Tag: incentive
Chinese, Indian Applicants Go Mad for Innovation Patents as System Gets Set to Close on a (Dubious) High
Over 1,000 Australian innovation patent applications were filed in July – an all-time record, ahead of 768 applications in June and 692 in May. Between 2010 and early 2020, there were typically between 100 and 200 innovation patent applications filed each month. But with the system set to close to new applications from 26 August 2021, filings have surged over the past year, with over 600 applications every month since October 2020 (with the exception of February 2021, when ‘only’ 482 applications were filed). China remains the most prevalent country of origin for these applications, accounting for nearly 45% of new innovation patent filings in July. However applications received from India have grown significantly since June 2020, with Indian applicants filing a third of applications in July. Applications by Australian applicants have increased modestly over the past couple of months, rising to 175 in July. Applicants from other jurisdictions seem (so far) nonplussed by the imminent demise of the innovation patent system, with no apparent recent surge in filing numbers.
It is well-known that the motivation for Chinese applicants seeking Australian innovation patents – which are subject only to a formalities examination before being granted – is to obtain government incentive payments without the delay and expense associated with substantive examination. While these subsidy schemes are supposed to be coming to an end, clearly there are still sufficient incentives available for Chinese entities to keep filing for as long as it remains possible to do so. It is less clear why innovation patents have recently become so popular with Indian applicants, however I have noted that many of the applications appear to be filed in the names of academic or research institutes, and/or individuals or teams including people with academic titles. I therefore suspect that being an inventor or applicant on a granted patent may have benefits for people pursuing academic or research careers in India.
In any event, it is clear that the vast majority of innovation patent applications are currently being filed by non-resident applicants for reasons that have nothing to do with any genuine desire to obtain or commercialise intellectual property rights in Australia, and few are filed by the Australia small and medium enterprises (SMEs) that the system was intended to benefit. Surging demand for innovation patents in the lead-up to the system being closed to new applications is overwhelmingly being driven by Chinese and Indian applicants, with Australian residents showing relatively little interest in taking advantage of the final opportunity to file new innovation patent applications.
Of course, genuine users of the patent system – including Australian applicants – are continuing to file standard applications and international (PCT) applications, and these may be converted to innovation patents in the future, or form the basis for divisional innovation patent applications, where the filing date is earlier than 26 August 2021. While these types of applications have been a minority in the past, they will necessarily become the only sources of ‘new’ innovation patents as the system is phased out over the coming eight years.
Read more »In Becoming the First Country to Recognise Non-Human Inventors, is Australia a Hero of Progress, or a Chump?
As I recently (tentatively) predicted, on Friday 30 July 2021 Justice Beach in the Federal Court of Australia handed down a judgment giving Australia the dubious honour of becoming the first country in the world to legally recognise a non-human as a valid inventor on a patent application: Thaler v Commissioner of Patents [2021] FCA 879. I would suggest that the remarkable speed with which this unnecessarily lengthy (228 paragraphs) decision was rendered, after being heard on 2 July 2021, may reflect the judge’s enthusiasm for issuing such a ground-breaking ruling. Unfortunately, I do not share that enthusiasm, and I am confident that there are many others who are equally uncomfortable with the outcome. My hope is that this includes officials within IP Australia and the Department of Industry, Science, Energy and Resources, and that the decision will be duly appealed to a Full Bench of the court. It is, in my view, deeply regrettable that the Commissioner of Patents did not put on a stronger defence in the first instance because, even though an appeal was probably inevitable either way, the worldwide publicity that this decision is now generating is not necessarily beneficial for Australia.
The judge summarised his reasoning (at [10]) that:
…in my view an artificial intelligence system can be an inventor for the purposes of the Act. First, an inventor is an agent noun; an agent can be a person or thing that invents. Second, so to hold reflects the reality in terms of many otherwise patentable inventions where it cannot sensibly be said that a human is the inventor. Third, nothing in the Act dictates the contrary conclusion.
The patent system faces many challenges, but right now a need to grant more patents in a wider range of circumstances in not one of them. We are in the grip of a global pandemic, and very serious questions are being asked about whether patents deliver a net benefit to the people of the world by incentivising the development of new vaccines and treatments, or whether they have the detrimental effect of denying affordable access to vital care and protection in poor and developing nations. While I am firmly in the former camp, it only becomes harder to defend the patent system when opponents see the law expanding access to allow inventions generated by machines – potentially including those owned and controlled by giant corporations.
The standing and reputation of Australia and our patent laws are also at risk. The country is already the target of criticism – rightly or wrongly – for declining to support calls for a waiver of IP provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The Federal Court’s decision in Thaler is receiving global attention, and not all of it is positive. One tweet (in Spanish) compares Australia’s patent-friendly approach unfavourably with the infamous incident of an early innovation patent being granted for a ‘circular transportation facilitation device’, a.k.a. the wheel.
Just because patents are (or, at least, can be) good, it does not follow that more patents, generated in more ways, by more entities, must be better. Australia should not think that we will necessarily come across as a socially and technologically progressive nation by ‘leading the way’ on allowing patents to be granted for inventions generated by non-humans. On the contrary, we risk being left out on our own and looking like chumps. The United States will not follow our lead – there are Constitutional, statutory and procedural barriers to permitting US patent applications naming non-human inventors. The European Patent Office will not follow in the foreseeable future – it has already established its position via an academic study and discussions with member states of the European Patent Convention. The UK has so far rejected any expansion of inventorship to non-humans. And, contrary to recent reports (and the claims of the Artificial Inventor Project’s Ryan Abbott), the recent grant of a patent in South Africa naming DABUS as inventor indicates nothing about that country’s law or position on the issue. As South African patent attorney Pieter Visagie has explained, the application effectively avoided any scrutiny of the legitimacy of the inventor by virtue of being filed via the international (PCT) system.
So what does Australia gain by being the first – and possibly only – country in the world to legally recognise non-human inventors? Nothing, as far as I can see, other than a whole lot of unneeded publicity and global scrutiny of our patent laws. If we are lucky, we will not receive many serious patent applications for inventions generated by machine inventors, and little practical harm will be done. At worst, however, we could become the only country in the world to grant patents on such inventions, mostly filed by foreign applicants, creating exclusive rights that are enforceable only in Australia to the relative detriment of Australian innovators and consumers.
Read more »Could Australia Become the First Country to Recognise Non-Human Inventors?
On 2 July 2021, a hearing took place at the Federal Court of Australia in Melbourne, before Justice Jonathan Beach, in the matter of Stephen Thaler v Commissioner of Patents. This case concerns the question of whether a patent may be granted for an invention that was devised by a machine, rather than by a human inventor. Back in February, I reported on the refusal by the Australian Patent Office to accept as valid an Australian patent application naming an ‘artificial intelligence’ going by the name DABUS (‘Device for the Autonomous Bootstrapping of Unified Sentience’) as inventor. And in March I reported that an application had been filed in the Federal Court for review of the Patent Office decision.
Regular readers will know my position on this issue – I do not consider it appropriate at this time (or, potentially, ever) to grant patents for inventions devised entirely by automated means, such that there is no human inventor. I have written an article targeted to a more general audience, which has been published by InnovationAus, providing an overview of the Australian case, and broadly discussing my concerns. Here I will be going into more detail of the arguments presented at the recent hearing, and why I think it would be very unfortunate if Justice Beach were to decide that this is a suitable case for judicial development of the law to embrace machine inventors, as he is being encouraged to do by Thaler.
I was able to attend the hearing virtually, since it was being held via web conference. Thaler’s team, led by experienced and highly-regarded barrister David Shavin QC, appeared in person in the Melbourne courtroom with Justice Beach, while the Commissioner of Patents was represented by Hamish Bevan, appearing via video from Sydney (subject to restrictions, due to an ongoing COVID outbreak). Although I disagree with the proposition, I thought that Mr Shavin presented a persuasive argument that the relevant provisions of the Australian Patents Act 1990 can, and should, be interpreted to encompass non-human inventors, and that Mr Bevan perhaps did not do enough to counter this argument. I formed the impression that Justice Beach just might be minded to ‘develop’ the Australian law to permit patent applications having no human inventor, in part because he was not presented with any particularly good reasons not to do so.
Read more »How Effective is Australia’s 12 Month Acceptance Deadline in Limiting Examination Delays?
One of the objectives of the Raising the Bar IP law reforms – most of which commenced on 15 April 2013 – was to reduce delays in the resolution of patent (and trade mark) applications. The perceived problem with such delays was not that applicants were unhappy with the speed of processing of their applications (in fact, most choose to defer examination and acceptance of their patent applications), but rather that delays create uncertainty about whether a patent will be granted, and what scope the granted claims might have. As noted in the Explanatory Memorandum to the Raising the Bar Bill, ‘[d]elay may suit the party, but it is not in the interests of the public, or the party’s competitors.’
There were four main features of the reforms that were expected to reduce delays and uncertainty:
- reduction, from six months to two months, of the period within which an applicant is required to request examination, once directed to do so by the patent office;
- reduction of the maximum period available for an applicant to obtain acceptance of a patent application, following issue of an initial examination report, from 21 months down to 12 months;
- ‘tightening’ of the rules around when divisional applications can be validly filed, to reduce opportunities for what the Explanatory Memorandum describes as ‘abusive uses’; and
- refinement of opposition proceedings, mostly in the form of more stringent criteria for obtaining extensions of time.
The reforms to opposition proceedings had an almost immediate impact, since they applied to all new oppositions filed on or after 15 April 2013, as well as (to a more limited degree) oppositions that were already in progress. However, since over 99.5% of all accepted applications are not opposed, the reduction in opposition duration is irrelevant to the overwhelming majority of cases.
It has taken longer to reach the point at which there is sufficient data to evaluate the effect of the change to the examination period, since this only applied to applications for which a request for examination was filed on or after 15 April 2013. Many of these applications remained in the system for years. Indeed, the last patent to be granted under the pre-Raising the Bar regime – without being additionally delayed by opposition proceedings – was no. 2010311063, which was derived from a PCT application that entered the national phase in Australia on 17 May 2012. Examination was requested on 9 April 2013, and a first report issued on 7 August 2018 (after the application inadvertently lapsed and was restored). The application was eventually accepted on 17 February 2020, and the patent granted on 18 June 2020.
I have now analysed nearly two decades worth of Australian patent examination data, spanning the period before and after commencement of the Raising the Bar reforms. Further details and charts are below, but in summary I have found that:
- reduction of the maximum examination period by nine months (from 21 to 12 months) has resulted in a drop of only a little over three months in the median period between initial examination and acceptance of successful applications;
- the reforms have not, however, resulted in any lasting improvement in the pendency of the most ‘stubborn’ applications, which are only accepted following one or more divisional applications being filed for the purposes of continuing examination (for want of any better term, I call these ‘continuation divisionals’);
- as a result, the ‘top’ 2% of cases are still pending for 900 days or more between an initial examination report being issued and an application finally being accepted;
- perversely, following an initial temporary drop in the number of continuation divisionals, the reforms actually seem to have resulted in an increase in the proportion of divisional applications that are filed for the primary purpose of continuing examination;
- on the other hand, however, the major use (i.e. over 60%) of divisional applications remains their primary purpose of pursuing alternative claims following acceptance of claims in a parent application.
Overall, reducing the examination period has had a relatively minimal effect on total pendency of patent applications – a reduction in the time prior to examination, i.e. between filing and a first examination report being issued, has been much more significant. However, it appears to have had the unintended consequence of increasing the use of divisional applications to continue examination.
Read more »‘Patent Box’ Update – the Devil is in the Details When it Comes to Dates
I previously reported on the Australian government’s budget announcement that it will be introducing a so-called ‘patent box’ tax incentive for medical and biotech (and, possibly, clean energy) innovations. Implementation details of the scheme are yet to be worked out, and the government is promising to consult closely with industry on the design of the patent box. However, while the final form of the scheme – which will not come into effect until 1 July 2022 – may not be known for many months, there is already at least one critical issue that prospective users of the system may need to consider.
The government’s fact sheet on ‘tax incentives to support the recovery’ states that ‘…granted patents, which were applied for after the Budget announcement, will be eligible’. There is, as yet, no clear indication of what the government means by ‘applied for’, however in its ‘What’s New’ email (to which you can subscribe here), sent on 14 May 2021, IP Australia states that ‘[t]o be eligible, the patent must have a priority date after 11 May 2021…’. Being unable to find this detail in the budget papers, I sent out a tweet asking whether anybody else had seen it, and tagging @IPAustralia, which responded:
Hi Mark, thanks for your comment. This is our understanding of the announcement. Further details on the patent box will be released in the coming weeks by Treasury as part of the public consultation.
— IP Australia (@IPAustralia) May 14, 2021
There is a big difference between ‘priority date’ and ‘filing date’, which hopefully will be open for discussion during the public consultation. If the critical date is the priority date, then this means that Australian medical and biotech innovators who have already filed a priority application (e.g. a provisional application) prior to the budget announcement would not be eligible for the patent box tax incentive if they subsequently file a complete application claiming the benefit of the provisional filing date. On the other hand, if they were now to file the same complete application in Australia without a priority claim, then they would be eligible for the scheme upon grant of any resulting patent.
The risk of dropping a valid claim to priority, of course, is there there may be intervening prior art that could invalidate or limit the scope of the claims, which has been made public after the priority date, but before the subsequent complete filing date. To minimise this risk, the complete application should be filed as soon as possible.
Fortunately, the Australian grace period protects an applicant against their own disclosures during the 12 months prior to the complete filing date. Furthermore, the discovery of intervening prior art would not be fatal, at least up until grant of the patent (see regulation 10.2B(7) of the Patents Regulations 1991), since the patent request could be amended to include the priority claim, with the consequence that the patent box incentive would then be unavailable.
The choice to file in Australia without claiming priority would not affect the applicant’s right to claim priority in other jurisdiction, either through direct applications or via the Patent Cooperation Treaty (PCT).
But, frankly, this seems perverse. To my mind, the logical choice for the critical date is the filing date of the complete patent application, which commences the patent term of up to 20 years during which the patent box tax incentive could be claimed. Basing eligibility on the priority date will simply encourage strategies, such as I have outlined above, to engineer eligibility. This does not serve anybody’s interests. The government will not make significant savings on the operation of the patent box scheme, while applicants will feel compelled to adapt their patent filing strategies simply to comply with an arbitrary choice of eligibility criteria.
Hopefully, through the consultation process, common sense will prevail. In the meantime, however, medical and biotech innovators with pending priority applications should probably seek advice from their patent attorneys.
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