Wednesday, December 18, 2013

IPONZ consults on new patent regulations

clipboard theThe Intellectual Property Office of New Zealand (IPONZ) has just issued a discussion paper seeking feedback on proposed regulations and fee changes. Submissions must be made to IPONZ by 24 January 2014, although I'm aware that extensions may be available.

The New Zealand Patents Act 2013 is due to come in to force on 13 September 2014. The regulations will set out the mechanics of how New Zealand applications will be treated under the new regime. Patent applications filed before September 2014 will continue to be examined under the Patents Act 1953.

Here are some of the main changes around examination processes.

Request for examination

Patent applications under the new regime will not be examined until a request for examination is filed. The request can be made voluntarily by the applicant, following a direction from IPONZ, or can be made by a third party.

The deadline for requesting examination is likely to be 3 years from the filing date of the complete specification. For patent applications arising out of national phase entry (called treaty applications), the deadline will be 3 years from the international filing date. Where a convention application claims priority, the deadline will be calculated from the date of application in New Zealand rather than the filing date of the priority application.

Where IPONZ issues a direction to request examination, the applicant will have a two month deadline to comply. This deadline is not extendible. If the deadline is missed the application will lapse, although there might be an opportunity to restore lapsed applications.

IPONZ expects to examine patent applications relatively quickly. IPONZ anticipates issuing directions to request examination:
  • within one year of the filing date of the complete specification; or
  • within 6 – 12 months of the national phase entry date

If this is the case, then we would expect most requests for examination will be in response to a direction from IPONZ rather than a decision by the applicant.

Time period for placing the application in order for acceptance

IPONZ will issue a first examination report at some point following a request for examination. The first examination report starts the clock ticking for putting the application in order for acceptance (allowance).

The proposed period for placing the application in order for acceptance will be 12 months from the date of the first examination report. It's important to note that this is an acceptance deadline rather than a response deadline. Any response needs to be filed early enough to be considered by an examiner before the 12 month acceptance deadline.

IPONZ will require a response to the first examination report within 6 months. If the first response does not place the application in order for acceptance the next examination report will give a 3 month deadline to respond. There will be a one month extension available for each response deadline. In theory there is no limit to the number of examination reports that IPONZ can issue within the 12 month acceptance deadline.

There will be some situations where IPONZ will not have sufficient time to consider a response before the 12 month acceptance deadline. There might be some discretionary extensions available. But applicants may prefer not to rely on discretionary extensions.

It will be important to allow applicants to file a precautionary divisional application (continuation) in such situations. There is no mention of imposing a restriction on divisional practice. This means that no restriction is contemplated. Or perhaps no consultation on such restriction is contemplated.

Electronic case management system

IPONZ introduced a new online case management system for patents in December 2012. We are advised that uptake of the online case management system has been very high. Almost 100% of all patent applications are made online. A minority of clients use other means which requires maintaining infrastructure, processes and staff in place to receive the documentation.

IPONZ proposes to mandate use of the online case management system for all communications to and from IPONZ and filing of documents with IPONZ under the Act.

This proposal seems a little strange. IPONZ acknowledges that they cannot mandate electronic filing of national phase (treaty) applications. Last year treaty applications made up 54% of patent application filings.

And there is a handful of patent applications that are subject to secrecy orders imposed by foreign countries. The information in such patent specifications would compromise New Zealand’s security, defence or international relations if mishandled. I talk about classified applications in my post the darker side of patent protection.

Does it make sense to impose a rule on all patent applicants to file patent applications online while acknowledging that the rule doesn't apply to over half the patent applications filed in any year? Does it make sense to require patent applicants to deal with IPONZ electronically when its own systems are not secure enough for classified patent applications?

Perhaps a more sensible approach would be to pat ourselves on the back about the high uptake of the online case management system and recognise that some patent applications will continue to be handled manually.

Further steps

IPONZ has compiled a list of 40 questions on aspects of the discussion paper. They would love to hear your views by the deadline of 24 January 2014.



Photo courtesy of author Cookieater2009 under Creative Commons licence.

Monday, November 25, 2013

TPP and patentable subject matter

U.S. Foreign PolicyThe Trans-Pacific Partnership (TPP) talks involve delegations from Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Right now a TPP Chief Negotiators summit is drawing to a close in Salt Lake City, Utah.

The talks are technically conducted in secret. However there seems to be a constant stream of leaked drafts and other documents. This in turn leads to a lot of comment from civil libertarians, fugitives and academics.

The latest document I came across is the confidential draft treaty chapter from the Intellectual Property group. It sets out the combined positions of all the parties as they were by the end of August 2013. Assuming this document is not a complete fabrication, what are the parties saying about the sort of technology that should be eligible for patent protection?

Patentable subject matter

The text contains the provision that:
'each Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application'. [Article QQ.E.1]
This provision makes sense. Those familiar with TRIPS (agreement on trade-related aspects of intellectual property rights) will see a passing similarity with TRIPS Article 27.

There is a slight divergence in policy between Australia and New Zealand. Australia would like to add that 'patents shall be available for any new uses or methods of using a known product'. New Zealand would not.

Morality

The text proposes that:
'each party may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to nature or the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law'. [Article 2].
No parties object to this statement, which is not really surprising.

New Zealand already has this provision in the Patents Act 2013 section 15. Australia has just concluded consultation on whether or not to exclude inventions from patentability where commercialization would be wholly offensive to the Australian public.

Subject matter exclusions

Most countries, with the exception of the United States, would like to exclude some subject matter from patentability.

New Zealand and Australia would like to be able to exclude:
  • plants and animals other than microorganisms;
  • diagnostic, therapeutic, and surgical methods for the treatment of humans or animals; and
  • essentially biological processes for the production of plants or animals, other than non-biological and microbiological processes for such production.

These exclusions go beyond what is currently in section 16 of the New Zealand Patents Act 2013. The current provisions relate to humans only. Are we going to see New Zealand law amended to exclude patents for diagnostic, therapeutic and surgical method for the treatment of animals?

New Zealand wants to amend the text to require parties to 'provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof'. This makes sense. Australia and New Zealand already have separate legislation for plant varieties.

Computer programs

All parties agree that they should make patents available for any invention in all fields of technology.

One of the parties to the agreement, New Zealand, has taken the position domestically that a computer program is not an invention. Section 11 of the New Zealand Patents Act 2013 says so. The logic is that if you assume that a computer program is not an invention in the first place then you don't have to make patents available for it.

As I have said in an earlier post, New Zealand will continue to grant patents for inventions that make use of or involve a computer program. It is the underlying technical function of the code that is patentable, rather than the code itself. New Zealand will continue to allow patents for technical functions that software code causes a processor to perform. New Zealand will continue to grant patents for computer-implemented inventions.

So what do other countries think? Are software patents a huge problem elsewhere? Is New Zealand's approach the way forward that every other country will rush to adopt?

Well, Mexico proposes an exclusion for:
'diagrams, plans, rules and methods for carrying out mental processes, playing games or doing business, and mathematical methods as such; software as such; methods to present information as such; and aesthetic creations and artistic or literary works'.
You can read into that what you will. No other countries, even New Zealand, seem to want a specific exclusion for computer programs in the text of the treaty. This seems strange. If New Zealand has adopted this exclusion based on defensible sound policy, then why not join Mexico and suggest that this exclusion be included in the treaty text? Maybe the exclusion is not based on defensible sound policy.

Either the parties to the treaty (other than Mexico) have no issue with computer-implemented inventions. Or they each consider that the issue can be dealt with under their existing frameworks.

Further steps

I guess we wait and see the outcome of the next round of talks. There doesn't seem to be anything surprising or alarming in the approach of the parties to patentable subject matter. It's simply a matter of sitting back and waiting for the next leak.



Photo courtesy of author Rick Galvan under Creative Commons licence.

Wednesday, November 20, 2013

Black hole expenditure

Puppies We each have our own version of a black hole. In my home I'm sure there is a black hole that removes random items from my kids' LEGO sets, last season's garments from my wife's wardrobe, and random socks from my sock drawer.

The Inland Revenue Department (IRD) has yet another version of a black hole. Black hole expenditure is defined in the discussion document as:
'business expenditure that is not immediately deductible for tax purposes and also does not form part of the cost of a depreciable asset for tax purposes, and therefore cannot be deducted over time as depreciation'.

Patents and plant variety rights

There is a proposal to allow depreciation of capitalised development expenditure that:
  • relates to an invention that is the subject of a patent or patent application; or
  • a plant variety that is the subject of plant variety rights.

Capitalised development expenditure will be allowed to be depreciated over the legal life of the asset to which it relates.

It's good that the IRD is consulting on this issue. They seem to have forgotten about registered designs (design patents). Those who work with them know that a significant amount of R&D cost is spent on technology for which registered design protection is obtained, or at least applied for.

Unsuccessful R&D

Some capitalised development expenditure may not give rise to a valuable asset. A valuable asset here is one that is depreciable for tax purposes. Or an asset that is non-depreciable for tax purposes because it does not have a finite useful life that can be estimated with a reasonable degree of certainty (eg know how).

The discussion document outlines a proposal to allow a person a tax deduction for capitalised development expenditure they have incurred if:
  • the intangible asset has been derecognised prior to it earning income;
  • the person intended that the expenditure would lead to an item of depreciable intangible property; and
  • no other deduction has been allowed.

Getting the incentives right

There's a risk of perverse incentives here. The discussion paper notes that:
'allowing immediate deductibility of unsuccessful capitalised development expenditure would create a perverse incentive for taxpayers not to complete marginal projects because, when the value of exploitation is low or uncertain, immediate deductability of unsuccessful capitalised development expenditure may be preferred by the taxpayer over depreciation of successful capitalised development expenditure.'
This has got to be weighed up against the greater risk that:
'businesses may be incentivised to complete projects that (ignoring tax) have been discovered to be inefficient, simply to avoid black hole treatment of sunk capital expenditure'.
My view is that abandoning inefficient projects is a prudent thing to do. It's a hard thing to do. A bit like drowning puppies. But it has to be done. I can't see any perverse incentive in doing that.

Further steps

The IRD is looking for submissions on the proposed reforms by 17 December 2013. I expect that feedback on the reforms will be largely positive from those doing R&D. Supporting business growth and innovation by changing 'black hole' tax treatment of R&D expenditure can't be a bad thing.


Photo courtesy of author Niall Kennedy under Creative Commons license.

Sunday, November 17, 2013

New Zealand prepares for SAP & SEP

e-commerceIntellectual property law is replete with acronyms. Commerce Minster Craig Foss recently added two more. We are now going to have a single application process (SAP) and a single examination process (SEP) for New Zealand and Australian patent applications.

The press release is a little bit tabloid in that the title 'Single trans-Tasman patent application approved' doesn't quite match the story. There is no single patent application. Merely a process for filing two applications.

A recent Cabinet paper and Regulatory Impact Statement (Cabinet paper) seeks approval to implement the SAP and the SEP for New Zealand and Australian patent applications, and to develop a bilateral arrangement between the two countries.

Single Application Process (SAP)

New Zealand and Australia are two separate countries. They have separate application processes. Under the new regime, patent applicants will continue to file separate patent applications in each country if that is what they want to do.

If the SAP goes ahead, patent applicants wanting to cover both countries will have the option of using a single SAP portal in New Zealand or Australia to file a pair of applications. The New Zealand application will be referred to the Intellectual Property Office of New Zealand (IPONZ) for examination. The Australian application will be referred to IP Australia for examination.

One of the benefits of the SAP stated in the Cabinet paper is cost savings to applicants. The information required to file the pair of applications will only need to be provided once [para 99]. We are told that this will provide data entry time savings to patent attorneys which may result in cost savings to applicants through reduced patent attorney fees [para 100].

There will be set-up costs and ongoing administrative costs that are not quantifiable [para 101]. Taxpayers are reassured that these costs are going to be recovered through increased patent application fees. Details of fee increases are not yet available, but are an important factor in whether or not there are in fact cost savings to applicants.

Single Examination Process (SEP)

If implemented, the SEP will see corresponding applications referred to a single patent examiner who will examine both applications simultaneously. The examiner could be based in either New Zealand or Australia [para 26]. The applicant does not choose. The examiner assigned to a pair of applications will be determined by agreement between IP Australia and IPONZ [Recommendations #3).

The SEP ends when the pair of applications has been accepted or refused [para 27]. All processes following acceptance or refusal (including grant) will be handled separately by each office. Hence there will still be separate New Zealand and Australian patents granted.

The Pilot Programme

The SAP is likely to be rolled out in 2015. An SEP pilot program will run for 18-24 months once the SAP is implemented. The SEP pilot program will then be subject to a review to determine whether it is worthwhile to implement fully. We will then be either fully implementing SEP or pulling the plug.

We haven't been told how corresponding applications will be selected for the SEP pilot program. The Cabinet paper states that the pilot program will involve 'a small number of corresponding applications' [128] and that it will run long enough to 'ensure that there are sufficient applications processed to provide meaningful information' [129].

There is no detail available yet about the selection criteria that will be applied to pairs of patent applications in order to enter the SEP. Will patent applicants elect to enter the SEP? Or will SEP be imposed on them? Is filing under SAP a pre-requisite for entry into the SAP? Or are they independent?

The legislation proposed empowers IP Australia and IPONZ to proceed without applicant consent. I guess it will depend on the level of interest in SEP. If there is not a large uptake then pairs of applications will be placed in the SEP program against the wishes of applicants.

Observations

About one third of Australian patent applications have a corresponding application in New Zealand. Examination timeframes in Australia are longer than those in New Zealand. IP Australia will be able to utilise IPONZ examination resources 'to ensure operational efficiencies can be maintained at least over the medium term' [para 31].

So which cases will IP Australia offload to IPONZ?

The New Zealand Patents Act 2013 will impose a change in examination to include examination for inventive step as well as novelty. IPONZ examiners will require significant training to examine patent applications under the new legislation [para 34]. This would suggest that suitable candidates for SEP would be 'easy cases', national phase entries with no inventive step issues.

As noted in the Cabinet paper, there will be significant differences between New Zealand and Australia on the criteria for granting a patent. The New Zealand Act contains legislative exclusions for methods of medical treatment, methods of diagnosis and computer programs. The claims in each of a pair of patent applications may be completely different.

I always thought that the invention is defined by the claims. A pair of applications with different claim sets relate to a different inventions. This would suggest that suitable pairs of applications are ones that claim subject matter in chemical, mechanical and electrical art areas that do not fall within New Zealand's excluded categories.

A further point to consider is that IPONZ views the SEP as an opportunity to leverage off IP Australia's examination experiences. This in turn will make it easier to bring IPONZ examiners up to the requisite standard for examining patent applications [para 113]. IPONZ intends to hire new examiners to deal with increased work volumes [para 118].

Patent applicants with a pair of applications will need to weigh up the benefits of entering the SEP program against the risk that their patent applications will be used to train IPONZ examiners. I can certainly see the benefit for IP Australia and IPONZ of SEP. It is the advantage for patent applicants that is not immediately clear to me. The SEP pilot program will be an interesting one to watch.



Photo courtesy of author Garfield Anderssen under Creative Commons license.

Thursday, October 17, 2013

The intellectual property gap

Gap filler book exchangeThe results of the annual Market Measures* study are out again. The study provides an overview of how New Zealand tech companies typically take their innovations to market. This year a record 346 companies put in the time and effort to complete the survey, up 25% on 2012.

Export focussed

Market Measures’ annual benchmarks continue to paint a picture of a buoyant, export-focused sector with a consistent commitment to the marketing and selling of products. In 2013 77% of New Zealand companies surveyed were exporting.

New Zealand's small domestic market forces most companies offshore early. Over half of the start-ups in the study are exporting. On average companies export to three or four countries. Exports to the USA have doubled since the 2010 survey, while non-traditional tech markets in Singapore, China and South East Asia are also getting stronger.

Intellectual Property Aware ...

It is good to see that only 10% of companies surveyed see no commercial value in protecting their intellectual property, and that only 6% consider intellectual property as not relevant to their business.

So the majority of companies see commercial value in protecting their intellectual property. But are we doing it well?

... but not Intellectual Property Savvy

Kiwi tech firms rate themselves strongly on design, production, managing money and staff. Overall they lack confidence at selling, marketing and protecting IP. Here's a list of commercialisation activities that New Zealand companies do. The items at the top of the list are things our companies believe they are good at. The ones at the bottom of the list, not so much.

  • Product design

  • Managing finances

  • Product development and manufacturing

  • Recruitment and retention of staff

  • Legal contracts

  • Business strategy and goals

  • Selling

  • Protection of intellectual property

  • Marketing and promotion

Tech companies see commercial value in protecting their intellectual property, but are not confident that they do it well.

What now?

It is great to see our export focussed companies recognise the commercial value in protecting their intellectual property. The challenge now is to help our companies get better at aligning their business strategy with their intellectual property strategy. We need to fill the gap.

*Market Measures was founded in 2009 by Concentrate Limited as a national study that benchmarks the sales and marketing activity of New Zealand’s technology companies. The aim of this survey is to give Kiwi technology companies useful information for planning their sales and marketing strategies.

Photo courtesy of author Christchurch City Libraries under Creative Commons licence.

Monday, September 16, 2013

New Zealand bans patents for software

New Zealand rejects software patentsThe New Zealand Government recently put in place a new Patents Act. One of the hotly debated topics was the extent to which patent protection should be available for computer-implemented inventions. These types of inventions are often referred to in mainstream media and anti-patent communities as "software patents".

So have we banned software patents? Or have we banned patents for software? There is a difference. The reporting so far on the new law is a little unclear.

The Washington Post reported that "New Zealand voted to ban software patents". Another post on ZDNet announced that New Zealand has "passed a new Patents Bill that will effectively outlaw software patents".

The Wall Street Journal reports that New Zealand will no longer grant patents for software. World Intellectual Property Review dismisses media outlets that  have reported the changes to the bill as an outright ban on patenting software. FOSSpatents acknowledges that the "movement pushing for abolition [of software patents is declaring] victory, that's not only inaccurate but also an irresponsible thing to do".

Despite conflicting opinions on the issue, one simple fact remains - New Zealand will continue to grant patents for inventions that make use of or involve a computer program.

The current law

Until the new law comes into force, inventions will be assessed under the Patents Act 1953 (the old act). The old act defines an invention as any "manner of new manufacture". What is patentable subject matter and what is not patentable subject matter is defined by case law and decisions of the Commissioner of Patents.

The Hughes Aircraft Company decision established the appropriate test for patentable subject matter in 1995 as: … whether each of the claims define a method which, either directly or by clear implication, embodies a commercially useful effect.

The Haddad decision held that the term "manner of new manufacture" implies a situation which involves some sort of interaction with a real entity or which achieves a tangible product or result.

A blanket exclusion

A draft Patents Bill was released for public consultation nearly 10 years ago in December 2004. It did not restrict or exclude patents for computer-implemented inventions. A new government introduced the Patents Bill to Parliament in July 2008.

The Patents Bill was referred to the parliamentary Commerce Select Committee which then called for submissions. Many of the submitters were from the New Zealand Open Source Society (NZOSS) or their supporters who wanted an exclusion for computer programs. What followed would later be acknowledged in Parliament as a departure from the "formatted process".

Many submissions urged a consistency of approach with other markets. The NZOSS for example suggested that "New Zealand could follow the European lead in patent law".

The committee published a revised Patents Bill in March 2010. The revised bill included new clause 15 (3A) simply reading "a computer program is not a patentable invention".

The view of government officials was that the committee intended this to be interpreted similarly to the interpretation of similar exclusions in the legislation of other countries, in particular the United Kingdom and other European members. This would allow computer programs to be patented if they produce a "technical effect".

There was understandable concern that the wording proposed by the committee did not clearly express the committee's intention. There was also concern that the courts would not interpret the restriction in the manner intended by the committee.

It is no surprise to see the most vocal supporters of the controversial clause acknowledge in Parliament that the new law is better of without it.

The 'as such' restriction

The government introduced supplementary order paper SOP 120 to better align the proposed wording of the exclusion with:
  • the intention of the committee
  • New Zealand's international obligations
  • overseas precedents.

The new clause had a European look about it as it excluded computer programs "as such". There was some concern from some of those submitters who had asked the Commerce Select Committee for an exclusion for computer programs. In order to address these concerns the government introduced supplementary order paper SOP 237. New clause 10A deals with computer programs.

Interpretation of the new restriction

As I said in the World Intellectual Property Review,
“Minister Foss has given a clear direction to the Commissioner of Patents and the New Zealand courts to apply the steps of the Aerotel test established by the English Court of Appeal. The Minister intends New Zealand practice to follow the Aerotel test, and subsequent English jurisprudence that applies the test, when considering patent applications involving computer programs".
The Intellectual Property Office of New Zealand (IPONZ) will apply the Aerotel test, at least initially. Subsequent English jurisprudence will also assist us. The UK courts for example have allowed patents for a computer programmed to work better (Symbian), a better way of designing drill bits (Halliburton), a technique for monitoring the content of electronic communications (Protecting Kids the World Over), and organisation of touch screen devices (HTC Europe v Apple).

A ban on software patents?

So, the question remains, have we banned software patents? Or have we banned patents for software? There is still some confusion on this issue.

Nowhere is this more evident than in the final Parliamentary debates. There was an observation made that software code is a mathematical algorithm, like a phrase in a book or a piece of music. I have seen similar sentiments echoed within anti-patent communities.

This is an interesting observation, but it has nothing to do with patent law.

As I said in the Wall Street Journal,
“The way that I look at it, is a computer program and a processor are just raw materials like plastic, like wire, like wood and you are not patenting raw materials but you are patenting what you’ve made with those materials”.
It is the underlying technical function of the code that is patentable, rather than the code itself. That was always the case with the old law. That will continue to be the case with the new law. New Zealand will continue to allow patents for technical functions that software code causes a processor to perform. We will continue to grant patents for computer-implemented inventions.

So when we talk about software patents, if we actually mean computer-implemented inventions, we haven't banned them at all.

Photo courtesy of author opensource.com under Creative Commons licence.

Monday, July 8, 2013

Who are the innovation leaders?

Global clocks
Have you ever wondered which countries have the best innovation ecosystems? We all know that innovation is important. But which countries are the best at it?

The Global Innovation Index

Last week we saw the launch of the Global Innovation Index 2013 (GII 2013). The Index is co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO). The GII 2013 ranks 142 economies, representing 94.9% of the world's population and 98.7% of the world's GDP.

The authors recognize that success in innovation requires excellence across a range of input conditions. This objective is difficult to reach for many less-developed economies. The authors note that:
[g]reat scientific centres not only require eminent universities and laboratories, they also require a broader environment of meritocracy and openness to diversity that can attract top talent from around the world. For this reason, it is unlikely that the world’s leading science cities will change significantly in coming decades. . . . The presence of major scientific centres has itself become a key source of innovation and economic growth. This is likely to lead to more concentrated innovation and economic development in the future, increasing the gaps between the world’s scientific ‘haves’ and ‘have-nots’.

How it works

The GII 2013 takes a holistic view of innovation. There are a total of 84 different indicators that are used to rank the innovation of different economies. The model involves four overall measures. These are the Innovation Input Sub-Index, the Innovation Output Sub-Index, the overall GII score, and the Innovation Efficiency Ratio.

The Innovation Input Sub-Index

There are five input pillars that capture elements of the national economy that enables innovative activities. These are:
  1. Institutions - political environment, regulatory environment, business environment
  2. Human capital and research - education, tertiary education, R&D
  3. Infrastructure - ICT, general infrastructure, ecological sustainability
  4. Market sophistication - credit, investment, trade & competition
  5. Business sophistication - knowledge workers, innovation linkages, knowledge absorption

The Innovation Output Sub-Index

Innovation outputs are the results of innovative activities within the economy. There are two output pillars:
  1. Knowledge and technology outputs - knowledge creation, knowledge impact, knowledge diffusion
  2. Creative outputs - intangible assets, creative goods and services, online creativity

The overall GII score

This is the simple average of the Input and Output Sub-Indices

The Innovation Efficiency Ratio

This is the ratio of the Output Sub-Index over the Input Sub-Index. It shows how much innovation output a given country is getting for its inputs.

What are the results?

The top ten most innovative countries in the world, according to the GII 2013, are:
  1. Switzerland
  2. Sweden
  3. United Kingdom
  4. Netherlands
  5. United States
  6. Finland
  7. Hong Kong (China)
  8. Singapore
  9. Denmark
  10. Ireland

Down here in South East Asia/Oceania the top ten are:
  1. Hong Kong (China)
  2. Singapore
  3. New Zealand (17th overall)
  4. Korea (18th overall)
  5. Australia (19th overall)
  6. Japan (22nd overall)
  7. Malaysia (32nd overall)
  8. China (35th overall)
  9. Thailand (57th overall)
  10. Mongolia (72nd overall)

The innovation leaders

The top 25 countries, including New Zealand and Australia, are described as 'innovation leaders'. Apparently we
'have succeeded in creating well-linked innovation ecosystems where investments in human capital thrive in fertile and stable innovation infrastructures to create impressive levels of innovation outputs'.
There is always room for improvement. But it is good to sit back for a moment and recognise that we're doing something right.

Photo courtesy of author futureatlas.com under Creative Commons licence.



Saturday, July 6, 2013

The halftime report

Mount Cook, New ZealandIs it July already? It's time to reflect on which PatentBuff posts published this year have been most popular. There's a real range here.

Once again, patent law reform and regulation of the patent profession are hot topics. Also up there are examples of case law on the patentability of software and business methods in the United States, Canada, Australia and New Zealand. Copyright has also been in the spotlight with our three strikes law and our ban on parallel imports of films.

Pitney Bowes denied printing patent: Is printing information on a mail piece a patentable invention? Or is it an unpatentable abstract concept? The United States Patent Trial and Appeal Board found that this type of subject matter is patent eligible but in this case was obvious.

Brave new patent law: In January this year the Patents Bill jumped to Number 2 on the Order Paper. My optimistic predictions were that the Committee of the whole House would consider the bill within the next few weeks. I was wrong. We all were. I don't make those sort of predictions any more.

The last of the patent attorneys: Patent attorneys are a rare breed in New Zealand. Under a new regulatory framework announced this year we are going to become even scarcer. Or maybe we are simply going to see fewer registered patent attorneys who do not do patent attorney work.

Research Affiliates and the unpatentable index: A judgment from the Federal Court of Australia sets out some new approaches to assessing subject matter eligibility for business method claims. These approaches are based on the product of the claimed method, the description of that method in the body of the specification, and the extent of computer implementation.

Canada's purposive proposal: A few years ago the Canadian Federal Court of Appeal issued a decision involving Amazon.com and the company's 'one-click' patent application. As a result of the decision, the Canadian Intellectual Property Office (CIPO) has put in place a new approach for computer-implemented inventions.

Ten years on: This year I passed a significant milestone. I have spent ten years as an equity partner in an IP law firm. So what's changed over the last decade? My take on social networking, communication, virtual law firms, alternate business models, and the multi-generational workforce.

The national phase workaround: New Zealand is in the process of overhauling 60-year old legislation. The new Patents Bill is intended to create a balanced patent system that will protect inventions and encourage innovation. One of the challenges imposed on the Intellectual Property Office of New Zealand (IPONZ) is to put in place a new computer system that will handle both sets of laws seamlessly. IPONZ has been providing workarounds to address the inevitable glitches in their system. One glitch is that the new system is unable to handle cases in which an applicant wishes to enter national phase before publication of the international specification.

Curtains for the Cinema: New Zealand has a way of preventing cinemas from having to compete with different formats such as DVD, Blu-Ray, Pay-Per-View or Free-To-Air. The Copyright Act bans parallel importation of films into New Zealand for nine months from the international release date. Government officials are likely to recommend removal of this mechanism. Does this mean curtains for the cinema?

Insurance method patent okay says IPONZ: In a decision published this year, the Intellectual Property Office of New Zealand (IPONZ) allowed a patent on a technique for providing data insurance. How would this invention be treated if it had been considered under the proposed law that will introduce a European-style "as such" restriction on the patentability of computer programs?

Copyright Tribunal takes Man Down: This year the music industry won its first copyright case under the New Zealand three strikes law. A Rihanna fan has been rapped over the knuckles for unlawfully downloading Man Down. What is interesting about this decision is that we now have a sense of what sort of monetary penalties an unsuccessful Respondent will have to pay.

Photo courtesy of author DragonWoman under Creative Commons licence.

Tuesday, July 2, 2013

Curtains for the Cinema - the sequel

Vogelsang - Cinema #4: Curtain, 70s style
The New Zealand cinematic industry can breathe a sigh of relief. The mechanism to protect them from competition with different formats such as DVD, Blu-Ray, Pay-Per-View or Free-To-Air is set to continue for another three years.

The Copyright Act bans parallel importation of films into New Zealand for nine months from the international release date.

That protection mechanism is set to continue for another three years due to new legislation introduced to Parliament today. The only tweak is that the period of the ban will be shortened to five months from the current nine.

The current regime

As I mentioned in a previous post, section 35(3) of the Copyright Act 1994 provides that a person infringes copyright in a film if that person:
  • imports a copy of the film into New Zealand within 9 months of first being made available to the public; and
  • knows or has reason to believe that the film is imported into New Zealand within 9 months of first being made available to the public; and
  • is not the licensee of the copyright in New Zealand; and
  • imports the film into New Zealand other than for that person's private and domestic use.

The advice of the officials

The officials at the Ministry of Business, Innovation & Employment (MBIE) want this ban to end. A Regulatory Impact Statement prepared by officials sets out three possible options for reform. These are:
  • Allowing the ban to lapse from 31 October 2013 so that retailers can import film titles as soon as they are released overseas on formats such as DVD; or
  • Continue the ban for three years but shorten its period to five months;
  • Reinstate the current nine month ban for a further five years

The preferred option, according to officials, is to retain the status quo and allow the ban to lapse.

The proposed law

The Government is putting forward the Copyright (Parallel Importing of Films) Amendment Bill. We seem to be going with a different option than that recommended by officials.

The Bill proposes to amend the Copyright Act to continue the ban for three years but shorten its period to five months.

Further steps

A Parliamentary Select Committee will now take submissions on the Bill and report back to the House by Friday 16 August 2013.

The Explanatory Note of the Bill notes that the film industry will now have another three years 'to finish converting to digital exhibition technology and ensure that the film distribution model reflects developments in the market for films, particularly online'.

So it's not curtains just yet for the owners of the 120 cinema complexes spread around New Zealand. The proposed law will extend the ban for another three years. Those in favour of the ban would be wise to make Select Committee submissions. Anything can happen during the Select Committee process.

Photo courtesy of author  AndiH under Creative Commons licence.

Sunday, June 16, 2013

Another case of the disappearing hens

UntitledSome of our hens are disappearing. It's a hard one to measure. We don't know exactly how many hens we have. We think it is somewhere between 15 and 20. They are free range so we're never quite sure where they all are at any given time.

But there is still a sense that they occasionally disappear. Someone or something is helping themselves without asking. Our flock is a bit like a lolly jar to some predator. But which predator?

We know it's not our own canine mobsters. I covered them in a previous post. The evil mastermind has passed on already.

It's probably not a harrier hawk or Kahu. I often see them gliding around our property. In my experience they tend to go for young chicks and eggs rather than adult birds. A month ago I did see a harrier swoop on one of our hens and try and carry it off. The hen won that encounter.

There are no other native predators in New Zealand. No snakes, foxes, coyotes, raccoons, weasels, skunks, wildcats, badgers or wolves. But there are plenty of introduced predators. We talked to the biosecurity folks at the Greater Wellington Regional Council. We compiled a short list of possible culprits from their list of pest animals.
Stoat trap
It could be a ferret, stoat or weasel. We set a kill trap for those a few weeks ago. No luck yet. The device has an entrance for the nasty little mustelid to enter the box. Once inside it trips a spring loaded plate and that's the end of it.

Bait stationMaybe it's a family of rats. It doesn't really matter whether they are norway rats or ship rats. They are all rats to us. We've set some poison bait in a bait station for those. The bait station is basically a housing that only a rat is small enough to enter. Apparently we need to avoid non-target animals.

Cage trapOr it could be a feral cat or possum. This is a little tricky. We have three domestic cats of our own. Surely it's not one of our own cats who are sneaking chickens?! I guess we'll find out soon enough. We've set a live cage trap that will catch and contain a feral cat, a possum, or one of our domestic moggies.

We'll find out soon enough who the lolly jar culprit is.

Lolly jar photo courtesy of author Sydney Wired under Creative Commons licence.

Thursday, June 13, 2013

Beware the moonlighting bureaucrat

MOONIn my last post I posed the question of whether we would see New Zealand patent examiners moonlighting as patent attorneys. This idea is not as far-fetched as it sounds. Consider the following example. I am not making any of this up.

The applicant

A few years ago an inventor in a rural New Zealand town came up with an invention for a spray tank assembly for an all terrain vehicle (ATV). He prepared and filed a patent application in New Zealand through a reputable patent attorney firm.

The inventor had a year within which to decide where to file further patent applications for his invention. The records show that he filed a PCT international application with the Intellectual Property Office of New Zealand (IPONZ).

There was obviously a change in advisor at some point between the filing dates of the New Zealand application and the PCT application. The inventor named someone else as address for correspondence on the PCT Request form.

The application

We can quickly see where things start going wrong. The PCT Request form lists a total of 21 pages filed. These include 3 request pages, 11 description pages, and 7 drawings pages. No claims pages. No abstract page.

WIPO published the PCT application with the International Search Report (ISR) attached. The international examiner managed to produce some prior art even though there were no claims to search.

The examiner noted in the International Preliminary Report on Patentability (IPRP) that '[t]here is no suitable claim on which I can base a search or opinion'. In fact, the examiner went on to state that 'the application has no claims'.

The PCT application has lapsed. Because the PCT application was published there is no scope for the inventor to secure patent protection for the invention described in the published application. Anywhere.

So who would encourage an inventor to file a PCT patent application with no claims? The inventor has forked out several thousand dollars in PCT patent office fees and now has nothing to show for it.

The advisor

Various publications describe the advisor as an IP strategist, one of the world's leading intellectual property experts, and an industry expert. There is no record of the advisor ever appearing on the New Zealand Patent Attorney Register.

The advisor authored a document while under contract to IPONZ to 'explore the viability of a support and advisory service for SMEs'. One of the proposals in the document, if implemented, would see IPONZ offer through its website:
  • IP search;
  • designs search and commentary;
  • patentability search;
  • patent validity search; and
  • freedom to operate search (all IP).

IPONZ made it clear that the views expressed, and any findings outlined, in the report are those of the author and not IPONZ. As far as I know, IPONZ has not implemented any of the above options.

What now?

There are quite a few observations we can make here. One is that a PCT patent specification should have claims. Most patent attorneys know that. Some IP strategists and leading intellectual property experts do not.

It is important when engaging an IP advisor to reassure yourself that they know what they are doing. Especially if they are a moonlighting bureaucrat. The advice may be cheap or even free. But what if it means losing potentially valuable IP rights forever? I guess it really is a case of getting what you pay for.

Photo courtesy of author Nick. K. under Creative Commons licence.

Wednesday, June 12, 2013

A trans-Tasman approach to patent examination

e-commerce

Two years ago the New Zealand and Australian Governments announced a faster, cheaper and more streamlined trans-Tasman process for securing patent rights in New Zealand and Australia. A single patent application and examination process for both countries, we were told, will remove duplication, drive efficiencies and reduce costs.

Further details of the plan have now emerged with the introduction into the Australian Parliament of the Intellectual Property Laws Amendment Bill 2013. Here is my take on the main changes.

The Moonlighting Examiner

Patent examiners are in a privileged position when it comes to inventions. They get to see a lot of sensitive material before it is publicly available. In New Zealand we have section 6(3) of the Patents Act 1953 that says:
[e]very officer and employee of the Patent Office commits an offence, and shall be liable on summary conviction to a fine not exceeding 20 pounds, if, outside the scope of his official duties, he drafts or prepares a specification or drawing or any part of a specification or drawing or makes a search of the records of the Patent Office for the use or information of any applicant or intending applicant for a patent under this Act.

The explanatory note says that the equivalent provision in Australia, section 185, is outdated and no longer required. We are told that such conduct would breach the APS Code of Conduct in the Public Service Act 1999, and could be dealt with appropriately under that Act.

The Bill will remove the Australian provision. It will be interesting to see if similar changes are made to the New Zealand Act. It is not uncommon for New Zealand examiners to qualify as New Zealand patent attorneys while working at IPONZ. Some continue to work at IPONZ after qualification. Will we see New Zealand patent examiners moonlighting as patent attorneys?

The Electronic Mailbox

At the moment an address for service must be a physical or postal address in Australia, and the permitted means of service are by post or personal delivery to that address.

Revised section 221(1) will permit an address in Australia or New Zealand to be an address for service of documents. Presumably a patent applicant will be able to maintain separate addresses in each country if that is what the applicant wants.

It looks like we will be sticking with post or personal delivery for now. But there is a specific provision to allow an electronic address to be an address for service in Australia or in New Zealand. New section 221(2) says that 'an address includes a reference to an electronic address'.

The question of whether a particular electronic address is in Australia or in New Zealand is to be 'determined in accordance with the regulations', according to new sections 221(3) and 221(4).

That will be an interesting one to watch.

The New Zealand Delegate

Patent examiners are usually referred to as 'examiners' for those of us in the profession and 'advisors' for those working at the Intellectual Property Office of New Zealand (IPONZ). The Bill introduces a couple of new labels. A 'New Zealand patents official' administers New Zealand patent law. A 'New Zealand delegate' is a New Zealand patents official 'to whom the Australian Commissioner delegates powers and functions under the Patents Act'.

A patent examiner in his/her role as a New Zealand delegate will be able to examine Australian patent applications while resident in New Zealand. There will be some teething problems. The Bill contains some provisions to deal with these.

A New Zealand delegate must, if so required, exercise a delegated power or perform a delegated function under the direction or supervision of the Commissioner or an employee in the Patent Office specified in an instrument of delegation. This will ensure that New Zealand delegates can be given appropriate guidance by Australian patents officials.

There may also be situations where an error or omission by a New Zealand delegate of the Australian Commissioner causes a deadline to be overlooked. There are new subsections to permit the Australian Commissioner to extend the time for doing a relevant act if the relevant act or the error or omission took place in New Zealand.

Protection of New Zealand Delegates

New section 20(3) will give New Zealand examiners immunity from liability in case they mess up examination of an Australian patent application. The example given in the explanatory note is where:
a New Zealand delegate of the Australian Commissioner does not accept an application for grant of a patent when examining it, owing to a mistaken understanding of the invention being claimed. Later on, a Deputy Commissioner in Australia hears the applicant and accepts the application. The applicant is inconvenienced by the delay in the grant of the patent. It is immaterial that the New Zealand delegate‘s decision is made in New Zealand: the New Zealand delegate will have the same immunity in Australia as an Australian delegate.

I expect that this limitation of liability would apply equally where a New Zealand examiner has a mistaken understanding of Australian law and practice.

The One-Stop Shop

New section 214(2) will allow applicants to file 'prescribed documents' required for Australian patent applications with one of the specified New Zealand patents officials. This will save applicants having to file the same document in both Australia and New Zealand. One example given is where an applicant applies for grant of a patent for the same invention in each country.

There are time differences between the two countries. What time is an Australian document filed in New Zealand deemed to have been filed? All we know from new section 214(3) is that the time will be 'ascertained in accordance with the regulations'. There is a hint in the explanatory note that the time of filing an Australian document with the New Zealand patents officials will be deemed to be the time in Canberra, Australia.

Currency trading

New section 227(6) says that a fee required for an Australian patent or application can be paid in New Zealand currency to a New Zealand patents official instead. An example is where a patent applicant files both New Zealand and Australian patents with the New Zealand Commissioner. The applicant would be able to pay the New Zealand filing fee for the New Zealand patent application and 'the New Zealand dollar amount' of the Australian filing fee.

Similarly, there will be provisions for fees required for a New Zealand patent or patent application to be paid in Australian currency to IP Australia.

So how is the New Zealand dollar amount of an Australian fee, or the Australian dollar amount of a New Zealand fee, going to be calculated? Again, the details are being left to the regulations.

New section 226(7) says that 'the amount of the fee in New Zealand currency is to be ascertained in accordance with the regulations'. Senior officials in IP Australia and the New Zealand Ministry of Business Innovation & Employment are going to establish an instrument for setting these amounts.

What will probably happen is that IP Australia will maintain a schedule of Australian fees and Australian dollar amounts of New Zealand fees. IPONZ will maintain a schedule of New Zealand fees and New Zealand dollar amounts of Australian fees.

New Zealand and Australia have separate currencies with floating exchange rates that are independent of each other. I expect a few canny applicants will select the country in which they pay patent office fees based on the exchange rate of the day. Will this turn patent applicants into amateur currency traders?

Perhaps the proponents of this regime are right. Maybe it will reduce costs for applicants and other users of the patent system.

Further steps

The Bill that will enable this regime still needs to go through due Parliamentary process. Once through we should start seeing some regulations coming out of Australia setting out in more detail how this regime is going to work in practice.

In the meantime you can read further details about the process, a less than complimentary report on the proposed regime, and a joint study by the Productivity Commissions of both countries.


Photo courtesy of author Garfield Anderssen under Creative Commons license.

Wednesday, June 5, 2013

Traditional knowledge - the proverbial square peg

square-peg-round-hole-21
South Africa is wrestling with the issue of how to protect traditional knowledge. Do you tweak traditional intellectual property rights to accommodate traditional knowledge? Or do you create a whole new sui generis (independent) regime?

The Waitangi Tribunal

In New Zealand we have been looking at this issue for years. We have the Waitangi Tribunal, set up to make recommendations on claims brought by Maori relating to actions or omissions of the Crown that breach promises made in the Treaty of Waitangi.

Last year we saw a decision issue on the 262nd claim brought before the Waitangi Tribunal. The genesis of WAI 262 is concern at the ease with which native flora and fauna can be lost to overseas interests. This claim puts under the spotlight the Maori rights of tino rangatiratanga (authority) and kaitiakitanga (guardianship) over indigenous flora and fauna. The report is unique in that it looks to build a partnership between Māori and the Crown beyond the grievance process. The report looks to establish a culture in New Zealand where both cultures are promoted, rather than one being promoted above the other.

The report acknowledges that current intellectual property laws and policies in New Zealand were not designed to deal with indigenous relationships with flora and fauna. Furthermore, current laws and policies allow third parties to use traditional knowledge without acknowledgement and consent. Furthermore, the report states that Maori tribes do not have ownership rights in “taonga species” or in traditional knowledge relating to those species.

It makes some recommendations to the Government as follows:

  • establish a Maori advisory committee to advise the Commissioner of Patents about whether inventions are derived from Maori traditional knowledge or use taonga species;
  • establish a register of traditional knowledge;
  • introduce a legal requirement for patent applicants to disclose the source and the country of origin of any genetic or biological material contributing to the invention; and
  • grant the commissioner the power to refuse patents that unduly interfere with the relationships between kaitiaki (guardian) and taonga.

Tweaking the existing regime

It has been almost two years since the Waitangi Tribunal released the WAI 262 report. Law makers have done nothing to implement its recommendations. The decision took almost 20 years to issue from the date the claim was first lodged. So maybe we have a while to wait before we see a substantive review of our intellectual property regime.

Progress on protection of traditional knowledge is further ahead in South Africa. The South African Parliament is considering a proposed Intellectual Property Laws Amendment Bill (the Traditional Knowledge Bill).

The Traditional Knowledge Bill has some 'issues', which is a polite way of putting it. One commentator describes the Bill as potentially damaging and that it appears to be proceeding:
... in spite of an independent report (the RIA Report), commissioned by the Department of Trade and Industry (DTI) in 2009, which seriously questioned both the need for the bill and the route taken to address the issue...
The TK Bill seeks to recognise and protect traditional knowledge within the existing forms of intellectual property, such as copyright and patents, but most expert opinion, including that of the World Intellectual Property Organisation (WIPO), is that, if traditional knowledge requires protection, it should be in the form of a new type of legal instrument rather than being subjected to IP.
In its diplomatic criticism of the TK Bill, the WIPO Secretariat describes the government’s approach as “novel and unusual”, which is a polite way of saying that it is unworkable.

An independent approach

What has recently emerged is an alternative South African bill called the Protection of Traditional Knowledge Bill.

IP law firm Spoor & Fisher published a summary of the new Bill on their website. The article states that:
[t]he new Bill, unlike the old Bill, proposes a sui generis approach to the protection of traditional knowledge.  In short, this means that traditional knowledge will be dealt with as a new category of intellectual property rather than fitting it into the already existing categories of intellectual property. This approach has generally been regarded internationally, including by the World Intellectual Property Organisation, as the proper approach for the protection of traditional knowledge.
The protection proposed to be offered by the new Bill can be divided into 3 categories, namely
  • Traditional Work, akin to copyright;
  • Traditional Designs, akin to Designs; and
  • Traditional Marks; akin to Trade Marks.

The noticeable exception is traditional knowledge relating to an invention, but this is due to the Patents Amendment Act, 2007 which established rules for dealing with inventions based on or derived from traditional knowledge.

Further steps

The new Bill has been published for consultation. The submission deadline has passed. It will be interesting to gauge the reaction from submitters. I suspect there will be general support for the approach but a lot of comment about the detail.

Does South Africa square peg traditional knowledge into an existing intellectual property rights framework? Or is a whole new regime needed?

New Zealanders will be watching with interest.

Photo courtesy of author Yoel Ben-Avraham under Creative Commons licence.

Friday, May 24, 2013

Insurance method patent okay says IPONZ

In a decision published recently, the Intellectual Property Office of New Zealand (IPONZ) allowed a patent on a technique for providing data insurance.

It has been standard practice for some time to make periodic backup copies of stored data to mitigate financial and similar harm caused by data loss. However, there are some problems with existing techniques.

New Zealand patent 563320 recognises that costs are incurred in retrieving data from a remote location's backup copy and transferring it back to the original site. A further problem is where the backup copy may not be current, may have been damaged or corrupted, or may never have been created properly in the first place.

In Hodgkiss et al v Monument Insurance (NZ) Limited [2013] NZIPOPAT 8 (8 April 2013), the opponent Monument Insurance failed to persuade the Hearing Officer that the patent claims did not relate to an invention.

The patent claims

Claim 1 of the patent application reads as follows:
1. A computer-implemented method for providing data insurance, comprising: 
storing by a first processing device, data of a third entity on a storage medium of the third entity; 
creating an agreement between a first entity and a second entity to provide data protection service to a third entity, wherein the first entity arranges for a data protection service to be provided by the second entity for the third entity’s data stored on a storage medium of the third entity; 
creating an insurance agreement between the first entity and the third entity, because the data of the third entity was stored on the storage medium of the third entity, that authorizes the third entity to use the data protection service provided by the second entity for the third entity’s data stored on the storage medium of the third entity without charging the third entity for use of the data protection service provided by the second entity; 
storing, by a second processing device, an electronic backup copy of the third entity’s data, as required by the data protection service agreement, on a storage medium of the second entity such that the electronic backup copy of the third entity’s data stored on the storage medium of the second entity is insured against loss according to the insurance agreements; and 
upon loss of the data stored on the storage medium of the third entity, providing the backup copy of data from the second entity to the third entity in an attempt to restore the third entity’s data; and 
providing compensation from the first entity to the second entity for the data protection services.

Independent claims 12 and 22 are of a similar breadth, directed to a data loss mitigation tool and an insurance system respectively.

Is it an invention?

The Hearing Officer considered whether the invention claimed is a manner of manufacture within the definition of 'invention' in section 2 of the New Zealand Patents Act 1953.

The High Court of Australia in National Research Development Corporation v Commissioner of Patents ("NRDC") [1959] HCA 67; (1959) 102 CLR 252 (16 December 1959) established a patentability requirement of ‘a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the fields of economic endeavour’.

The Hearing Officer noted at [35] that Patent Office decisions in New Zealand have followed NRDC to:
allow many different claims to inventions which do not fall easily within the scope of the ordinary meaning of 'manufacture', including allowing claims to 'computer-implemented' methods in a number of applications.
The appropriate test, as set out in the Hughes Aircraft decision is:
...whether each of the claims define a method which, either directly or by clear implication, embodies a commercially useful effect.
The Hearing Officer referred to Haddad's Application which clarified that:
the term [manner of manufacture] still implies a situation which involves some sort of interaction with a real entity ... or which achieves a tangible product or result.
At [47] it was noted about the patent under consideration that:
there appears to be a resulting effect which appears to fall within guidance given by ... the Assistant Commissioner's decisions in Hughes Aircraft and Haddad.
A further point of interest was a response to one of the opponent's arguments. The opponent submitted at [43] that mere computer implementation of a contracting process cannot confer patentability, relying on the Cool 123 decision. That decision notes that:
...it seems to me that it cannot be an 'invention' or 'manner of manufacture' to replace the previously conventional means (telephone, email or post) by the known SMS technology whose known properties or characteristics make it suitable for this use.
The Hearing Officer found at [44] that he wasn't persuaded that the present invention amounts to mere computerisation of a known process.

What next?

This invention was assessed under the current patent regime. There is currently a proposal to change New Zealand patent law to introduce a European-style "as such" restriction on the patentability of computer programs.

Under clause 10A of the proposed law a claim in a patent or an application relates to a computer program as such 'if the actual contribution made by the alleged invention lies solely in it being a computer program'.

So how would this invention be treated if it had been considered under the proposed law?

The Hearing Officer's comments give an interesting clue. The statement that this invention is more than a mere computerisation of a known process suggests that the actual contribution lies in more than just a computer program. It is therefore likely that this invention, and other inventions of this nature, would be patentable under the new law as well.

Tuesday, May 21, 2013

Maintaining a global patent portfolio

GlobeBuilding a strategic patent portfolio requires tough decisions to be made all the time. In which countries do I file patent applications? Which patent applications should I abandon? Which issued patents should I maintain?

In a previous post I outlined one corporate strategy. You view country selections as a set of buckets that are grouped to define the different business approaches to the countries in each bucket.

Another corporate approach is to apply tools from optimisation theory to patent lifecycle decisions. There are four specific factors that must be considered in order to optimise a patent portfolio across various countries. These are:
  • geographic importance
  • strength of the existing portfolio
  • diversity across technology areas
  • filing/management costs.

Each of these factors are assigned specific parameters or weights that are then used as inputs to an optimisation model.

Importance of geographic region

Factors to consider within a geographic region are the proliferation of relevant products, strength of the IP regime, and regional holes.

A patent applicant should seek protection in countries most relevant to its products and technologies. It is therefore important to file patent applications in all geographic regions where infringing products are made, used or sold.

In order to prioritise individual countries it is important to consider:
  • expected revenue in a country for the relevant products;
  • whether a country is a major manufacturing centre for relevant products;
  • whether a country is an import/export centre for relevant products.

The strength of the IP regime within each country is important. There is more value in securing patent protection in a country with a strong IP regime than securing patent protection in a country with a weaker regime.

There are a few ranking engines around that rank IP regimes of various countries based on factors such as legal enforcement, judiciary independence, average length of litigation, and so on. Examples include the Global Intellectual Property Index (GIPI) and the Intellectual Property Rights Index (IPRI).

Another factor in country selection is whether a country is helping a company fill a gap in a particular region where it has no protection otherwise. These gaps are known as regional holes.

Countries are assigned relative weights to reflect relative importance in the above areas.

Strength of the existing portfolio

It's important to consider the strength, in the sense of size and value, of the portfolio that already exists in a jurisdiction. Consider a case where a company has many patents in Country A but only a few in Country B. The marginal value of an additional patent filed in Country B is potentially higher than in Country A.

Diversity across technology areas

The most fundamental and valuable inventions in any given technology area are typically protected early on. Different elements of the technology are invented as the technology evolves. Companies need to recognise such trends and ensure there are no time gaps in their portfolio holdings for any technology area.

Cost of obtaining patents

The cost of obtaining patents varies across countries, although the cost does tend to follow the same general pattern. There is the initial cost of preparing the patent specification. Following initial drafting, there are the following cost steps in each country:
  • Filing - cost of filing the application including professional fees, Patent Office fees and translation costs
  • Prosecution - cost associated with examination reports that must be dealt with to secure grant.
  • Granting - cost payable to Patent Office for granting a patent
  • Annuities - fees paid to Patent Offices periodically to keep a patent or patent application alive

In most countries the cost of prosecution is much higher than during any other phase in the patent's lifetime. This is also the time when the uncertainty associated with a patent's value is also the highest. The prosecution stage is a good time to assess whether continuing with a patent application in a given country is worthwhile.

The optimisation model

Having considered and assigned weights to geographic importance, strength of the existing portfolio, diversity across technology areas and filing/management costs, a company is then in a position to formulate and solve an optimisation problem.

Each company will have its own optimisation model. However this is defined, the process provides a company with a rational and objective approach to the strategic management of patent portfolios.


Photo courtesy of author Benjamin Bunch under Creative Commons licence.

Wednesday, April 17, 2013

Curtains for the Cinema

Vogelsang - Cinema #4: Curtain, 70s styleNew Zealand has a way of preventing cinemas from having to compete with different formats such as DVD, Blu-Ray, Pay-Per-View or Free-To-Air. The Copyright Act bans parallel importation of films into New Zealand for nine months from the international release date.

Government officials are likely to recommend removal of this mechanism. Does this mean curtains for the cinema?

Legislation

Section 35(3) of the Copyright Act 1994 provides that a person infringes copyright in a film if that person:
  • imports a copy of the film into New Zealand within 9 months of first being made available to the public; and
  • knows or has reason to believe that the film is imported into New Zealand within 9 months of first being made available to the public; and
  • is not the licensee of the copyright in New Zealand; and
  • imports the film into New Zealand other than for that person's private and domestic use.
Government officials say the ban is there to:
'give sufficient time for the domestic film industry to profit from their investment in the distribution and exhibition of films before opening up the market to competition from retailers and other commercial users.'
In the late '90s an amendment to the Copyright Act did away with the ban. The United States Trade Representative (USTR) promptly placed New Zealand on the Special 301 Watch List, a register of countries that the USTR considers to have inadequate copyright protection laws. A press release from the US Embassy stated that:
'New Zealand was placed on the Watch List ... after the New Zealand Government passed an amendment to the Copyright Act abolishing the exclusive importation right for copyright owners. The law was of serious concern because it eroded the level of copyright protection available to right holders in New Zealand and made it more difficult to combat pirated goods'.
The Government at the time revived the ban with an amendment to the Copyright Act in 2003. New Zealand was then taken off the Watch List.

Time for a change

It is unlikely that the ban will be in place much longer.

Section 35(5) automatically repeals the ban on 31 October 2013. The Ministry of Business, Innovation & Employment (MBIE) is currently conducting a review of the ban to form a view on whether to allow the ban to lapse or continue the temporary ban. MBIE published a discussion document in February 2013 titled 'Review of Ban on Parallel Importation of Films'. Submissions on the discussion document closed last week.

The vibe of the discussion document suggests that the ban is going to be allowed to lapse. The introduction notes that:
'[a]llowing for parallel importing is generally thought to encourage the competitive supply of consumer goods such as copyright works. Previous reviews of parallel importing undertaken by the Ministry of Economic Development have shown a net benefit to New Zealand from allowing parallel importation of copyright works. Despite the temporary ban on films, the Act otherwise allows for the parallel importation of non-infringing copies of all other works into New Zealand'.
I'm not sure that many rights holders were aware of the review and therefore would not have made submissions. In the absence of strong arguments in favour of continuing the ban it is likely that Government officials will recommend the ban be allowed to lapse.

What's the effect?

It is hard to anticipate the effect of removing the ban. The Discussion Document points to a Law and Economics Consulting Group report that suggests 'there is no link between parallel importing and box office revenue'.

I think it is likely that commercial cinema complexes will continue to show new releases of blockbuster films. We are likely to see the New Zealand release date for such blockbusters closer to the international release date.

Less popular and art-house films will face competition with parallel imported copies of films as the New Zealand release date is likely to be much later than the international release date. Some of these films may prove to be financially risky to distribute in New Zealand. Distributors may choose not to bring them in at all.

So does this mean curtains for the cinema? I don't think so. Cinemas will still be around showing films to New Zealand audiences. It's just that the films will increasingly be blockbusters rather than art-house.

What is not clear to me is whether we are still operating under the same environment today as we were back in the late '90s. Back then the removal of the ban caused us to be placed on the USTR Watch List. Are we likely to face the same situation in October when the ban lapses?

It will be interesting to see the views of the submitters.

Update - The Government proposes to retain the ban for another three years. The period of the ban will be shortened to five months from the current nine. See Curtains for the Cinema - the sequel.


Photo courtesy of author AndiH under Creative Commons licence.
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