19 November 2009

No Grace for Web Applications

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I have recently received a number of inquiries regarding patent protection for web applications. Unfortunately most have already made their web sites public. Those with a "dangerous" level of understanding believed that it was safe to do so because details of the software were not made available. Those with an even more dangerous level of understanding believed that they could make use of the grace period.

Secret use

Section 18 of our Patents Act governs "secret use". In short, an invention is patentable if, inter alia, it has not been secretly used in the patent area before the first application for a patent covering the invention is filed.

But what is "secret use"? Azuko Pty Ltd v Old Digger Pty Ltd [2001] FCA 1079 contains an excellent discussion on the meaning of "use". In Heerey J's opinion, the term "use" refers to the exercise of any of the rights which would be conferred by a patent for the invention in question. Section 13(1) of the Act does use the word "exploit". But his honour said that the choice of "exploit" instead of "use" would hold little weight if the meaning was otherwise clear. As he set out: "The definition of "exploit" in the present Act is not exhaustive; it "includes" the matters specified. In the case of a product, those matters amount to twenty different alternatives, one of which is "use".

Heerey J. made reference to the Sargent Committee Report (1931) in which it is set out that the prior secret user "... should invalidate any patent subsequently granted, since patentees might otherwise postpone indefinitely the communication of their inventions to the public, and might in practice obtain a monopoly not only for the ordinary period of 16 years under the Statute but also for any prior period during which they had contrived to retain the secret of their inventions."

The "monopoly" referred to is the monopoly to enjoy the exclusive rights which a patent confers. There is a natural symmetry between what patentees can do with the invention after grant and what they could do secretly before grant, were it not for the doctrine of prior secret use.

It follows that the simple question to be asked is: "If I had a patent on my web-based application and someone else was doing what I was doing, would there be an infringement of my patent rights?". If the answer is yes, then there is "secret use" of the application. This is supported by Lord Diplock's use of a reverse infringement test in In R v Patents Appeal Tribunal, Ex parte Beecham Group Ltd [1974] AC 646.

Where use has been public it may be possible to assert that the use has been by way of "reasonable technical trial and experiment". Such use would not invalidate a patent granted for the invention, provided the application is filed within 12 months of the use. However, in the case of a web application, the use is not in public and this proviso does not apply to "secret use".

It appears that Heerey J would have been prepared to accept that use without a "taint of commerciality" would not be "secret use". So, if the web application was made available in such a way that it did not invite commerce, use of the application might not be secret use. For example, if the web application was made available via a public website to team members for use with a password, that would more than likely not be secret use.

The grace period

In terms of section 24(1)(a) and regulation 2.2(1A) of the Act, any public use of the invention is not to be regarded for the purposes of assessing the validity of a patent provided a patent application for the invention is filed within 12 months of such use.

Clearly, "secret use" does not attract the provisions of the grace period because it's not "public".

A final word

The cost of filing patent applications for web-based applications can be very high. So it is understandable that an application needs to be tested before a patent application is filed. But it is critical that all beta testing of an application be carried out "in house" or via password-protected websites if patent protection is being sought. Any establishment of a website that offers a commercial transaction before the patent application is filed would destroy the validity of a patent granted on that application.

06 November 2009

Bombala Council Keeps its Platypus

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Case - Wilkshire v Registrar of Trade Marks [2009] FCA 1222.

I felt compelled to report this case because I often have to convince prospective clients of the dangers of self representation. This case shows what can go wrong with self-representation in an adversarial matter. Legal details and the need to check emotions at the door are often overlooked without proper representation.

This case dealt with two motions. One was an application for summary judgement against Wilkshire on his application to have Bombala Council's trade mark cancelled. The other was for Wilkshire's proceedings to be dismissed.

The court was satisfied that summary judgement should be given against Wilkshire.

I'm neither a lawyer nor a barrister, so this post focuses on the trade mark issues.

Wilkshire is the owner of a trade mark for education; providing of training; entertainment, sporting and cultural activities for people who are interested in fossicking for gold being services in class 41. The trade mark includes a platypus and has a registration date of 30 March 2001. In 2003, Bombala Council applied for registration of its mark in class 35 for tourism promotions and advertising. Wilkshire opposed the application by Notice of Opposition on 18 July 2003. He made a declaration alleging that a number of people giving evidence for the Council had colluded and fabricated evidence. Australian National Geographic had opposed registration of similar mark by the Council back in 1995. That dispute was settled and Nat Geo redesigned the Council's logo and assigned it to Council on 28 April 1997. This was disputed by Wilkshire.

In 2006, Wilkshire's opposition was dismissed and costs were ordered against him. The court noted that the Delegate found that the services performed by Wilkshire were not "the same kind of thing" as those for which Council sought registration. At that stage, the Act had not yet been amended to introduce the opposition ground of an application being made in bad faith. Wilkshire appealed to the Federal Court. In the appeal he raised lack of impartiality and collusion. Negotiations ensued. Council's solicitors made an offer of settlement. Wilkshire agreed to the terms. That appeal resulted in orders dismissing the appeal, ordering costs of $30 000 against Wilkshire. The Court then noted the undertakings made by Wilkshire.  Those undertakings were not to interfere with Council's application to register its trade mark and not to threaten the Council with any form of action (shortened).

Two days before the consent orders, Wilkshire filed five new trade mark applications. These were very similar to the trade mark referenced above.  The Council opposed the registrations. The Delegate refused to register the trade marks citing bad faith (the ground had by then been introduced). He observed that Wilkshire had previously recognised the trade marks as the property of another. In the meantime, Wilkshire had commenced proceedings to have Council's registered trade mark cancelled. Wilkshire's supporting affidavit was filled with allegations of lack of impartiality and collusion. It even raised possible corruption by extortion or bribery on the part of the Delegate.

Section 88 of the Trade Marks Act governs rectification of the register. Appositely, section 88(1)(a) sets out that rectification can be cancellation of a registration. Section 88(2) sets out that the application may be made on a number of grounds it enumerates and on no other grounds. Unfortunately for Wilkshire, his framing of the application did not include any of the grounds set out in Section 88(2). One of the grounds is that a registration can be cancelled on any of the grounds on which its registration could have been opposed. Wilkshire had attempted to rely on the bad faith provisions. At the time when the Council's application was accepted for registration, the bad faith ground was not available. As a result, it was a simple matter for the court to give a summary judgement against Wilkshire.

Clearly Wilkshire was highly emotional throughout the case. The Court made a number of pointed references to his allegations, hinting at their lack of verity. With proper counsel, Wilkshire could have avoided significant cost orders and possibly the wasted effort and emotion associated with legal proceedings. As far as the details of the case are concerned, it would have been readily apparent to legal counsel that the ground for cancellation was not available.