround times for requests for access to or the return of data.  As soon as proceedings are issued, the client should think about what data might need to be reviewed (and retrieved), and make an early request from the cloud service provider for the retrieval of the data.  Enquiries should also be made of the cloud service provider before agreeing to any discovery timetable as this will be relevant to the client's ability to comply with any timetable set by a court.  If possible, a contractual indemnity should be obtained from the service provider, so that it is obliged to indemnify its client in respect of any loss occasioned as a result of delays (such as costs associated with a court hearing in relation to non-compliance with a discovery timetable).

Integrity

A client might wish to ensure that its data is stored separately from that of others (eg, if privacy or confidentiality issues are of concern), and that only designated people or groups have access to the data. The issue of ownership might be particularly important if the cloud service provider becomes insolvent.

Contractual protections should also include prohibitions against altering or modifying the data (other than as agreed), as this might raise questions about ownership (including of intellectual property rights) in relation to the modified version of data and, importantly, the integrity and therefore admissibility of the data should the client become involved in litigation and the data is required to be produced to the court or tendered in evidence.

In this regard, whilst the Uniform Evidence Acts contain provisions directed towards facilitating the admissibility of electronic data or documents, it might be prudent to impose a contractual obligation on the cloud service provider to provide all necessary assistance in relation to legal proceedings in which the client is involved, including an obligation to provide evidence as to the manner in which the data has been stored and retrieved should data integrity become an issue on a challenge to admissibility.

Other matters

Cloud service provider agreements should also address the client's rights and obligations in the event that the agreement is terminated by either party, where the agreement naturally comes to an end, or where the cloud provider becomes insolvent.

The location of the data and the cloud provider are also very important.  A client should be mindful of the potential application of foreign laws, for example the application of foreign insolvency laws on the insolvency of the cloud service provider, or the application of general laws of the jurisdiction entitling a third party to access data within its jurisdiction (eg, the USA PATRIOT Act).

Other jurisdictional issues relate to the proper law of the service agreement; the service of proceedings should the client wish to issue proceedings against the cloud service provider for breach of the service agreement; and the enforcement of any judgment in the client's favour should it succeed in any proceedings.

Some more general issues relating to the use of the cloud are canvassed in AGIMO's paper, 'Negotiating the cloud - legal issues in cloud computing agreements', released earlier this month.

Partner: Paul Kallenbach

Website users beware – accessing a website with fine print may form a binding contract and copying its content may infringe copyright

A recent decision of the Supreme Court of British Columbia found that visitors to publicly available websites can be bound by its terms and conditions, even where users did not explicitly accept them. The decision has broad implications, particularly for automated website indexing.

Background to the Dispute

Century 21 Canada Limited Partnership (Century 21 Canada) developed and operates a publically accessible website (Century 21 website) designed to promote its business to potential users by featuring property listings belonging to Century 21 brokers and agents from British Columbia and across Canada.

Zoocasa Inc. (Zoocasa) operated a website that collated property listings from various real estate websites using automated software programs. It provided users with relevant results in response to their search queries (such as location, price and number of bedrooms), including photographs of properties offered for sale, property descriptions and other property details on the Century 21 website.

Century 21 Canada informed Zoocasa that they did not consent to their activities in indexing and copying material from their website. It then placed Terms of Use on their website home page, forbidding the copying or reuse of its property listings. The Terms of Use were at the bottom of the home page and were not drawn to the attention of users in any active way. The Terms stated that 'by accessing or using the Website You agree to be bound by these Terms of Use without limitation or qualification'. The website did not require users to acknowledge reading and agreeing to them. Century 21 Canada also immediately notified Zoocasa of the existence of the Terms of Use and that they considered Zoocasa to be in breach of those Terms and infringing Century 21 Canada's copyright.

Zoocasa continued to access Century 21 Canada's website to index and copy material without consent. As a result, Century 21 Canada commenced proceedings seeking an injunction and damages for Zoocasa's conduct. The issue for the Court was whether Zoocasa's acts in accessing the Century 21 website were sufficient to result in the formation of an agreement.

Contract claims

Zoocasa argued that there was no valid offer, acceptance or consideration for the creation of a contract, particularly as users did not have to expressly agree to anything and the website was freely available for anyone to access. Zoocasa also argued that, as a matter of public policy, it would be detrimental to the operation of the Internet if merely accessing a website that contained terms and conditions would serve as acceptance sufficient to form a binding contract, where the user did not expressly agree to such acceptance.

Punnett J was unconvinced by this argument. In its view, not all information on the web is available without restrictions and contract law is available to protect such restricted information. The Court considered how the law has adapted to changing methods of contracting through the recognised 'ticket' cases, such as buying a car park or concert ticket, where a machine is involved in the contractual process. In these cases, the machine is the mechanism by which the customer enters into a contract upon the receipt of a ticket. Applying these principles, Punnett J found that a publicly available website does not necessarily give a right of access free of any contractual terms.

The Court found that the user's act of accessing the website beyond the initial screen page constituted agreement to the contractual terms of the website. As a result, Zoocasa had agreed, simply by accessing Century 21's website, to observe Century 21's Terms of Use. In making this finding, the Court noted that the type of user of the site will be taken into account in determining whether a valid contract exists. For example, whether the user is (i) an individual consumer or a commercial entity or (ii) a one-time user or a frequent user.

The Court concluded that Zoocasa breached the contract with Century 21 Canada. Interestingly, the Court only awarded $1,000 in damages, stating that Zoocasa's conduct was not 'particularly egregious'.

Copyright infringement claims

There was also claims for copyright infringement made on behalf of Century 21 Canada and two real estate salespersons who were the authors of the sales listings. They argued that the photographs and property descriptions (the Works) created for its online property listings were protected by copyright and Zoocasa infringed that copyright by indexing and copying them on the Zoocasa website. Punnett J found that the Works were entitled to copyright protection due to the level of skill and judgment required to produce them. Punnett J held that Zoocasa had copied a substantial part of the property descriptions and the entire photographs and as such, Zoocasa had infringed copyright.

The Court granted Century 21 Canada a permanent injunction, restraining Zoocasa from accessing the Century 21 website in contravention of the Terms of Use posted on that website.

Implications of the decision

The critical consideration as to whether the sort of agreement at issue in this case (often referred to as 'browse wrap' agreements) is enforceable is whether the user is aware of the terms and conditions. If so, then the browse wrap agreement could be binding and enforceable. Importantly, there is no need for the user to take steps to indicate his or her acceptance of the terms eg. by ticking 'I agree'. Whether or not the user can be taken to have accepted the terms in such circumstances will depend on factors such as:

(i) what notice the user has respecting what they are agreeing to, including the prominence the site gives to the terms and conditions

(ii) whether the user is an individual consumer or a commercial entity and in addition a one-time user or a frequent user of the site.

As the Judge stated, '[a]t the root of this lawsuit is the legitimacy of indexing publically available websites'. A website operator seeking to prevent a competitor from scraping its site can potentially use contractual terms to do so.

Partner: John Fairbairn

Woolworths has a successful victory over disputed domain name wooliesonline.com.au

The WIPO Arbitration and Mediation Centre Administrative Panel has decided in favour of Woolworths Limited (Woolworths), finding that the domain name wooliesonline.com.au (the Domain Name) is confusingly similar to Woolworths' trade mark WOOLLIES.

Background to the Dispute

In 2008, Woolworths obtained registration in Australia of the WOOLLIES trade mark (the Mark) for a variety of goods and services, including online wholesaling and retailing of products. The Mark is known as a colloquialism to the supermarket trade name, Woolworths.

In March 2011, Save Cash Pty Ltd (Save Cash) registered the Domain Name. In July 2011, the Domain Name linked to a web page containing sponsored advertising links, including links to Woolworths and its competitor, Coles.

Woolworths subsequently filed a complaint to the Arbitration and Mediation Centre.

Parties' Arguments

To succeed in its claim under the .au Dispute Resolution Policy and the Rules for .au Dispute Resolution Policy, Woolworths had to establish that:
(i) the Domain Name was identical or confusingly similar to its Mark;
(ii) Save Cash had no rights or legitimate interests in respect of the Domain Name; and
(iii) the Domain Name was registered or subsequently used in bad faith.

In arguing satisfaction of the second limb (which went to legitimacy), Woolworths argued that Save Cash is not known by the Domain Name, appeared to be running a car sales business and the Domain Name was not being used in good faith in the offer of goods and services.

In respect of the third limb (bad faith), Woolworths asserted that the Domain Name had clearly been registered in bad faith, as Save Cash had no rights or legitimate interests in the Domain Name and Woolworths had not consented to its use of the WOOLLIES mark. Further, Woolworths' strong reputation was such that Save Cash must have been aware of Woolworths and its mark or must have known that the Domain Name would have benefited from being so similar to the Mark.

Save Cash in turn argued that it intended to develop the Domain Name to market goods and services that incorporate woollen products and other associated lines, and not to sell food or other items which Woolworths sells. They further claimed that the Domain Name did not infringe the Mark as it was not offering or selling food or anything that would fall within the goods or services in respect of which the Mark was registered. Save Cash also argued that it was lawful to use a trade mark within a domain name provided the website contained a disclaimer dissociating it from the trade mark owner or offered a completely different product or service.

Panel Findings

The Panel considered that the Domain Name comprises the WOOLLIES Mark together with the word 'online', which describes one of the services for which the Mark is registered. In that respect, the Domain Name did not detract from the distinctiveness of Woolworths' well-known Mark and was found to be confusingly similar.

In finding that Save Cash had no rights or legitimate interests in the Domain Name, the Panel stated that:
(i) Save Cash failed to provide evidence of its plans to use the Domain Name in any of the ways it claimed;
(ii) Save Cash was not commonly known by the Domain Name or the word Woollies; and
(iii) the Mark is so well-known that it is inconceivable that the Domain Name could be used in a way that would not mislead Internet users.

The Panel also found that Save Cash had registered and subsequently used the Domain Name in bad faith. The Panel considered that, as the Domain Name contains the distinctive Mark with a descriptive word, it gave an impression that users would be led to a website where Woolworths' products were available to buy online and created a likelihood of confusion that the Domain Name was endorsed by or affiliated with Woolworths. The Panel held that Save Cash must have been fully aware of this potential affiliation and used the Domain Name in an attempt to attract Internet users for commercial gain.

Impact of the Decision

As Woolworths had satisfied all the elements, the Panel ordered the Domain Name to be transferred to Woolworths. The decision is confirmation that domain name dispute resolution policies can be effectively utilised to prevent trade mark misuse within domain names and that the addition of certain words to a trade mark ('online' in this case) may not obviate the likelihood of confusion.

Partner: Lynne Peach

Full Federal Court provides further clarification on the purposive approach to patent construction

The Full Federal Court recently dismissed Australian Mud Company Pty Ltd's (AMC's) appeal against Barker J's finding that its innovation patent (the Patent) was not infringed. In doing so, the Court endorsed the 'purposive approach' to claim construction and provided helpful guidance on the fundamental principles of patent construction.

By way of background, the Patent claimed a device for indicating the orientation of a sample obtained from a geological drilling survey. AMC alleged that Coretell Pty Ltd's (Coretell's) orientation device (which consisted of two components; a 'down hole' component wirelessly connected to a 'handset' component) infringed the Patent. The primary judge (Barker J) accepted that Coretell's device, by operation of its two components, performed the same function as the device claimed in the Patent. However, the issue of infringement turned on the meaning of the word 'device'. After hearing expert evidence, Barker J concluded that the 'two separate and separated parts' of Coretell's device were not within the scope of the term 'device' as used in the claims of the Patent. Accordingly, AMC's infringement claim failed.

The appeal centred solely on whether the primary judge had erred in that conclusion. AMC argued that the primary judge had disregarded the 'bedrock of claim construction in Australia'; namely, that 'it is not legitimate to narrow or expand the boundary of the monopoly fixed by the words of a claim by adding glosses drawn from other parts of the specification'. Based on this principle, AMC contended that the primary judge had 'read in' an integer that was not present in the claims (that the device must be a single piece), and therefore construed the claims by importing a gloss from the specification, not from the wording of the claims themselves.

AMC also argued that, even on a literal interpretation, the word 'device' could encompass orientation tools in two or more parts. To support this assertion, AMC referred to the dictionary definition of the word as meaning 'a particular function for the thing', as opposed to 'a single thing'. As such, the claims of the Patent would not be 'impermissibly stretched' if the word 'device' was construed as referring to all the components of a thing which performs a single function.

In response, Coretell argued that ‘the claims of the patent do not comprehend the assemblage of the accused apparatus, being an apparatus in two parts which… provided an improved form of orientation equipment’. In construing the Patent, the word 'device' should not be isolated, but instead considered as part of the 'phraseology of the claims' specifically chosen by AMC to define its monopoly. Coretell submitted that the correct construction of the claims involved looking at all the words appearing in each claim, which necessarily resulted in a finding that the claims covered only a unitary apparatus.

The Court upheld the decision of the primary judge, confirming that he applied the correct principles of patent construction. In particular, the Court re-iterated that the words of the claim define the invention and that they should not be stretched beyond their textual limits:

'there is no warrant for adopting a method of construction that gives a
patentee what it might have wished or intended to claim, rather than what the
words of the relevant claim actually say. While the Court should read the claims
purposively and not with an eye for pedantry, even an appropriately liberal
approach to construction should not permit the words of the claims to be
stretched beyond their textual limits'.

Furthermore, the Court held that 'a purposive construction of the claims did not result in a construction that was at variance with the plain text of the claims themselves'. Applying these principles, the Court rejected AMC's approach requiring the various meanings of the word 'device' as used throughout the claims to be considered in isolation. The Court even expressed a suspicion that this approach to construction was an attempt to capture the accused apparatus within the Patent. On the other hand, Coretell's construction of the claims provided a consistent meaning to the word 'device' throughout the claims and was the preferred approach. Accordingly, the Court dismissed AMC's appeal.

The decision provides an important reminder that patentees should take extra care when drafting their patent claims to ensure that the specific words they use accurately reflect the monopoly they seek. The principle of purposive construction does not allow one to depart from the monopoly as defined by the words used in the claims and does not enable broader inventive ideas to be imported from the body of the specification. If AMC had intended their Patent to cover orientation tools comprising multiple components (which would have been a simple matter of drafting), then they should have provided for it in the words they chose for the patent claims.

Senior Associate: Dennis Schubauer

Global tablet war between Apple and Samsung continues

As the fierce global battle between Apple Inc. (Apple) and Samsung Electronics Co. Limited (Samsung) continues, the Federal Court of Australia has granted Apple an interlocutory injunction restraining Samsung from releasing the Galaxy Tab 10.1 tablet (the closest competitor to Apple's iPad 2) in Australia. As a result of the injunction, Samsung would miss out on the significant pre-Christmas sales market. Samsung therefore (successfully) applied for an expedited appeal hearing which will be heard by the Full Bench of the Federal Court (comprising Justices Keane, Dowsett and Yates) on Friday, 25 November 2011.

Background to the dispute

Samsung had intended to launch the US version of the Galaxy Tab 10.1 in Australia, however Apple caught on and threatened to take action for patent infringement. Samsung agreed to modify the US version and provide Apple with a sample prior to releasing it. Despite the modifications, Apple commenced proceedings alleging that the modified Galaxy Tab 10.1 infringed 2 of Apple's patents (the Patents), breached provisions of the Australian Consumer Law and constituted passing-off of Apple's iPad 2.

The Patents alleged to have been infringed are the 'Touch Screen Patent' (which covers multipoint touch screens) and the 'Heuristics Patent' (which covers the touch screen method and graphical user interface for determining user commands by heuristics).

The Court's finding

In determining whether to grant Apple the interlocutory injunction, Justice Bennett considered whether Apple had established two elements, namely (i) a sufficient likelihood of success at the final hearing (ie. a prima facie case); and (ii) that the inconvenience or injury Apple would be likely to suffer if an injunction were refused outweighs the inconvenience or injury Samsung will suffer if the injunction were granted (Australian Broadcasting Corporation v O'Neill (2006) HCA 46).

Justice Bennett was of the view that Apple would be successful in proving that the Galaxy Tab 10.1 infringed at least one of its Patents, and therefore found that Apple had established a 'prima facie case'. In doing so, she acknowledged the presumption that the Patent Office has properly examined the patent application and that the granted patent is to be presumed valid unless there is strong evidence to the contrary.

She considered that the 'balance of convenience' was evenly weighted, that is, one party would suffer significant harm whether the injunction was granted or refused.

Ultimately, Justice Bennett appears to have been heavily influenced by Samsung's decision to launch in Australia with its 'eyes wide open' (it knew that Apple would likely commence proceedings because there were equivalent actions pending in the United States). She also criticised Samsung's failure to move expeditiously. Not only was Samsung unable to prepare for a final hearing in November 2011 (albeit on limited grounds), Samsung maintained that it could not be ready for a trial before March 2012 (nearly 5 times the proposed timetable). Accordingly, Justice Bennett found in favour of Apple and granted interlocutory relief restraining the importation, promotion, sale and supply of the Galaxy Tab 10.1 in Australia.

Impact of the decision

The decision was solely concerned with whether to grant the interim injunction (both parties requested that the final decision be reserved in order for them to gather further evidence). As noted above, Samsung has successfully applied for an expedited hearing, which will deal with both Samsung's application for leave to 'appeal', and its substantive case against the injunction. The outcome of this hearing will be crucial as to whether the Galaxy Tab 10.1 can take advantage of the peak holiday shopping period. Interestingly, a number of online retailers have sought to circumvent the injunction by directly importing the Galaxy Tab 10.1 product from outside Australia. It remains to be seen whether Apple will also pursue such retailers and, if so, how.

On a broader level, the decision demonstrates the importance of moving quickly and remaining flexible in the context of interlocutory injunctions. Where a party enters the market with its 'eyes wide open' to the risk of patent infringement (having decided not to revoke the patent first), it would be wise to take steps to prepare defensive evidence as soon as possible.

Partner: Charles Alexander

Full Federal Court of Australia – update on 'fair basis' requirements for patents

The Full Federal Court of Australia (Bennett, Nicholas and Yates JJ) recently found that the majority of Wyeth's patent claims covering a method of administering the antidepressant compound venlafaxine hydrochloride (Patent) were invalid (see Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth [2011] FCAFC 132).

The Full Federal Court based its decision on a finding that the Patent was not entitled to its earliest priority date. Wyeth had accepted that, without the earliest priority date, the patent lacked novelty – perhaps not surprising given the loss of 10 years' priority. The decision highlights the care required when amending patent claims to ensure they are not broadened such that they cease to be fairly based on the specification and any priority documents.

By way of background, the complete specification of the Patent was first filed in 1997 and claimed a priority date of 1996 based on a US patent application (Priority Document). In 2006 the Patent was amended by removing references to 'encapsulated extended release' (ER) formulations from the specification and claims.

At first instance, Jagot J found that the Priority Document disclosed two inventions: (i) an encapsulated ER formulation; and (ii) a method for controlling drug plasma levels. In particular, she found that the method was not confined to the encapsulated ER formulations of the Priority Document. Accordingly, the Patent (as amended) was fairly based on the Priority Document (and Sigma had threatened to infringe the Patent).

Wyeth submitted that the claimed method represented a new result or thing, obtained by a new application of principle as in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274. In that case, the High Court rejected notions of 'inventive merit' in assessing fair basis. In assessing whether a claimed invention is fairly based, the High Court held that it is only necessary to consider what the specification describes as the invention. Accordingly, Wyeth submitted, the inventor may claim all the alternative means by which the thing or result may be achieved.

With respect to fair basis, Wyeth relied on references in the specification of the priority document, including the consistory statement, to the provision of an encapsulated ER formulation containing venlafaxine hydrochloride, unlimited by reference in that sentence to the particular spheroid formulation the subject of the later examples. In essence it argued that all that was required was a mere comparison of the claims and the relevant priority document to assess whether there is a disclosure that mirrors and supports the claims as a matter of drafting of words.

The Full Court held that the invention was not the discovery of a new method with any formulation. The method disclosed is the use of the invention, the ER formulation. It also emphasised that Lockwood does not set down a superficial test based solely on the presence or absence of words. Rather, the words must be construed in the context of the document as a whole.

In the case of external fair basis, the Court acknowledged that 'a development along the same line of thought which constitutes or underlies the invention described in the earlier document' may be fairly based. However this principle must not derogate from the requirement that the priority document must in substance disclose the claimed invention. The Court found that properly construed, the Priority Document was limited to encapsulated ER formulations (further, it even expressly taught away from the use of conventional (non-encapsulation) formulation techniques). The consistory statements in the Priority Document did not help Wyeth – such statements were said to be 'in accordance with this use aspect of the invention' and therefore limited to the invention, ie. the ER formulation.

Accordingly both the product and method claims of the Patent were not fairly based in the Priority Document (ie the was no external fair basis for those claims).

The Court also considered whether the claims were fairly based on the specification (ie. internal fair basis). The Court emphasised that the specification must contain a 'real and reasonably clear disclosure' of what is claimed. In this case, the invention was in the context of a finding that an ER formulation was impossible to achieve using conventional (hydrogel) technology. The amended claims covered such conventional technologies and, accordingly, were not fairly based on the specification.

The decision echoes the amendments proposed by the Intellectual Property Laws Amendments (Raising the Bar) Bill 2011 currently before the Senate. That Bill proposes a number of amendments to the Patents Act with a view to raising Australian patentability standards in line with international standards. The current 'fair basis' test (both for internal and external fair basis) would be replaced with a support requirement –  there must be basis in the specification for each claim and the scope of the claims not extend beyond that justified by the description, drawings and contribution to the art.