Australia: Australian Intellectual Property Law Reforms To Become Reality in 12 months

We have previously foreshadowed proposed changes to Australia's various IP regimes that were intended to "strengthen and improve Australia's IP system" (link: . Having passed, unamended through the Federal Senate, the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 was then passed by the House of Representatives on 20 March 2012. All that remains now is for it to attain Royal Assent. Once this (usually a formality) is achieved, most of the changes prescribed in the Bill will then enter into law 12 months later.

The Bill comprises six schedules, each of which addresses one "key" area:

  1. "Raising the bar" on the quality/validity of granted Australian patents
  2. Providing freedom of access to patented inventions for the purposes of attaining regulatory approval and conducting research
  3. Reducing the delays often encountered in resolving patent and trade mark applications/oppositions
  4. Assisting the operation of the IP profession;
  5. Improving mechanisms for trade mark and copyright enforcement
  6. Simplifying the IP system.

In this article, we briefly examine some of the more salient changes from the dual perspectives of both local and foreign applicants.

  1. "Raising the bar" on the quality/validity of granted Australian patents

    It has been argued that the standard of patentability in Australia has not advanced in step with that of our major trading partners. Rightly or wrongly, there has been a perception that Australian patents have been too easy to obtain; a corollary of this is that an undesirable number of granted Australian patents may actually be invalid. Invalid patents, of course, have flow-through effects in that they stifle innovation by not satisfying their end of the "patent bargain". A summary of the changes made in an attempt to address these shortcomings are as follows:

    1. The criteria by which a prior art document is eligible to be considered for the purposes of inventive step are to change. The changes will remove restrictions on the information and background knowledge taken into account when assessing inventive step. Currently, prior art eligible to be considered for the purposes of assessing inventive step must be demonstrably "ascertained, understood and regarded as relevant" by a person skilled in the relevant art. It will now only be necessary that a skilled person would understand the prior art – and regard it as relevant. The requirement that a document be "ascertained" (i.e., located, which could often be "argued around" in cases where the publication was, for instance, in an obscure or unrelated journal) will be removed, thereby effectively widening the "prior art base".
    2. Secondly, the assessment of the "common general knowledge" of an ordinary skilled worker in the art will no longer be restricted to Australia, but will be assessed against an undefined but apparently more "international" standard.

      This change also has flow-through consequences to category (a), above. Previously, the geographical restriction imposed constraints in court and opposition proceedings, where the parties often require expert evidence on what is the common general knowledge. The geographical restriction often required the selection of Australian-based experts, even when they may not, for whatever reason, be best placed to provide this evidence. It also compelled the parties to compete over a relatively small pool of local experts. More complete expert evidence should lead to a higher (or more appropriate) threshold for applications passing through examination and opposition.

    3. The changes will extend the present requirement that a patent specification adequately explains how the invention works. An Australian patent must be "useful". However, the courts have been reluctant to revoke a patent on such grounds. Under the new legislation, the patent specification will need to disclose a "specific, substantial and credible" use for the claimed invention, the parameters of which may see "junk" patents screened effectively.
    4. The bar will be raised on "sufficiency". The changes will now require that the specification discloses the invention in a manner which is "clear enough and complete enough for the invention to be performed by a person skilled in the relevant art". This change seeks to ensure that a claim is enabled across its full scope, as compared with the present situation where it is merely necessary to enable "something" within the scope of the claims.
    5. The idiosyncratic Australian requirement that the claims are "fairly based" on the description will be replaced with a more generic requirement that the claims find "support" within the specification. In the recent past, the courts have held that fair basis was met where the claims were consistent with the body of the specification, when read as a whole. The change clearly seeks to prevent claims that are "broader than is justified by the extent of the description, drawings and contribution to the art".
    6. The changes also expand the grounds that can be considered during examination; this is to make them more consistent with the grounds available to the courts. For example, during examination, it will become possible to consider prior use of an invention. Further, all examination criteria will be considered under a "balance of probabilities" test, rather than the applicant being afforded the benefit of the doubt.
    7. A further consequence of the Bill is likely to be that the amendment of a complete specification will be more heavily restricted, such that the amended specification cannot disclose matter that extends beyond that disclosed originally. Exceptions, of course, will remain in the cases of correcting an obvious mistake or a clerical error. However, the change seeks to avoid a bizarre anomaly possible under the present legislation in which patent rights may accrue before the applicant has fully described their invention.

    The transitional provisions state that the "old" lower patentability standard will be applied to applications where examination has been requested as at the commencement date of the changes (tentatively, April 2013), whereas the "new", higher standards will be applied to cases for which examination has not yet been requested. Of particular importance is the fact that the category an application falls into as at the commencement date will apply to that application throughout its entire lifespan. Not only will cases under the old regime have an easier standard of examination, they will be more difficult to invalidate over their lifetime.

    We recommend that once the commencement date is known, applicants wishing to enjoy the lower standard of patentability, and thus stronger validity over the life of the patent should consider bringing forward their examination requests. It may even be worthwhile considering bringing forward PCT national phase and Paris Convention filings so that examination can be requested in time.

  2. Providing freedom of access to patented inventions for the purposes of attaining regulatory approval and conducting research

    Patents legislation throughout the world generally provides that one party shall not "exploit" another's patented invention. On the other hand, it is widely accepted at common law that "experimenting" with or around such an invention is permissible so long as such experimentation is not "commercial" in nature. The so-called Experimental Use Exception to patent infringement (EUE) is thereby a balance between at once providing strong and exclusive rights to a patentee (i.e., Art.30, TRIPs), whilst at the same time serving to stimulate innovation, research and development. Naturally, the differing social, political and economic climate of different countries necessitates a unique "line in the sand" as to precisely where "experimentation" ends and "exploitation" begins.

    The Australian Government has been considering enacting a statutory EUE for more than a decade. Accordingly, the Bill now ensures that regulatory approval for generic manufacturers is not delayed or negatively impacted by the existence of patents. This gives certainty to researchers and manufacturers and allows them to go about their activities without worrying about the prospect of patent litigation. It also allows R&D funds to be focussed on R&D, rather than patent searches and infringement opinions. Concerns had been raised that the lack of a statutory EUE was hindering Australian research and follow-on innovation. Although it was generally accepted that some form of implicit EUE did exist, this had never been tested in the Australian courts. As a consequence, the existence and scope of any Australian EUE was uncertain – and innovation was arguably suppressed as a consequence.

    The Australian EUE will cover work done for experimental purposes relating to the "subject matter" of the invention. This applies to tests, trials and procedures that a researcher or follow-on innovator undertakes as part of discovering new information or testing a principle or supposition. The exemption covers circumstances where a researcher may be unaware of the existence of the patent, and include the subject matter of a patent as part of a larger more complex experiment.

    "Springboarding" has been allowed in Australia for more than a decade in respect of pharmaceutical patents. However, these are not the only types of patentable product where pre-market regulatory approval is required; agricultural chemicals and certain medical devices also require such approval. The Bill extends "springboarding" to non-pharmaceutical technologies, removing the present de facto extension of term.

    EUE and springboarding provisions are distinct from many of the other changes insofar as they will take effect the day after the Bill receives Royal Assent.

  3. Reducing the delays often encountered in resolving patent and trade mark applications/oppositions

    The Bill tightens up the procedures for patent and trade mark oppositions and the filing of divisional patent applications. Refining opposition proceedings is considered to better meet their intended purpose as a means for settling disputes relatively quickly and inexpensively. The Bill also restricts the timeframes within which divisional applications can be filed, reducing opportunities for abusive or exploitative use of the system by delaying the process.

    1. Patents

      Australian pre-grant opposition was originally intended to be a relatively quick and inexpensive process that provided a reasonable indication as to what may happen if corresponding proceedings were to be commenced in, for instance, the Federal Court. However, the current system has certain procedural "loopholes" that sometimes result in oppositions being relatively protracted and expensive. The changes prescribed in the Bill seek to restore that balance and may indeed lead to Australia becoming an even more effective "testing ground" for potential patent litigation overseas.

      The period within which a divisional application can be made will be up to the end of the time within which a notice of opposition to grant of the parent application can be filed (three months after advertisement of acceptance). This means that an applicant will be unable to file a divisional once the period for commencing opposition proceedings on the parent application has expired.

    2. Trade Marks

      The amendments relating to trade marks are to commence 12 months after Royal Assent is given.

      The major impact on trade mark practice and procedure concerns changes to the handling of oppositions. These changes will apply to notices of opposition filed on or after the commencement date. Any opposition in progress prior to that date will continue to be handled under the current regime.

      The objective is to reduce delays in resolution of oppositions so that these types of disputes are settled quickly and inexpensively.

      As most of the procedural changes are to be made by amendments to the Regulations, we will need to wait until those amendments become available before providing detailed advice.

      Significantly, an opponent will be required to file a statement of particulars of the grounds to be relied upon in an opposition. This must be filed within one month of filing the opposition. The particulars will need to describe the material facts on which each ground of opposition is based. Failure to file this document will result in dismissal of the opposition. Amendments to a notice of opposition and statement of particulars will also be limited.

      This means that an opponent will need to use the three month period after advertisement of an application to research its position, particularly as it appears that grounds for extending the opposition period may also be limited.

      The other significant change is that the applicant will need to file a notice of intention to defend the opposed application. Failure to do so will result in lapsing of the application. An extension of time will be available to file this notice.

      It is likely the amendments to the Regulations will also significantly enhance the Registrar's power to issue directions and control the duration of the evidence phase. Extensions will be tightly controlled and the parties to an opposition will need to act promptly and diligently.

  4. Assisting the operation of the IP profession

    The Bill allows Australian patent and trade marks attorneys to incorporate. This gives them greater freedom in their business activities. Presently, there are anomalies between the ways in which patent and trade mark attorneys may conduct their business and the ways in which other professionals can operate – specifically, the legal profession. The Bill allows patent and trade mark attorneys to extend to client-attorney communications the same privilege as presently exists for client-lawyer/solicitor communications.

    These changes will come into force 12 months following Royal Assent of the Bill.

  5. Improving mechanisms for trade mark and copyright enforcement

    Significant amendments are briefly as follows:

    1. Customs

      The current "notice of objection" scheme for Customs to seize goods will be amended to close loopholes and make it easier for trade mark owners to obtain information about the exporter and importer. A particularly significant change is that the importer of the seized goods must make a claim for their return, otherwise they will be forfeited to the Commonwealth. This claim must include information which will assist the objector in contacting the importer.

    2. Penalties

      The penalties for indictable offences are to be raised to be in keeping with similar offences under the Copyright Act.

      The Court will also be given discretion to award additional damages for flagrant trade mark infringement.

  6. Simplifying the IP system

    The Bill does away with many unnecessary procedural hurdles and simplifies the application processes across all forms of registrable IP. These changes are designed to make the Australian IP system easier to use in an increasingly electronic and globalised business environment. In particular:

    1. Presumption of registrability of trade marks

      The amendments will make it clear that there is a presumption of registrability when applying all criteria for assessing a trade mark's capacity to distinguish. The Registrar can raise an objection if satisfied, on the balance of probabilities, that a ground exists for rejecting an application.

      This is unlikely to materially impact on current practice, but may assist in a borderline case.

    2. Federal Magistrates Court

      The Federal Magistrate's Court will be given jurisdiction to hear trade mark and design matters.

Concluding Remarks

It could be argued that many of these changes have been "a long time coming". Any changes that remove uncertainty (e.g., the EUE), promote innovation (e.g., raising the bar on invalid patents), or streamline cumbersome and frequently-abused processes (e.g., reducing opposition delays) are, in our opinion, most welcome. Of course, there are still more that 12 months until such changes take effect – and it will be interesting to observe what, if indeed any, "real" effect they may have. However, we suspect that things may be about to change for the better.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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