The Experts

Amazon.com has recently been in the news again about its patented “1-click” internet business method (now successfully patented in a number of countries including the US). The patent covers what, in essence, is an improved, remotely accessible virtual checkout kiosk. Customers with prior entered details use the system for online purchases and will now be able to avoid the painful shopping trolley checkout. To purchase, a user simply clicks on the item to be purchased and is on their way. Amazon.com of course licensed this technology to Apple, who now successfully use it to sell apps all over the world.

Simon Bond (link) frequently and enthusiastically writes about the rapid rate of growth and change taking place in the virtual economy. He reminds us of the size of that economy, the opportunities it presents and that, more and more, business now depends on virtual services, including those serviced by and through the ‘cloud’.

I often attend angel investor forums, and many of the early stage businesses seeking investment have innovative service offerings that form a part of the virtual economy. And I’m often staggered by how few have adequately secured their intellectual property; through ignorance of the patentability of their platform, or a belief their technology will be superseded before the patent issues, or through a deliberate aversion to patents. In other words, businesses assume that their virtual business models are not patentable, or don’t require patenting. However, I’ve also been pleasantly surprised to see that savvy investors have started to mark down companies that have no adequate IP in place. Indeed, a number I’ve spoken to decline to invest for this reason alone.

Given the ubiquitous, unseen, matrix-like nature of the virtual economy, Australian businesses playing in the virtual world should be asking how best to compete sustainably in this rapidly changing and global space. The beautiful thing about patents is that they too can be ubiquitous, unseen, broad and matrix-like in nature.As a result, they have a real part to play in sustaining virtual competitive advantage.

As Amazon.com has demonstrated, it doesn’t take or require ‘rocket science’ to patent the business methods that underlie the business models and services being offered virtually. And when the underlying functionality of the model or service is protected, the patent can end up being both valuable and resilient in the face of the rapid pace of technological change.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

This is the fifth and final article in the series of ‘IP basics’.

Today, some procedures you should put in place to better manage the confidential information (including trade secrets and know-how) generated by or used in your business. Spend a few minutes asking and writing up answers to each of the following questions:

• Do we have any procedures in place for managing the valuable confidential information of the business including its trade secrets and know-how?
  Note, such information includes blueprints and plans (including business plans), financial data, customer lists and customer information, relationships knowledge, ‘tricks of the trade’, ways of performing (such as, a process or technique that our competitors are not aware of), etc.
• Have our key employees (such as, key technical staff or researchers that could damage the business if they take such confidential information to competitors) signed an agreement to hold secret and to disclose and transfer all knowledge they create as part of their duties to the business?
• Do contractors and other third parties that are to be exposed to such confidential information sign a confidentiality agreement before they see the information?
• Does our contractor/third party confidentiality agreement transfer any IP that is generated in the course of the consultation?
• Do we protect our trade secrets and know-how by fully documenting and authenticating (signing and date stamping) them as proprietary information of the business?
• Do we keep an updated (such as, electronic) register of all the trade secrets and know-how of the business and does the register make it clear to viewers that such confidential information is important and sensitive to the business and is not to be copied or otherwise disseminated?
• Do we have clear, simple, well drafted employee agreements clearly outlining our employee’s duties and obligations to the business, especially if they are employed to generate IP for the business?
• Do we explain to our employees (such as, at induction) the importance of our IP, where and how we generate it and periodically remind our employees of their obligations including their duty to disclose to the employer the developments they (are paid to) create?
• Do we remind employees of their obligations in relation the business’ confidential information at all exit interviews, and do departing employees sign an acknowledgement form on departure?

If you have answered a number of these questions in the affirmative, you are well on the way to maintaining the health and wellbeing of your business’ IP assets. If not, maybe it’s time for a thorough check-up.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Related articles

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

IP Health Check Part I: trade marks

This is the fourth article in the series of 'IP basics'. Today, I’ll present some procedures you should put in place to better protect the inventions created by or for your business using patents. Spend a few minutes asking and writing up answers to each of the following questions:

• Does my business engage in research and development of any kind?
• Am I aware that my business might be generating patentable subject matter?

(Note - patents provide a 20-year monopoly for the underlying concept or functionality of products and processes; a wide variety of subject matter is able to be patented, including some types of business methods, such as those facilitated by the Internet or via software).

• Have I made a list of any of the inventions/innovations currently under development in my business? Have I checked whether these might be patentable?
• Do I at least run periodic checks on the free, online patent search databases for any of our new ideas?
• Have I ever performed a cost/benefit analysis regarding protecting the inventions/innovations being developed by my business?
• Is my business collaborating with third parties in relation to any of these inventions/innovations and have we discussed ownership and future commercialisation of the inventions/innovations?
• Have I ever performed a scoping search of the patent landscape in the technology area in which my business operates, to make sure that we are not ‘reinventing the wheel’ or infringing on someone else’s rights?
• Does my business have in place a regular ‘watch’ of the patent landscape in our technology area to make sure that something doesn’t surface that shuts us out of future growth/expansion?
• Was I aware that inventions of lesser inventive merit might be patented using the Innovation Patent?

How’d you go this time? Time for some professional input? Again, if nothing more, I hope that these questions have confirmed that the inventions of your business are being well looked after.

Next in the series – basics on trade secrets and confidential information

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Related articles

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

IP Health Check Part I: trade marks

This is the third article in my IP Health Check series. Today, some procedures you should put in place to better manage the designs created by or for your business. Spend a few minutes asking and writing up answers to each of the following questions:

• Does my business design and create 2D or 3D articles?
• If I have designs created for my business, do I always have the IP in those designs assigned (transferred) across to my business from the designer?
• Am I aware that the shape, configuration, pattern and/or ornamentation of such articles can be protected by a registered design?
• Have I protected at least the important designs that my business produces? (Note – registered design protection is relatively inexpensive)
• Am I aware that distinctive elements of my designs can be highlighted in the registered design, offering me a broader level of protection?
• Was I aware that registered design protection for spare parts is excluded?

How’d you go this time with these questions? Is it time for some professional advice? If nothing else, I hope these questions have confirmed that the designs of your business that can be registered are being looked after.

Next in the series – patent basics.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Related articles

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

IP Health Check Part I: trade marks

This is the second article in my IP basics series. Today, some procedures you should put in place to better manage a business’ copyright. Spend a few minutes asking and writing up answers to each of the following questions:

• Have I secured ownership of the copyright in the works produced for my business? (Note – these works include graphics, logos, website design/layout, software, business articles and literature, music, etc.)
• Am I aware that if a third party has produced such works for my business, they will retain ownership of the copyright, unless I enter into an agreement with them?
• Have I agreed upfront with our third party suppliers to have the copyright assigned (transferred) to my business (that is, before that party commences work for us)? Did I then have the work formally transferred upon completion?
• Do I at least have a royalty free and unfettered licence to use the copyright work in whichever manner I choose?
• If I trade in China and the US, have I registered my important copyright works in each country (including the copyright in my business’ logos)?
• Do I mark my business’ copyright works appropriately using the internationally recognised standard: ©XYZ Pty Ltd 2011?

How’d you go with answering these questions? Is it time for some professional guidance? If nothing else, I hope these questions have confirmed that the copyright of your business is in good shape.

Next in the series – registered design basics.

Related articles

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

IP Health Check Part I: trade marks

I’m often asked by owners of small and medium enterprises operating today – what basics should I put in place to better manage my business’ intellectual property (IP)? Why? Because increasingly IP is one of the most valuable assets of a business.

I’ve developed a series of simple DIY checklists (or IP ‘self-audits’) that you can easily apply to your business. Today we start with trade marks (or brands). Spend a few minutes asking and writing up answers to each of the following questions:

• Have I searched my business’ name and logo at the Australian Trade Marks Office free database? http://pericles.ipaustralia.gov.au/atmoss/Falcon_Users_Cookies.Define_User (I should note that trade mark searching is specialised and you should seek professional advice if in any doubt).
• Have I registered my business’ name and/or logo as a trade mark? (Company and business name registrations provide no rights, and that rights only arise through use or, preferably, through registration of trade marks).
• Is my business name non-distinctive (e.g. Smith’s Shoes)? If so, should I consider registering that name in a stylised (designed) format, or should I register the name together with a distinctive logo?
• Is my logo distinctive? Do I ever use just the logo in my business literature? If so, have I also registered the logo independently to my business’ name?
• If my trade mark is registered, do I mark it (or my literature) using the internationally accepted symbol ®?
• If my trade mark is not registered (or unregistrable) do I use the ™ symbol to advertise my business’ ownership of the name/logo?
• Do I place public notice (such as, on my website) of the trade marks owned, registered and used (or used under license) by my business?

If you haven’t been able to effectively answer many of these questions, then it might be time for some professional guidance. At the least, I hope these questions have confirmed that your business’ IP is heading in the right direction.

Next in the series – copyright basics.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Related articles

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

IP Health Check Part I: trade marks

Innovation patents are unique to Australian law, and were introduced in 2001 to allow protection for innovations having insufficient inventive merit. Innovation patents only require a lesser hurdle of an ‘innovative step’. In essence, if your innovation is new but not inventive it might still be protectable by way of an innovation patent. The innovation patent system can allow a business to more easily protect its new ideas against copying.

Some businesses consider that an innovation patent has certain shortcomings:

• A maximum term of eight years (compared with 20 years for a standard patent).
• Published shortly after filing (providing competitors with early access to the technical content of the invention).
• May include only a maximum of five claims.
• Offers less options for filing ‘divisional applications’.

Such limitations are often outweighed by the strengths of an innovation patent:

• Can be rapidly obtained and rapidly examined for early enforceability.
• The examination procedure is easier (that is, ‘inventiveness’ is no longer a requirement).
• The infringement test and available remedies are the same as for standard patents.
• A lesser ‘innovative step” hurdle makes an innovation patent harder to remove than a standard patent (that is, it is difficult for a challenger to prove that the lower hurdle has not been met).
• No pre-grant opposition is available to competitors prior to enforcing an innovation patent.

Strategies

A number of strategies can assist a business in maximising the advantages of innovation patents to provide a potent IP right.

As always, the initial patent application must be filed in a timely manner, preferably before any commercialisation or public disclosure of the innovation. This can be done by first filing a provisional patent application (filing a provisional can effectively increase the duration of the innovation patent from eight to nine years because, at the 12-month point, an innovation patent is then filed that ‘claims priority’ from the provisional patent application. Also, provisional patent applications are not published during this 12-month period).

Optionally, the provisional patent application can also be followed with a standard patent application (even if an innovation patent only is required). This allows for one or more ‘divisional’ innovation patent applications to be filed at any time during the pendency of the ‘parent’ standard application. A standard patent application may remain pending for several years, providing the opportunity to file (divide off) multiple divisional innovation patent applications, even years after filing, while leaving the parent application pending and ‘untouched’. Also, any given divisional innovation patent application can be filed to target an infringer (that is, the document can be tailored to best catch that infringement).

These approaches can overcome most of the disadvantages of the innovation patent, except its eight-year term (which for many businesses in fast moving areas is in any case sufficient). While the patent system can seem complex, your patent attorney can help you unlock the benefits of innovation patents, to add this weapon to your IP arsenal.

This article was written with input from a longer article by Daniel Rosenthal, an associate at Griffith Hack.

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Patenting business methods can be as simple as “1-Click”

IP Health Check Part V: confidential information

IP Health Check Part IV: patents

IP Health Check Part III: registered design basics

IP Health Check Part II: copyright basics

We are often asked by clients (especially in-house IP managers), “how can I better communicate to our staff the goals of technical IP?” By ‘technical IP’ we refer here to patents and designs (whereas brands/trade marks and copyright can be referred to as ‘marketing IP’).

What should technical IP deliver to an organisation?

While seemingly trite, technical IP, through the monopoly it creates, should deliver value to an organisation. In other words, the technical IP should be linked to and should contribute to the specific or general business strategies of the organisation.

But how can value and contribution be measured and communicated? We offer here a few indicators, using a generalised categorisation of technical IP as a defensive and/or strategic asset:

* Means the effect is both strategic and defensive.

The ability to prevail in any of the above benefits will depend on the strength of the technical IP. For example, a weak patent filed in just a few countries, and that has narrow scope or that protects something of the Development that is only of marginal commercial significance, is less likely to be able to deliver on any of the above benefits. On the other hand, a suite of patents and designs for a development, that includes a number of quite strong patents protected in key markets, is far more likely to deliver on a number of the above benefits. By ‘strong’ patents we mean of broad scope and/or that protect an aspect of the Development that has commercial significance/impact.

Bundling IP

Sophisticated products are often protected by a portfolio of patents. For example, the current model Toyota Prius is thought to be protected by more than 1000 patents. In practice, this makes it extremely difficult to sell a similar product. While it might be possible to invalidate or design-around one or two patents or designs, the cost of doing so for a large portfolio of patents is generally prohibitive. Hence, when evaluating individual IP rights, consideration must also be given to where those rights sit in a portfolio.

Relationship with marketing IP

Especially for products, technical IP needs to be considered in conjuction with marketing IP. Technical IP generally expires after a maximum of 20 years, but marketing IP (trade marks or copyright) can last for many decades (or more). Often, at the beginning of a product lifecycle, any specific brands associated with the new product may be relatively unknown. Technical IP can protect the foothold in the marketplace to enable establishment and build of product brands. If and when the technical IP expires or is designed around, the company can still rely on the brands it has built in the marketplace.

We recommend that in-house IP managers survey their internal customers and develop a picture of the organisation’s views and positions on technical IP. This survey should be used to understand whether these customers see their organisation’s technical IP as delivering value and contributing to the organisation. The findings should also be reviewed to improve the links to and to better target the generation of technical IP in the business.

This article was co-authored with Mike Lloyd, IP management consultant at Griffith Hack.

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Looking to safeguard your business? Consider your domain name when creating trade marks.

Plus, how can you maximise your business’ competitive advantage by managing intellectual property?

A review of almost any well-performing stock exchange listed company will often reveal a significant differential between that company’s market capitalisation and the value of its tangible assets. This differential is attributed to the company’s intangible assets’ value, often lumped under the ubiquitous term ‘goodwill’. Closer scrutiny will reveal that much of the intangible asset base comprises intellectual capital (in turn comprising people, resources and intellectual property).

Effectively managing the intellectual property (IP) component of a company’s intangible asset worth from the start can, and should, increase the value of the business for both short- and long-term gain. A global economic downturn is often the right time to ‘audit’ a company’s IP, which in turn can lay the foundation for an increase in profits, a strengthening of market share and an improvement in competitive advantage as the economy picks up.

Getting IP ownership right from the start is vital. For example, clear internal communication can avoid future disputes with employees regarding creation and ownership of IP. Likewise, clear external engagement can avoid future IP disputes with third parties, contractors, etc. If not managed well, each of these can consume management time and reduce productivity.

Contract negotiation with external parties is likely to be more aggressive in the current recovering climate so, in order to have the edge, be creative. For example, if your company creates IP for other businesses, consider offering an exclusive license for a specified term rather than an assignment. Any IP agreements should be properly documented.

As part of the IP audit, document all IP agreements and set up and maintain an internal IP register, with a designated person appointed to keep the register up-to-date. This is a simple, low cost way to make the protection and enforcement of IP faster, and can maximise IP value on sale. Also, keep all signed IP agreements, such as confidentiality and licensing agreements, in one place either electronically or physically. Again, this can assist with a faster resolution of disputes, or sale, because the rights and obligations agreed by the parties will be certain and accessible, and can be relied upon, rather than having to interpret fall back provisions of the law.

Marketing will usually be crucial to distinguish a business from competitors and to increase market share, and websites are increasingly one of the most valuable marketing tools. Because websites are also easily located in a search, they are increasingly the cause of name disputes, resulting in costly litigation, loss of IP, and a waste of marketing investment.

The following strategies can help avoid name disputes:

• Carry out a search to determine the availability of the chosen trade mark to be used in countries of interest, before using it on the website, and especially to avoid the risk of infringing another business’s trade mark.
• Ensure that the trade mark is used in the form it was registered to avoid the risk of a third party applying to remove it from the register on the basis of non-use.
• Ensure that the website hosting agreement is in order, to avoid a dispute and access to the website being denied.

If your IP is in order, it will be easier to protect and enforce, and will help maximise profits.

This article was co-authored with Tara Parkes, trade marks professional, and Albert Terry, principal.

Looking to safeguard your business? Consider your domain name when creating trade marks.

And, it’s not easy being green. Wulff uncovers why.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

With worldwide growth in innovations to alleviate the effects of climate change, businesses should ensure the trade marks they choose are distinctive, before attempting to register a trade mark that contains ‘green’ credentials or connotations.

While the climate change debate rages on, what is clear is the strong growth in technology and innovation that attempts to address the climate change challenge. This has resulted in strong growth in protecting the IP of these technologies.

At this year’s World Intellectual Property Day, the Minister for Innovation, Industry, Science and Research, Senator Kim Carr, noted a 250 per cent increase over the last five years in the filing of applications for trade marks relating to green technology. This is true for Australia and other major economies, such as the US and the UK.

Across the world, businesses are scrambling to incorporate connotations into their trade marks that suggest the business or product is climate friendly. This poses challenges, as it may give rise to “misleading and deceptive conduct” (actionable by the Australian Consumer and Competition Commission). In addition, trade marks containing the words ‘green’, ‘clean’ and ‘eco’ will be subjected to the same assessment of distinctiveness as for any other trade mark that does not claim green credentials. Unless there are other distinctive features in the mark, it is likely that trade marks containing the word ‘green’ will encounter descriptiveness objections when examined by the Trade Marks Office. Not only does this increase the cost of obtaining registration for the applicant, but trade marks that do not have a significant degree of inherent distinctiveness are also usually difficult to enforce once registered.

The development of a distinctive registered trade mark provides the trade mark owner with strong, enforceable rights. Such marks become valuable assets for a business, especially businesses operating in the green innovation space. Business owners need to focus on getting their choice of trade mark right at the early development stage.

This article was co-authored with Nicola Scheepers, Principal at Griffith Hack.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

A recent Australian Federal Court decision (Mantra Group Pty Ltd v Tailly Pty Ltd (No. 2) [2010] FCA 291) confirms that domain names can, in certain circumstances, be used as trade marks, and that this use can amount to trade mark infringement.

The centre of the dispute was a complex of privately owned holiday apartments in Surfers Paradise in Queensland, named Circle on Cavill. Mantra Group Pty Ltd (Mantra) was the official onsite-letting agent for apartments in the Circle on Cavill complex. However, it was also possible to rent apartments through alternative letting agents, including Tailly Pty Ltd (Tailly).

Mantra owns trade mark registrations in Australia that consist of or contain the words ‘Circle on Cavill’ covering various services, including property management services. Tailly registered 10 domain names that contained the words ‘Circle on Cavill’ and misspellings thereof, such ascircleoncavile.com.au andcircleoncavillappartments.com.au.

The domain names pointed to websites offering apartments for lease in the Circle on Cavill complex. Justice Reeves found that Tailly was using the words Circle on Cavill as they appeared on its websites as trade marks rather than as descriptors. It followed that the domain names that pointed to such websites were also being used as trade marks.

The question of whether a domain name is being used as a trade mark depends on whether the same sign is being used as a trade mark on the website to which the domain name points.

Tailly was found to have infringed Mantra’s trade mark registrations. It was unable to rely on any defences to the claim of trade mark infringement. Justice Reeves ordered, among other remedies, for the domain names to be transferred to Mantra.

The moral of the story is that trade mark infringement is a real risk when using domain names that include a registered trade mark. Seek professional guidance if a conflict is perceived.

This article was co-authored with Jürgen Bebber, Senior Associate at Griffith Hack.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

If you are exporting a patented product to the USA beware!

A recent United States Federal Circuit decision in the case of The Forest Group, Inc. v Bon Tool Company highlights the dangers of marking a product as ‘patented’ or ‘patent pending’ without ensuring that the product is in fact still covered by a patent or pending patent application.

Patent owners mark products because marking may enhance the reputation of the product and deter competitors from creating a similar product. Further, in the US, marking serves as constructive notice to infringers, allowing a patent owner to maximise recoverable damages.

Under the US Patent Act (the Act), the penalty for falsely marking products is up to $500 for each offense. Previously, US courts have applied a single fine for continuous false marking – so, for a batch of 100 products falsely marked, a single fine of up to $500 would apply. However, in this latest case, the court determined that the legislation requires a per article fine. The fine for falsely marking a product batch of 100 would now be up to $50,000.

There are limitations on the impact of this case. The court has discretion in the amount of a fine, including ‘discretion to determine that a fraction of a penny per article is a proper penalty’. Further, false marking must involve deceptive intent, which ordinarily requires evidence of knowledge of falsity.

The Forest Group case does not denote a change in substantive law, but opens the door to vast false marking fines and multiplies financial incentives for making a claim of false marking.

And it’s not just a competitor or purchaser who might bring the case. The Act permits any citizen to make the claim and retain half of the penalty. This gives individuals motivation to seek marked products and investigate the accuracy of the marking. One individual, Thomas Simonian, filed 39 potential false marking claims in February and March this year. Such individuals have been referred to in the media as ‘patent trolls’.

Targets for such actions include large and small corporations in technical fields as varied as pharmaceuticals, IT products, thermostats and envelopes. The case underscores the importance of carefully policing patent marking, ensuring that marking on products and in advertising is accurate and current.

This piece was co-authored with Griffith Hack principal David Hughes and associate Georgina Higinbotham.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Australian innovation patents are a so-called “second tier” patent. To be valid, they still require novelty (newness) but, compared to standard patents, have a lesser requirement of an ‘innovative step’. The question of what is needed to prove 'innovative step' was recently tested in The High Court of Australia (The High Court).

In the case of Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225, the High Court rejected an application to challenge the current test for ‘innovative step’. This was an appeal from the first Australian court decision to interpret the meaning of ‘innovative step’.

Delnorth had alleged infringement of its three innovation patents for a flexible roadside post. Dura-Post then contested the validity of the patents on several grounds, including the ground that they did not involve an ‘innovative step’.

The Patents Act defines ‘innovative step’ as requiring ‘a substantial contribution to the working of the invention’.

The Federal Court accepted that the invention in Delnorth’s first innovation patent involved an ‘innovative step’. It said that the “obviousness” test of standard patents is not a relevant consideration in determining whether an invention involves an innovative step. An obvious invention can thus be the subject of a valid innovation patent. The Full Federal Court went on to uphold this decision.

Dura-Post then sought special leave to appeal to the High Court and failed. Dura-Post contended that the accepted interpretation of the definition of ‘innovative step’ was wrong. Instead, it argued the test should require more than a mere functional comparison of how the invention as claimed works when compared to previous publications (the “prior art”).

Dura-Post suggested the correct test was a comparison of the ‘advance’ that the invention makes over the prior art and how the ‘advance’ makes a substantial contribution to the invention’s working compared to the prior art.

High Court Justices Gummow and Hayne said an appeal on this basis would fail. These decisions have thus confirmed that an innovation patent provides a strong and effective way of protecting both inventions and incremental improvements in technology.

This piece was co-authored with Griffith Hack Associate Simone Tyndall.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

The most recent significant recent reforms concern patent litigation. The Supreme People’s Court of China has now adopted a US-style patent interpretation (claim-driven interpretation, file history estoppel, means and function interpretation, etc.). In patent litigation, the selection of the right IP venue (for example, an ‘IP experienced’ court in Beijing or Shanghai) has always been critical.

In its most recent promulgation, the Supreme People’s Court (Article 18) implemented a reform to prevent ‘forum shopping’. Previously, a third party (ie. Chinese) infringer could, on receipt of a ‘Cease and Desist’ letter, immediately apply to an obscure court (such as a local, inexperienced District court) for a declaration of non-infringement, forcing all subsequent proceedings to be conducted in that court. Now, the third party has to wait one month after it replies to a patentee before it can file such a declaration. This gives the patentee time to proceed in the court of its choosing, while putting the infringer and its customers on notice.

The Supreme People's Court has also recently positively reformed the way patent damages are apportioned, has introduced clearer principles for design interpretation, and has improved the procedures for enforcing well-known trade marks.

The reform agenda of the Supreme People’s Court suggests that further reforms to judicial procedures for trade marks may well be on the way.