Madderns

Sequenom, Inc. v Ariosa Diagnostic, Inc. [2019] FCA 1011, is a recent Australian Federal Court decision, which has been widely reported on, with writers predominantly focusing on aspects of validity (whether or not the invention claimed was a manner of manufacture) and infringement. This article however, focuses on the lesser reported aspect of the decision relating to infringement of the patent.

In short, Sequenom holds a patent comprising a series of method claims directed toward a prenatal detection method using non-invasive techniques. Co-respondent, Ariosa, developed the Harmony non-invasive prenatal test some 15 years after the priority date of the patent. Aspects of the Harmony Test were found to infringe the claims of the patent.

A portion of this much larger decision dealt with whether infringement occurred during a period of time, where prior to being licensed by Ariosa to use the Harmony Test in Australia, Australian co-respondents Sonic Healthcare and Clinical Laboratories each operated a “send out” testing service where they collected blood samples from pregnant women in Australia and sent those samples to Ariosa in the United States, where Ariosa would use the Harmony Test to produce the results which were then provided to Sonic and Clinical in Australia, and were subsequently forwarded to healthcare professionals in Australia. Sonic and Clinical each promoted and supplied Harmony Test results produced by their own and Ariosa’s use of the Harmony Test in the United States.

Sequenom sought relief for infringement against Sonic and Clinical, arguing that the Harmony Test results were a “product” resulting from the performance of the patented method and the promotion and supply of the results was an infringement.

The respondents cross-claimed that the test results were not a product that could be imported (or kept or sold) within the meaning of the definition of “exploit” in the Patents Act, and that the test results were “the information that could be brought within Australia by a form of communication, or by a person receiving that communication directly overseas and themselves travelling to Australia whilst retaining that information in their memory”.

In reaching his conclusion, Justice Beach turned to Section 13 of the Act, which provides that the patent gave Sequenom the exclusive rights during the term of the patent, to “exploit” the invention as defined in the relevant claims and to authorise another person to exploit the invention.

Schedule 1 of the Act states that where the invention is a method or process, “exploit” in relation to an invention includes use of the method or process or to make, hire, sell or otherwise dispose of a product resulting from such use, offer to make, sell, hire or otherwise dispose of such a product, use or import it, or keep it for the purpose of doing any of those things.

Accordingly, a person will be taken to have infringed a method claim of a patent if that person:
(a)        within Australia uses the invention; or
(b)        exploits, in Australia, a product resulting from the use, anywhere, of the method or process; or
(c)         authorises or procures from anywhere an infringing act referred to in (a) or (b).

Justice Beach explained that the term “product” is not defined in the Act and should thus be afforded its ordinary meaning as “covering anything resulting from the patented method that can be commercially exploited”… “a vendible product” should be “understood as covering every end produced or artificially created state of affairs which is of utility in practical affairs and whose significance thus is economic”.

Critically, Justice Beach explained that “Interpreting the definition of “product” broadly limits the undesirable possibility that a potential infringer could utilise a patented process overseas and then import the resulting product into Australia, and so circumvent the monopoly granted by the method patent”.

Unpersuaded by the argument presented by the respondents, his Honour said “In my view, the reality is that the Harmony Test is carried out for the purpose of obtaining the results. The results are clearly commercially valuable; patients pay in the order of $400 to obtain them. The Harmony Test results, whether recorded in electronic or paper form, are the product of a patented process for the purposes of the definition of “exploit”. Moreover, by supplying the Harmony Test results to clinicians in Australia, Sonic and Clinical infringed the relevant claims during the send out [testing service] period.”

What could this mean?

This decision provides an important precedent that the exploitation in Australia of a product produced overseas by a patented process (i.e a process patented in Australia) constitutes an infringement. It is not limited to tangible products, but can also be found where the product of the patented process is one which is intangible such as medical test results like the prenatal test results obtained with the Harmony Test. It is, however, not hard to imagine how this decision might also be followed where the product of a patented process performed overseas constitutes some other commercially valuable information such as an online gaming outcome, or even a received telecommunication signal processed overseas according to a patented method, so the findings of this decision ought to be considered in analogous situations in other technical fields.

The Australian Government is negotiating a Free Trade Agreement (FTA) with the European Union (EU). As part of the FTA, the EU wants a variety of geographical indications (GIs) to be protected.

A GI indicates that a product comes from a specific geographical area. Use of a GI may indicate that the product was made according to, eg, traditional methods or may indicate a certain reputation. An example is “Champagne”, which refers to the specific region of France known for its sparkling wine.

The EU is looking for protection of a specific list of GIs (236 spirit names and 172 agricultural and other foodstuff names) which includes the names such as: “Camembert de Normandie” for cheese, “Καλαμάτα or Kalamata” for olive oil, “Φέτα or Feta” for cheese and “Scotch Beef” for meat. The EU has confirmed examples of where the protection it is seeking would not extend to the use of parts of EU GI names which are identified in the list by text that has been underlined. The complete list of names can be found here.

As well as seeking protection for the specific GIs, the EU is seeking broader protections that would prevent use of the GIs accompanied by an expression such as “style”, “type”, “method”, “as produced in”, “imitation”, “flavour”, “like” or similar, including when those products are used as an ingredient.

Accordingly, Australian cheese makers would no longer be able to sell cheese as “Feta” or even “Feta-style” or “Feta-like”. The same applies to “Kalamata” olive oil.

Seems like the EU is asking too much. Your thoughts?

If you have any objections, they can be made here and must be received by 6pm AEST Wednesday 13 November 2019.

We are delighted to announce the promotion of Phillip Boehm and Kin Seong Long to Partner.

Phillip Boehm is an Australian and New Zealand Patent and Trade Mark Attorney within our specialist Engineering team.  Phil is a trusted IP advisor to his clients across mechanical engineering technologies, especially automotive, aeronautics, heavy transport and mining. Phil is noted by his clients for his pragmatic approach, and has a key mentoring  role within Madderns.

Dr Kin Seong Leong is an Australian and New Zealand Patent and Trade Mark Attorney within our specialist ICT team. With a strong technological background in communication systems and signal processing, especially in Radio Frequency Identification (RFID) systems and applications, Kin is able to understand new inventions and advise clients of the best IP protection. Kin is fluent in Mandarin and is a member of our China Team, which provides specialist filing and prosecution services for patents, trade marks and designs in China, as well as strategic IP advice including anti-counterfeiting and litigation strategy for that jurisdiction.

Commenting on the promotions, Managing Partner Tom Melville said: “We are very pleased to welcome both Phil and Kin to the Madderns partnership. Both have gained a strong client following and recognition in their respective fields of expertise. They are known for teaming with their clients in protecting IP at home and in global markets.”

Australia and New Zealand are close trading partners and it is therefore worth considering whether to register your trade mark in both countries simultaneously. Madderns has attorneys registered in both Australia and New Zealand and can assist with filing New Zealand trade mark applications, as well as Australian trade mark applications.

New Zealand trade mark applications and registrations are overseen by the Intellectual Property Office of New Zealand (IPONZ). The process for filing a New Zealand trade mark application is similar to filing a trade mark application in Australia.

A New Zealand trade mark application can be filed directly with IPONZ or a New Zealand designation can be made through the Madrid Protocol System for international registrations (New Zealand became a member of the Madrid Protocol System in December 2012).

Like Australia, the New Zealand trade marks system follows the International NICE Classification whereby all goods and services are classified in one or more of 45 classes. Madderns can provide tailored advice on filing strategies, assist with drafting an appropriate description of goods and services for which protection is sought and then prepare and file the application with IPONZ.

Prior to formally filing a new trade mark application, it is also possible to file a request for a “Search and Preliminary Advice Report” (S&PA) from IPONZ. The S&PA report consists of two parts and provides an assessment within five working days as to whether your proposed trade mark complies with the requirements of the New Zealand Trade Marks Act 2002. The “Search Report” will involve the IPONZ Examiner searching the Register for any pre-existing conflicting trade marks and the “Preliminary Advice Report” will advise as to whether the proposed trade mark is distinctive enough within your industry to act as a trade mark. After receiving the S&PA report from IPONZ, you can decide whether you would like to proceed with formally filing your application or to abandon the process.

Once the New Zealand application is filed, it will generally be examined by IPONZ within 5-10 working days. If objections are raised during Examination (for example, based on the nature of the mark itself or pre-existing conflicting trade marks on the New Zealand Register), IPONZ will issue a Compliance Report. The Applicant will then have a period of 12 months (calculated from the filing date of the application) to file a response to the Compliance Report.

Once the application is accepted, it will be advertised in the public domain for a period of three months.  During this three month period, any third party may oppose the acceptance of the application. Assuming that there are no oppositions filed, the application will then proceed to acceptance.

In summary, the registration process in New Zealand, as well as Australia, can typically take around 8-9 months from the date the application is filed through to registration.

New Zealand trade marks are valid for a ten year period and can be renewed every ten years. There is also a 12 month “grace period” within which the renewal fees can still be paid after the registration has expired.

Finally, like Australia, it is possible to record registered New Zealand trade marks with New Zealand Customs in order to arrange border protection for your trade marks. In New Zealand, there is a requirement to file a “Customs Authorisation” and a “Security under the Trade Marks Act 2002” form, together with a security bond of NZ$5,000. In contrast, Australian trade mark registrations can still be recorded with Australian Customs by filing a “Notice of Objection” and “Deed of Undertaking”, however, there is no security bond required at the time of filing the two forms.

Madderns has experience in filing and prosecuting New Zealand trade mark applications and managing New Zealand trade mark portfolios, in addition to Australian trade marks. If you would like our assistance with New Zealand trade marks, please do not hesitate to contact us.

Many people are aware that for an invention to be patentable, the invention must not have been publicly disclosed prior to filing a patent application for the invention (i.e. must be “novel”). Public disclosure of the invention as claimed in a patent application may prevent grant of the patent application, or may later invalidate an Australian patent granted for the invention.

Less well-known, is the fact that “use” of the invention, even if under confidential terms (or “in secret”), can, in some cases, equally invalidate a patent granted for the invention, if that use was made before the earliest priority date of the patent¹.

The philosophy behind the secret use provisions is to prevent a patentee from obtaining a “de-facto extension” of term of the patent, beyond the normal 20 year term² (or 8 years for an Innovation Patent). The classic example of this is in the case where a company makes and sells a product that is manufactured using a secret manufacturing process and then some years later, seeks to obtain patent protection for the process to obtain a 20-year monopoly, thus having effectively had over 20 years of protection. Under the normal “novelty” requirements, because the process was never made public (i.e. had been kept secret), the invention is novel at the time of filing a patent application and would, but for the secret use provisions, mean that a valid patent may be able to be obtained.

Section 9 of the Australian Patents Act 1990 sets out the provision of Secret Use, and in particular, sets out what is not to be taken as secret use, as paraphrased below:

(a)  use of the invention for the purpose of reasonable trial or experiment only;

(b)  any use of the invention occurring solely in the course of a confidential disclosure of the invention

(c)  any other use of the invention for any purpose other than the purpose of trade or commerce;

(d)  any use of the invention by or on behalf of the Commonwealth, a State, or a Territory where the patentee or nominated person, has disclosed the invention, to the Commonwealth, State or Territory.

Thus, it can be seen that a number of factors will exclude use as “secret use” for the purposes of considering the validity of a patent. One of these factors is whether the “use“ was for “reasonable trial and experiment” (subsection 9(a)), rather than for the main purpose of gaining commercial benefit..

In a recent Federal Court Decision, SNF (Australia) Pty Limited v BASF Australia Ltd², this concept of what is “reasonable trial and experiment” was considered. In this case, SNF (Australia) Pty Limited (SNF) attacked the validity of Australian Patent App Nos. 2004203785 and 2013204568   entitled “Treatment of Aqueous Suspensions”, and directed to a process of treating a material, claiming that they were invalid because Ciba Specialty Chemicals Water Treatments Limited (Ciba), the previous owner of the patent applications, had secretly used the claimed inventions on a number of field sites prior to filing any patent application.

SNF contended that Ciba had (among other things), used the claimed invention at 3 mines between Dec 2002 and the priority date (2003); sold 29 tonnes of flocculent for a value of $93,915 for use in the claimed invention before the priority date; and sold or licensed equipment for use in the claimed invention before the priority date and derived at least $50,000 from that use.

SNF argued that these examples of use clearly provided Ciba with a commercial advantage and was thus not solely for “reasonable trial and experiment”.

BASF Australia Ltd (BASF) countered that the use was for reasonable trial and experiment because (among other things); the trial team at Ciba were involved in the use at all times and the results of the trials were discussed at monthly meetings; the work was undertaken to support patent applications and further data collection; secrecy agreement was in place, which is only really used when trialling an invention; both CRL (the owner of the sites and for whom the invention was being trialled) and Ciba made R&D tax claims for the work; the nature of the invention required testing in the field – not just in the laboratory; and that at no point during the trial work did CRL accept the technology to be proven, even well into 2003 (and well after the earliest priority date of the patent applications of 7 May 2003).

In deciding whether the use was for “reasonable trial and experiment”, despite the fact that some monies were charged during the trials, Justice Beech noted the following considerations:

First, the relevant enquiry is whether the true purpose of the use was reasonable trial or experiment. If the true purpose of the use is found to be for trial or experimentation, the fact that there may be some commercial benefit to the patentee will not constitute invalidating prior use.

Second, the assessment of whether a series of activities can be characterised as trials or experiments must be made in light of the nature of the invention to be claimed and the tasks and conditions for which it was designed.

Third, to constitute reasonable trial or experiment there must be some intention to use the invention to be claimed with a view to its development or validation including proof of concept.

Fourth, it may be significant that no remuneration was received for any of the trials. To receive remuneration may point away from reasonable trial or experiment; and

Fifth, it may be significant that although there have been negotiations for the supply and manufacture of the invention, the negotiations were not concluded until after the priority date. If they have been concluded beforehand, that may support an invalidating secret use.

Taking all considerations and facts into account the use by Ciba was held to be for reasonable trial and experiment and thus not to be secret use for the purposes of invalidating a patent.

Thus, when considering whether use is made of the invention in secret, and even in cases where monies were charged or other commercial events took place, that use may be excluded from secret commercial use if it falls under one of the exemptions of Section 9, including “reasonable trial and experiment”, and thus the specific details of the use must be sought and considered.

It is also worth noting that under the current patent law, which was not applicable in this case, any use which would otherwise be considered to be “secret use”, and thus potentially invalidating, is to be disregarded if a Complete patent application is filed within 12 months of the first of that use³.

1. Paragraph 18(1)(d) of the Patents Act 1990 states that an invention is patentable if (among other things), the invention “(d)  was not secretly used in the patent area before the priority date of that claim by, or on behalf of, or with the authority of, the patentee or nominated person or the patentee’s or nominated person’s predecessor in title to the invention.”
2. SNF (Australia) Pty Limited v BASF Australia Ltd [2019] FCA 425 (20 march 2019)
3. Section 9(e) Australian Patents Act 1990