Courts get stricter in Australia and Singapore

Courts get stricter in Australia and Singapore

Courts get stricter in Australia and Singapore

First published in Intellectual Property Focus by Managing Intellectual Property

Paul Dewar of Davies Collison Cave Law Pty Ltd and Desmond Tan of Davies Collison Cave LLP provide overviews of the most important developments in IP in Australia and Singapore, including a series of important court decisions.

AUSTRALIA

1. Have any new laws or amendments been passed in the past year that will have an impact on IP rights?

There have been no legislative changes in 2016, to date.

2. Has the jurisdiction signed any IP-related treaties or joined any IP-related agreements?

Australia China Free Trade Agreement

The China Australia Free Trade Agreement (ChAFTA) entered into force on December 20 2015 and will be fully implemented by January 1 2029. With Australia’s exports to China in between 2014 and 2015 comprising more than a quarter of Australia’s total exports to the world, China is Australia’s largest trading partner. ChAFTA contains a section on intellectual property, which affirms existing IP obligations and provides a framework for future cooperation.

Trans Pacific Partnership

On February 4 2016 Australia was one of 12 Pacific Rim countries to sign the Trans Pacific Partnership (TPP). The TTP is a regional free trade agreement which covers a range of trade and economic areas, and contains an important chapter on intellectual property. The IP chapter of the TPP sets out a minimum level of protection that parties to the agreement must meet. The Australian Government considers that the “TPP Intellectual Property Chapter is consistent with Australia’s existing intellectual property regime”, however some minor legislative change may be required if another signatory questions Australia’s implementation of the agreement.

3. Have there been any notable changes at the IP Office in terms of practice, procedures or leadership? And if so what impact have they had so far?

Fee changes

IP Australia has announced plans to simplify its fee structure for the IP it administers, reducing so called “touch points” with its clients and aligning itself better with international practice. The changes reflect IP Australia’s innovation policy to support small businesses, as well as the Australian Government’s red-tape reduction initiatives. The changes, designed in consultation with key stakeholders, including the Law Council of Australia and the Institute of Patent and Trade Mark Attorneys of Australia, are intended to become effective on October 28 2016.

The more important changes will see trade mark owners pay less per registration, and patent owners pay more after the rights have been held for 10 years (encouraging patent owners to make an assessment of the value of continuing to hold the rights). The cost structure for obtaining copies of documents from IP Australia, as well as opposition and hearing fees across each of the IP rights, will also be simplified to increase efficiency and reduce red tape. IP Australia has published a comprehensive Cost Recovery Implementation Statement, which provides further information on how it recovers costs and its implementation of the new fee changes.

Myriad guidelines

After the High Court’s decision in D’Arcy v Myriad Genetics Inc [2015] HCA 35, (see question 4), IP Australia sought public consultation on how to modify its examination practices to align with the High Court’s findings.

On December 15 2015, IP Australia released examination practice guidelines, which were incorporated into the Patent Manual of Practice and Procedure (a reference manual for patent examiners that defines the authorised current practice that applies to the examination of applications). The guidelines reflect the law as understood by the Commissioner of Patents, and provide guidance to examiners, as well as inventors and IP professionals, on the Patent Office’s approach to the issue of patent eligible subject matter.

The guidelines set out four questions to be asked, on a case by case basis, when determining patent eligibility. These are:
1. What is the substance of the claim (not merely its form)?
2. Has the substance of the claim been “made” or changed by man, or is it “artificial”?
3. Does the invention have economic utility?
4. Does the invention as claimed represent a new class of claim?

The guidelines expand on and provide further guidance on the manner in which IP Australia will apply the four steps. It must be noted however that it will ultimately be up to the Courts to determine how the Myriad decision will be applied.

4.What have been the most notable patent cases in the courts in the past year and why?

Best method

Two recent Federal Court cases have highlighted the consequences for patentees who fail to satisfy the best method requirement under Australian law.

Under Australian law, patent applicants are required to disclose in their specifications the best method known to them at the filing date for performing the claimed invention. Although Australia has had a best method requirement since the Patents Act 1952 came into force, the requirement has received little judicial consideration before this year.

Recently, the Federal and Full Federal Courts have clarified the scope of the best method requirement in two separate cases, Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 (Servier) and Sandvik Intellectual Property 4 AB v Quarry Mining & Construction Equipment Pty Ltd [2016] FCA 236 (Sandvik).

Servier v Apotex

The patent at issue in Servier, Australian Patent no 2003200700, was directed to the arginine salt of perindopril (perindopril arginine), its hydrates and pharmaceutical compositions thereof. Perindopril, an angiotensin-converting enzyme (ACE) inhibitor, is used for the treatment of hypertension and related conditions. Due to the inherent instability of perindopril, the preparation of a suitable pharmaceutical form for administration was problematic. The specification indicated that the arginine salt surprisingly exhibited improved stability whilst maintaining good bioavailability.

With regard to the preparation of perindopril arginine, the specification simply stated that it was “prepared according to a classical method of salification [salt formation] of organic chemistry”; that is, a standard method known in the art. No other details relating to the preparation of the claimed arginine salt were provided and no specific method was referred to by citation or otherwise. However, evidence considered by the Court indicated the patentee had prepared perindopril arginine via two distinct methods before the filing date. Neither of the specific methods was disclosed in the specification.

The primary judge held that the mere reference to the use of a classical method of salification was “wholly inadequate”. In particular, the primary judge indicated Servier had used a particular method and parameters that produced a guaranteed result, whereas the complete specification described a very general method of performing the invention. As such, the patent was found to be invalid on the ground that it failed to meet the best method requirement. Of note, the Court also found that the invention wasnovel, inventive, and fully described (except for best method), and the claims were fairly based. Servier had argued at first instance and on appeal that all claims were directed to a product and, as such, the best method requirement should be satisfied by the identification of the best product per se (i.e. the claimed compound).

However, on appeal the Court held that the nature and extent of the disclosure required to satisfy the best method requirement depend on the nature of the invention itself. The Court acknowledged that in some cases where the claim is to a product, there is no requirement to provide a method of using or making that product. The Court noted, however, that in the case of the patent at issue, the particular salt formation and the methodology to prepare such a salt had more importance than might be the case where the claimed invention was a product for which these characteristics were irrelevant.

The Full Federal Court found that by omitting sufficient description of the methods used to prepare perindopril arginine, that Servier had failed to describe in the complete specification the best method known at the filing date of performing the invention.

Servier applied to the Court to amend the specification after grant to remedy the deficiencies with regard to the best method, but the Court declined to exercise its discretion to allow the amendment. While the Court did not comment on the allowability of the amendment, it held that the nature of the amendment and the ground of invalidity sought to be overcome are important matters for the Court to consider in exercising its discretion. 5 In this instance, Servier had received advice from their attorneys during the course of prosecution recommending that further examples be added to the specification (if possible) to satisfy the “written description requirements”. Servier’s failure to act on this advice contributed to the Court’s decision to reject the application for amendment.

Sandvik  v QuarryMining

The patent at issue in Sandvik was directed to an extension drilling system for use in drilling bores, in particular for coal mining. The Federal Court found the patent was invalid for failing to meet the best method requirement.  The Court heard evidence that during the course of development of the drilling system one of the “real issues” to be addressed was the design of an effective water seal. However, technical drawings which pre-dated the filing of the complete application and which described an improved sealing arrangement for use with the drilling system were not disclosed in the specification at filing. The Court found that the improved seal did not amount to some minor or incidental dimension, but was in fact “the ultimate evolution of the seal” and “a superior design”.

In accordance with the approach in Firebelt Pty Ltd v Brambles Australia Ltd [2000] FCA 1689, the applicants argued that the detailed characteristics of the improved seal did not specifically relate to “a method of performing the invention” and were therefore irrelevant when considering the disclosure of the best method. To this end, there was no indication in the specification that the inventors regarded the seal as an important feature of the invention for which they were seeking protection and none of claims referred specifically to
the seal per se.

However, the Court held that the inventors were aware that the improved water-sealing arrangement was critical to the efficacy and quality of the ultimate form of the invention as at the date of the filing of the complete specification and, as such, the best method of performing the invention necessarily included that arrangement. In omitting this information from the specification, the applicant had failed to describe the best method known to them at the filing date.

Sandvik has sought leave to appeal the decision to the Full Federal Court. However, as part of associated undertakings, Sandvik has not sought leave to amend the specification to remedy the best method deficiencies.

A uniquely Australian situation

While the United States has moved to curb the consequences for failing to meet the best method requirements, and most other countries do not have a best method requirement, these recent Australian decisions highlight the importance of including the best method in patent specifications destined for filing in Australia. Indeed, Australia is now out of step with the rest of the world on the best method issue. Key stakeholders and peak industry bodies, including the Australian Law Council and the Institute of Patent and Trade Mark Attorneys (IPTA), have called for reform of this provision to realign Australia with international practice. In the absence of reform, and in view of the more stringent standards for amendment under the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 which came into force in 2013, it is paramount that patent applicants in Australia ensure the best method known to them of performing the invention is included in the specification at the time of filing.

Utility

One of several requirements for patentability under Australian patent law is that the invention as claimed is useful, however it is relatively rare for invalidity to be found on that ground. In those few cases, the failure to provide utility was usually in the inability for the invention as claimed to fulfil an expressed objective of the invention. In a recent decision of the Federal Court Ronneby Road Pty Ltd v ESCO Corporation [2016] FCA 588 “inutility” was found in a circumstance where the patent specification indicated several advantages which would be achieved by the invention. The court found that only some of those advantages were, on the evidence, achieved and invalidity was found on that basis.

The invention concerned replacement wear members for excavating buckets of the type typically used on mine sites and the like. In effect, these wear members form teeth at the edge of the bucket and cut into the ground. They are subject to harsh conditions and heavy loading and require periodic replacement. This aspect of the case focused on a paragraph within the summary of the invention which said that the invention would provide the advantages of enhanced stability, strength, durability, penetration, safety and ease of replacement of the wear members. The assessment of utility was in relation to the invention as claimed and the passage referred to was construed as saying that all six of the advantages would be achieved. The evidence accepted by the court was that only some of the claims only achieved some of the advantages but not all and inutility was found on that basis. Although not clear from the decision, one presumes that those advantages were all achieved by preferred embodiments of the invention as described in detail in
the specification.

Despite the finding of invalidity for inutility, the defect can be corrected by amendment. The amendments needed would be within the scope of amendments permitted in the patents legislation and a simple change to the paragraph in question would probably achieve that. Although allowance of amendments at this stage is discretionary, from a subsequent part of the decision it seems that the court was prepared to allow or to consider amendment in this case. However this does not mean that corrective amendment will always be permitted where a court finds invalidity on this ground and it is a clear message to all of those drafting patent specifications when making promises, however expressed, as to the advantages and benefits of an invention.

Disclosure and supportrequirements

The patent in question in CSR Building Products Limited v United States Gypsum Company [2015] APO 72 related to fire resistant building panels with a gypsum core containing high expansion particles, encased by two cover sheets. Different manufacturing parameters resulted in panels of differing weight and fire resistance. The specification provided details and fire resistance test results from 20 different panel configurations, which used the same high expansion particles.

Requirements not met

The delegate held that the disclosure requirements of s 40(2)(a) were not met as the specification did not provide enabling disclosure for panels with fire resistant properties. There were a number of elements which determined whether a panel was fire resistant but the patent did not disclose how to control these variables to ensure a fire resistant product.

In addition, the prohibitively high cost of assessing whether a panel met fire resistant standards meant that adjusting the composition of the panels and assessing whether it met the relevant standards was a burden which went beyond “reasonable trial and error”. As a result, attempting to develop a fire resistant panel beyond one already described in the specification was unreasonable as it required significant experimentation and expense.

Limited technical contribution

In terms of the support requirements, it was found that the technical contribution to the art was limited to only the specific example compositions disclosed in the specification, which were shown to produce panels with the desired fire resistant properties.

The claims themselves were to “gypsum panels that contain high expansion particles and are fire resistant”. It was held that there was no disclosure of how to produce a product which met these claims beyond the compositions already specifically described. In addition, it was found that not all panels using high expansion particles had satisfactory fire resistant properties. As a result, the Delegate found that the technical contribution to the art was more limited than the subject matter of the claims, and therefore the patent failed to comply with the support requirements at section 40(3) of the Patents Act.

Important guidance

This decision provides guidance on how the Patent Office will interpret the new disclosure and support requirements introduced to the Patents Act 1990 pursuant to the Raising the Bar amendments. In particular, it highlights the requirement that the breadth of the subject matter of the claim should not exceed the technical contribution to the art described.

High court weights in on gene patents – Myriad

In a decision handed down on October 7 2015, the High Court unanimously allowed the appeal from the decision of the Full Federal Court in D’Arcy v Myriad Genetics Inc [2014] FCAFC 115. In this decision, the High Court held that claims 1 to 3 of the Myriad patent directed to isolated nucleic acids coding for 7 mutant or polymorphic forms of the BRCA1 polypeptide do not meet the requirement of manner of manufacture and are therefore non-patentable. Critical in the court’s decision was that the real invention (as opposed
to the actual words of the claim) was the information present in the claimed sequences. The claims were not to be simply read as claims to “chemical compounds”. The court held that as the information possessed by the claimed sequences was not “made” and that as the claims properly construed were claims to “information”, they did not constitute patentable subject matter.

The court also noted that the claims in question cover a “very large, indeed unquantified” class of isolated nucleic acids bearing the requisite information, and that allowing patent protection for this class risks “a chilling effect upon legitimate innovative activity outside the formal boundaries of the monopoly”. A further factor in the decision was the court’s view that “if the claims are properly the subject of a patent, the patent could be infringed without the infringer being aware of that fact”.

Creating uncertainty

It is expected that this decision will lead to more patents being challenged on the ground of not a manner of manufacture in future revocation proceedings. Many believe the ruling has created uncertainty over what is now considered patentable, however it is hoped that the D’Arcy judgment will be restricted in its future application by the Courts to the specific fact situation; namely in relation to naturally occurring human nucleic acids.

5. How does the IP environment compare with a year ago – what has improved or got worse?

Several decisions over the last year have improved the IP environment by providing some guidance on how certain laws will be applied. Importantly we now have Patent Office guidance in relation to the grounds of disclosure and support introduced by the Raising the Bar Act in April 2013.

Conversely, the D’Arcy decision has caused considerable uncertainty, pending future application by the Courts.  While the Patent Office guidelines offer some direction for now, the industry awaits to see how the Federal Court will apply the decision. Australia also has a number of areas of law that are out of step with international practice. This may cause difficulties for international applicants unaware that specifications may need to be modified before being filed in Australia, in relation to, for example Best Method and Utility, as considered above.

SINGAPORE

1.    Have any new laws or amendments been passed in the past year that will have an impact on IP rights? If so please provide details.

There have been no legislative changes in 2016so far.

2. Has the jurisdiction signed any IP-related treaties or joined any IP-related agreements?

Singapore has signed up with the Trans-Pacific Partnership (TPP), and the ASEAN Economic Community (AEC). Both agreements have IP provisions which member countries should abide by.

The TPP is not yet in force, and if all countries have not ratified by February 4 2018, it will enter into force after ratification by at least six countries, with a cumulative GDP of more than 85% of all the signatories. Interesting aspects of the TPP relate to how geographical indications are eligible for protection as trade marks, and how the term of copyright is “not less than life of author plus 70 years after the author’s passing”.

Regarding the AEC, the objective is for a single market for goods, services, capital and labour. With the AEC, there is a push for all member countries to be members of the PCT and the Madrid System. There is also a directive for increased cooperation and collaboration among IP offices of the member countries, potentially leading easier filing of IP in the ASEAN region.

3. Have there been any notable changes at the IP office in terms of practice, procedures or leadership? And if so what impact have they had so far?

In late 2015, there was a change of the chief executive of the Intellectual Property Office of Singapore (IPOS). The new chief executive, Daren Tang, is very open to receiving feedback and acting on the feedback that he receives. This is positive for the IP industry.

There have been amendments made to the patent examiner’s manual, which provide updated guidelines for the patentability of computer implemented inventions and for isolated materials/microorganisms. The guidelines provide patent applicants with some clarity in relation to the patentability of computer-implemented inventions and for isolated materials/microorganisms. The updated guidelines may be construed to indicate more stringent requirements on patentable subject matter 8 than in the past.

There have also been new guidelines issued for post-grant amendments of patents. With effect from June 30 2016, IPOS will assess post-grant amendment based on these criteria:

  • No additional matter is disclosed;
  • The protection of the patent is not extended;
  • Whether relevant matters are sufficiently disclosed;
  • Whether there was any unreasonable delay in seeking amendments; and
  • Whether the patentee has gained an unfair advantage by delaying amendments which are known to be needed.

It should be noted the first two points are found in the legislation, while the rest are due to rulings in two patent cases which will be discussed in the following section.

4. What have been the most notable IP cases in the courts in the past year and why?

Patents – post-grant amendments

Two recent patent cases which have led to the issuance of guidelines for post-grant amendment at IPOS are Ship’s Equipment Centre Bremen GmbH v Fuji Trading (Singapore) Pty Ltd &Ors [2015] SGHC 159, and Warner-Lambert Company LLC v Novartis (Singapore) Pte Ltd [2016] SGHC 106. In both cases, the plaintiff requested leave from Court to amend the patents, but the respective requests were refused. It appears that it will be more difficult to obtain post-grant amendments for patents in the future.

In view of the respective rulings, patentees should be more cautious given the difficulty in obtaining post-grant amendments for patents. However, we would like to suggest some pointers for patentees as follows:

  • Patentees should be aware of additional criteria
  • listed in the IPOS guidelines when filing post-grant patent amendments;
  • To avoid uncertainty, applicants may consider filing amendments during the examination stage, before grant;
  • It may be worth delaying grant if the applicant is aware of unfinished prosecution in other jurisdictions;
  • Alternatively, a divisional application may be filed such that options are reserved for the patentees’ best interests; and
  • “Unreasonable delay” with regard to seeking post-grant amendments should be avoided, meaning that the patentee will have to be in regular communication with their patent attorney(s) to ensure that the requisite tasks are promptly carried out.

Trade marks – the own name defence

The Court of Appeal recently issued a decision in The Audience Motivation Company Asia Pte Ltd v AMC Live Group China (S) Pte Ltd [2016] SGCA 25, which provides guidance on the use of the own name defence for trade mark infringement. The applicant took action for infringement of the registered mark and the defendant sought to rely on the own name defence. The defendant was successful in the first instance, but the Court of Appeal overturned that decision. The court held that the defendant’s use was not in accordance with honest practices as there was evidence that, before the defendant’s incorporation, a related entity had misrepresented itself as a Singaporean company named AMC and the early designs of the offending marks bore an uncanny resemblance to the registered mark.  This suggested an intention to misrepresent itself as the applicant and, further, the defendant could not provide a satisfactory alternative reason for adopting the offending marks.

Singapore appears to treat the own name defence as a narrow one, which requires the  infringing party to demonstrate both objective and subjective good faith when adopting and using the name. Furthermore, the Singapore courts have now expressly extended the scope of the defence to trading names.

5. Are any major developments expected in the coming year?

The Registered Designs legislation is undergoing review and amendments are expected in the coming year. The reason that we are aware of the changes is due to the fact that IPOS has engaged practitioners in Singapore and sounded out the feasibility of some suggested amendments. Feedback has been transmitted to IPOS, and we are awaiting progress. Based on the suggested amendments, we are hopeful that the Registered Designs legislation will be usable for aesthetic objects of modern times.

6. How does the IP environment compare with a year ago – what has improved or got worse?

We believe that the IP environment in Singapore is more favourable compared with a year ago. The change of the chief executive of IPOS is a positive development, as IPOS is now more receptive to feedback that they are receiving and is more open to working with IP professionals in Singapore. We also note that awareness of IP is increasing, leading to more IP enquiries, although this has not yet translated to more work at this juncture.

Compared with a year ago, a substantial number of contentious IP matters have been settled, and as such, the general perception that contentious IP matters are rare in Singapore is flawed, since nearly all contentious IP matters are settled in a confidential manner.