Roundtable: Patents 2011
Who's Who Legal has brought together four leading practitioners from around the world to discuss key issues facing patent lawyers today
Participants
Stephen Stern
Corrs Chambers Westgarth
Australia
Jay (Young-June) Yang
Kim & Chang
Korea
Ron Dimock
Dimock Stratton LLP
Canada
Nicola Dagg
Allen & Overy
England
Who’s Who Legal: Have you seen any significant regulatory changes in recent months? Are there any impending changes that are likely to affect the practice of patent law in your jurisdiction in the future?
Stephen Stern: There are a number of proposed legislative changes which would, if enacted, impact significantly on the practice of Australian patent law.
First, the Intellectual Property Law Amendment (Raising the Bar) Bill 2011 was published by the Commonwealth government in late December 2010. The stated purpose of the bill is to raise the standards and improve the processes of the Australian patent system so that it aligns with the positions and standards in other jurisdictions. Some key changes that the bill would introduce include:
• removing the limitation for ‘inventive step’ so that the common general knowledge is broader than what was disclosed in Australia only;
• adoption of the USPTO requirement that a patent specification disclose ‘a specific, substantial and credible use’ (ie, utility);
• requiring the examiner to consider utility and allowing the examiner to consider prior use (rather than prior art documents only) at the application stage;
• granting client-patent attorney communications privilege to the extent that client-lawyer privilege would apply; and
• deeming a patent to have been ‘sealed’ when it is entered onto the register.
The bill is a welcome development as it will strengthen granted patents and make them less vulnerable to attack by raising the threshold that must be met in order to obtain a patent. The bill has been released as a draft only and IP Australia is seeking submissions on the bill.
Secondly, there is considerable movement in Australia on the question of what may properly constitute ‘patentable subject matter’. There is currently a bill before the Australian parliament entitled Patent Amendment (Human Genes and Biological Materials) Bill 2010, which would amend the Patents Act to exclude ‘biological materials’ (including derivatives) from patentability. If such an exclusion was introduced, as proposed in the bill, it appears that the practical implications would be limited as it would only exclude patenting biological material per se and would not invalidate method claims relating to or using biological material.
At the same time, and in contrast to the Bill’s proposal, the government’s Advisory Council on IP (ACIP) has released a report recommending that (among other things):
• there is no persuasive case for the government to amend the Patents Act to expressly exclude ‘biological materials’ from patentability at this stage; and
• the Patents Act should be amended to codify the common law test that an invention must be ‘an artificially created state of affairs in the field of economic endeavour’.
At this stage it is too early to predict whether the government will prefer the bill’s approach or ACIP’s recommendations.
Jay (Young-June) Yang: Korea has proposed the Framework Act on Intellectual Property Policies, the purpose of which is to guide future developments of IP-related policies and to establish a national framework for the protection and enforcement of IP rights. In the current system, laws and regulations are each proposed and enforced by individual agencies of the government. Ultimately, the Act will unify these fragmented laws into a single consistent legal framework in order to promote more efficient protection and application of IP in Korea.
An impending change that is likely to affect our patent practice in the future is a proposed amendment to the Korean Patent Attorney’s Act. The main thrust of the amendment is to allow Korean patent attorneys to co-represent clients with attorneys-at-law in patent infringement litigation. Currently, Korean patent attorneys are not allowed to ‘officially’ represent clients in patent infringement proceedings, although the two professional groups work together closely. The proposed amendment will allow for greater involvement of Korean patent attorneys.
Ron Dimock: There are no impending regulatory changes likely to affect Canadian patent law in the near future.
There is, however, an impending court decision that may affect patent law in Canada.
Amazon successfully appealed a decision of the Commissioner of Patents that rejected the ‘one-click’ patent on the basis that business methods are not patentable in Canada. The Federal Court of Appeal for Canada is currently reviewing the case, and an affirmation of the Federal Court decision would confirm that business methods are patentable in Canada. Amazon has filed its memo of fact and law and the interveners are currently awaiting a decision regarding their inclusion in the appeal.
Nicola Dagg: In March this year proposals for a unitary, pan-European patent court system were rejected by the Court of Justice of the European Communities (ECJ) as incompatible EU law. Under the proposals patentees would have been able to obtain a single court decision applicable across Europe and pan-European remedies including cross-border injunctions. This regime now seems unlikely to succeed. Although the European Commission is pressing ahead with proposals for a modified unitary European patent there is currently much uncertainty about how such a patent might be litigated and about whether it will be possible for European countries to find a way of working together to rationalise the current fragmentary system of patent litigation in Europe. In the meantime the spotlight that has been thrown on these issues may have some indirect consequences for national litigation as the European courts continue to try to co-operate more on timing when there are parallel patent cases and in taking notice of each others’ precedents. Some have also speculated that, inspired by the more civil style procedures that had been proposed for the European Patents Court, the UK Patents Court may take a tougher approach to case management.
Who’s Who Legal: In your experience, has the economic downturn affected clients’ needs where patents are concerned? If not, why not?
Stephen Stern: The economic downturn certainly had an impact on clients’ appetites for litigation in 2008 to 2009, particularly where clients did not identify the subject patent as ‘crucial’ to their business and where the prospect of success was moderate. As a consequence, clients were more willing to consider more cost-conscious approaches in these cases, such as:
• utilising re-examination requests (rather than commencing proceedings) and other patent office procedures; and
• resolving matters through licensing agreements to resolve a dispute (rather than pursuing litigation to trial).
However, where clients perceived the subject patent as critical to their business (such as clients in the pharmaceutical industry) they generally remained willing and prepared to take whatever steps were necessary in order to enforce or defend their patent rights. By comparison to clients defending or enforcing other IP claims, clients in patent matters commonly tend to view patents as fundamental to their business.
Notwithstanding this, our experience over the last 12 months is that clients in Australian patent matters are optimistic about the economic climate and do not consider that their Australian business’ are in the midst of, or confronting, an economic downturn.
Jay (Young-June) Yang: The global economic downturn has led clients to increasingly focus on efficiently securing their IP. Whereas in the past, clients may have looked to quantity in terms of their IP portfolios, the trend is moving towards quality of IP portfolios. For example, we are seeing clients continuously update their IP portfolios by clearing out IP that is no longer important to their businesses, increasing the ratio of foreign patent filings to domestic patent filings, etc.
The number of patent filings in Korea significant dropped in 2009 compared with 2008, but recovered somewhat in 2010. The 2010 figure, however, still falls below the 2008 figure. In addition, the total number of cases in has steadily dropped in each successive year. This is not to say that companies are not actively seeking to protect their patents in Korea; they are likely being more strategic with regards to their IP portfolios.
Nicola Dagg: We have not experienced any downturn in patent litigation work as a result of the recession. Clients remain willing to protect their key products by enforcing their patents. Clients are increasingly willing to consider mediation though this is not exclusively a result of the recession. We have seen more patent and breach of confidence disputes arising in the context of employees leaving their employment and more interest from clients in advice about patent entitlement in this type of context. Licensees are also often concerned about what their position would be on the insolvency of the licensor, and vice versa.
Who’s Who Legal: Which industries have been the source of the greatest amount of patent work for your firm in recent months?
Stephen Stern: Certainly the pharmaceutical industry has remained a constant source of patent work. We have been involved in, especially in more recent times, litigation where manufacturers of generic pharmaceutical products are increasingly interested in identifying possible markets in which there may be an opportunity to seek the invalidity of an innovator’s patent. In recent months we have also been acting in a number of matters involving patents for mechanical inventions relating to industries as diverse as hospitality, sports equipment and footwear as well as in matters concerning health care products.
Jay (Young-June) Yang: Much of our patent work involves protecting complex inventions in various fields such as chemistry, traditional pharmaceuticals, biotechnology, polymers, electronics, computer software, internet, e-commerce and BM, semiconductor, telecommunication, automotive, medical system, and optical system technologies.
Korea has several companies that are market leaders in their respective industries, so we get a fair share of work related to those industries. For example, since companies such as Samsung and LG Electronics are major electronics companies worldwide, there are usually a large number of patent filings and litigations in the electronic material and device areas. Samsung is also investing in biosimilar and new bio pharmaceutical drug industries, so we also get work in those areas from foreign companies. Recently, we have also noticed an increase in the amount of patent work in the biotechnology and medical device industries, likely due to a rise in the aging population and their changing health care needs.
Ron Dimock: On the prosecution side, we have not seen much change in the sector distribution of work. On the litigation side, our firm has seen a recent up-tick in interest from consumer products companies. Work from the pharmaceutical industry and technology industry appears to be relatively constant.
Nicola Dagg: Life sciences, especially biotech, and telecoms.
Who’s Who Legal: Have you seen any marked change in the local patent legal market in recent times? Have firms been trying to establish a practice in this sector, or has there been a movement towards boutique firms?
Stephen Stern: The Australian patent law market is characterised by a small number of top patent lawyers, at both top-end full service firms and law firms associated with patent agent firms, who continue to act in the majority of significant matters. This has not changed in many years. While medium-sized full service firms have continued to develop ‘soft-IP’ practices (trade marks and copyright matters) they have not established notable patent practices. Rather, competition remains between patent practitioners at top-end full-service firms and those at patent agent firms. As clients in patent matters are primarily interested in which lawyer is acting, rather than which firm, and clients continue to appreciate the benefit of a ‘full service offering’ (as general commercial, competition, tax and other issues arise) top-end full service firms will continue to occupy a strong position in the Australian patent law market.
Jay (Young-June) Yang: The Korean patent legal market can generally be seen in two extremes. On one side, you have ‘quality’ filings by big firms that have both extensive patent prosecution and litigation capabilities. On the other side, you have ‘quantity’ filings by patent boutique firms that can offer clients deeply discounted fees.
In addition, many general practice law firms are building up their IP practices. Some GP firms have arrangements with IP boutique firms. Some GP firms try to merge with IP boutique firms, but in most cases fail to go through. With IP concerns taking up a larger role, firms are seeing the need to be able to handle areas of law such as patent law, in order to remain competitive in the market.
One trend we are seeing is Korean companies recruiting more in-house patent attorneys. For companies with large IP portfolios, it may be more cost effective to do some of the work in-house than to send the work to law firms. As the level of sophistication of companies’ in-house IP departments increase, these companies will likely rely less and less on outside firms.
Ron Dimock: The Canadian patent law market has seen a trend over the last few years of large full service firms trying to grow their IP departments through merger with boutique firms or lateral hire of experienced practitioners. At the same time, several new small IP boutiques have started.
Litigation clients are generally looking for an IP firm that has sufficient depth and experience to handle their files, rather than differentiation based upon full-service or boutique. The trend over the last few years is towards IP firms that can provide a range of experience and availability to the litigation file with the capability to drive the case to trial within two to three years.
Nicola Dagg: Intellectual property issues do not arise in a vacuum and intellectual property clients are increasingly looking for firms which can provide a ‘full-service’ approach. Strong offerings on the antitrust, arbitration, corporate and tax sides are becoming an essential complement to specific intellectual property advice.