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09.03.17

What Germany and the EPO Could (and Should) Learn From Australia About Patent Scope

Posted in Australia, Europe, Patents at 6:24 am by Dr. Roy Schestowitz

Public Release of Productivity Commission Final Inquiry Report into Australia’s IP Arrangements
Reference: Public Release of Productivity Commission Final Inquiry Report into Australia’s IP Arrangements

Summary: Patent maximalism, including patenting of software, recognised as an undesirable, but will the EPO accept that rather than publicly advocate software patenting?

Australia — like Canada (subject of our previous post) — is a large developed country with a relatively small population. Both are historically inspired by English/British law.

“Australia’s patent policy seems to be improving, e.g. by reducing the incentive to troll Australian firms.”As we noted the other day, Australia not only recognises the dangers of overpatenting but also does something about it. Australia has just limited patent scope and Peter Leung from Bloomberg did an article about it (“Australia Seeks Tougher Inventiveness Patent Requirements”).

Australia’s patent policy seems to be improving, e.g. by reducing the incentive to troll Australian firms. Here are some portions from Leung’s report, which compares it to the EPO:

Inventors seeking new patents in Australia may have to meet more stringent inventiveness requirements that better match Europe’s under a government proposal aimed at improving the nation’s intellectual property system.

Prime Minister Malcolm Turnbull’s government’s recent response to recommendations from the Productivity Commission, a government research body, included support for raising the inventive step requirement— analogous to the U.S. requirement that an invention be not obvious. An invention is not obvious if it’s sufficiently different from the known technology at the time.

“As it currently stands, the inventive step bar isn’t as high in Australia as it is at the European Patent Office,” Simon Potter, principal and patent attorney with Spruson & Ferguson in Sydney, told Bloomberg BNA. “Even though the Australian government made some changes back in 2013 with the Raising the Bar Act, the Productivity Commission’s view is that the bar remains too low, and the government apparently agrees.”

[...]

More Like Europe

The government said it supports amendments to the Patents Act to clearly establish that a “scintilla” of inventiveness is not enough to secure a patent. The law should also make clear that the “obvious to try” test used by the European Patent Office can be used to determine whether an invention has an inventive step, it said.

[...]

Rachel Hooke, a partner and patent attorney with FB Rice in Sydney, told Bloomberg BNA adopting an inventive step requirement in line with the EPO’s in theory likely won’t be too controversial, but much will depend on the details and implementation.

The government also supported a related Productivity Commission recommendation requiring applicants to identify the technical features in its patent claims, a practice that the EPO employs. Whether an invention meets the inventive step requirement should turn on the claim’s technical features, so requiring the applicant to lay out those features should help patent examiners come to the right conclusion, the commission said.

[...]

Furthermore, Australia has a “manner of manufacture” test but the EPO doesn’t, which is why the technical features analysis is so important in Europe, Hooke said. Having both seems “unnecessary and confusing,” she said.

Here in Britain patent trolls are quite rare. Software patents are also quite rare if not rarer than lawsuits from overseas trolls like Ericsson’s (earlier this year in London it unfortunately got its way). Perhaps the departure from the UPC would help guard British software companies, which rightly oppose the UPC.

“Here in Britain patent trolls are quite rare.”What about Germany?

The Germany-based EPO receives a lot of patent applications from Germany (far more so than from the UK) and “some similarities exist between German and EPO practice,” say Meissner Bolte’s Dr. Stefan M. Zech, Jochen Kilchert, Dr. Stephan Held, Christian Hess, Tilman Pfrang and Dr. Tobias Wuttke. Their days-old article notes: “Another restriction on software is the requirement under Section 1(1) of the [German] Patent Act that patents are granted to inventions or fields of technology, excluding any subject matter considered to be non-technological” (as is often pointed out by the German patent ‘industry’) and here is the part about the EPO, where software patents are being in granted in defiance of the rules:

When determining novelty, only direct and unambiguous disclosure is relevant. However, this requirement is broadly interpreted when compared to the practice before the European Patent Office (EPO).

With respect to the inventive step, some similarities exist between German and EPO practice. However, the EPO problem-solution approach – although generally known by German patent law practitioners – is of considerably lower importance. The decisive question in Germany is often whether the prior art can provide any motivation or incentive to add further features to an already-known solution of the prior art.

It’s already widely publicised that in Germany there’s a plague of patent trolls; they’re truly surging there. We wrote many articles about that. No doubt it’s good for law firms, especially those that specialise in litigation/prosecution. But what does that mean for the ordinary German software developer? No good…

“It’s already widely publicised that in Germany there’s a plague of patent trolls; they’re truly surging there.”The following portion of text was brought forth to me by an online friend, citing an old book from James Stewart Martin, titled All Honorable Men (1950). It’s about fascism’s history (Patents and Cartels) and the role played by patents at the time. Under “Chief of the Decartelization Branch for Military Government in Germany after World War II” it says this:

The practice of I.G. Farben was to capture the basic patents in each field of synthetic chemistry. They would file applications for patents not only in Germany but also in most of the civilized countries of the world.

Our own patent laws were full of loopholes that helped a great deal. For one thing, despite the legal requirement that a patent specification must be so detailed as to enable a man “skilled in the art” to practice the invention, a vague description of the method of producing a chemical compound is often enough to obtain a patent.

(…)

Further, these loopholes permitted an enterprising firm to file its application for a patent long before the actual “bugs” had been worked out of the production process.

The Germans, between the two wars, made an especially energetic drive to exploit their initial advantage in the field of synthetic chemistry in this way. In many cases they blanketed whole new fields of industrial technology by securing basic patents covering all known or suspected processes for synthesizing important materials.

In some cases they themselves had not discovered how to make these materials, but that mattered very little. If someone else did discover the “know-how,” he would find himself blocked by the patents already issued to some German firm or individual on the basis of a general description of the process.

Confronted with this earlier patent, the new inventor had a simple choice before him : spend anywhere up to ten years and thousands of dollars in arguing a patent interference through the Patent Office and the courts; or make a deal. Most of them chose to make a deal. But each deal included specific and legally enforceable recognition by contract on the part of the newcomer that the German patent was valid and not open to question.

Then he would get a promise from the Germans that as they worked with the new process in their own factories and laboratories, they in turn would make available to him the technical know-how that they might discover.

This made it a mutual enterprise beneficial to both, saved expense of litigation, and besides the two could then join forces against any other inventors who might still be outside the arrangement.

In practice, this meant that if I.G. Farben caught Du Pont on the first go-round with the Farben patents in the United States and made a deal with Du Pont, from then on it was I.G. Farben and Du Pont against, shall we say, Monsanto. And as more outsiders fell in with the scheme the team of solidly organized patentees grew and the chances of the remaining outsiders were less and less.

There’s a true danger that unless Germany ends the gold rush for patents, small- and medium-sized companies will suffer. At the EPO, last year’s statistics show a consistently high number of patents. From 2007 to 2016 the number of German patent filings was: 32,103, 33,384, 30,472, 33,104, 33,447, 33,814, 31,887, 31,691, 31,379, and 31,815 (last year).

“There’s a true danger that unless Germany ends the gold rush for patents, small- and medium-sized companies will suffer.”Compare that to France with: 10,797, 11,487, 11,608, 11,721, 11,865, 12,234, 12,378, 13,194, 13,294, and 12,726 (last year).

The UK is even lower with: 7,260, 7,172, 6,569, 7,142, 6,508, 6,691, 6,510, 6,917, 7,099, and 7,226 (last year).

“If the EPO was to study the reports from Australia, Battistelli would get the boot the following day.”Remember that the EPO is primarily based in Germany, France’s INPI does not really do proper examination, and the UK has the IPO.

France never quite did any quality assessment of patents (it’s more like registration), the UK-IPO is pretty strict, and EPO is nowadays granting patents like mad. Insiders tell us that anything goes, even software patents. If the EPO was to study the reports from Australia, Battistelli would get the boot the following day.

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