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Software Patents: the Difference between Excluding Computer Programs as Such and Excluding Computer Programs as Such Peter Kerr May 23

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By guest blogger Doug Calhoun

The Patents Bill has had a tortuous ride through Parliament – to say the least. Introduced in 2008, it was reviewed by a select committee in 2009 and reported back in March 2010. In September 2012, the bill finally got its second reading that featured a heated debate over the exclusion from patent eligibility of “a computer program as such”.

Since then the committee stage (when the “as such” wording would be voted on) has been delayed.

On 9 May the government tabled Supplementary Order Paper 237.

The main change proposed in SOP 237 was to rewrite the September 2012 exclusion in a new Clause 10A. The new clause features 4 sub-clauses that seek to explain how the exclusion is to be interpreted – but the substantive exclusion is still “a computer program as such.”

So it came as a bit of a surprise to read Clare Curran’s description of the change as David conquering Goliath – a win for the 90%+ of New Zealand innovators that she claims to represent. It is a bit difficult to fathom how the exclusion of a computer program “as such” can be condemned so strongly in September and then be a triumph the following May.

But hey, this is politics. And Clare Curran has borrowed a page from the George W. Bush manual of political spin. She didn’t have a bomber jacket, a “Mission Accomplished” banner or an aircraft carrier. So she had to settle for a declaration of victory – never mind the inconvenient details – on her party’s “Red Alert” blog.

Ms Curran’s victory announcement included this slight revision of history:

“Three years ago, the Commerce Select Committee undertook a much needed review of New Zealand’s patent laws which hadn’t been looked at since 1953. A substantial review which considered and recommended modernisation to an important plank of our intellectual property regime ranging from inventions to medicines, traditional knowledge and indigenous plants and animals to software programs.”

The Patents Act 1953 has been under review for half of its life. In 1983 a government appointed committee (the Industrial Property Advisory Committee) began the process. Since then reviews have done by the Law Commission (1989/90), the Ministry of Commerce (1990-1994), and the Ministry of Economic Development (2000-2008). The Patents Bill, in its original form was introduced by a Labour led government in 2008. What happened before Clare Curran became aware of it was seemingly beyond her event horizon.

The policy development had been conducted in a largely non-partisan way through to September 2012, when computer software became a political football and the rest of the Patents Bill and its purpose became largely ignored. The injection of partisan politics into patent policy at this stage is hardly a recipe for success for New Zealand.

According to its explanatory note, the wording of SOP 237 is intended to be

“more consistent with English precedent.”

But one wonders how closely the authors of the change have looked at English precedent.

In the most recent (3 May 2013) UK appeal decision HTC Europe v Apple the English court of Appeal reversed a lower court decision and held an Apple patent claim to be valid. The invention related to the organisation of touch screen devices. The claim reads:

  • “(i) A method for handling touch events at a multi-touch device, comprising:
  • (ii) displaying one or more views;
  • (iii) executing one or more software elements, each software element being associated with a particular view;
  • (iv) associating a multi-touch flag or an exclusive touch flag with each view, said multi-touch flag indicating whether a particular view is allowed to receive multiple simultaneous touches and said exclusive touch flag indicating whether a particular view allows other views to receive touch events while the particular view is receiving a touch event;
  • (v) receiving one or more touches at the one or more views; and
  • (vi) selectively sending one or more touch events, each touch event describing a received touch, to one or more of the software elements associated with one or more views at which a touch was received based on the values of the multi-touch and exclusive touch flags.”

The lower court decision was that this claimed an (ineligible) computer program as such – the appeal court held it did not. The invention claimed was patent eligible.

Lord Justice Lewison, in paragraphs 140 to 144, had a bit of a moan:

“This appeal requires us, once again, to venture into the minefield of the exclusion from patentability of computer programs ‘as such’”

He then went on to explain that the two simple words “as such” found in the European Patent Convention (which governs both UK domestic law and the law applied in the European Patent Office) still have no clear meaning after 35 years of trying. Instead of arguing about what the legislation means, the arguments now are about what the gloss means. And still no one can agree.

SOP 237 sets out to put into law in New Zealand, a New Zealand “gloss” on the gloss that they have been disagreeing about in the English courts and the European Patent Office since 1978.

Clare Curran paints

“the bloated patent attorney sector”

as one of the villains on the side of Goliath in this saga. (Gratuitous insults seem to be as common to political blogs as a bit of biffo is to rugby pitches.)

What her “triumph” has unwittingly done is to open up a fertile new field for the bloated patent attorney sector to venture into over the next few years. And among the most likely innovations will be in defining software-implemented inventions.

Clare Curran might also want to have a look in her own (Dunedin) back yard. A successful University of Otago spinoff company there is Pacific Edge. That company boasts on its website that it underpins its products with a strong portfolio of patents.

One of its New Zealand patents, NZ 544432, claims a method for determining the prognosis of colorectal cancer in a patient using analysis software.

Under the new clause 10A and under clause 15 of the Patents Bill such claims might no longer be eligible for patents because they might claim a computer program per se or else because they might claim a method of diagnosis, or both.

The most valuable asset that Pacific Edge has is its intellectual property. The Patents Bill casts doubt on the patent eligibility of innovative technologies that Pacific Edge is seeking to commercialise.

Is this really going to promote investment in innovation?


Australian Gene Patent Held Valid: Patent is for Isolated Nucleic Acid, not for Information Per Se Peter Kerr Feb 21

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By guest blogger Doug Calhoun

In a decision: delivered on 15 February 2013, nearly a year after the oral hearing, Federal Court of Australia Justice John Nicholas held that the Myriad Genetics patent for “An isolated nucleic acid coding for a mutant or polymorphic BRCA1 polypeptide … ” was an invention under Australian patent law.

The case was solely about whether or not the isolated nucleic acids claimed were “manners of manufacture” as required under the Australian Patents Act 1990. It was not about policy issues, such as access to medicines, or what the law ought to be in future. I discussed these issues in an earlier post:

The governing case on the interpretation of the words ”manner of manufacture” in Australia (and in New Zealand) is the 1959 decision of the High Court (Australia’s highest appeal court) in the case of National Research and Development Corporation v Commissioner of Patents (NRDC). NRDC was about a patent application that claimed a process for selectively eradicating weeds using a herbicide of known chemical composition.

In reaching its decision that the process claims were indeed patentable, the High Court took an innovative approach.

The words “manner of manufacture” originated in the 1623 English Statute of Monopolies.

The High Court observed that the intention of patent legislation is to protect inventions – and what would constitute an invention in 1959 was well beyond the imagination of the English Parliament of the 17th century. In order to interpret the words in a contemporary context they should not be given a literal meaning – rather they should be interpreted to ask the question: “is this an artificially created state of affairs in an economic field?”

Justice Nicholas reviewed the NRDC decision and then considered how it should be applied in this case:

86 There are three important points that emerge from these passages. First, the Court identified the question that must be addressed for the purpose of determining whether or not subject matter is patentable, viz. “[i]s this a proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies?” Secondly, this question involves a conceptual inquiry as opposed to a consideration of the etymology of the expression “manner of manufacture”. Thirdly, the concept of manner of manufacture has a “broad sweep” intended to encourage developments that are by their nature often unpredictable.

 

88 It is apparent from this passage that a product that consists of an artificially created state of affairs which has economic significance will constitute a “manner of manufacture”.

103 There are two further points to be made concerning NRDC. First, it is important to note that NRDC does not require the Court to ask whether a composition of matter is a “product of nature” for the purpose of deciding whether or not it constitutes patentable subject matter. NRDC recognises that it may be unhelpful to approach the problem in this way. I think this is especially so in the field of biotechnology in which micro-organisms play a critical role in the development, manufacture and use of diagnostic and therapeutic products and techniques. And second, NRDC does not require the Court to ask whether a micro-organism is “markedly different” to something that already exists in nature for the purpose of deciding whether it constitutes patentable subject matter (cf. Chakrabarty at 310).


Justice Nicholas observed what the claims did not cover, in spite of the submissions of Cancer Voices to the contrary:

76 First, the disputed claims are not to genetic information per se. They claim tangible materials. Much emphasis was placed by the applicants [Cancer voices] upon the informational character of DNA as a storehouse of genetic information. But the disputed claims are not to information as such. They could never be infringed by someone who merely reproduced a DNA sequence in written or digitised form.

77 Secondly, because each of the claims is to an isolated chemical composition, naturally occurring DNA and RNA as they exist in cells are not within the scope of any of the disputed claims and could never, at least not until they had been isolated, result in the infringement of any such claim.

The substance of the decision is set out in four paragraphs:

106 Accordingly, the issue in this case turns upon whether an isolated nucleic acid, which may be assumed to have precisely the same chemical composition and structure as that found in the cells of some human beings, constitutes an artificial state of affairs in the sense those words should be understood in the present context. There are three considerations which lead me to think that it does.

107 First, in explaining the concept of manner of manufacture as one involving the creation of an artificial state of affairs, it is apparent that the High Court in NRDC was deliberate in its use of very expansive language. Not only did the High Court emphasise the “broad sweep” of the concept involved, it also made clear that metaphorical analysis may not be helpful in determining whether or not something constitutes patentable subject matter.

108 Secondly, in the absence of human intervention, naturally occurring nucleic acid does not exist outside the cell, and “isolated” nucleic acid does not exist inside the cell. Isolated nucleic acid is the product of human intervention involving the extraction and purification of the nucleic acid found in the cell. Extraction of nucleic acid requires human intervention that necessarily results in the rupture of the cell membrane and the physical destruction of the cell itself. And purification of the extracted nucleic acid requires human intervention that results in the removal of other materials which were also originally present in the cell. It is only after both these steps are performed that the extracted and purified product may be properly described as “isolated” in the sense that word is used in the disputed claims.

109 Thirdly, as Dann’s Patent demonstrates, the isolation of a particular microorganism may require immense research and intellectual effort. In that case, it was only as a result of an intensive research effort that the isolated micro-organism in question could be made available for use in the manufacture of the new antibiotic.It was fortuitous for the patentee that it was its employees who were first to isolate the new micro-organism and first to deploy it in the manufacture of the new drug. That will not always be so. It would lead to very odd results if a person whose skill and effort culminated in the isolation of a micro-organism (a fortiori, an isolated DNA sequence) could not be independently rewarded by the grant of a patent because the isolated micro-organism, no matter how practically useful or economically significant, was held to be inherently non-patentable. In my view it would be a mistake, and inconsistent with the purposes of the Act, not to give full effect in such situations to the broad language used by the High Court in NRDC.


Justice Nicholas, after completing the reasons for his decision also referred to the various reviews conducted in Australia and the enquiry and bill not passed in the Australian Senate. He pointed out that none of these had any bearing on his decision – he had to interpret patent law as it now existed.

The applicants who sought to revoke the Myriad Australian patent have 21 days to appeal the decision.

Justice Nicholas also commented upon the US cases considering the validity of the US patents equivalent to the one he was considering:

134 On 30 November 2012, the US Supreme Court announced that it would hear an appeal in the Myriad case. The US law in relation to the patentability is therefore not likely to be settled until the Supreme Court reaches it own decision on the issue.

135 In any event, it seems to me that the Myriad decision does not provide any direct assistance to either side in the present case. I say this for two reasons. First, the law in Australia is different. I must apply the law as explained in NRDC. It must also be recognised, especially as the Myriad case heads to the US Supreme Court, that the constitutional setting in which patent legislation operates in the US is quite different to that in which patent legislation operates in this country: Grain Pool of Western Australia v Commonwealth of Australia (2000) 202 CLR 479 at paras [28]-[32]. Secondly, the evidence in the Myriad case was not the same as the evidence in the present case. And at least in relation to the matter of covalent bonds, I have taken a different view of the facts to that taken by Judge Lourie.

For more on the first and second US Federal Court of Appeal Cases see my earlier posts here and here:

The date set for the oral hearing before the US Supreme Court is 15 April 2013. A decision can be expected by the end of June 2013 when the court’s 2013 term ends.

And in an interesting twist, if the US Supreme Court says “no” to gene patents, will the Australian negotiators of the Trans Pacific Partnership agreement insist on a change to the IP chapter so that isolated nucleic acids are eligible for patents in the US?


The Patents Bill and the Wai 262 Report: two solitudes in search of common ground Peter Kerr Sep 26

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A guest blog by Doug Calhoun

In an earlier post on the Patents Bill: I mentioned that the introduction of the Bill had been delayed for 14 years because of concerns about the Wai 262 claim. Nearly fifteen months after the Wai 262 Report was completed there has still been no formal government response to it.

The Patents Bill proposed to “address” the Wai 262 claims by establishing a Maori advisory committee to advise the Patents Commissioner (on request) on whether:

“a) an invention claimed in a patent application is derived from Maori traditional knowledge or from indigenous plants or animals; and
(b) if so, whether the commercial exploitation of that invention is likely to be contrary to Maori values.”

The Commissioner must consider but is not bound by the advice of the Committee.

Quite apart from whether or not it implements the Wai 262 Report recommendations, the provision contains the vague and subjective expressions “derived from” (derived to what extent?); and “contrary to Maori values”.

The critical question that is left unanswered is, so what?

The Patents Bill requires the Patents Commissioner to examine every patent application and if it is found to meet the patentability criteria – to grant a patent. But it does not specify what the Patents Commissioner is supposed to do if the Committee advises that an invention is derived from traditional knowledge and that its exploitation is likely to be contrary to Maori values. Neither is among the criteria the Commissioner is to consider.

The Green Party Amendment

The Green Party introduced a proposed amendment (SOP124) on 11 September. This will come up for a vote during the committee stage in the next few weeks. The amendment would declare that organisms and traits in organisms are not patentable inventions. “Organism” would mean the same as it does in the Hazardous Substances and New Organisms (HSNO) Act. It would include both naturally occurring and modified organisms.

The amendment seeks to exclude “traits in organisms”. But patents are granted for products or processes that are a practical application of a trait – they are not now and never have been granted for the traits themselves. The HSNO definition of “organism” includes a microorganism. Such an exclusion is not permitted under Article 27.3 of the TRIPS Agreement.

Steffan Browning, in discussing the amendment in the second reading debate, said:

“Allowing the passing of this bill without supporting my Supplementary Order Paper will lead to the continued blocking of pure research, of open research. Private profit-making from our collectively owned genes and resources will, importantly, continue the process of stealing resources, this time including the intellectual property of Maori—removing it from the commons for private gain.”

This argument was made by Greenpeace New Zealand to the GM Royal Commission. The GM Report, Chapter 10 concluded:
“117. The economic benefits of intellectual property systems are generally considered to be positive. Removing biotechnology developments from coverage by patent or property rights systems would not necessarily have the effect that opponents to such applications want. New inventions or ideas would probably be kept as trade secrets or “know how”, and, in the absence of the disclosure required by patents and PVRs, be held even more tightly. Not allowing New Zealand inventors and investors to protect their work under an IPR would leave them in an invidious position against the rest of the world. It would also place New Zealand in breach of its obligations under major trade agreements.”

“118. The Commission sees a need to address some tensions or gaps, notably in the exemption for patenting of human beings and their biological processes, and the development of an appropriate framework for the protection of traditional knowledge and taonga of Maori. However, we are not persuaded that the IPR system is antithetical to the appropriate development and regulation of genetic modification.”

This recommendation was followed in both the original Patents Bill and the Bill as amended by the select committee.

The Green Party proposal is also not an approach recommended in the Wai 262 Report.

The Wai 262 Report

The Report is in three volumes of over 1,200 pages. So it is not that surprising that there has not yet been a government response. The interface between patents and the Wai 262 claims is only a relatively small part of its recommendations.

The report reviews developments in science and then analyses its understanding of the concerns of both sides in the debate:

“These developments have created a point of potential tension between those who wish to utilise private property rights in the genetic and biological resources of plants and animals to create wealth, and kaitiaki who often have very different priorities. We explained above how research science is founded on an empirical world view that is blind to many aspects of te ao Maori. Patents, and the commercial system they serve, are likewise at odds with te ao Maori in fundamental ways. The idea that knowledge about the specific properties of a taonga (such as kawakawa or manuka) can be parcelled up and assigned to different owners is, in itself, alien to the relationship-based world of mauri and whanaungatanga. As with research science, the patent system is founded on a set of values that are not those of kaitiaki. Its central concerns are the advancement of knowledge and the protection of commercial interest in that knowledge, rather than mauri or environmental values.

There is also tension between Maori and Pakeha approaches to access to knowledge. Pakeha culture places great value on unrestricted access to knowledge and ideas. This has long been seen as a precondition to progress. Of course, access to knowledge and ideas even in the public domain is constrained in Western societies by laws relating not only to IP but also to public safety, defamation, moral standards, and privacy, to name a few. But the principle that access should be as unconstrained as possible is fundamental to Western thinking. By contrast, Maori culture does not place such great value on free access. Concepts of tapu, mauri, and whakapapa tend to suggest that access must be earned. The first priority of kaitiaki is to protect rather than publish information. That is not to say that matauranga Maori is always secret. Far from it. But kaitiaki are often very uncomfortable when they have lost oversight of readily available matauranga Maori.”

The Report then attempts to measure the dimensions of the square hole and round peg it has been tasked to accommodate:

“ These tensions go to the heart of the ways in which we generate knowledge and wealth in New Zealand. The central question is whether our current system can accommodate a new set of rights to be held by kaitiaki communities and individuals who do not share the values upon which the system was built.”

… the issues the claimants brought before us were focused on specific but related areas :

  • unauthorised use of matauranga Maori in research based on bioprospecting, and the resulting unauthorised scientific or commercial use of genetic and biological resources of taonga species;
  • offensive interference with the whakapapa of taonga species when they are subjected to genetic modification ; and
  • use of the IP regime to exploit rights in the genetic and biological resources of taonga species in ways that exclude kaitiaki and undermine the relationship between kaitiaki and taonga species.”

The Patents Bill debate is focused on the third issue – the use of the patents regime in exploiting rights in the genetic and biological resources of taonga species.

The Wai 262 Patent Recommendations

The Tribunal tried to take a balanced approach that both sides could live with:

“As will be seen in the chapters to follow, we do not always agree with the way the claimants framed this problem, but where we do, we look for ways in which the priorities of kaitiaki can be relocated from the margins of legal or policy discourse to the centre, where they can be properly and transparently weighed against other considerations. Sometimes our recommendations are procedural – a simple requirement on the Crown to notify or consult with kaitiaki; sometimes we recommend that new substantive standards be introduced – for example, positive obligations on Crown agencies to explore partnership opportunities with kaitiaki; and sometimes we recommend statutory decision-makers should change – whether by vesting power directly in kaitiaki in some cases or by the creation of new partnership mechanisms.”

“In all cases, the innovations we recommend are designed to express the new generation of Treaty partnership in which Maori have a meaningful voice in the ongoing fate of their taonga, and the partnership itself is not static but is being constantly rebalanced.”

“It is no longer possible to deliver tino rangatiratanga as full autonomy in all cases in which taonga Maori are ‘in play’, as it were. After 170 years during which Maori have been socially, culturally, and economically swamped, it will no longer be possible to deliver tino rangatiratanga in the sense of full authority over all taonga Maori. Yet it will still be possible to deliver full authority in some areas. That will be either because the absolute importance of the taonga interest in question means other interests must take second place or, conversely, because competing interests are not sufficiently important to outweigh the constitutionally protected taonga interest.”

The specific recommendations that the report makes that might be incorporated in the Patents Bill are:

  1.  “… kaitiaki relationships with taonga species and matauranga Maori are [to be] expressly protected in accordance with their proven depth (unless it can be demonstrated that other interests deserve priority). This includes a mechanism to ensure that any matauranga Maori is treated as a key factor in decisions about whether a patent application is novel or involves an inventive step.”
  2. “… the establishment of a Maori committee to advise the Commissioner of Patents about whether matauranga Maori or taonga species have contributed in any way to the invention, and whether the proposed use is consistent with or contrary to tikanga Maori. This advice should be relevant to the requirements of patentability and (even if the patentability criteria are satisfied) whether there are kaitiaki interests as risk.”
  3. “… the commissioner be empowered to refuse patents that are contrary to ordre public as well as morality. … the committee should not be reactive : the commissioner should be required to take formal advice from it, and work in partnership with a member of the Maori committee when making patent decisions that affect the kaitiaki relationship.”
  4. “… kaitiaki be able to formally notify their interest in particular species or matauranga Maori by way of a register. … kaitiaki should always have a right to object to a patent application, whether or not they have registered their interest.”
  5. “… patent applicants be required to disclose whether any matauranga Maori or taonga species have contributed to the research or invention in any way. IPONZ must make these records publicly available. Patent applicants who fail to comply with a disclosure requirement can be subject to a range of outcomes, from no sanctions at all to the being revoked, to be decided by the commissioner and the chair of the Maori committee.

My Thoughts

The following are my thoughts of how easy or difficult it might be for the Patents Bill to implement the five recommendations:

  1. The second part of this recommendation is already accommodated. Under the Patents Bill novelty and inventive step are to be judged against a prior art base. Matauranga Maori fits within the definition of “prior art base”, provided it has been made available to the public in some way. Where there may be difficulty is if matauranga Maori has not been made available to the public, and kaitiaki are opposed to it being made available. But how does one judge when “other interests deserve priority” – a call that is to be made under the first part of this recommendation?
  2. The Patents Bill would establish the committee. But the words “contributed in any way to the invention” and “use is consistent with or contrary to tikanga Maori” are fraught with uncertainty, especially when used to define the boundaries of property rights.
  3. The third recommendation answers the “so what” question left hanging by the provisions in the Patents Bill. But the understanding of the meaning of “ordre public” goes beyond what it is understood to mean under the European Patent Convention – where the term that is used in the TRIPS agreement originated. (The report acknowledges that its recommendations must be compliant with TRIPS.) And Recommendation 10.5 of the GM Report urged New Zealand to pursue amending TRIPS “to include a reference to the avoidance of cultural offence as a specific ground for exclusion or reservation” – inferring that the commissioners thought that an exclusion like the Wai 262 Report suggestion would not comply with TRIPS.
  4. The fourth recommendation would assist in doing a prior art search to determine if any matauranga Maori is in the prior art base. But, given the optional nature of the recommendation, a negative prior art search could not be relied upon.
  5. This is the most problematic of the recommendations for many reasons. Discovering new properties of or uses for a known taonga species may have been done without any use of matauranga Maori (known to the researcher) – leaving a researcher in a dilemma as to whether any disclosure of origin needs to be made. The nature of the applicable penalties if a disclosure should have been made (and was not) has been the subject of debates over a number of years. They have been hotly debated in both the Convention on Biological Diversity forums and the Intergovernmental Committee of the World Intellectual Property Organisation. Any provision to implement this recommendation that is out of step with whatever is finally agreed to internationally could put us offside with our international trading partners.

Accommodating “a new set of rights to be held by kaitiaki communities” within the existing intellectual property regime was never going to be easy – and the new Patents Bill may be where the rubber first hits the road. Good luck to the policy advisors on this one.


Patents Bill Second Reading: A Software Storm in an Ideological Teacup Peter Kerr Sep 17

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By guest blogger Doug Calhoun

Thirty years after the Muldoon government first looked at patent law reform, a new patent law is on track to come into force by the end of 2013. This guest blogger has been involved in working with and on the current act since 1974. And my reaction to the second reading debate?

“This is the way the world ends:
This is the way the world ends:
Not with a bang but a whimper.”

“The Hollow Men”

-TS Elliott

The bill runs to 165 pages with over 300 sections. It emphasises the goal of its authors to make it as difficult as possible to obtain a patent and as easy as possible for anyone to invalidate one. But the second reading debate: was based almost entirely on whether patents should be granted for software. And not a single Maori Party MP took part. Only Steffan Browning (Greens) mentioned that none of the Wai 262 Report recommendations on changes to patent law were implemented – even though the introduction of the Patents Bill was delayed from 1994 until 2008, largely because government concerns about the Wai 262 claim (hence my TS Elliott quote) – but that’s another blog post.

A Bit of History

The Patents Bill was introduced in 2008 by the then Labour government. The original bill did not have any software exclusion. In the policy development process, the MED officials had issued policy papers, considered submissions and recommended that there be no software exclusion. The practice of the Intellectual Property Office (following a decision of the Commissioner of Patents) was that if an invention involved software as a means to an end and it was novel and inventive then it could be patented; but if the software was an end in itself it could not be. This had been the practice since 1994. It was founded on old UK decisions that you could not get a patent for a mere mathematical formula – and software code itself is a form of mathematical formula.

In the select committee hearings most of the submissions on software patents came from software developers who were vehemently opposed to them. And the squeaky wheels got the grease. The committee introduced an amendment saying:

“A computer program is not a patentable invention”.

The committee reported in March 2010 and the bill sat on the Order Paper for nearly two and a half years until this month. The government then introduced a proposed amendment that qualified the exclusion. The exclusion would, “prevent anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.”

The effect of the exclusion is that there is no real change in the law. Software as an end in itself is still not patent eligible; software as a means to an end still is patent eligible. That is the beginning and end of the effect of the words, “as such”.

But in politics reason is the first casualty.

The Second Reading Debate

The commerce minister, Craig Foss, stated that the intention of the select committee:

“was that granting of a patent should be prevented only where the novelty and inventive step lie in a computer program. In order to make the committee’s intention clear, and to avoid any doubt as to what is intended, I propose that the computer program provision be amended so as to provide that only computer programs as such are ineligible for patent protection.”

The opposition was adamant that the change had completely cut across and changed what the select committee had recommended. And the consequences were said to be putting the software development industry at risk.

Clare Curran was the lead Labour spokesperson. One example she gave of an industry at risk was the games development one:

“The chair of the New Zealand Game Developers Association said: ‘We’ve learnt how to make money from business models like digital distribution, freemium, virtual goods and crowdfunding. Exporting and acting global from day one have been key to the industry’s growth.’ Ninety-seven percent of Kiwi games were digital downloads, with low distribution costs and high margins. Ninety-nine percent of sales revenue came from exports, with the USA and Europe being the largest markets.”

The trouble with that example is that the New Zealand patent law is only applicable in New Zealand. So (on her quoted figures) only one percent of the games developers’ sales revenues would be at risk from infringing someone else’s New Zealand patents. Any sales made in the USA or Europe are still going to be subject to the patent laws there.

Trevor Mallard joined the fray:

“What has become clear over the last few days is that this Government has been captured. This Minister has been captured by offshore people who are involved in the software industry.”

What Trevor Mallard did not mention was that he was a member of a Labour cabinet that agreed to a cabinet paper (Review of the Patents Act 1953 – Stage 3, Part 1)

that included the paragraph:

“50. There are, then, no strong arguments for specifically excluding business methods and software from patent protection. In light of this, I consider that business methods and software should continue to be patentable as long as they meet the requirements for patentability.”

It could equally be argued that the select committee had been “captured” by the software development lobby. And it should be remembered that the select committee was chaired by Lianne Dalziel, also a member of the same Labour cabinet that could see no strong arguments for excluding software from patent protection.

No Software Patents Petition

The opponents of software patents are quick on their feet. They set up a website:and collected over a thousand digital signatures asking that the “as such” wording proposed by the government be replaced so that it says that the exclusion:

“does not prevent an invention that makes use of an embedded computer program from being patentable.”

The origin of that wording is in the select committee report where the committee expressed some reservations about the effect of the ban. While embedded computer programs are an example of inventions relating to software as a means to an end, they do not represent all such inventions – and the exclusion would not be of much assistance in making the more general distinction.

Clare Curran tabled the no software patents petition during the course of the debate. She also introduced a Supplementary Order Paper seeking to amend the government amendment exactly as proposed in the petition. And then her colleague, Mr Mallard, accused the government of being captured by an interest group – not the first pot to call a kettle black.

Those who signed the petition might well consider the complexity of making the distinction between software as an end in itself and software as a means to an end in this post by Australian blogger, Mark Summerfield.

The No Software Patents contains a space for comments as well as for signing. There are several recurring themes in the comments. Many petitioners are under the mistaken impression that the original Patents Bill was introducing software patents for the first time:

“The potential introduction of software patents in New Zealand critically threatens our ability to innovate in the information technology field.”

“It greatly disturbs me to think we may bring in software patents to appease the Americans with the TPPA.”

Others are under the mistaken impression that inventions related to computer code as an end in itself would be patentable:

“Computer software programs are essentially mathematical algorithms, i.e. methods to solve problems. If software were to be patented, then any thought process can be patented – an absurd situation.”

“Computer software is nothing more than design decisions mixed with algorithms.”

Many expressed concerns about the complexity and costs of enforcing patents in international markets. While these concerns are real, any change in New Zealand patent law is not going to have the slightest effect on the laws of other countries or the players that seek to take advantage of them there.

I am left with the same feelings as Ken Perrot in this recent post:

The Labour opposition has sided with an ideological ghetto that has not taken the time or effort to try to understand both sides of the debate on the worth of patents.

Patents and Innovation

Jonathon Young was the only speaker who talked about the positive role of patents:

“Recently it was announced that the Advanced Technology Institute is going to be set up and established. It will be named after Sir Paul Callaghan, one of our great scientists. He said that science could make New Zealand a better place, and that is such a true thing. We are focused on boosting growth and creating jobs, and you do not do that just by talking about it. You have to innovate, you have to invest, and you have to then commercialise those inventions and those products in order to get the financial gain from them.”

One of the man objectives of the Patents Bill is to ensure that quality patents are granted. A quality patent is one that claims an invention that is novel, inventive and of a scope that is fairly based on what is described. I know of no patent attorneys who do not strive to get quality patents for their clients. But the policy development and debate have been single minedly focused on how to make it more difficult to get a patent in New Zealand and how to make it easier to block patents from being granted and to overturn granted patents. What if the balance has been tipped so far against patents that very few innovators can be bothered, or afford, to get patents? The Paul Callaghan Institute mentioned by Mr Young will have to overcome the higher barriers being set by this law in order to fulfil its roll of transferring its inventions to the firms that will commercialise them.

What this country needs is a change in culture that embraces technology transfer – both inwards and outwards – as a path to improving innovation and thereby increasing productivity. And we need to acknowledge that patents are the currency of that technology transfer.


US Federal Appeal Court upholds gene Myriad Gene patent after referral from Supreme Court Peter Kerr Aug 21

3 Comments

By guest blogger Doug Calhoun

A US appeals court has for a second time upheld the validity of the Myriad Genetics gene patent.  In its 16 August 2012 decision: the same judges again decided 2 to 1 in favour of Myriad for the same reasons as in their July 2011 decision.  Each of the judges expanded on her or his reasoning, but their conclusions remained unchanged.

The opponents to gene patenting could leave the matter here; or they could apply to have the case reheard by all 12 judges of the appeal court; or they could appeal to the US Supreme Court.  In either case it would be up to the higher court to decide if they would hear the appeal.

A bit of history 

In 2009, the New York southern district court gave a decision declaring that all the claims of the patents in question were invalid.  Myriad Genetics, the patent owner, appealed to the CAFC (Court of Appeal of the Federal Circuit), which in July 2011 overturned the district court decision on claims to isolated DNA sequences.  That decision was discussed in a Code for Life post:

The opponents to gene patents then appealed to the US Supreme Court.  Earlier this year the US Supreme Court unanimously declared a patent for a method of determining the optimum dosage of a medicine in a patient to be invalid on the ground that the method was merely applying a law of nature.  That Mayo v Prometheus decision is discussed in an earlier guest post:

The next day the Supreme Court “vacated” the July 2011 gene patent decision and instructed the CAFC to reconsider its decision in the light of the Supreme Court’s Prometheus decision.   For all three judges and the lawyers it was groundhog day and deja vue all over again.

Judge Lourie

For Judge Lourie the case was not about whether cancer patients were entitled to a second opinion, nor whether Myriad had acted improperly or for other extraneous reasons.  The case was solely about:

“…whether the claims to isolated BRCA DNA, to methods for comparing DNA sequences, and to a process for screening potential cancer therapeutics meet the threshold test for patent-eligible subject matter.”

His response to the Supreme Court concern about laws of nature was:

“The isolated DNA molecules before us are not found in nature. They are obtained in ingenuity. While they are prepared from products of nature, so is every other composition of matter. All new chemical or biological molecules, whether made by synthesis or decomposition, are made from natural materials. For example, virtually every medicine utilized by today’s medical practitioners, and every manufactured plastic product, is either synthesized from natural materials (most often petroleum fractions) or derived from natural plant materials. But, as such, they are different from natural materials, even if they are ultimately derived from them. The same is true of isolated DNA molecules.”

“… [T]he district court disparaged the patent eligibility of isolated DNA molecules because their genetic function is to transmit information. We disagree, as it is the distinctive nature of DNA molecules as isolated compositions of matter that determines their patent eligibility rather than their physiological use or benefit. Uses of chemical substances may be relevant to the nonobviousness of these substances or to method claims embodying those uses, but the patent eligibility of an isolated DNA is not negated because it has similar informational properties to a different, more complex natural material. The claimed isolated DNA molecules are distinct from their natural existence as portions of larger entities, and their informational content is irrelevant to that fact.”

“The Supreme Court in Mayo focused on its concern that permitting patents on particular subject matter would prevent use by others of, in Mayo, the correlation recited in the method claims. Plaintiffs argue here that they are pre-empted from using the patented DNA molecules. The answer to that concern is that permitting patents on isolated genes does not pre-empt a law of nature. A composition of matter is not a law of nature. Moreover, as indicated earlier, a limited pre-emption is inherent in every patent: the right to exclude for a limited period of time.”

“When the patent expires, the public is entitled to practice the invention of the patent. That is true of all inventions; during the term of the patent, unauthorized parties are “pre-empted” from practicing the patent, but only for its limited term. The seven patents being challenged here all expire by December 18, 2015. “

Judge Lourie also relied on the principle that the US patent law allows for patents over a broad subject matter spectrum.  Patents have been granted for isolated DNA sequences for over 30 years.  If this is to be changed it is up to Congress not the courts:

(“[W]e possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them.”). Congress is presumed to have been aware of the issue, having enacted a comprehensive patent reform act during the pendency of this case, and it is ultimately for Congress if it wishes to overturn case law and the long practice of the PTO to determine that isolated DNA must be treated differently from other compositions of matter to account for its perceived special function.”

Judge Moore

Judge Moore did show a bit more deference to the Supreme Court ‘s referral:

“While the Prometheus decision does not control the outcome in this case, it is nonetheless instructive regarding the scope of the law of nature exception. As an initial matter, the Prometheus discussion of laws of nature (process claims) clearly ought to apply equally to manifestations of nature (composition claims). Myriad’s argument that Prometheus is constrained to methods is an untenable position.”

However, she did agree with Judge Lourie that earlier Supreme Court precedents on composition claims were more relevant than Prometheus.

Judge Moore made a distinction between shorter strands of isolated DNA and a full-length gene, the former clearly having a different utility from the latter and therefore being clearly eligible for a patent.  But she had her doubts about the eligibility of full length isolated DNA sequences:

“If I were deciding this case on a blank canvas, I might conclude that an isolated DNA sequence that includes most or all of a gene is not patentable subject matter. The scope of the law of nature/manifestation of nature exception was certainly enlarged in Prometheus. But we do not decide this case on a blank canvas. Congress has, for centuries, authorized an expansive scope of patentable subject matter. Likewise, the United States Patent Office has allowed patents on isolated DNA sequences for decades, and, more generally, has allowed patents on purified natural products for centuries.”

“As I explain below, I believe we must be particularly wary of expanding the judicial exception to patentable subject matter where both settled expectations and extensive property rights are involved natural products for centuries. There are now thousands of patents with claims to isolated DNA, and some unknown (but certainly large) number of patents to purified natural products or fragments thereof.”

She then expanded on this:

“The settled expectations of the biotechnology industry – not to mention the thousands of issued patents – cannot be taken lightly and deserve deference. This outpouring of scientific creativity, spurred by the patent system, reflects a substantial investment of time and money by the biotechnology industry to obtain property rights related to DNA sequences. The type of fundamental alteration in the scope of patentable subject matter argued in this case ‘risk[s] destroying the legitimate expectations of inventors in their property.’  I believe leaving intact the settled expectations of property owners is particularly important in light of the large number of property rights involved, both to isolated DNA and to purified natural products generally.”

The Supreme Court has warned that ‘courts must be cautious before adopting changes that disrupt the settled expectations of the inventing community.’ The settled expectations of the inventing community with respect to isolated DNA claims are built upon the broad language of the statute, judicial precedent.”

“To change so substantially the rules of the game now, ‘after more than a century of practice, ‘could very well subvert the various balances the PTO sought to strike when issuing the numerous patents which have not yet expired and which would be affected by our decision.’”

“This case typifies an observation by the late Chief Judge Markey, our first Chief Judge, that ‘[o]nly God works from nothing. Men must work with old elements.’ Human DNA is, for better or worse, one of the old elements bequeathed to men to use in their work.”

“We cannot, after decades of patents and judicial precedent, now call human DNA fruit from the poisonous tree, and punish those inquisitive enough to investigate, isolate, and patent it.”

“I will not strip an entire industry of the property rights it has invested in, earned, and owned for decades unchallenged under the facts of this case.”

Judge Bryson

Judge Bryson on the other hand had no such inhibition:

“We … should not shy away from deciding the issues of law that the parties have brought to us. Although my colleagues believe our analysis of the legal question in this case should be influenced by purported expectations of the inventing community based on the PTO’s past practice of issuing patents on human genes, that is in effect to give the PTO lawmaking authority that Congress has not accorded it. There is no collective right of adverse possession to intellectual property, and we should not create one. Our role is to interpret the law that Congress has written in accordance with the governing precedents.”

The main thrust of his dissent is:

“Myriad is claiming the genes themselves, which appear in nature on the chromosomes of living human beings. The only material change made to those genes from their natural state is the change that is necessarily incidental to the extraction of the genes from the environment in which they are found in nature. While the process of extraction is no doubt difficult, and may itself be patentable, the isolated genes are not materially different from the native genes.”

He continues:

“[I]t is an oversimplification to say that something that can be characterized as “isolated” or “extracted” from its natural setting always remains a natural product and is not patentable. One could say, for example, that a baseball bat is “extracted” or “isolated” from an ash tree, but in that case the process of “extracting” the baseball bat necessarily changes the nature, form, and use of the ash tree and thus results in a man made manufacture, not a naturally occurring product. In that setting, man has defined the parts that are to be retained and the parts that are to be discarded, and he has molded. … The result of the process of selection is a product with a function that is entirely different from that of the raw material from which it was obtained. In the case of the BRCA genes, by contrast, nature has defined the genes as independent entities by virtue of their capacity for protein synthesis and, ultimately, trait inheritance. Biochemists extract the target genes along lines defined by nature so as to preserve the structure and function that the gene possessed in its natural environment. In such a case, the extraction of a product in a manner that retains the character and function of the product as found in nature does not result in the creation of a human invention.”

Observations

The main point of agreement between the two majority judges is that the expectations of the biotechnology industry based on both the policy of the US Patent Office and the lack of any express prohibition from Congress dictate that isolated DNA sequences are patentable.

The main points of disagreement are over the nature of an isolated DNA molecule.  For Judge Bryson, “The medium is the message” (Marshall McLuhan).  For Judge Lourie, the message is not relevant – the patent is for the medium.  For Judge Moore, the medium may be the message, but it is now too late to turn back the clock.

It remains to be seen if there is an appeal and if their decision is upheld.  Keep posted.

The situation in Australia remains unchanged from what it was in this guest post:

The challenge to the Australian Myriad gene patent was heard in the Federal Court in February and the decision was still pending as this post went to press.

In New Zealand the GM Royal Commission recommended against any ban on gene patents and the government subsequently accepted that recommendation.  There is no prohibition against gene patents in the Patents Bill now before Parliament.


Gene patents in Australia — an ongoing saga Peter Kerr May 23

1 Comment

By guest blogger Doug Calhoun

In an earlier guest blog I commented on the gene patent debate inAustralia.  My conclusion then was that the opponents were a determined lot.  That observation has been reinforced by yet another initiative in the form of a proposed private member’s bill.  This was reported in the ABC programme ‘Lateline’ on 14 May.  The programme and a transcript are at the link:

I was sufficiently annoyed at the lack of any balance in the report to respond to their invitation to comment.  The following is what I said:

Your story on gene patents is unbalanced, it omits several important facts and it repeats a discredited myth.  For the other side of the story I refer you to this post I made on a science blog earlier this year:

The myth is:

‘Four thousand human genes have been patented already – that’s 20 per cent of the human genome.’ ‘Already 4,000 of these genes have been patented by organisations hoping to profit through exclusive research on them.’

The 4,000 figure is based on one 2005 article in Science.  (And the patents referred to areUS patents, not Australian ones.)  That article has been misinterpreted and its conclusions misrepresented.  For an in depth analysis of why I refer you here:

While Dr Oliver may be an eminent physician, his knowledge of patent law does not appear match his medical expertise.  He stated:

‘Look, if you can just get a patent for just discovering the presence of a gene, then you really block everyone else from being able to work on that gene. And so we are saying that that’s not what patent law should be. It should be about an inventive step, then you can have the patent.’

The Patents Act requires that a discovery must have a practical usefulness before a patent can be granted.  The need for this was reinforced with the passing of the Raising the Bar Act.  That requires the patent applicant to show a ‘substantial, specific and credible’ usefulness before a patent is granted.  The change and the existing law require far more than ‘just discovering the presence of a gene.’  An inventive step is yet another requirement that must be present along with usefulness before a patent can be granted.

Suzanne Smith expressed an incomplete understanding of how cures get to patients when she stated:

‘At stake here is the future of cancer therapies. If an organisation can monopolise a gene, that means the world’s scientists can’t collaborate and swap their results. This could potentially delay a cure for cancer or the invention of a vaccine.’

There is much more to making cures for cancer available than scientists collaborating and finding a potential cure.  The initial promising results must go through patient trials to prove that they work and that they are safe before a cure can be made generally available.  And for many new cures, half or more of the patent life may be up before a cure is approved and a patent owner gets any return on their investment.   A patent gives exclusivity in respect of a defined invention for a maximum term of 20 years.  (A fact nowhere mentioned in your report.  The Myriad patent expires inAustraliain 2015.)  After that anyone can use it.  The purpose of a patent is to motivate investment in taking a promising research result to the medical marketplace.  Those who are promoting the ban on gene patents do not explain what will drive the commercialisation of ‘targeted therapies in cancer based on genes and their products’ if they succeed.

The suggestion that the world’s scientists can’t collaborate and swap their results because of the gene patents is simply wrong.  Over 8,000 scientific papers have been published on the BRAC genes since the patent was granted.  Part of the patent bargain is that the patent document must fully describe the invention and how to put it into practice.

While interviewers have no control over what their guests have to say, responsible reporters should at least do rudimentary fact check before making supportive statements like those that Suzann Smith made here.  And on the question of balance you might have mentioned that two different senate committees and the Advisory Council on Intellectual Property have all considered the case put by Dr Oliver and Melissa Park; and all have declined to recommend banning gene patents.  (See my blog post linked above for the details.)

And as for the throwaway line that AusBiotech were unable to comment, how much warning were they given?  It sounds like a cheap producer’s trick to give someone five minutes warning and then pretend that this equates to balanced reporting.

The reply ABC sent me was:

‘Thank you

Thanks for your message. Your input is important to us.

Please Note: The ABC’s Current Affairs department welcomes feedback on its programs. Your email will be passed on to those responsible for producing the program. Emails containing general comments or suggestions and those offering personal opinion will be noted but may not receive a reply. Any emails relating to complaints concerning accuracy, impartiality and objectivity will be considered by ABC Audience and Consumer Affairs. In this case, please be aware that it may take up to four weeks for a response to be forwarded. We will not respond to anonymous emails and we are unable to help people with research for school projects, student assignments and enquiries unrelated to our service.’

I await their response with interest.

 

            ~ Doug Calhoun

IP Mentor

Serial Stirrer

 


ACC and Ministry of Health: winners in patent battle over computerised healthcare information ‘connectivity’ invention Peter Kerr Apr 05

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By guest blogger, Doug Calhoun

Throughout the debate on the patenting of software, a battle has been quietly percolating under the radar over a NZ patent application (NZ525001) that has touched upon just about every issue in the software patent debate. And the outcome has been a complete success for ACC and MoH. A patent application originally accepted by IPONZ has been comprehensively refused by a hearing officer after an opposition process that lasted almost six and a half years.

The link to the decision is here:

The original owner of the patent application was an American firm, Healthtrio Inc:

The invention of NZ 525001 is ‘a system for communicating health care data from a sender to a receiver’. After it had been examined and accepted by IPONZ in 2005, no less than three major players in healthcare (ACC, MoH and Southern Cross) and Telecom opposed the further step of granting a patent. Since then there have been two interim hearings and an appeal to the High Court before they finally got around to the substantive hearing and decision. Along the way Healthtrio dropped out, but its founder, Dr Hasan, continued to pursue the patent; on the other side Telecom and Southern Cross ceased active participation at an early stage. So in the end it was Dr Hasan against ACC and the Ministry of health.

And why did ACC and MoH oppose? The answer is found in paragraphs [266] to [268] of the decision. ACC had been using its ‘EMG system’ since June 2000. In paragraph [268] the decision refers to evidence that ‘the EMG system was widely used, with GPs, physiotherapists, ambulance services and hospitals all registered to communicate data with the EMG.’ They were worried that they might be sued for using a system they had developed before Healthtrio had filed its original patent application — and they were cross that Healthtrio had tried to patent something that they had already done.

They were more than vindicated. The only difference the hearing officer saw between the EMG system and the Healthtrio one was in the latter’s normalisation of information. But:

‘[271] Normalisation is well known from the common general knowledge and it would be a desired outcome that all information appears in a common form in a combined database that is to contain the accumulated data from existing independent databases. The invention claimed is obvious when the prior art is considered alongside the common general knowledge. It would be unfair on the skilled worker to give patent rights which would prevent that skilled worker from its previously enjoyed right to put information into a database and for the information in that databases to be put into a standardised form, something the skilled addressee would have been able to do without any exercise of inventiveness from their common general knowledge.’

The main ground upon which the hearing officer made his decision was that the ‘specification did not sufficiently and fairly describe the invention and the method by which it is to be performed’. (One theory of the basis for patents is the social contract theory — in return for granting a time limited exclusive exploitation right, the state receives a public disclosure of the invention. But if, as has happened here, the disclosure is not sufficient and fair, the patent applicant has not fulfilled its side of the bargain. So the state declines to grant a patent.)

Paragraphs [103] to [208] explain why. The hearing officer placed a great deal more weight on the evidence of the opponents’ expert witness, Dr David Parry, than on the evidence of the expert witnesses for Healthtrio.

‘[073] In conclusion, I agree with the opponents’ analyses of the experts, above, and I consider that little if any weight can be given to the evidence of Dr Desai, Mr Prib and Mr Cooper. The evidence of Dr Parry and Mr Bowden is very relevant, being from experts in the field, and especially experts in the field in New Zealand, New Zealand being ahead of other countries in this technical field, and I consider much weight can be placed on their evidence.’

Dr Parry gave evidence (paragraph [142]) that the term ‘normalise’ as used in the specification ‘could not … be understood by any reasonable person working in the informatics field based on their experience or knowledge … or on any information in the specification itself.’ He expressed similar concerns (in Paragraph [146]) about the meaning of the word ‘meaning’.

The hearing officer agreed.

The hearing officer noted in paragraphs [160] to [162] that the corresponding European application had also been refused for lack of clarity.

For trainspotters the decision can be downloaded from this link:

To complete the dissection of the Healthtrio application, the hearing officer also found that the invention claimed in claims 26 to 29 had been prior published in two separate earlier US patents; and that the invention claimed was ‘not an invention’.

The ‘not an invention’ finding was an extension of the obviousness finding, as opposed to a finding that the system was not a ‘manner of manufacture’ – which is at the heart of the debate on the patent exclusion of computer programs. The hearing officer’s conclusion was:

‘[275] As I see it, the invention claimed in claims 1 to 25 is a mere collocation of known steps and/or components, in particular the use of a known normalisation step and a known transliteration step in the transmission of data in a known network environment, and particularly in the creation of a common database containing all information contained in a number of existing databases. Each step or component performs its known function without any alteration or synergy. The claims represent mere collocations of known integers and therefore lack inventiveness and are thus unpatentable.

[277] It would be wrong to prevent others in the field from extracting data from several databases to create a single database containing all the information in one place using standard techniques within the common general knowledge of the skilled addressee, as I find to be the case in the claims under consideration.

[278] If one looks beyond the normal extraction of data from a known database into another database, at the ability for a system to automatically understand data in an unknown database and extract that information into another database, then there is mere speculation and a casting of the claims widely to catch future developments that fall within the vague claims. Applicants are only entitled to claim what they have themselves invented. In the present case there is no explanation as to how the system can automatically understand the meaning of data in unknown databases and extract that data into a set of fields in its own database.’

The lesson taught by this decision is that if someone is seeking a software related patent in New Zealand, and they have not done anything more than a rehash of what has gone before, there are tools available under the existing law to put a stop to them.

The process has taken six and a half years. One reason is that the opponents tried to shortcut the process to get a decision only on the issue that ultimately was the decider. But in the end both sides collected and filed extensive detailed evidence on all issues — and that takes time. And the hearing officer did a remarkable job of sifting through it all and producing a detailed but coherent 75 page decision within three months, including Christmas.

And we can all do a metaphorical haka over his finding that New Zealand is ahead of others in this technical field.

And speculate as to why the Australian equivalent patent (AU 2002211889) was granted with claims identical to those refused here; and the US equivalent (US 7,664,660), while containing many more qualifications in its main claim, still uses the terms ‘normalise’ and ‘meaning’ that were found to be meaningless here.

~ Doug Calhoun
IP Mentor


Optimising autoimmune treatment patent invalid: a ‘Law of Nature’ is not a law passed by Congress Peter Kerr Mar 23

8 Comments

By guest blogger Doug Calhoun

On 20 March the Supreme Court of the United States (SCOTUS) issued a decision unanimously allowing an appeal by the Mayo Clinic and declaring invalid two patents that a lower court had found Mayo to be infringing: (see here)

The background to the invention is described on the web page of one of the inventors: (see here)

In Yves Théoret’s own words:

‘[We study] the relationships that exist between concentrations of medications and their metabolites (medication transformation products) in plasma and blood cells, and therapeutic response, according to genetic characteristics of individuals or a given population (French Canadians, Amerindians, American Blacks, Asians). These characteristics (or polymorphisms) can translate into a deceleration or an acceleration in the enzymatic transformation of medication and/or an amplification or reduction in medicated response on specific tissue sites. By determining these various variables, it is possible to individualize and optimise therapeutic treatment while minimizing toxic effects.’

‘Our studies with thiopurines (6-mercaptopuirine or Purinethol; azathioprine or Imuran) administered to children have made it possible to validate this axiom. Thus, patients with an activity deficiency of a particular transferase enzyme (thiopurine methyltransferase) have higher concentrations of active metabolites (nucleotides of 6-thioguanine) and a higher percentage of therapeutic response than patients who do not have reduced enzymatic activity. The sex and age of the patient are also determining factors when it comes to the pharmacokinetics of the medication and therapeutic response. Facing the obvious impracticality of performing pharmacokinetics (measuring the concentration of the medication and its metabolites per unit of time) on all drugs administered to children with various ailments, we also study the possible relationships between the intensity of the drug dose (quantity administered per unit of time) and the therapeutic response as evaluated by various parameters (white blood cell count, gastric acidity, hepatic enzymes). Specialized software makes it possible to determine these relationships.’

In the words of the patents, the invention ‘provides a method of optimising therapeutic efficacy of 6-mercaptopurine drug treatment of an immune-mediated gastrointestinal disorder’ — the goldilocks level of dosage.

The SCOTUS decision (pages 5 and 6) focused on one representative claim (claims define the invention of a patent — the rest is background):

‘A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and
(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
wherein the level of 6-thioguanine less than about 230 µmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject, and
wherein the level of 6-thioguanine greater than about 400 µmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.’

The decision then went on to analyse the claims. On page 11 it came to the conclusion:

‘… the claims inform a relevant audience about certain laws of nature; any additional steps consist of well understood, routine, conventional activity already engaged in by the scientific community; and those steps, when viewed as a whole, add nothing significant beyond the sum of their parts taken separately.’

Going back a step, SCOTUS was making a determination of whether or not the invention claimed was patent eligible – whether it fitted within the definition of an invention:

‘Any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.’

It did.

But then SCOTUS went on (from page 2) to consider if it was nevertheless excluded under any of the three judge-made exclusions to patent eligibility: ‘phenomena of nature, mental processes and abstract intellectual concepts.’ It focused on the first of these exclusions. The balancing act it said it was performing was to exclude patents for the ‘basic tools of scientific and technological work’ – while at the same time recognising ‘that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’

The premise (Page 8) on which SCOTUS came to the conclusion that the patents were invalid was:

‘Prometheus’ patents set forth laws of nature–namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm.’

This is a breathtaking extrapolation. Go back up and read Dr. Théoret’s first paragraph. There is a huge variability between people, based on their genetic make up, causing different rates of metabolising the thiopurines they are taking. The relationships are hardly ‘laws of nature’ within the meaning given in earlier SCOTUS decisions referred to in this one. Determining that a particular range of metabolites in the blood for a particular disorder is the goldilocks range is hardly going to pre-empt a ‘basic tool of scientific and technological work’.

What is a law of nature? One example is that nothing can travel faster than the speed of light (except maybe neutrinos between Geneva and northern Italy!). I think a definition most scientists could agree on is that it is an hypothesis that has not been disproved by so much experimentation that it is generally agreed to be correct. But remember the scientist’s lament, ‘a beautiful hypothesis – ruined by an ugly fact.’

SCOTUS justices generally deal with matters concerning the interpretation of the constitution. And a training in and understanding of science is not a prerequisite to being appointed. But a lack of understanding of science, or a wilful overlooking of what a law of nature is to a scientist, has led to this decision. And there is no appeal from here.

And who is the winner? The Mayo Clinic:

Although it is a non-profit organisation, it brings in handsome sums of money and any premium it might have had to pay for the Prometheus diagnostic kits will hardly make what it charges its patients any cheaper.

And the losers?

Prometheus Laboratories will now lose its exclusivity in marketing the diagnostic kits used to carry out the patented method. The patents were due to expire in seven years time, so its investment in commercialising the invention will have to be recouped in competition with suppliers who have contributed nothing to getting the science from the lab to the market place.

But the real losers are Ste-Justine’s hospital (the French language children’s hospital in Montreal — my home town) and the taxpayers of Quebec who fund the public health system that Ste-Justine’s is a part of. They will lose the royalty income stream the patents were generating.

And where does this leave the Myriad Genetics gene patents appeal pending before SCOTUS?

One commentator has speculated that SCOTUS will refer that case back to the appeal court that held the ‘gene’ claims to be valid. But in 2011 SCOTUS referred Mayo v Prometheus back to them — and the CAFC did not change its mind.

Watch this space.

~ Doug Calhoun
IP Mentor


The Patents Bill: Please leave it alone until the super ministry is sorted Peter Kerr Mar 16

2 Comments

Guest blog by Doug Calhoun

The new Ministry of Business, Innovation and Employment, which will combine Economic Development, Science and Innovation, Labour, and Building and Housing, attracted the usual headlines about job losses and efficiency dividends: (see here).

But beyond the headlines there has been some reasoned analysis of what current structures and accountability procedures have and haven’t achieved. The ‘Better Public Services Report’: (released at the same time as the announcement of the super ministry) has added a new word to government speak — RESULTS. In a sardonic footnote on page 23 the report notes:

‘The technically-minded reader will note this report uses the term ‘results’ rather than the PFA term ‘outcomes’. We have gone with the more open term as results can encompass outcomes, intermediate outcomes and outputs where necessary.’

The report notes, on several occasions, a common problem from the current set up:

Page 20 — ‘The most challenging social and economic issues facing New Zealand need action across agency boundaries, and currently this action takes too long. Having many agencies and a culture of high levels of consensus-seeking consultation between agencies slows progress down.’

Page 23 — ‘Alongside containing and reducing costs, the greatest challenge facing the state services is to gain more traction on achieving results: the complex and long term issues that cross agency boundaries. This is hard territory as it requires cooperative action from Ministers, boards and agency leaders and staff, action that sometimes competes with those Ministers’ and agencies’ narrower objectives.’

Page 26 — ‘The Advisory Group’s assessment, supported by discussions with chief executives and Ministers, is that one of the main obstacles to the state services responding more effectively to cross-agency results is the inflexibility in current organisational arrangements. It tends to be too hard to divert staff from existing work plans. Multi-agency work is on occasion characterised by individual agencies protecting their own patch rather than focusing on solving the common problem.’

Page 27 — ‘Overall, and on balance, the Advisory Group considers that New Zealand is not well served by the high number of departments in the state services, particularly where there is a lot of overlap and duplication between separate agencies’ briefs.’

Page 28 — ‘One of the reasons the system has struggled to make traction on inter-agency results is the quality and alignment of policy advice.’

[And a footnote references the December 2010 Scott Report]:

Which can all be summed up by saying that all too often the left hand of government does not know (or care) what the right hand is doing.

The solution announced on Super Thursday is to put both hands under the control of one management with the objective that they work together to achieve an overall result consistent with the government’s objectives. And Stephen Joyce has been given the task of doing this.

The Patents Bill v Innovation Policy

As I endeavoured to point out in my first guest post: the Patents Bill was drafted with the aim of minimising the leakage of patent ‘benefits’ to overseas owners. The result intended under the new regime is that patents are to be as difficult to obtain as possible, they are to be vulnerable to validity attacks by anyone, and they make many high value manufacturing sector (HVMSS) technologies ineligible for patent protection.

At the same time the innovation policy endorsed by the government during the last election campaign advocated ramping up HVMSS technology transfer from universities and CRIs through enhanced intellectual property deal flow.

The patent policy came from MED; the innovation policy came from MSI.

Now – have a look back at each of the quotes from the Better Public Services Report. ‘This is hard territory as it requires cooperative action from Ministers, boards and agency leaders and staff, action that sometimes competes with those Ministers’ and agencies’ narrower objectives’ – is my favourite.

The result that both Mr key and Mr Shearer said they wanted to achieve in their ‘Super Thursday’ speeches was a more prosperous New Zealand. The result that the Patents Bill aims to achieve is a chill on New Zealand patents. The result that MSI is seeking is to convert good science ideas into innovation — and one of the tools they recommend for doing so is technology transfer. And patents are the currency of technology transfer.

The Patents Act 1953 was virtually a carbon copy of the 1949 British Patent Act. The British Act was replaced in 1977 by a substantially different one based on the European Patent Convention. In the early 1980s the government appointed a committee (IPAC) that looked at some aspects of patent law on an ad hoc basis. In 1989 the Law Commission had a brief look at patent law, but gave it over when the Ministry of Commerce took on the task. In 1992 MOC produced a set of ‘proposed recommendations’ that almost led to a rewrite of the patent law. But in 1994, in anticipation of the formation of the WTO with its minimum IP standards, the Patents Act was tweaked. The 1994 changes resulted in the Wai 262 claimants protesting that all IP law reform should halt until their treaty claim was settled. It did. The Wai 262 report was finally released in mid-2011.

If you are still with me, in 2000 a new round of patent law reform began, and it set off in a very different policy direction from the 1992 recommendations. The resulting Patents Bill has been through a select committee and returned to Parliament where it has sat in limbo for two years so far. (My take is that the delay is partly because the government is awaiting the outcome of the TPP negotiations — and American demands — and partly until the government responds to the Wai 262 Report recommendations.)

So my plea to Mr Joyce is this. Review of our patent law has been going on for 30 years. So another delay will not be of much consequence. Your government has to define the results that it wants to achieve. Does it want a Patents Act that puts a chill on anyone getting patents (to stop leaks of benefits to foreigners); or does it want a Patents Act that achieves a result of quality patents serving as a reliable currency for technology transfer? Don’t pass the Patents Bill until you define the result you want. And then make sure the bill achieves that result.

~ Doug Calhoun
IP Mentor
Serial Stirrer


Science embraced: patent policy merits a brief mention Peter Kerr Mar 07

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Another guest blog by IP mentor, Doug Calhoun

The McGuinness Institute is to be congratulated on its exhaustive analysis of science in New Zealand, ‘Report 9: Science Embraced: Government-funded Science Under the Microscope’:

The report will no doubt generate considerable debate.

In focusing just on the very brief patent policy aspects of the report I feel a bit presumptuous – like Spike Milligan when he wrote ‘Hitler: My part in his downfall.’ But it is the patent bit about which I would like to continue the debate.

In my first guest post: I pointed out the inconsistencies between the MED and the MSI approaches to patent and innovation policies. The McGuinness Report concludes (on pages 94 and 95) that these inconsistencies are symptomatic of a wider problem:

‘There is a lack of clarity surrounding the respective roles of MSI and the Ministry of Economic Development (MED) regarding economic development. MED clearly has a role in fostering economic development and prosperity for all New Zealanders, and many of its portfolios are aligned to the six areas of investment determined by MSI: high-value manufacturing and services sector (HVMSS); biological industries; energy and minerals; hazards and infrastructure; environment, and health and society. It is not clear how the two ministries coordinate their strategies in these areas given that the difficulty in distinguishing the stated aims of these two ministries has been noted in the science-policy community.’

The report discusses the role of intellectual property on pages 72 and 73. The teaching that it extracts from the Uniservices Report: is that although there is some evidence that patents act as an incentive to innovation and thereby increase productivity, it did not find evidence that IP on its own is a driver of productivity.

What the McGuiness Report did not really get to is that the primary role of patents is to incentivise investment in the commercialisation of inventions.

A comprehensive study of the importance of patents to US entrepreneurs was the Berkley Patent Survey that is discussed by its authors: here, here and here.

While they urge readers not to leap to too many conclusions, one common theme that comes through is that patents are seen as being more important to the investors in entrepreneurial ventures than to the entrepreneurs themselves.

There is some evidence of this in New Zealand. At the Grow Wellington launch of its Innovating for Health Challenge on 5 March, Robert Feldman, a venture capitalist with Pacific Channel: outlined his company’s expectations of entrepreneurs who are seeking funding. His two highest priorities were the quality of the management and the quality of the IP, with particular emphasis on patents. Dr Feldman then drilled into what he meant by high quality patents. They must be:

1. Focused on the product that they are intended to protect,
2. They must be free of prior art, and
3. The entrepreneur must have freedom to operate.
4. The enterprise should have a track record in New Zealand (Underlining the point I was making in my first post that NZ patents do matter!)

(‘Freedom to operate’ means that you have done a comprehensive search for other patents in markets you intend to enter and have determined there are no patents you are likely to infringe. And, if there are such patents, you have arranged to licence them or made some other accommodation.)

With some technologies, freedom to operate may involve having to navigate your way through a dense patent thicket. How this is being done on a global basis through private collaborative arrangements is described in chapter 3 of the WIPO publication here.

The McGuinness Report (probably without realizing it) did consider one approach to solving the problem:

‘Creating better forms of co-creation based on collaborative practices between institutions, and new initiatives that allow inventions to be put into the public domain more quickly, seem part of the solution. For example, New Zealand could consider becoming a leader in Common Patents [I think that should read a Patent Commons], patents that register the creator and are fully transparent, but allow free use with acknowledgement (along the lines of the approach used by the Creative Commons, but through specific ‘New Zealand Invention Commons’). There are obviously a number of different ways to explore this landscape, but it is clear that such a system, which puts vast numbers of inventions into an open marketplace where entrepreneurs have access to them, can help economic growth, health and well-being. The challenge is therefore to create a system where new knowledge and technological advances are created and then traded in an open marketplace, which recognises the creator but also enables the entrepreneur to bring benefits to society.’

The reference to ‘patents that register the creator and are fully transparent’ is a bit of a mystery. All New Zealand patents do ‘register the creator’ by the requirement to name the inventor(s). And before a patent will be granted it must describe how to put the invention into practice — in terms that would be understood by someone able to put it into practice — so they are ‘transparent’.

Firms who invest in R & D and seek to protect that investment through patents are hardly going to be motivated to give up their exclusivity by donating their patents to a Patents Common when the only reward is an acknowledgement of authorship.

The ‘public domain’ is a part of an ‘accessible domain’ (there is a chapter in the book ‘Driving Innovation’ by Michael Gollin on this). The accessible domain includes a vast Patent Commons of published patents in other countries that are not enforceable in New Zealand and New Zealand patents that are no longer in force because a renewal fee has not been paid. And the accessible domain includes patents that others are prepared to license out a right to exploit. Freedom to operate can be thought of as finding a place in the accessible domain.

The WIPO Report at pages 118 and 119 explores why the open source software business model seemingly exists without patents. Studies it refers to show that:

‘both producers and users of open source products often blend participation in open source and proprietary software. In the case of producers, it is common for firms to develop both proprietary and open source programs. Firms may also participate in open source software projects strategically to upset dominant players.’

It then asks:

‘whether similar practices are transferable to other industries. Indeed, models of the open source type have been applied to other innovative activity. However, their uptake appears less spectacular than for software. One explanation may be that the success of open source software is closely linked to the special circumstances of software development: projects can be broken into small, manageable and independent modules; input by geographically dispersed developers can be easily shared; upfront capital costs are limited; and new products do not face lengthy regulatory approval processes. Nonetheless, additional opportunities for open source types of collaboration may well arise in the future as technology and the nature of innovation evolve.’

The business models that the WIPO Report describes in chapter 3, such as patent pools and markets for the sale and purchase of patents or patent licences, are being used by those seeking to monetise their IP instead of the open source software model.

Both the Uniservices and the McGuinness Report say that a lot more research needs to be done (they would say that wouldn’t they). And that research should begin where the WIPO report leaves off.

The McGuiness Report also mentions the importance of Talent (with a capital ‘T’). At the Grow Wellington launch Elf Eldridge promoted nurturing that talent with a dose of real world interaction through a programme to be run by Chiasma:

The Uniservices Report survey noted the shortage of understanding of the management of IP. The call for nurturing science talent should extend to nurturing IP talent in talented scientists.

~ Doug Calhoun
IP Mentor
Serial Stirrer


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