On 30 March 2006, the Intellectual Property
Laws Amendment Bill 2006 was introduced into the House of Representatives of the Australian
Commonwealth Parliament.

For a
copy of the bill — click here.

For a
copy of the explanatory memorandum — click here.

For a
copy of the Ministerial press release — click here.

For a copy of IP Australia’s press
release — click here..

Take
home

Proposed amendments to the Patents Act
include:

Clarification
of the prior use defense to infringement;

Adding
compulsory licenses of patents as a remedy under the Trade Practices Act;

Adding the
possibility of exemplary damages in patent infringement cases (this is
similar to the situation in the USA where treble damages may be
awarded for willful);

Adding a bolar
provision (a defense to infringement of pharmaceutical patents for activities
directed to obtaining regulatory approval);

Proposed amendments to the Trade Marks Act
include:

Power for the
Trade Marks Commissioner to revoke trade marks in certain circumstances;

Making more
documents relating to Trade Mark applications publicly available;

Other amendments include:

Clarification
of the effect of various aspects of the Plant Breeders Rights system in Australia.

Various minor
technical changes to the Acts.

On 10 March 2006, the Australian Full Federal
Court handed down its decision in Commissioner of Patents v Emperor Sports.

Take home

In
dismissing the appeal, the Full
Court reinforced the logical, stepwise approach
to assessing the availability of prior art in an obviousness attack based on
s 7(3). In essence, the approach to
take is as follows:

1
— identify the relevant art of the patent specification;
2
— identify the person skilled in the relevant art;
3
— consider whether this notional person could reasonably have:

(a) ascertained (ie, found) the relevant
prior art document;

(b) understood the content of the document;
and

(c) regarded the document as relevant to
solving the problem in question.

If the
answer to all three questions is yes, then the document is available to use
in an obviousness attack (along with the common general knowledge of such a
person).

In Emperor Sports, the person skilled in
the relevant art was held to be “a Rugby League or Australian Rules coach,
referee/umpire or administrator” and the prior art documents in
question were US Patents. The Full Court held
that such a person could not reasonably be expected to ascertain such
documents.

Strategy

Interestingly,
the case was kicked off by a post-grant third party re-examination request
filed by the Australian Football League (AFL) (see s
97(2) of the Act
). The claims were
narrowed during re-examination several times with the result that they are
limited to use of the (touch football) product for Rugby League or Australian
Rules Football. This will presumably
be cold comfort for the AFL.

Consequently,
unless there is a settlement, we should not be surprised to see the patent
back before the courts in either a revocation or infringement suit, or both.

On 24 February 2006, the US CAFC handed
down its decision in SmithKline v Apotex.

Take home

In
essence, SmithKline v Apotex provides generic pharmaceutical companies with
another avenue of attack when seeking to invalidate later-filed process
patents in the USA. However, as discussed below, it is unlikely
that this case will change the practice of filing (or litigating) such
patents as there appear to be several clear grounds to distinguish it.

Facts

The product-by-process
claims to paroxetine in tablet form in SmithKline’s ‘944 patent
were invalidated by the District Court by summary judgment in light of the
earlier broad product claims to paroxetine in tablet form in
SmithKline’s ‘723 patent.
A key point was that the later, product-by-process claims were to the
same product. The CAFC affirmed the
District Court’s ruling.

SmithKline
had attempted to argue before the CAFC that the products claimed in each
patent were not the same. However,
argument was precluded on appeal as this point wasn’t raised in the
appeal brief.

Comment

We are
obviously left wondering who would have prevailed if SmithKline had been
allowed to argue the ‘different product’ point.

This
case is unlikely to act as a deterrent to filing such patents, as there are a
number of avenues left open to distinguish (and possibly overrule) this
case. The obvious ones being to firstly argue that the product of the
later patent is different and secondly to argue that novelty requires disclosure
of each and every claim element. The
process-elements being further limitations and therefore novelty-conferring.

The flip
side for patentees is that inherent in the Court’s decision is the
finding that product-by-process claims are not limited by the process
elements. Thus, if they can chart the
now-more-difficult waters of validity, then, in the US, the patent confers a much
broader monopoly than in other countries.

If this
case is appealed, then it is quite likely that it will be reversed since, as
pointed out in the dissenting opinion by Judge Newman, the basic rules of
novelty seem to have been ignored.

Australian patent litigation strategy

(The following is a set
of speaker notes, so please forgive the truncated style.)

Types of proceedings

The standard proceedings are available in Australia:
namely – infringement / revocation and declarations of non-infringement

In addition to the above, unjustified threats
and re-examination by the Patent Office are also possible, though the
re-examination procedure can be problematic.

As at the date of writing, no application for
a declaration of non-infringement has been made under the 1990 Act. This is for a number of reasons, including
that it is Onerous on the applicant,
who amongst other things, must seek written a admission; pay legal costs &
costs of proceedings and can not challenge validity.

Split validity
and infringement

This is unusual due to inconvenience for the
court. However, the court will
entertain such an application if will be determinative of the proceedings.

Split liability
and quantum

This is often ordered. The parties will often negotiate a
settlement after liability and before full investigation of quantum.

Streamlined / expedited cases

Increasingly favoured by the courts.

8-10 months from issue to trial is possible.
(Depends on facts & whether parties consent.)

Judgments can still take 12mths or more after
trial.

Courts

First instance, Court of Appeal, etc

1st instance — Federal Court or a State
Supreme Court. (Fed. Court hears
almost all cases.)

Appeal — 3 Judges — Full Court of the
Federal Court (or Full Court of the Supreme Court as applicable),

Final Appeal – High Court (5 Judges).

Specialist judges, Juries

No formal specialist judges. Certain Judges in Federal Court hear most
IP cases.

No juries.

Remedies

Injunction, damages, account of profits,
delivery up etc

All available.

Other remedies might include rectification of
the Register of Patents (eg. where invalidity is based on proprietorship of
the patent.)

Procedure

Time taken from issue of proceedings to trial,
then to appeal

1st Instance: (Issue to trial ~ 1-2
years

Trial to Judgment ~ 3-12 months

Issue to Judgment ~ 33 months.)

First Appeal: (Hearing ~1 year from 1st
instance judgment; Judgment ~3-6mths).

Costs — how much and is it recoverable?

~AU $2m / ~�1.25m / ~ US $1.5m —
is a moderate figure for a 1st instance – fully litigated
infringement & invalidity proceedings

Recovery usually ~50% but periodically as low
as 0% or up to 66% depending on conduct of parties.

Evidence

Discovery / Disclosure

Based on pleadings and narrowed to categories
ordered by court (after negotiation by parties).

Standard practice is that substantial time is
spent on negotiating categories and substantial money on reviewing large
volumes of discovered documents.

Experiments

Apply for directions from court, which has
discretion about conduct.

Parties negotiate terms (eg. who to be
present, what will be done, etc.)

Process inspections

As per experiments (above).

Evidence from abroad (letters of request)

Depositions outside jurisdiction — both
parties present; independent examiner, transcript etc

Letters of Request — file copy of letter
interrogatories � certified translation

Experts / Witnesses of fact

Strict guidelines for communication with
experts.

Experts – ability to give evidence from
Skilled Addressee’s perspective: (Issues include: Australian Art, are
they too inventive, actual experience before priority date etc).

Witnesses of fact are rarely required.

Cross-examination of witnesses

Evidence in Chief tendered by affidavit.
Examination in Chief is restricted to correcting typographical errors and
clarifying details if necessary.

Parties inform each other which witnesses they
wish to cross examine.

Re-examination usually required.

Interim injunctions

What are the requirements?

(1) Serious question to be tried, (2)
Irreparable harm; and (3) Balance of convenience.

Other factors: (delay; are damages
quantifiable; undertakings by respondent; etc).

Pharmaceutical cases – new requirements s
26A-D Therapeutic Goods Act 1989 (Cth):

Certification by generic about infringement of
patents granted ‘in relation to’ the drug

If generic filed a ‘b’ certificate
(ie under s 26B(1)(b)):

Prior to commencing patent infringement
proceedings, patentee must certify to TGA & generic: good faith,
reasonable prospects of success, conduct without unreasonable delay.

AUD $10m penalty — false or misleading,
or breach of undertaking (will take into account profit of patentee &
loss suffered by any person)

� compensate Aust. Govt for damages if
interloc. injunction had been granted.

Patentee to notify Attorney General before
seeking interlocutory injunction

Potential enormous damages awards to generic
Australian government if interlocutory granted and proceedings later
dismissed / discontinued / vexatious.

For a long time, researchers in non-profit organisations in the USA have assumed that they are effectively shielded from patent infringement suits by the non-profit aims of their institutions. This is not necessarily the case, as reinforced by the Federal Circuit Court in its decision in Madey v Duke.

In this article we set out the background to that case and compare it with the situation under Australian law.

Madey v Duke

Dr John Madey had been a professor in the physics department of Duke University (Duke). He and his research team conducted research using laser equipment covered by patents owned by Dr Madey. Following a dispute with Duke, Dr Madey resigned from Duke University in 1998 but the University continued to use the equipment without his authorisation. Dr Madey later sued Duke for patent infringement. Duke was successful at first instance before the District Court based on the experimental use defence to infringement.

The Federal Circuit Court overturned the District Court judgment, saying that it had applied the experimental use defence in an overly broad manner. In so doing, the Federal Court stated:

In short, regardless of whether a particular institution or entity is engaged in an endeavour for commercial gain, so long as the act is in furtherance of the alleged infringer’s legitimate business and is not solely for amusement, to satisfy idle curiosity, or for strict philosophical inquiry, the act does not qualify for the very narrow and strictly limited experimental use defense. Moreover, the profit or non-profit status of the user is not determinative.

The Federal Circuit went on to explain that a university will obtain a number of benefits from such experiments, such as attracting further research funding or increasing its reputation, even where no direct commercial gain comes from them.

The situation in Australia

As in the US, the experimental use defence has been rarely used in Australia. In fact, there is very little relevant case law on the defence so that the courts are likely to rely heavily on precedent from overseas jurisdictions, and particularly the United Kingdom.

In Australia, as in the US, it is irrelevant whether the research institution is non-profit. However, the defence as applied in Australia would be broader in scope than in the US. In particular, it is likely that as long as the experimental use is bona fide and not done with the aim of obtaining a profit (even to a limited extent), then there will be no infringement. The rationale under UK law (as set out in Frearson v Loe is that patent rights were never granted to prevent persons of ingenuity exercising their talents in a fair way. In fact, one reason for the existence of patents is to enable new technology to be disclosed so that it may be improved on.

This is to be contrasted with the US requirement that the experiment will be an infringement unless it is done "solely for amusement, to satisfy idle curiosity, or for strict philosophical inquiry".