Federal Court rejects business method patents

Posted by Dennis Schubauer and John Fairbairn

On 13 February 2013, the Federal Court of Australia issued a decision relating to the patentability of business methods in Australia (Research Affiliates, LLC v Commissioner of Patents [2013] FCA 71). Emmett J held that the claimed inventions were business methods that were not eligible for patent protection. The patentability of business methods remains a vexed area of law in Australia (and many other countries). While this decision provides some guidance, it seems unlikely to resolve conclusively the uncertainty in this area of the law.

Background

Under the Patents Act 1990 (Patents Act) there is no express prohibition on patents covering business methods. Section 18(1)(a) of the Patents Act requires that, in order to be patentable, an invention must be 'a manner of manufacture within the meaning of section 6 of the Statute of Monopolies'. Historically, claims regarded as 'mere working directions' or 'mere schemes' have been regarded as unpatentable, and recent decisions have also interpreted the 'manner of manufacture' requirement in a way that rendered business methods unpatentable.

For example, in Grant v Commissioner of Patents [2006] FCAFC 120, the Full Court of the Federal Court of Australia held that, in order for there to be a patentable invention '[it] is necessary that there be some 'useful product', some physical phenomenon or effect resulting from the working of a method'. In that case, a patent directed to a method of asset protection was held not to be patentable. The Full Court applied the relevant principles as enunciated by the High Court in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252, including that, in order to be patent eligible, the Court must be satisfied that the 'process belongs to a useful art as distinct from a fine art' and that the effect produced by a claimed invention exhibits the qualities of being an artificially created state of affairs that is of economic significance.

The patent office has not regarded the position to be any different where the claimed method involved a computer. In Invention Pathways Pty Ltd [2010] APO 10 the delegate reasoned that the patentability of a business scheme cannot 'arise solely from the fact that, in a general sense, [the method] is implemented in or with the assistance of a computer or utilises some part of a computer or other physical device in an incidental way'.

In the present case, Research Affiliates, LLC (Research Affiliates) owned two patent applications relating to methods for constructing and using passive portfolios and indexes in securities trading. Consistent with the approach in Invention Pathways, the patent office rejected both of the patent applications on the basis that they were not a 'manner of manufacture'. Research Affiliates appealed those decisions to the Federal Court of Australia.

The decision

Emmett J, in seeking to apply the NRDC test, stated the 'method of a claimed invention will not be patentable if it does not produce an artificial state of affairs, in the sense of a concrete, tangible, physical or observable effect. Even if there is not a physically observable end result, in the sense of a tangible product, a claimed invention that is a method may nevertheless be patentable if it applies the method in a physical device. In such a case, an artificial state of affairs is produced in the physical device by the claimed method. Thus, a physical effect, in the sense of a concrete effect or phenomenon or manifestation or transformation, is required. It is sufficient if there is a component that was physically affected or a change in state or information in part of a machine. They can be regarded as physical effects. However, if the claimed invention is a mere scheme, an abstract idea or mere information, it will not be patentable as there is no physical consequence...'

In refusing the appeal, his Honour held that:

(a) the only physical result generated by the method of the claimed invention is a computer file containing an index. 'However, the index generated is nothing more that a set of data. The index is simply information: it is a set of numbers. It is no more a manner of manufacture than a bank balance';

(b) '[while] the Specification appears to be intended to create the impression of detailed computer implementation, the Specification says almost nothing about how that is to be done';

(c) 'the claimed invention does not involve a specific effect being generated by the computer... The effect of the implementation is not to improve the operation of or effect of the use of the computer'; and

(d) the implementation of the claimed invention 'is no more that the modern equivalent of writing down the index on pieces of paper... The Specification asserts a patentable invention, not in the use of the computer, but in the particular series of steps that give rise to the generation of the index. Those steps could easily have been carried out manually. The aspect of computer implementation is nothing more than the use of a computer for a purpose for which it is suitable. That does not confer patentability.' (emphasis added)

Comment

The decision is timely given that over 7 years have passed since the last judicial consideration of the patentability of 'business methods' (ie. in the Grant case) and, in the intervening time, the uncertainty in this area of law has increased.

The decision does provide some practical guidance for patentees. In particular, his Honour made it clear that a specification must do more than merely recite the implementation of a method using a computer. It must describe how that invention is to be implemented by the computer. Further, there must be a specific effect on or generated by the computer that goes beyond its standard operation.

Emmett J's reasoning may be open to criticism. First, his Honour's distinction between a computer generated output of a 'curve, or a presentation of Chinese characters, or the writing of particular information on a smart card' as being patentable on the one hand but an 'unspecified index' as being unpatentable on the other, may prove to be illusory. It seems his Honour was drawing a distinction between an invention relating to application software and one that merely uses pre-existing software for a purpose for which it is suited. However, if the focus is on the physical consequence of such inventions, at a number of levels, they are indistinguishable.

Second, the reasoning appears to conflate issues of fair basis (ie. whether the specification discloses how to implement the method using a computer) and inventive step (ie. whether the invention was obvious) on the one hand and whether the invention is a 'manner of manufacture' for the purposes of section 18(1)(a) on the other. In Lockwood Security v Doric Products [2004] HCA 58, the High Court made it very clear that such grounds of invalidity should be treated separately. While threshold requirement of 'newness' and 'inventiveness' are relevant to an assessment of section 18(1) (per the High Court's reasoning in NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655), in the present case his Honour did not expressly adopt such an assessment in his reasons for judgment. They seem to have formed part of the assessment as to whether there was an 'artificial state of affairs, in the sense of a concrete, tangible, physical or observable effect.'

Business methods are potentially very valuable, particularly in the financial services sector. In the present case his Honour noted that Research Affiliates received a 'significant licence fee' for the use of its technology. Therefore companies wishing to protect business methods will need to consider carefully what strategies to use to protect their inventions (eg. confidentiality obligations and/or patent protection) and the extent to which they meet the requirements highlighted by Emmett J in this case.

Federal Court confirms that isolated genetic material is patent-eligible

Posted by Dennis Schubauer and John Fairbairn

Image courtesy of net_efekt

On 15 February 2013, the Federal Court of Australia handed down its much anticipated decision in Cancer Voices Australia v Myriad Genetics Inc [2013] FCA 65 relating to whether human genetic material is patentable in Australia. In what is the first Australian judicial consideration of the issue, Nicholas J held that claims for isolated naturally occurring DNA and RNA are patentable subject matter. This decision (and any appeal) will be closely reviewed by the many interested bodies presently debating whether, as a matter of policy, patents covering genetic materials are appropriate.

Background

For present purposes it is sufficient to note that genes found in the human body are made of nucleic acids and that useful diagnostic and therapeutic tests can be developed by identifying particular genes (and variants of such genes) that are associated with certain diseases.

Myriad owns Australian patent no. 686004 (the Patent), which relates to a gene associated with human breast and ovarian cancer known as the 'BRCA1' gene. The Applicants, which included an organisation representing Australians affected by cancer, commenced proceedings to revoke the Patent. The primary basis of their case was that the claims in issue did not satisfy the requirements of s 18(1)(a) of the Patents Act 1990 (Patents Act) because each claim comprises 'isolated' nucleic acid (either DNA or RNA) that is not materially different to nucleic acid that occurs in nature. Importantly other typical grounds of invalidity, such as lack of novelty or inventive step, were not in issue.

Section 18(1)(a) of the provides that an invention is patentable if, amongst other things, it 'is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies'. Nicholas J stated that this issue must be determined in accordance with the principles enunciated by the High Court in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (the NRDC Case). The relevant test was summarised as being whether a substance consists of 'an artificial state of affairs, that has some discernible effect, and that is of utility in a field of economic endeavour'. The Applicants accepted the claimed invention was of economic significance.

The decision

His Honour held that:

1. 'There is no doubt that naturally occurring DNA and RNA as they exist inside the cells of the human body cannot be the subject of a valid patent.'
2. 'However, the disputed claims do not cover naturally occurring DNA and RNA as they exist inside such cells. The disputed claims extend only to naturally occurring DNA and RNA which have been extracted from cells obtained from the human body and purged of other biological materials with which they were associated.'
3. The issue of whether this was an artificial state of affairs must be considered in context and 'does not turn upon what changes have been made to the chemical composition of such substances as a result of them having been isolated'.
4. In this case there was an artificial state of affairs because 'in the absence of human intervention, naturally occurring nucleic acid does not exist outside the cell, and “isolated” nucleic acid does not exist inside the cell. Isolated nucleic acid is the product of human intervention involving the extraction and purification of the nucleic acid found in the cell'.

Nicholas J observed that '[it] would lead to very odd results if a person whose skill and effort culminated in the isolation of a micro-organism (a fortiori, an isolated DNA sequence) could not be independently rewarded by the grant of a patent because the isolated micro-organism, no matter how practically useful or economically significant, was held to be inherently non-patentable'.

Comment

The decision affirms the existing patent office approach that isolated genetic material can qualify as a 'manner of manufacture'. The result of the decision is also consistent with the position in much of Europe and in the United States. In the United States, the Court of Appeals for the Federal Circuit upheld the validity of similar claims covering isolated BRCA1 genes, although that case is the subject of an appeal to the Supreme Court.

Nonetheless, patents claiming isolated gene sequences are by no means safe from attack.

First, as noted above, there were several grounds of invalidity that were not argued (eg. novelty and inventive step) and his Honour expressly noted that his 'reasons have nothing to say about the possible invalidity of the disputed claims on any other grounds'. In the case, the patent at issue was relatively 'old', with a priority date of 12 August 1994. Since 1994, there have been considerable advances in genetic technology, including in techniques for isolating and sequencing genes, and in 2003 the Human Genome Project sequenced and mapped the complete human genome.

Second, the recent Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Amendment Act) means that higher standards (including inventive step, utility, sufficiency and disclosure) will apply to Australian patents and applications examined after 15 April 2013. Interestingly, Nicholas J even noted that new section 7A of the Patents Act (which requires a patent to disclose a 'specific, substantial and credible use for the invention') will 'make it more difficult for patent applicants to obtain patent protection for expressed sequence tags'. These higher patentability standards will provide further grounds for challenging patents.

In addition, various proposals have been and continue to be put to Parliament to reform this area of patent law. While the decision provides guidance on some of the underlying patent eligibility criteria, it remains a contested and developing area of the law and public policy. Regardless of whether the Australian decision is appealed, it seems unlikely that this case will settle the controversy regarding gene patents.

Twitter's terms of service do not allow unlimited use of content by third parties

Posted by Nicole Reid and Paul Kallenbach

Image courtesy of renjith krishnan

Following in the wake of furore concerning proposed changes to Instagram's terms of service that seemingly would have allowed commercial uses of user's photographs without any compensation to them (which we posted about here), a US court has issued a decision about the rights of third parties to use online content under the terms of service of another popular social media site, in this case Twitter. This case provides further comfort to the users of social media sites that they retain at least some control over content that they post online.

The case concerned the use by Agence France Presse (AFP), Getty Images Inc (Getty) and the Washington Post (the Post) of photographs depicting the aftermath of the January 2010 Haiti earthquake. The photographs were taken by a photographer, Daniel Morel, and posted by him to his Twitter account via TwitPic (a companion site to Twitter). They were then published by each of AFP, Getty and the Post, without any express licence to do so having been sought from, or granted by, Mr Morel.

The decision of the US District Court (Southern District of New York) was made at an early stage in proceedings and did not reach conclusions on all of the arguments put forward by the parties. The Court did, however, decide that AFP and the Post were liable for infringing Mr Morel's copyright in the photographs and granted summary judgment in favour of Mr Morel on this issue. (Getty raised additional defences that will be considered in a further hearing, alongside the question of the amount of damages to which Mr Morel is entitled for the copyright infringement.)

The defence put forward by AFP was that its actions did not infringe Mr Morel's copyright in the photographs because it had been granted a licence authorising use of the photographs. AFP argued that the licence arose because:

• in posting the photographs to TwitPic, Mr Morel granted a licence of those photographs under the provisions of Twitter's terms of service (which terms apply to pictures uploaded to Twitter via TwitPic)
• AFP was a third party beneficiary of the contract created between Twitter and Mr Morel on those terms
• therefore, the licence granted by Mr Morel extended to AFP as a licensee.

The Court rejected that argument, finding that:

• under US law, a person will only have the benefit of a contract to which it is not a party if the terms clearly evidence an intent to benefit that person, which may be shown if the contract necessarily requires that the person be benefited
• the Twitter terms of service reflected the parties' intention that a licence to content uploaded by the user be granted to Twitter's partners and sub-licensees, but not to other third parties
• although there was some broad language used in the terms of service that could have suggested that a broad licence was intended (for example, 'This license is you authorizing us to make your Tweets available to the rest of the world and to let others do the same.'), other language was much narrower (for example, 'You retain your rights to any Content you submit, post or display'), so reading the terms as a whole meant that there could be no clear intent, or necessary requirement, to imply the broad licence argued for by AFP
• even if the terms of service did grant persons other than Twitter and its partners some form of licence to use content posted to Twitter (for example, a right to re-tweet others' tweets), this did not mean that the licence was broad enough to allow third parties to use photographs out of the context of a tweet and for commercial gain.

This decision demonstrates that material posted to Twitter cannot necessarily be reproduced and used by third parties for any reason.   The Court did not have to consider the rights of Twitter itself to use content on Twitter or to grant licences to others to do so.   These rights are likely to be broader than those of third parties like AFP who do not have an arrangement with Twitter.   However, any acts by Twitter seeking to exercise these rights in a manner that is perceived as disregarding the rights of its users may spark further legal action in the future about the scope of the licences granted by users under the terms of service.

Google wins AdWords appeal in High Court

Posted by Emily Hawcroft, John Fairbairn and Lynne Peach

Snapshot

The High Court (Australia's ultimate appellate court) today delivered judgment in proceedings commenced by the Australian Competition and Consumer Commission (ACCC) in relation to sponsored links within Google Inc's (Google) search engine results (see Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (6 February 2013)). The High Court unanimously allowed Google's appeal and found that Google had not engaged in misleading or deceptive conduct contrary to section 52 of the Trade Practices Act 1974 (Cth) (TPA) (now section 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth)).

Background

Google's advertising service known as the 'AdWords program', displays sponsored links. In this case, advertisers paid Google for a sponsored link to their websites by selecting keywords comprising the names of competitors . By way of example, STA Travel had purchased the AdWord 'Harvey World Travel' that led to its website being displayed in response to a search using the words 'harvey world travel', namely:

'Harvey Travel
Unbeatable deals on flights, Hotel & Pkg's Search, Book & Pack Now! www.statravel.com.au'

The ACCC commenced proceedings against these advertisers and Google alleging contraventions of section 52 of the TPA.

 

At first instance, the Federal Court found the advertisers liable as they had falsely represented both an association or affiliation with a competitor and that information regarding a competitor could be found on their websites. However, the Court found that Google had not engaged in misleading or deceptive conduct as it had not adopted or endorsed the representations of its customers and did no more than represent that the advertisements were advertisements.

 

The ACCC successfully appealed to the Full Federal Court, which unanimously held that Google had engaged in misleading and deceptive conduct. The Full Court found that, given the nature of its search engine and AdWords program, Google was much more than a mere conduit, as its systems generated the sponsored links. In doing so, Google effectively informed users of its search engine that the content of the sponsored links were responsive to the user's keyword searches.

 

The High Court's decision

 

The High Court unanimously allowed Google's appeal, holding, in summary, that Google did not itself engage in misleading or deceptive conduct, as it had not endorsed or adopted the representations which it displayed on behalf of advertisers.

 

The High Court held that 'ordinary and reasonable' users of the Google search engine would have

understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations.

 

In particular, in relation to the issue of adoption or endorsement of the advertisers' representations, French CJ, Crennan and Kiefel JJ (the majority judgment) found (at [67] - [73]):

• Google had no control over a user's choice of search terms or an advertiser's choice of keywords;
• the advertiser was the author of the sponsored link, as each relevant aspect of a sponsored link was determined by the advertiser;
• the search engine response in displaying a sponsored link was wholly determined by the keywords and other content of the sponsored link, which the advertiser had chosen; and 
• Google is not relevantly different from other intermediaries, such as newspaper publishers or broadcasters, who publish, display or broadcast the advertisements of others:

The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers. (at [69])

This was notwithstanding the fact that Google personnel advised or assisted advertisers in the selection of keywords.

 

The High Court made reference to Google's policies and complaint procedures for the misuse of trade marks and business names as well as its Advertising Policies and AdWords Program Terms, which variously provided that:

• advertisers were solely responsible for all advertisements and keywords selected;
• advertising and keywords must 'directly relate' to the content on the advertiser's homepage;
• advertisers may not imply an affiliation, partnership or relationship with any unrelated third party.

Whilst the High Court's conclusion made it unnecessary to determine the application of the 'publisher's defence' in section 85(3) of the TPA, it considered the scope of the defence in the context of whether an intermediary publisher can be said to have made the misleading representations of another which it has communicated to a third party. The majority judgment observed that to succeed in this defence, an intermediary may need to show that it had some appropriate system in place (at [75]).

 

Implications

 

The High Court's exoneration of Google's conduct has broad significance. While directly relevant to search engine providers, it has implications for businesses whose operations revolve around the online publication of advertisements and content created by third parties (such as YouTube). It is another example of the High Court determining that internet intermediaries are not liable for the unlawful conduct of those who use their services. Whilst the High Court's judgment is a positive outcome for internet intermediaries, each case will turn on its facts and care still needs to be taken in relation to policies and complaints systems for dealing with unlawful conduct.

 

Further, advertisers should pay careful attention to the Court's findings in this case. The High Court's decision in no way exonerates the conduct of the advertisers themselves and reinforces the position that advertisers will be liable for misleading and deceptive conduct if they purchase AdWords containing another person's trade mark and link those AdWords to a sponsored link. 

Court sees folly in 'copying' claim

By Helen Paterson, Emily Hawcroft and John Fairbairn

 

A recent decision of the Federal Court provides a cautionary tale for persons tempted to make allegations of intellectual property infringement, including via personal social media posts.

 

In Seafolly Pty Ltd v Madden [2012] FCA 1346 the Federal Court found that Leah Madden, the principal of the swimwear label White Sands, had engaged in misleading and deceptive conduct by posting Facebook statements and sending emails representing that Seafolly, a competing swimwear brand had copied her designs.

 

Madden's statements

 

Madden posted various comments, both on her personal Facebook page and the White Sands Facebook page, suggesting that Seafolly had copied her swimwear designs by sending someone to pose as a buyer and take photos of the swimwear. Examples of these comments include:

1. 'Seriously, almost an entire line-line ripoff of my Shipwrecked collection'; and
2. 'Ripping off is always going to happen, but sending in a dummy 'buyer' to get photos is super sneaky!'

Madden also posted an album on her personal Facebook page headed 'The most sincere form of flattery?' which contained 8 photos of models wearing Seafolly swimwear appearing alongside photos of models wearing White Sands swimwear. Each pair of photos had the caption 'White Sands as seen at RAFW in May – Seafolly September 2010' or 'White Sands 2009 – Seafolly 2010'.

 

Madden then sent an e-mail to certain news and fashion publications with the subject 'The most sincere form of flattery?' followed by 'Is it just us, or has Seafolly taken a little to [sic] much 'inspiration' from White Sands?' This email contained the 8 comparison photos posted on Madden's personal Facebook page. 

 

These statements were made in circumstances where, in fact, the evidence showed that the Seafolly garments were either already on the market or in the process of being designed prior to the buyer taking photos of the White Sands swimwear.

 

Claims

 

Seafolly sued Madden claiming:

1. misleading and deceptive conduct and false representations;
2. injurious falsehood; and
3. copyright infringement arising out of Madden's posting of photographs of Seafolly's range.

Seafolly could not rely on defamation laws given the operation of uniform defamation laws, which prevent companies (other than non-profit organisations or small businesses) from suing for defamation.

 

Injurious falsehood and copyright infringement 

 

Seafolly's claim for injurious falsehood failed as it did not provide adequate evidence of actual economic loss suffered by it. The copyright infringement claim also failed as Seafolly did not own the copyright in the photos of the swimwear at the relevant time (which was assigned to Seafolly after Madden posted the photos).

 

Seafolly had sought general damages of $500,000 and additional damages of $500,000 for the alleged copyright infringement. Tracey J stated that, had it been necessary to consider damages for copyright infringement, the quantum claimed was 'grossly excessive in the circumstances', particularly given that the photos were only displayed on Facebook for a short time and there was no evidence of actual damage flowing from their use. 

 

Misleading and deceptive conduct and false representations

 

The claim for misleading and deceptive conduct and false representations was brought under sections 52 and 53(a) of the Trade Practices Act 1974 (Cth) as the relevant conduct occurred before the commencement of the present Competition and Consumer Act 2010 (Cth). 

 

Seafolly argued that Madden's statements were misleading and deceptive as they falsely represented that Seafolly had copied Madden's swimwear designs, that Seafolly was not the creator of the original Seafolly designs and that Seafolly had used underhanded means to obtain photos of the White Sands swimwear. 

 

In reply, Madden argued that:

1. she did not contend that Seafolly copied her swimwear designs; and 
2. her statements were merely expressions of her opinion and not statements of fact.

Tracey J rejected these arguments. His Honour found that Madden's language was intended to and did convey to her readers that Seafolly had, as a matter of fact, copied her swimwear designs and that this copying had been made possible by Seafolly's access to the photos taken by the buyer. In light of the evidence that the Seafolly garments predated those of White Sands, Madden's statements were false.

 

In relation to Madden's expression of opinion arguments, his Honour noted that the relevant consideration was the readers' perception of the statement, not the subjective purpose of the maker of the statement. In addition, his Honour stated that expressing an opinion could contravene section 52 if that opinion was not honestly made. Applying these considerations, his Honour concluded that:

1. Madden's statements, when read in context, would not have been understood by readers as mere expressions of Madden's opinion, given that her language conveyed that copying had, as a matter of fact, occurred; and
2. even if Madden's statements could be understood as opinions, she had been reckless in forming them. In particular, his Honour noted that as Madden's allegations were against a competitor and had the potential to harm Seafolly's reputation, Madden should have adopted a cautious approach. Instead, Madden posted her comments within hours of seeing the photos and failed to take steps to determine if the swimwear designs were in fact copies (such as making enquiries as to when Seafolly's swimwear was placed on the market).

Madden also denied that her conduct was in 'trade or commerce', presumably on the basis that she was merely commentating on industry matters. However, Tracey J rejected this argument finding that Madden's statements were in 'trade or commerce', as the principal of White Sands, she had sought to influence the attitudes of customers and potential customers of Seafolly, a trade competitor.

 

Accordingly, Tracey J found Madden liable for misleading and deceptive conduct.

 

Orders

 

Tracey J ordered that Madden:

1. pay Seafolly limited damages of $25,000 (for reputational damage only, as Seafolly had failed to establish any economic loss);
2. be restrained from reproducing or authorising the reproduction of the Seafolly photos without Seafolly's consent;
3. be restrained from making, or aiding, abetting, counselling or procuring the making of, similar statements, representations or claims to third parties; and
4. pay Seafolly's costs.

In coming to the decision only to award limited damages, Tracey J noted that the Facebook postings were only accessible to a relatively small number of 'friends' for less than two days. This was in contrast to the email to the publications, which had the potential for wide distribution. However, this email did not in fact lead to any significant publicity in the mainstream press.

 

Conclusion

 

This case provides a cautionary tale for those tempted in the heat of the moment to publically allege that their intellectual property rights have been infringed. While fabric and clothing designs may appear similar, that can arise for reasons other than 'copying'. The matter needs to be investigated, and if necessary, legal advice sought, before public statements of infringement are made.

'SUNNY ROO' infringes 'SUNNY BOY'

Posted by Charmain Panickar and Peter Kearney ● Partner: Paul Kallenbach

A recent decision by Perram J in the Federal Court case Solar Technology AG v Beyond Building Systems Pty Ltd [2012] FCA 1483 provides some instructive illustrations of the law of passing off and trade mark infringement.

The case concerned use of the trade marks 'SUNNY BOY' and 'SUNNY ROO' in relation to solar inverters.

Crowd funding in Australia

Posted by Alberto Colla

Crowd funding is currently receiving significant media attention in Australia, with today's edition of The Australian Financial Review devoting commentary to this topic with a prominent article on page 3 [registration required]. 

Crowd funding broadly encompasses schemes that seek to raise funds for projects and ‘start up’ companies through donations from internet users. 

In return, crowd funding schemes may offer a variety of incentives to invest ranging from discounts and product samples to debt or equity interests in the business.  While crowd funding is not specifically prohibited or legally regulated in Australia, a number of Australian technology start-up companies are urging the Australian Securities and Investments Commission (ASIC) to relax the current rules governing crowd funding, on the basis that the current rules were simply not designed with crowd funding in mind.  To date, ASIC appears cautious that small investors may be scammed or burnt by crowd funded companies, particularly if it is extended to start-up companies in exchange for equity.

You can read a more detailed explanation of the Australian regulatory regime relevant to crowd funding here.