When Google launched its AdWords advertising programme in 2003, keyword-linked advertising seemed to herald the future of online advertising. If only it didn’t infringe brand owners’ IP Rights in the process, says Duncan Bucknell

It all seemed to make perfect sense. Companies looking to ensure their details appeared at the top of a web search results page simply had to purchase ‘pay-per-click’ advertising banners that linked to particular industry-specific search terms. So, for example, if a consumer was looking to find ‘trademark counsel’, the law firm that had sponsored those keywords with a search engine provider, such as Google or Yahoo!, would appear next to the actual search results. It sounds no different from selecting the appropriate keyword terms as website metatags for your own website. That is, after all, how search engines work.

And yet the potential for IP infringement has proved immense, as businesses looking to cash in on their competitors’ goodwill have taken to purchasing trademark-protected terms (for example, the brand or product names of their competitors) as part of their sponsored keyword triggers in order to divert some of the potential customers of their competitors to their own websites. Worse still, say brand owners, Google and its peers have chosen to turn a blind eye.

Trademark owners have started to protest, filing lawsuits claiming trademark infringement, unfair competition, and trademark dilution. To date, Google, AOL’s Netscape search engine, Yahoo! and Excite have all been sued for keyword infringement, with mixed results. Most jurisdictions are clear that trademark infringement exists if a company uses another company’s trademarks as metatags on its own website, but they are divided as to whether the use of trademarks in keyword-linked advertising is trademark infringement or simply a fair means of competition.

France has already ruled that in ‘some’ circumstances it does count as infringement, but UK courts have found the opposite to be true: in their minds the sponsored ads are clearly labelled as such, so the potential for consumer confusion (necessary to prove the common law tort of passing off) has been adequately reduced.
Google, for its part, argues that one of the critical steps in effective advertising is placing the ad where interested consumers may see it. It is not to blame, it suggests, if companies nominate the brand names of their competitors as search terms: ‘As a provider of space for advertisements, we cannot arbitrate trademark disputes between advertisers and trademark owners... We encourage trademark owners to resolve their disputes directly with our advertisers, particularly because the advertisers may have similar advertisements on other sites.’

It has good reason to fight its corner: Google receives the majority of its revenue through pay-per-click keyword advertising. Prior to 2004, it denied advertisers the ability to link their ads to the trademarks of others; however, it modified its ad-linking policy in January 2007 to allow advertisers to bid on the chance to have their ads associated with any keyword, even if those keywords were trademarks owned by a competitor. That is not to say that Google is allowing unbridled use of trademarks, as the company still ‘reviews trademark complaints that relate to the content of the keyword ads, just not the keywords purchased to trigger the ads’. But that is small comfort to brand owners.

Be prepared

Be aware that your intellectual property is a high risk factor in China.

• Be committed in the protection and enforcement of your most valuable property: your intellectual property rights.
• Budget enough financial means to protect and enforce your intellectual property rights.
• Raise the awareness in your whole organisation about the risks of intellectual property infringements in China.

Do your homework

• Do a due diligence research of your potential business partners. Were they in any way involved in an intellectual property infringement before?
• Demand that potential business partners sign an confidentiality agreement before you hand over any sensitive business information.
• Set up a contract that includes all aspects of intellectual property rights. Who owns what intellectual property right? In what way can the business partner use the intellectual property rights? What is the time frame he can use these? Spell out that you can visit the plant unexpectedly to control how your intellectual property is used. If a potential business partner refuses to sign the contract, find another business partner.

• Although with copyright there is no registration needed, according to the 'no formalities provision' of the Berne Convention to which China is a signatory, it can be very helpful to establish prima face evidence, for example ownership. So do register your copyright at the National Copyright Authority of China.
• Register your trade marks in Chinese characters too. If you want to register the phonetic equivalence of your Western name, it is possible you need different sets of Chinese characters, because Chinese characters are pronounced differently in different Chinese dialects, such as Cantonese. Make sure the Chinese characters have a laudatory meaning appropriate for your brand.
• Register your patents, utility models and design rights. In China designs are, together with inventions and utility models, part of the so called inventions-creations, which are protected by the Patent Law of China..

To trust is nice, to control better

Monitor the use of your intellectual property in the plant frequently.

• Know who has access to your plant, to your intellectual property rights.
• Use and combine several anti-counterfeit technologies.

Monitor whether there are intellectual property infringements in your market.

• If there are counterfeit products, track the origin, gather the evidence.

Be ready to enforce

In case of an intellectual property infringement act in an optimal way. Different situations ask for different enforcement routes. Timing is important too. Strike the infringers at a moment when they have added maximum value to their infringed products, because of packaging and transport, in order to hit them hardest financially.

Administrative enforcement route

• In China the administrative enforcement route is the most commonly used. The Administration for Industry and Commerce (AIC) enforces trade marks, the State Intellectual property Organisation (SIPO) enforces patents, utility models and design rights and the National Copyright Administration of China (NCAC) enforces copyrights. Apart from the enforcement of patents, SIPO is responsible for the patent work throughout the country. At the national level SIPO is also responsible for the examination of foreign and domestic patents (Patent Re-examination Board). The Trademark Office (TMO) is responsible for the registration of trade marks and the Trademark Review and Adjudication Board (TRAB), which deals with trade mark disputes, are both under the control of AIC.
  
• The advantage of the administrative enforcement route is that it is an easy and a cost efficient way. The disadvantage is that no damages are awarded and that the punishment is often limited to the confiscation of the infringing goods and/or a fine for the infringers. And often the infringers use another company as vehicle to continue their infringements.
  
• Customs is one of the underestimated routes of enforcement. The Chinese customs authorities are willing and able to cooperate with intellectual property right holders. So instruct them on how to recognise genuine from infringing goods and how to track down infringing cargo.
  
• A lesser known way for trade mark and design rights holders is to base their case on infringements of the Product Quality Law at the Administration of Quality Supervision Inspection and Quarantine.

• If the complexity of the infringement is high and the scale serious, then going to the People’s courts is the preferred route of enforcement.
• The advantage is that the People’s courts can award damages. Disadvantage is that this route is often time-consuming and costly.
• Legal protectionism can be a problem outside the big cities, such as Beijing, Shanghai and Shenzhen, which makes forum shopping of crucial importance.

Criminal enforcement route

• Alot is expected from the criminal enforcement route in China, because of the alleged deterrent effect.
  
• The advantage is that you can harm infringers by locking them up or punish them with serious fines. However, the disadvantage is that there are relatively high evidentiary thresholds before alleged criminal infringers are prosecuted.

Institutions that regularly give information about IPR in China

• Quality Brands Protection Committee (QBPC) http://www.qbpc.org.cn/, lobby group of 180 multinational companies that want to improve the protection and enforcement of intellectual property in China.
• Business Action to Stop Counterfeiting and Piracy (BASCP) http://www.iccwbo.org/bascap/id1127/index.html address intellectual property rights issues and petition for greater commitments by local, national and international officials in the enforcement and protection of intellectual property rights.
• Intellectual Property Owners Association http://www.ipo.org//AM/Template.cfm?Section=Home trade association for owners of patents, trademarks, copyrights and trade secrets.
• International Trademark Association http://www.inta.org/ association of more than 5,500 trade mark owners.
• American Chamber of Commerce in China http://www.amcham-china.org.cn/amcham/home/index.php.
• European Union Chamber of Commerce in China http://www.euccc.com.cn.
• British Chamber of Commerce in China http://www.britcham.org/index.php.
• Australian Chamber of Commerce in China http://austcham.org/index.html.

Websites about IPR in China

• Intellectual Property Protection in China http://english.ipr.gov.cn/en/index.shtml, official website about the activities of the Chinese government to improve protection and enforcement of intellectual property in China.
  
• IP Dragon http://ipdragon.blogspot.com, weblog by Danny Friedmann. Gathering, commenting on and sharing information about intellectual property to make it more transparent, since 2005.
  
• China Law Blog http://www.chinalawblog.com weblog by Daniel Harris has often interesting articles about IPR in China.
  
• China Hearsay http://www.chinahearsay.com weblog by Stan Abrams, has often interesting posts about IPR in China.

Conclusion

Prevent as much infringement as possible, protect your intellectual property rights assertive, anticipate that infringements will still happen, enforce your rights aggressively. In other words build a fierce reputation that no one can infringe the intellectual property rights of your company without feeling the consequences.

(This article is a summary of the issues discussed in Duncan’s 21 May 2008 presentation at the Generic Medicine Industry Association conference in Sydney Australia.)

The Glivec battle in India

Novartis’s ongoing stoush with the Madras High Court in India created quite a stir on the world stage late last year.  It concerns the patentability of the Beta crystalline form of Imatinib, the active pharmaceutical ingredient in the blockbuster drug Glivec (Gleevec).  (For those who are unaware, polymorphs are the various crystal forms of a material.)

The case derives from substantial changes to the Indian Patent Act made in 2005 and focuses on section 3(d) which bars from patentability certain types of patents which have traditionally been quite useful to innovator companies.  The section reads:

'The following are not inventions within the meaning of this Act,
...
‘the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.'

The case is currently mired in side issues about the constitutionality of the section and the proper composition of the Appeals Board which was to hear the appeal from the original patent office decision.  Please read our August 2007 article for further background on the case. 

International ramifications

One of the allegations that has been made by Novartis is that India’s section 3(d) does not comply with TRIPS.  The contrary argument (much propounded by Shamnad Basheer over at SpicyIP) is that it does, as it is merely an obviousness standard that member states are free to define in a manner consistent with their national policy.

The controversy has become even more acute since a number of other Asian countries have apparently foreshadowed that they will enact provisions similar to India’s 3(d).  These include the Philippines, Maldives, Pakistan, Sri Lanka, Vietnam, Indonesia, Malaysia and Bangladesh.

So how are things looking in other jurisdictions? 

A mixed bag...

United Kingdom criticises ‘try on’ patents

On 9 May 2008, the UK Court of Appeal handed down its decision in the Perindopril (Coversyl) beta polymorph patent case.  In essence, the patent was held to be obvious in light of a prior patent owned by the innovator (Servier) which disclosed an almost identical process to that required to form the beta polymorph.

The Judges were quite critical of the use of this patent to attempt to extend the monopoly period – saying that it was “invalid, and very plainly so’ and ‘It is the sort of patent which can give the patent system a bad name.’

Filing the beta polymorph patent was not the only thing that Servier has done to reinforce their IP position for the drug – they acquired to groups of synthetic process patents from Lupin in April and then October 2007 to add to their portfolio.

Australia – perindopril opposition dismissed, but what does it mean?

The same patent was the subject of an Opposition in Australia which was dismissed on 11 April this year.  This doesn’t mean that the Australian Patent Office thinks such patents are automatically valid, only that the grounds on which the opposition was run – that the amendment itself was bad – were insufficient.

United States – Detrol application by Hetero...

The issue of polymorph patentability is yet to be litigated at the CAFC, but the USPTO seems to still be content to issue polymorph patent claims.  The latest that I am aware of is Hetero’s tolterodine tartrate (Detrol) polymorph patent application – US 20050131067, which has been allowed with a claim 1 that reads:

1.       A crystalline tolterodine tartrate form 1, characterized by an x-ray powder diffraction spectrum having peaks expressed as 2 theta at about 11.9, 13.6, 14.2, 15.9, 16.9, 18.4, 18.8, 20.4, 22.0, 23.9, 25.4, 26.3 and 29.8 degrees.

Whether a District court, or the CAFC would uphold such a claim is a different matter altogether, particularly in light of the greater invalidity risk created by the US Supreme Court in the KSR v Teleflex decision on 30 April 2007.  (KSR basically made it easier to invalidate patents on the ground of obviousness.)

Strategic options

For innovators, each of these cases obviously serves as a roadmap as to what you can expect in these respective jurisdictions.  Careful attention to developments, and proactive steps will obviously be crucial.  You may, for example decide that it is worthwhile to seek amendments well before the time when you are currently expecting generic competition, and you will certainly need to reconsider the drafting and prosecution strategy for these patents.

Generic companies will obviously take heart from some of these developments.  However, you should not assume that just because a polymorph patent has been invalidated in one jurisdiction that another will in the same jurisdiction, or that even the equivalent patent will be invalidated in a different jurisdiction.  Instead, focus on understanding the underlying rationale for invalidation and deeply analyse the ways that this can be used in the jurisdictions of interest to you. 

In the Australian context (for this conference)...

As I wrote in my August 2007 article in IAM Magazine,  even at the best of times, Australia is a difficult place to invalidate a patent based on obviousness.  As mentioned in the article, this is due to the very narrow prior art base on which obviousness is tested there.  Consequently, the mere fact that a particular patent has been invalidated in another country based on obviousness does not mean that this will automatically happen in any other country, and least of all in Australia.  You will need to take a very careful look at the prior art used and whether it can be fitted into the narrow category of relevant prior art under the Australian test.

On the innovator side of the equation, I would be considering co-filing an Innovation patent (which is even harder to invalidate) which will at least provide 8 years of stronger protection.

Here is a great article on patent quality from Sara-Jayne Adams at IAM-Magazine - Quality is the key to a bright patent future.

Sara-Jayne interviewed the following people for the article:

• Jonathan Barney, Managing Director of Ocean Tomo
• Alison Brimelow, President of the European Patent Office
• John Dudas, UNder Secretary of Commerce for Intellectual Property and Director of the USPTO
• Douglas Clark, Managing Partner, Lovells, Shanghai, China
• Carl Horton, Chief IP Counse, General Electric Co
• Tom Ewing, IP Value Added Consultant
• Horacio Gutuerrez, Vice President & Deputy General Counsel, IP & Licensing, Microsoft
• Masanobu Katoh, Corporate VP and President, Law & IP, Fujitsu
• Lisa Kellberg, Corporate VP and Head of Corporate Patents, Novo Nordisk
• Judge Pauline Newman, Judge of the United States Court of Appeals of the Federal Circuit
• Sherry Knowles, Senior VP, Corpoate IP, GlaxoSmithKline
• Chris Mercer, Presidento of the EPI
• Stephen Potter, Director and immediate past chair of the R&D Society (UK)
• Manny Schecter, Associate General Counsel, IP Law IBM
• Peter Spours, Director IP Transactions & Strategy, TomTom
• Marian Underweiser, IP Law Counsel, IP Law Strategy & Policy, IBM
  
• Margareta Ydreskog, Group Patent Manager, Corporate Strategy & Business Development, Saab

Two recent books have done patent agents and patent attorneys and their trainees a great favour by making substantial contributions to the body of recorded knowledge on the subject of patent drafting. Paul Cole’s ‘Fundamentals of Patent Drafting’ published by CIPA, will surely go down in history as one of those legendary works and a ‘must-have’ for every patent agent or patent attorney’s library. Similarly, Gwilym Roberts’ book, “A Practical Guide to Drafting Patents” published in Sweet & Maxwell’s EIPR Practice Series, is an extremely practical guide for those wishing to learn more about this black art.

Read the full article, available for download at Oxford University Press' Journal of Intellectual Property & Practice.

Search the internet for “Jeremy Phillips” and you will find out that he is an intellectual property consultant; author, lecturer and commentator on patents, trade marks, copyrights and most contemporary issues involving intellectual property rights. Those who don’t know him would very quickly get the strong impression that he’s been fairly busy in the world of IP during his 50-something years on the planet.

And they would be right: while Jeremy is based in London, his influence extends much further due to his roles in creating, editing and writing for IP magazines and journals, as well as blogging. He is well known as a “founding co-blogmeister” and current blog team member on the award-winning IPKat intellectual property weblog. Not satisfied with that, he has more recently created blogs focusing on European trade marks (Class 46), African IP (Afro-IP) and the interface between IP and monetary matters (IP Finance). It’s frankly surprising that Jeremy has not yet been inducted into the IP Hall of fame, but no doubt that will happen this year.

Duncan: OK, so Jeremy, I’ve often wondered - if you hadn’t been an IP lawyer what would you have been?

Jeremy: er .. I’m not actually an IP lawyer. It’s just that everyone thinks I am. I’ve never held any professional qualification for any job I’ve ever done in my entire career. I would have been a teacher, though. I love teaching and spent the first 11 years of my gainfully employed life in doing just that. But I couldn’t pay the bills …

Duncan: Right, with all due respect to my fellow lawyers and patent and trade marks attorneys, that probably explains why you have been so successful. I know (and have met) a lot of people who have been heavily influenced by you. I’m always delighted to meet one of your former students. Who would you say has been the greatest influence in your IP work and why?

Jeremy: In the Ethics of the Fathers Ben Zoma is quoted as saying “Who is the wise man? He who learns from all men”. I’ve tried to implement that from the start, which means I’ve been influenced by my teachers, colleagues, students, rivals, friends and foes alike.

Duncan. So, getting down to brass tacks - what would you say is the one intellectual property issue that you think successful companies must do incredibly well?

Jeremy: They treat their problems as business problems rather than as legal problems. Many lookalikes and inexact copiers are a distraction that can be swept aside by better marketing policy, rather than by suing them.

Duncan: Why?

Jeremy: It’s because they use their resources to best effect. For example, marketing heads, R&D chiefs, finance and HR are all better at doing their own jobs than in having interminable meetings with lawyers, reading and re-reading witness statements that had to be written for them, hanging around in court, arguing over which bit of the corporate budget the cost of litigating comes out of and delegating their real jobs to others while this all goes on.

Duncan: Another important emerging issue is that some say that IP will gradually be taken over by open source and creative commons, which are based on shared benefits rather than monopolies – do you agree?

Jeremy: Cooperation and easy access has happened in several areas: blanket licensing of copyright, FRAND licensing of technological standards. But there are areas where it is simply inappropriate and will always remain so. One is branding, another is know-how licensing.

Duncan: Can you expand on this?

Jeremy: Let’s take branding as an example. Branding (including business format franchising) depends on functions such as quality control, which are inherently exclusionary. If a fashion house licenses the manufacture of watches bearing its brand, an open source model or collective commons model deprives it of the effective power to control the manner in which licensees make those watches, thus risking fatal damage to the exclusive or quality-laden ethos of the brand that makes people want to take a license to it in the first place.

Duncan: One last burning question - if you could change one thing in the world of IP what would it be?

Jeremy: I’d make all IP investment far more tax-friendly. IP exploitation generates so much in terms of corporation tax, VAT and so on. It creates, stimulates and continually nourishes markets. Anyone investing in the development of IP rights, or the acquisition of an IP portfolio, should be given positive inducements to make it more worthwhile.

Duncan: OK, this really is the last question, how can the IP community best influence governments to this end?

Jeremy: I don’t think the IP community can influence governments at all, because we’re not a single focused community but a complex interrelationship of symbiotic relations. While we see ourselves as a community, the businesses and industries that are based on IP - and which depend on our advice - do not. And they’re often in total conflict with one another. Thus retail chains and independent brand manufacturers are both dependent on IP but their interests are quite different. So too with hardware and software manufacturers, music performers and the music distribution industry. The list is a long one.

Duncan: Thanks so much, as always, Jeremy for your insight.

If you’re unaware of Jeremy’s work, then I recommend visiting his website http://jeremyphillips.blogspot.com/.

I also highly recommend his four blogs: IPKat , Class 46, Afro-IP and IP Finance.

In essence, in a long-awaited decision, the Australian High Court reviewed several key questions pertaining to patent validity and inventive step in particular. In so doing, it has made it harder to invalidate Australian patents.

Abstract, full text, pdf version

"Observational evidence from all continents and most oceans shows that many natural systems are being affected by regional climate changes, particularly temperature increases.

A global assessment of data since 1970 has shown that it is likely that anthropogenic (human made) warming has had a discernible influence on many physical and biological systems."

These excerpts from the Climate Change 2007 report by the Intergovernmental Panel on Climate Change (IPCC) add to the body of evidence that the climate is changing and human activity has contributed.

Whether you agree with the evidence or not, it is certain that there has been a global shift in thinking. In the intellectual property space, there have recently calls for a change in strategy, and proposals for new laws covering innovation and intellectual property for green technology.

Globally populations are looking for ways to reduce pollution and be more resource efficient.

People are keen to adopt (and will need) new technologies, products and services to meet their needs.

Just in case you've missed them, some of the predicted impacts of climate change listed in the IPCC report include;

• Water availability will increase to 10 to 40% at high latitudes and in some wet tropical areas.

• Water availability will decrease by 10 to 30% in some dry regions at mid latitudes and in the dry tropics.

• More areas affected by drought.

• Increased risk of flood

• Changes to ecosystems due to wildfire, the ocean becoming more acidic, flooding and drought.

• Globally food production is predicted to increase with warming of 1 to 30C but above this it will decrease.

• Health effects including increased frequency of cardio-respiratory diseases due to higher concentrations of ground level ozone, increased diarrhoeal disease, increases in malnutrition and consequent disorders, and increased deaths, disease and injury due to heat waves, floods, storms, fires and droughts.

• Altered spatial distribution of some infectious disease vectors

It’s not all doom and gloom - the global mood of change offers plenty of opportunities. Such predictions make the development of new processes, products and technology vital to human life on Earth.

Here are some ideas on potential opportunities;

Technology that provides cleaner electricity and fuels, food packaging and storage technology for hotter climates, water efficient processes and plumbing, filtration devices for water reuse and recycling, drought resistant crops and plants, efficient cooling systems for homes, public buildings and workplaces and pharmaceuticals to deal with increases in disease.

Industries dealing in these areas may have opportunities, but of course there are many more areas. It’s limited only by your ingenuity!

So how can you work climate change into your IP strategy? Climate change should already be one of the variables built into your future business planning and hence your IP strategy.

If not;

• Consider your present and future IP, does it reflect the global shift in thinking regarding climate change?
• Is it time to rethink your branding and marketing message? Are there opportunities to capture a new or emerging market with new trade mark and other branding IP?
• Revisit past IP – an idea that’s in storage may now be economically sound.
• Use Climate Change as a springboard for a workshop on new ideas with your business team.
• Your organization may have an environmental policy, but has it filtered through to your core business or your IP Strategy?
• Does it need to?
• Can you license products in new regions eg. cooling equipment in Southern Europe (predicted to become hotter due to climate change)?
• Can you access government support for Climate Change projects or partner with research organizations?
• Are there tax breaks (or deductions) on offer for Climate Change for your company?
• Don’t forget to promote your good works - there’s marketing and public relations glory to be had as well.

With Climate Change considered as part of your IP strategy you not only save your bacon, but perhaps play a part in saving the world.

Duncan caught up with Deepak Somaya when in Washington earlier this year. Deepak is an Assistant Professor at the R. H. Smith School of Business at the University of Maryland.  (Deepak's Bio)

1. Please tell us a little about your work.

I am a professor in strategic management, so my fundamental goal is to understand how companies can be successful by employing different strategies. I am particularly interested in intellectual property strategies, as well as other managerial approaches to protect and leverage a company's intellectual assets.

It is very important to me as a researcher to ground this understanding in rigorous theoretical models that can then be tested with real-world data. This gives the research findings and conclusions a great deal of robustness and longevity, rather than it being simply someone's opinion.

2. How did you become interested in intellectual property?

I happened to be a Ph.D. student at Cal (University of California at Berkeley) at the same time as a lot of great scholars in intellectual property, which was a fabulous resource. The primary lenses used by these scholars were either law (I benefited greatly from Mark Lemley, Rob Merges, Pamela Samuelson) or economics (Bronwyn Hall, David Mowery, Suzanne Scotchmer, Carl Shapiro, Hal Varian, Brian Wright) ... I may be unintentionally omitting some people. I wanted to do something a little different ... more managerial, strategically oriented ... closer in spirit to David Teece, who was a big influence. I got an opportunity to work on a project studying international differences in patent protection, and it just went on from there.

3. Could you please tell us your current working definition for intellectual property strategy ?

To me, intellectual property strategy encompasses the top management decisions about the use of intellectual property to support business objectives.

I should clarify a little here. Sometimes the conversation about IP can easily get bogged down in the minutiae of IP law. IP strategy is only really successful if one can abstract away from some of this detail and focus on the big picture of what decisions are important, and how they matter to the company.

4. What would you say are the key lessons from businesses that have come out of your work so far?

Let me list two sets of ideas that I think are valuable. The first is to be disciplined and clear about what IP strategy one is pursuing for a given line of business. This is not a stand-alone decision. It depends on the firm's strengths and strategic goals in the business. In most cases, I think the strategy boils down to one of 3 "generic" strategies - a proprietary strategy, a defensive strategy, or a leverage strategy.

The second idea connects patent strategy and business models in industries that I call "multi-invention" industries. Essentially, these are businesses where there are lots of inventions needed to make end products, many of them patentable. Companies may just go ahead and commercialize and "worry about IP later." Sometimes, they are too obsessed with IP and don't think through their business model. In these situations, business models and IP strategy really go hand in hand. One cannot really think about one without the other. So, one needs to develop a good strategy to commercialize innovation, and simultaneously combine this with a well-crafted and compatible intellectual property strategy.

5. Where do you see the future of IP Strategy heading? (For example, I personally think that over time, open source / creative commons type systems will increasingly be demanded by consumers across all industries. There will be great rewards for those who properly prepare for this.)

In my mind, the knowledge and relationships that move when employees move is really big. This goes beyond legal IP alone. It’s in a zone where IP strategy meets strategic HR meets business strategy. I think companies will struggle with this issue for some time to come. A significant fraction of my current research is directed towards this area.

In addition, I think there is still a lot of room for better understanding and strategizing in multi-invention contexts.

This is the second in a series of articles on Pharmaceutical & Biotech Lifecycle Management, the first article looked at whether generics are launching earlier than ever.

The series comes from a pilot study I put together to test some views on the factors which affect success in the ongoing war between 'innovator' and 'generic' companies. In this article I look at how early non-innovator companies are filing patents covering a drug and the effect that this has on the period of monopoly for the drug.

Please join the discussion about this article at the equivalent blog post at IP Thinktank.

Background

The study looked at 15 of the globally top selling pharmaceutical products on the market today to identify possible trends which might explain, and potentially predict what can be done to affect the length of monopoly. Future articles will explore some of the other interesting findiings, and provide updates as more data and aspects of lifecycle management are analysed. (Raw patent filing data was supplied by the team at GenericsWeb.)

Other people are filing patents incredibly early

There's a pdf document with three slides which accompanies this article - you can find it at - http://duncanbucknell.com/articles/141/Pharmaceutical-and-Biotech-Lifecycle-Management-(II).

Slide 1 shows the time from marketing authorisation until the first non-innovator patent is filed. By 'non-innovators' or '3rd party', I mean companies other than the innovator for that particular drug.

The yellow markers each represent a different product. The X axis shows years of monopoly that the innovator has obtained in each instance while the Y axis shows the number of years away from Marketing authorisation.

The first thing to note about the slide is that the values are all negative. That's right - other people are filing patents covering a new pharmaceutical product before the innovator obtains Marketing Authorisation.

The second thing to note about Slide 1 is that there seems to be a reasonable trend upwards and to the right. In other words, the longest monopolies went to those products for which there was minimal delay between 3rd party patent filings and Marketing Authorisation. (Presumably this trend would continue above the X axis - so that a product for which there are no 3rd party patents prior to marketing authorisation would obtain a still longer monopoly - 25 years?)

Slide 2 shows the years from the priority date of the first API patent covering the molecule until the 1st non-innovator patent filing. The axes are the same as slide 1.

The clarity of the trend is less clear here - but there seems to be a suggestion that a delay in the filing of 3rd party patents enables a longer period of monopoly.

For those who have picked it up - yes there's an apparent anomoly in the graph - there are negative values - some 3rd party patents were filed before the original API patent. How could this happen? These are drugs which are second or third generation - so that earlier class-covering patents (for formulations, synthesis or medical methods) also cover the new molecule.

Slide 2 is another reminder as to why second or third generation drugs seldom have a very long period of monopoly. (Of course, they are often commercially very valuable notwithstanding this.)

Strategy
Is there a direct link between the date at which a 3rd party files a patent covering a new pharmaceutical and the years of monopoly that can be expected for that product?

Probably not.

Interestingly based on some other findings in the same study (to be discussed in a future article), it appears as though an accumulation of 3rd party patent holders (especially early on) tends to reinforce the innovator's monopoly and not detract from it. So the timing for the first 3rd party patent is not about this.

However, 3rd party patents are an indicator of the research activity being undertaken by other (usually sophisticated) entities in relation to the product. The earlier they become sophisticated about that product, the more likely they are to be able to successfully deal with any patent barriers put up to sustain a monopoly.

What to do?
Innovator companies should consider how they might delay the time until 3rd parties commence filing patents covering the new molecule. This may mean carefully (even more carefully?) screening company announcements, marketing materials, journal articles and other publications for a set period - even up to marketing authorisation. Public listing disclosure rules and the marketing department will obviously hamper the ability to do this, but my suggestion would be to at least consider it.

These findings tend to reinforce the trend by generic companies towards searching for and developing generic versions of products earlier in their lifecycle than would have been done in the past. The trick of course is to balance this against the investment required and the risk that the product will not be successful on the market. This is obviously particularly important given that the earliest patents are being filed before Marketing Authorisation.

Notes:

The distinction between 'innovator' and 'generic' companies is rapidly disappearing. Many traditional 'innovator' companies have their own generic subsidiaries, and of course will routinely allow authorized generic products. Similarly, the larger 'generic' companies are increasingly engaging in drug discovery and coming up with their own new chemical entities, and / or in-licensing products from smaller firms, etc.

This pilot study was designed to generate discussion, and so it has not been designed to be statistically bullet-proof. Consequently, you will not see R squared values on any of the lines of best fit - there are only 15 data points so far.

Iin this study, 'years of monopoly' was defined as time from first marketing authorisation in any country, until launch by a generic company in any country. (As we all know, the monopoly increases over time as marketing authorisation is granted in each country, and then decays over time as generic competitors are able to launch in new countries. So the measure used in this study is an indicator but not equivalent to the actual monopoly gained.)

You can obtain a copy of the article from the OUP website.

It has also now been published at ipFrontline.

This article provides the background, an update and some strategic options in the dispute and finishes with a list of online resources for further reading. You can comment on this article at the equivalent post on my blog IP ThinkTank.

Background

The patent in issue claims a new crystalline form of imatinib mesylate. The original composition of matter patent is not patentable in India as it a drug product patent which was originally filed prior to 1995 when the mail box procedure began.

The Indian Patent Office refused to grant the patent on the ground that it lacked patentability under section 3(d) which states:

'The following are not inventions within the meaning of this Act,
...
‘the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.'

A brief consideration of the section quickly reveals a few ambiguities (which I won't discuss here). Section 3(d) was added to the Indian Patent Act as part of the 2005 amendments. The explanation to the amendment states:

'For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.'

Novartis files two High Court challenges

Novartis' response to the refusal was to file two High Court Challenges:

(1) - an appeal from the original decision to the Chennai High Court, arguing that the new crystalline form does in fact have an enhanced efficacy as it has a 30% increased bioavailability;

(2) - a challenge to the enactment of section 3(c) on the ground that it was "unconstitutional as it is vague, arbitrary and violative of Article 14 of the constitution (right to equality)."

(1) - The Appeal

Unfortunately, this has not progressed very far. On 2 April 2007, the Indian Government issued a notification declaring that section 117G of the Indian Patent (Amendment) Act 2005 (which provided that all pending appeals in the High Court shall be transferred to the Appellate Board set up under the Act), was to be made effective as of 2 April 2007.

Consequently, the Glivec appeal was transferred to the Intellectual Property Appeals Board (IPAB). The IPAB had been running since 2003, but had never heard a patent case as it did not have a 'technical member'. Former Patent Controller S Chandrasekharan was appointed as the technical member of the newly constituted IPAB for patents.

Novartis appealed Chandrasekharan's appointment as he had been the presiding Controller at the office which originally refused the patent. To make the perceived conflict worse, before the proceedings were transferred from the High Court, Chandrasekharan had filed an affidavit defending the rejection of the patent application by the patent office.

Curiously, the IPAB itself heard the appeal about its own membership, and unsurprisingly, dismissed the appeal. On 3 August 2007, Novartis appealed this decision at the Chennai High Court.

So, we're back before the Chennai High Court on a narrow question of the composition of the IPAB. This could take a while, folks.

It seems reasonably clear that the IPAB will be forced to remove Chandrasekharan by the High Court. The same mess has recently occurred, also concerning Chandrasekharan in the Magotteaux International appeal. (Magotteaux had to go through the same 5-step process - High Court writ, removal to IPAB, challenge to membership, refusal, appeal to High Court.)

Once the membership of the IPAB is sorted out, the real question will be whether the beta crystalline form is patentable within the confines of s3(d) (and the more usual ground of obviousness). In other words, does the beta crystalline form result in the enhancement of the known efficacy of imatinib free base form (the subject of the 1992 patent), and is it non-obvious in light of that patent?

Novartis will argue that the 30% increase in bioavailability makes it so. However, there's a semantic argument that bioavailability is not efficacy to start with. Then there's the question of whether the 30% threshhold is sufficient to be an 'enhancement'. After that, there's always the argument that notwithstanding these section 3(d) arguments, it would have been obvious to produce the mesylate and beta crystalliine form with a reasonable expectation that it would improve therapeutic use and most likely bioavailability. (Note here that to succeed, this obviousness argument needs two steps - the first to the mesylate salt and the second to the beta crystalline form.)

The danger posed by the obviousness argument is clear - it makes irrelevant the s3(d) challenge (which will go to the WTO as explained below). Having said that, (and subject to the prior art), one would expect that Novartis will have some pretty good counter arguments - they do this all the time all over the world.

(2) The challenge to section 3(d)

On 6 August, the High Court in Chennai dismissed the writ petition challenging the constitutionality of Section 3(d), and deferred to the World Trade Organization (WTO) to resolve the TRIPS compliance question.

It makes sense that the Chennai High Court refused to hear the application. Compliance with TRIPS isn't a constitutional matter under Indian law.

Having said that, the case has certainly created a lot of publicity about this unusual section of Indian patent law. The ongoing debate is not a bad place to launch a WTO challenge. Strategically then, by running the challenge, Novartis has helped set the stage for the real battle - before the WTO.

But will they win?

Shamnad Basheer over at Spicy IP thinks not:

"...section 3(d) is compatible with TRIPS, as it is an "obviousness" standard that member states are free to define in a manner consistent with their national policy. Section 3(d) does not "discriminate" against the pharmaceutical sector but only makes a "justified" differentiation, given the specificity of salt forms in the pharmaceutical sector i.e. other technology sectors such as mechanicals, electronics etc do not face “different salt form” kind of issues.

It bears noting that US patent law encompasses a heightened utility requirement in the context of gene patents—i.e. in order to be patentable, a gene sequence has to demonstrate “substantial”, "specific" and "credible" utility. This came out of a desire to put a stop on the multitude of frivolous gene patent applications that cited the obvious utility of being a “mere probe”. These steps that cater to the specificities of technology sectors are perfectly legitimate exercises of national discretion by member states. And India is no different. For similar reasons, section 3(d) is not likely to be struck down as an “arbitrary” standard under Art 14 of the Constitution of India."

I tend to agree with Shamnad - at least in relation to patentability of new forms of known substances.

However, section 3(d) also provides a blanket ban from patentability of all new uses of known substances. The difference is that new forms of known substances are subject to the proviso that they are not patentable if they '[do] not result in the enhancement of the known efficacy of that substance'. This proviso brings Shamnad's argument into play - that this is merely an obviousness requirement and so is in compliance with TRIPS. (The obviousness analogy is a very good one, and it is quite arguable that the law of many jurisdictions would bar from patentability a very similar set of patents as are barred under India's s3(d). See for example the anonymous comment on the situation in Europe at the IPKat's post "Novartis fight for patentability in India").

However, the ban on new uses of known substances does not have any such proviso. It simply states:

'The following are not inventions within the meaning of this Act':

...

(d) ... a new use for a known substance...'

I haven't looked, but I wonder whether there is any disclosure in the patent in issue to enable claims to a new use. If this were the case, perhaps Novartis could win at least on the new use of a known substance limb of the argument. If successful on both, then back India, they could argue that the beta crystalline form is used in a new way (subject to the disclosure in the patent, and an amendment, of course).

(The other ban from section 3(d) is on discoveries of new properties of a known substance. It is well known across the world that mere discoveries themselves are not patentable. Consequently, patent protection would be sought for the new use which becomes possible as a result of the new property.)

Summing Up

In the Appeal, the IPAB will likely be reconstituted without Mr Chandrasekharan. The IPAB will then have to consider patentability and, to win, Novartis must convince the IPAB that (a) in relation to s3(d) the 30% increase in bioavailability is an enhanced efficacy and so the beta crystalline form is patentable, and (b) the beta crystalline form of the mesylate salt is not obvious in light of the free base form.

Whoever wins, there will be an appeal back to the Chennai High Court, and then possibly on to the Supreme Court.

The s 3(d) challenge will take a long time to wind its way through the WTO process. Novartis appear to have a difficult task to win on the argument that the restriction on patentability of new forms is not compliant with TRIPS. However, a challenge to the ban on new uses of known substances may be more successful (though fruitless unless they can obtain claims to a new use).

As I mentioned in my earlier blog post, after all of that, India could still grant a Compulsory License to a generic company. To the best of my knowledge, India has not granted a Compulsory License before - presumably because of the lack of product patents has meant that they did not need to.

Resources:

Novartis:

• Website devoted to the Glivec case in India
• Latest press release

Spicy IP

• First mailbox opposition (Gleevec) decided in India (11 March 06);
• Indian Patent Act faces TRIPS challenge (30 September 06);
• Novartis case before the IPAB? (3 April 07);
• Allegations of bias in the Novartis Patent Litigation (20 June 07);
• Novartis' objection to Chandrasekharan dismissed by IPAB (22 July 2007);
• Novartis moves High Court to remove Chandrasekharan (3 August 2007);
• Novartis loses at the High Court: Focus now shifts to IPAB (6 August 07)

Economic Times of India:

• Novartis hits a blind spot with Glivec appeal;
• Setback for Novartis as Chandrasekaran stays;
• Novartis not to plead Glivec case;
• It's D-day for Novartis' Glivec case

Times of India - Novartis loses fight for cancer drug patent

Lawyer's Collective (public interest service provider in India that represents patient groups in the Novartis Group)

• Email list serve with updates

IPKat

• Novartis fight for patentability in India;
• Novartis lose Indian Glivec / Gleevec appeal;

In this article in the August/September 2007 edition of IAM-Magazine, I explain why patentees or licensees of Australian patents can be more bullish about asserting them as they now have less concerns over invalidation than they would in many other countries. The article focuses on why obviousness in particular continues to be problematic for those seeking to challenge Australian patents and offers some brief suggested approaches.

Click the 'download PDF' link above to download a copy of the article.

I recently put together a pilot study to test some views on the factors which affect success in the ongoing war between 'innovator' and 'generic' companies. In this, the first in a series of articles, I look at one of the interesting (but expected) outcomes from the study - that over time, generic companies have become better at getting on to the market earlier. To comment on this article, please go to the equivalent blog post on my site. If you are reading the blog, then you can read the full article in the article section of the site.

Background

The study looked at 15 of the globally top selling pharmaceutical products on the market today to identify possible trends which might explain, and potentially predict what can be done to affect the length of monopoly. Future articles will explore some of the other interesting findiings, and provide updates as more data and aspects of lifecycle management are analysed. (Raw patent filing data was supplied by the team at GenericsWeb.)

'Generics' seem to be launching earlier than in the past

In the graph which accompanies this article, the X axis shows the number of years of monopoly achieved by each of the drugs. The Y axis shows the number of years ago that the first Active Pharmaceutical Ingredient (API) or Composition of Matter (COM) patent was filed in relation to the product.

The bottom left of the graph shows the products in this study for which the composition of matter patent was filed more recently (17 to 20 years ago), and the top right shows the products for which the COM / API patent was filed the longest ago (31 years). The graph goes up to the right - the oldest products in this study received the longest periods of monopoly.

The implication here is clearly that if you discovered a drug 30 years ago, you would have been more likely to get a longer period of monopoly (23 years) than if you discovered it 20 years ago. Note that this is 23 years after marketing authorisation (which took on average 10-13 years in this study) - so 33 to 36 years after the priority date of the original composition of matter patent.

Why has this happened?

There are no doubt many reasons why this trend is apparent (and please let me know your thoughts). Here are some:

1 - The Hatch-Waxman legislation came into effect in 1984 - during the period of this study. This provided an enormous incentive for 'generic' companies to seek to launch as early as possible in the US, in return for 180 days generic exclusivity.

2 - Generic companies have become more aggressive over time - the enormous return balancing the risk.

3 - Generic companies have become much better at launching in countries outside the USA.

4 - The courts today are more likely to find yesterday's technological advances as obvious. Thus, certain types of patent which would have worked to extend a monopoly in the past are now considered obvious (for example, simple enantiomeric separations, simple dosage form switches, related indications, etc).

Notes:

The distinction between 'innovator' and 'generic' companies is rapidly disappearing. Many traditional 'innovator' companies have their own generic subsidiaries, and of course will routinely allow authorized generic products. Similarly, the larger 'generic' companies are increasingly engaging in drug discovery and coming up with their own new chemical entities, and / or in-licensing products from smaller firms, etc.

This pilot study was designed to generate discussion, and so it has not been designed to be statistically bullet-proof. Consequently, you will not see R squared values on any of the lines of best fit - there are only 15 data points so far.

Iin this study, 'years of monopoly' was defined as time from first marketing authorisation in any country, until launch by a generic company in any country. (As we all know, the monopoly increases over time as marketing authorisation is granted in each country, and then decays over time as generic competitors are able to launch in new countries. So the measure used in this study is an indicator but not equivalent to the actual monopoly gained.)

Earlier today (23 May 2007), a unanimous Australian High Court handed down the long-awaited decision in the Lockwood v Doric patent dispute.

For those who aren’t patent lawyers - the decision means that it is now harder to invalidate patents in Australia as an often relied upon attack (the ‘Threshold Test’) has been all-but removed, and the requirements for proving obviousness are now more difficult.

Having said that, the decision has brought Australia into better alignment with many other jurisdictions, by putting admissions in a patent specification into proper context and by (all but) removing the ‘Threshold Test’ of inventiveness.

For those in patent law - in relation to obviousness, the court stated (some would say restated) that:

obviousness is a question of fact;

‘obvious’ means ‘very plain’

a ‘scintilla of invention’ remains sufficient in Australian law to support the non-obviousness of a patent;

in contrast to the situation in Europe, the ‘problem-solution’ approach may be useful but is not determinative of obviousness under Australian law;

admissions made in a specification about prior art and common general knowledge are not determinative of their contents, but must be weighed against other evidence presented to the court (such as that from technical experts);

the role of secondary evidence (such as commercial success, satisfying a long-felt want or need, the failure of others to find a solution to the problem at hand and copying by others) should not be discounted in obviousness cases (secondary considerations have been used to great effect in the USA).

In addition, the Court held that the infamously confusing Australian ‘Threshold Test’ of inventiveness does not exist. In the words of the Court: “The decision in Microcell has not always been properly understood; it does not involve a separate ground of invalidity or a discrete "threshold" test.”

Comment

Obviousness

The decision reinforces the differences between Australian law and that of Europe in which the ‘problem-solution’ approach prevails. This is not to say that the problem-solution approach shouldn’t be used in Australia, just that it isn’t determinative.

On the other hand, in the USA, secondary considerations are oft-cited in obviousness arguments and litigants can expect their prominence to increase in Australia in light of this decision.

Admissions made in a patent specification have at last been put in their proper context by this decision. Based on the Wrigley and BMS decisions, there has been a widespread view that the content of such admissions was unchallengeable.

The Threshold Test

Another nail in the coffin of this infamously confusing test can only be a good thing. The test exists no where else in the world (as far as I am aware), and came about by misinterpretation of obiter comments in earlier decisions in different contexts. While the High Court has clearly stated here that there is no such test, there is High Court authority that could be used to argue against this position, and the comments in this decision were not part of the ratio.

Section 7(3) prior art

Under Australian law, obviousness is tested against (a) the common general knowledge of the person skilled in the art either alone or combined with (b) prior art information that could reasonably have been ascertained, understood and regarded as relevant by the person skilled in the art. The High Court made some confirmatory observations about the operation of this section which are also well worth a read. Most interesting of these is that ‘regarded as relevant’ for the purposes of this test may vary with each claim in a patent.

Background

Background to the patent and the invention

The priority date of the Patent is 14 February 1996. The application for the Patent was filed on 11 February 1997 and Lockwood was entered on the Register as the proprietor on 2 November 2000. The Patent claims a "key controlled latch":

"This invention relates to latches of the kind which are controlled by a key operable lock and which are intended for use on doors and other movable members adapted to close an access opening ...

Latch assemblies for doors commonly include a turn knob or handle which is generally located at the inside of the door and which is rotated to withdraw the latch bolt into its casing. In order to improve the security of such assemblies, manufacturers have included a key operated lock which is operative to releasably hold the turn knob or handle against rotation."

The specification further explains:

"Such locks are typically arranged so as to be operated from the inside of the door and are not operable from the outside of the door. In particular, key operation of the latch from the outside of the door will not release the lock. That can lead to serious problems in circumstances where the door needs to be opened urgently from the inside, particularly if the lock key has been misplaced or is not conveniently accessible.

It is an object of the present invention to provide a key controlled latch which can be released from a locked condition by use of a key at the outside of the door or other member with which the latch is used."

The litigation

The proceedings were commenced on 12 October 2000. Doric, sought relief under s 128 of the Patents Act 1990 (Cth) ("the Act") on the grounds that Lockwood had unjustifiably threatened Doric and its two distributors with infringement proceedings. Lockwood cross-claimed against Doric for infringement of the Patent; in a second cross-claim Doric sought revocation of the Patent on the basis that it was invalid.

For a copy of the decision, click here.

It’s usually safe to assume that because IP rights must be granted by each country, then infringement of a particular IP Right can only occur in that country.

That’s the simple rule.

The loophole is equally simple - prepare the thing in such a way as to not infringe (for example, in a kit), and then export it. This is the loophole that the US Congress tried to fix (in response to the famous Deepsouth case) when it enacted section 271(f) of the US Act (35 USC 271(f)).

So, now we have a simple rule, with an exception — if you export something that if re-combined would infringe, then you still infringe (see below for the actual words of 271(f)).

AT&T owned a patent (for digital encoding of speech) which it argued was infringed by Microsoft’s Windows product. The catch was that Microsoft exported a single Master copy from the US which was not sold, but used to make copies for sale.

AT&T wanted to extend the exception to cover the alleged infringing copies sold abroad, which themselves had never been exported from the US nor even existed in the US.

The US Supreme Court said, no and left it to Congress to decide whether to change the law.

Just another example of technology getting ahead of statute drafters.

Comment

The Supreme Court’s reasoning in Microsoft v AT&T:

1 — A (specific) copy of Windows and not ‘Windows in the abstract’ is a ‘component’ pursuant to 271(f). The copy which was exported was not installed on the foreign-made computers.

2 — The copies which were installed on the foreign-made computers were never themselves supplied from the USA.

3 — The presumption against extraterritoriality resolves any doubt that Microsoft’s conduct falls outside 271(f). Foreign law alone and not US law governs the manufacture and sale of components of patented inventions in foreign countries.

4 — The Court’s role is to interpret the statute. It is up to Congress to change the statute itself.

35 USC 271(f) states:

(f)

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Links

The Microsoft v AT&T Opinion

Microsoft press release

Lawyers love bullet point tests that they can apply when advising clients about intellectual property. Such tests can readily become ingrained in everyday practice, at the IP Office, and even the decisions of the lower courts.

Teleflex have just been resoundingly reminded that the problem is that this can lead people away from the jurisprudence underlying the issue to be decided.

In KSR v Teleflex, the US Supreme Court rejected the slavish application of the ‘TSM’ test (Teaching, Suggestion, Motivation) used by many practitioners and the Court of Appeals for the Federal Circuit to determine questions of obviousness.

This is not a unique situation, for example, the House of Lords recently criticised the slavish use of the Improver test for claim construction in Amgen v TKT and the Australian High Court criticised the use of tests for obviousness in Aktiebolaget Hassle v Alphapharm (the Omeprazole case).

Here are some further points of interest from the US Supreme Court’s decision:

1. T,S,M is not overruled, and does capture a useful insight — A patent composed of several elements is not obvious merely because each element was independently known in the art.
2. Obviousness is not to be determined only by reference to the problem the patentee was trying to solve. (In contrast to the situation in Europe — briefly discussed below.)
3. It is incorrect to assume that a person skilled in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem.
4. A patent claim can be proven obvious merely by showing that the combination of elements was obvious to try.

Comment

Obviousness in Europe

In contrast to the comments by the Supreme Court in KSR v Teleflex, the European ‘problem solution’ approach to obviousness is quite formulaic and relies on identifying the problem to be solved and follows the following well-travelled path:

(a) identifying the closest prior art;

(b) assessing the technical effect achieved by the claimed invention when compared with the closest prior art;

(c) defining the technical problem to be solved as the object of the invention to achieve these results; and

(d) examining whether or not a skilled person, having regard to the state of the art would have suggested the claimed technical features for obtaining the results achieved by the claimed invention.

(For more detail, see the EPO Guidelines, C-IV, 9)

Obvious to try

This can be quite a low threshold for obviousness. Many other countries require some degree of expectation of success as part of the obviousness analysis.

Slavish use of legal tests

I’m all for simplifying things wherever possible. See for example, the 6T’s articles on my website.

However, the trick is in remembering the limitations of the simplified approach — see for example the article “There's an exception to every simple rule in IP Strategy (Zyprexa)”.

Links

The KSR v Teleflex opinion.

Commentary on Patently’O

Washington Post article.

KSR website.

Teleflex website.

However, obtaining certainty about freedom to operate can be a complex and expensive process. The better you understand how the intellectual property landscape is structured, the better you can manage this risk and utilize resources necessary to do this.

Using the 6T’s™ framework, you can quickly get a sense of the potential magnitude of a freedom to operate issue. This will help you to make faster and more effective business decisions, and potentially save a lot of time and money.

There are essentially two phases to a freedom to operate analysis. First you need to prepare for and conduct the search, and then you need to analyse the search results to see whether they may in fact stop you, and if necessary, what you can do about it.

This is the first of a two-part series on freedom to operate put simply with the 6T’s™ framework. In the second part, we will look at how the 6T’s™ framework assists with the analysis phase.

Just to recap, the 6T’s™ consists of: Type of IP, Time (until expiry), Territory, Terminated (the status of the IP right), Technical scope of the monopoly, True monopoly? (validity).

Comment

Phase 1 —preparing for and conducting the search

Type of IP

Intellectual property rights have a habit of overlapping in the protection that they can provide for a given good or service. The message here is to be careful. It may not be enough to have only a patent or trademark search undertaken for your next product launch - as expensive as that may be.

For example if the product is of a particular shape or design it may be necessary to search also for design registrations (designed patents), and of course, you should also consider other common law rights, for example in brands.

Theoretically, you should not have to do any searches to ensure that you are clear from copyright infringement. This is because to infringe copyright, one must copy the protected work. However this does raise a useful reminder to have adequate procedures in place within the organization to ensure that employees working on new products do not infringe another’s copyright. This is a surprisingly common problem, for example in relation to product packaging.

Type of IP

Once you have adequately set out what you propose to do, the search can be properly mapped out. To those who are not familiar with intellectual property freedom to operate analyses, the sad news is that there is no one single database that you can use that covers all intellectual property rights. In fact it’s worse than that, even within a particular type of intellectual property right (for example patents), one should search multiple databases to increase the likelihood that the search is comprehensive.

This raises an important point — it’s actually not possible to have a search that can be guaranteed to be 100% accurate. Instead, by making a series of intelligent decisions you can actively reduce the risk entailed in a search. You should engage a qualified, specialist intellectual property searcher who will help you minimize risk.

Time (until expiry)

An awareness of the time over which the monopoly extends for the different intellectual property rights can help narrow down the search. For example depending on the type of situation, there may be little point in identifying patents that have long expired. (Having said that, depending on the circumstances such patents can be very handy prior art to assist the invalidity side of the analysis, if required. It can be easier and cheaper to have at least the patent part of the invalidity search done at the same time as the infringement search in this way.)

Territories (in which IP is held/registered)

If you have exhaustively identified the territories that you will likely be marketing, selling or producing your product new service then you can further restrict the search according to those.

In stage one, it is important to map out which territories you may be interested in the short, medium and long term.. If properly planned, the freedom to operate analysis will be more effective as it will allow you to cost effectively deal with future potential territories.

Terminated (ie the status of the IP)

Some of the search engines and databases allow one to restrict the search results to only those intellectual property rights that are currently in force. However, care should be taken in relying on the database to this information. It’s usually much more prudent to identify all possible intellectual property rights, and then independently confirm their status.

Technical Scope of the monopoly

The technical scope of the monopoly is another example of the great usefulness of using a specialized searcher to do the search for you. While keyword searches are a useful guide, they rarely if ever give a comprehensive view of the intellectual property rights covering a particular new product or service. Instead, there are other strategies used to search with a particular technical scope. Thus, for example in the area of patents, the IPC (International Patent Classification) classes are used. Of course, the best searchers use a combination of different overlapping strategies in order to further minimize the chances that a particular intellectual property right has been missed in the search. Thus for example in the area of pharmaceuticals a searcher may commonly use chemical abstracts registry numbers, keywords in a Boolean search, IPC classes etc.

True monopoly? (validity)

Phase one doesn’t include any details analysis of the validity of the a few identified intellectual property rights.Instead, however invalidity should be taken into account when designing and conducting the search.As stated above, it may be useful to include historical intellectual property rights that would clearly have expired so that they can be used for prior art.