Welcome back to The SaaS Playbook, a bi-weekly rundown of the top articles, tactics, and thought leadership in B2B SaaS. Not a subscriber yet? 🥤 One of the often misunderstood aspects of term sheets is liquidation preferences. These preferences give VCs the right to receive the funds they have invested before any common shareholders, such as founders, if a liquidation event occurs. That doesn’t just mean in the case of bankruptcy or winding down your company – any sort of transaction in which there is a change of control is considered a liquidation event.
In this blog post I summarized the potential legal liability of issuers raising capital using Title II Crowdfunding (aka Rule 506(c)), Title III Crowdfunding (aka Reg CF), and Title IV Crowdfunding (aka Regulation A). Here, I’ll summarize the potential legal liability of a registered Title III funding portal. To start, let’s distinguish between two kinds …
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.
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.
The coupling of Artificial Intelligence with the Internet of Things represents a natural progression for applications in both these spaces. Machine learning and...
After unveiling its plans for the competitive Wild Rift scene in Brazil, Riot Games announced Thursday that the first tournament, Wild Tour, will be an in-person event to be held on Oct. 8 – 10, in the Riot Games studios in São Paulo. The event will not be open to the public due to COVID-19 […]
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.
Jag Singh, Managing Director, Techstars, Berlin, offers an investor’s perspective on why it is important for startups and SMEs think about IP at the earliest opportunity.