18 MAY 2021 - IP SPOTLIGHT

IP SPOTLIGHT NEWS FROM AUSTRALIA

18 May 2021

AUSTRALIA’S 2021-22 FEDERAL BUDGET A WIN FOR MEDICAL AND BIOTECH COMPANIES

Last Tuesday night Australian Treasurer Josh Frydenberg

The tax incentives will be introduced by the establishment of a “patent box” system offering tax breaks specifically targeted at income derived from new medical and biotechnology patents. Treasurer Frydenberg also postulated a possible extension of this system to the clean energy sector. By adopting the patent box, Treasurer Frydenberg hopes to bolster investment support for medical and biotech technologies in Australia with the aim of encouraging businesses to undertake their R&D and maintain their medical and biotech business in Australia.

Amongst those priorities, specific focus was given to essential services, childcare, job creation, infrastructure, education and training, small business and the environment. Importantly, the budget also paves the way for Australia’s economic recovery following the COVID pandemic, with a specific focus being given to technology innovation. From July 2022 the Government is looking to introduce tax incentives for medical and biotechnology technology companies, research institutes, and

handed down the 2021- 22 Federal Budget. That budget focused on what will be the Government’s core priorities for 2021-22.

start-ups to drive and stimulate commercialisation of R&D from innovative research.

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THE PATENT BOX The “patent box” is likely to cost the government about $100 million annually and will follow OECD’s guidelines ensuring the system meets internationally accepted standards. It will offer a competitive tax rate for profits generated from Australian-owned and developed medical and biotechnology patents. Corporate income derived from new medical and biotechnology patents developed in Australia will be taxed at a corporate tax rate of 17 per cent – almost half the rate that applies to large companies. Currently, the corporate tax rate for large companies is 30 per cent and 25 per cent for SME. Over the next 12 months the government will consult industry about the design of the patent box. What we do know about the system is that only granted patents, which were applied for after the budget announcement, will be eligible. According to the budget papers, the “requirement for domestic development will encourage additional investment and hiring in research and development activity and encourage companies to develop and apply their innovations in Australia”.

ST IMULAT I NG ADD I T IONAL I NVESTMENT AND I NNOVAT ION The patent box scheme complements the Government’s $2 billion investment in the Research and Development Tax Incentive, announced in the 2020-21 Budget. The Board of Taxation will review the administrative framework for the research and development tax incentive (RDTI) before the end of 2021. The budget also rolled out a new Global Science and Technology Diplomacy Fund, which is to be allocated $54.2 million over four years, with $8.2 million released annually. The new Fund will be directed towards “strategically important science and technology collaborations with global partners”. The government will also invest $42.4 million over seven years into the Boosting the Next Generation of Women in STEM program, which is a new initiative that will offer co- funded scholarships for women in STEM in partnership with the private sector. The Government’s patent box system has been a much- awaited investment in medical research and biotechnology. It provides a clear focus on the strategic importance of IP protection and investment in the medical research and biotechnology field. Seemingly this budget aims to position Australia as a global player in the technology, innovation, and commercialisation landscape, particularly in the field of medical research and biotechnology.

CHANGES TO PCT FEES FOR AUSTRALIAN FILERS

Australian filers of PCT applications are set to receive some more welcome financial relief as the Australian Patent Office (IP Australia) adjusted their fees for PCT-associated patent filings, effective from 1 May 2021. This follows a series of fee decreases over the last 8 months.

INTERNATIONAL PRELIMINARY EXAMINATION FEES Fee Type

INTERNATIONAL PCT FEES

Old Fee (AUD)

New Fee (AUD)

Fee Type

Old Fee (AUD)

New Fee (AUD)

1. Transmittal Fee

$200

$200

1. International Preliminary Examination Fee

2. International Search Fee 3. International Filing Fee*

$2200 $2200

If the search was performed by IP Australia If the search was not performed by IP Australia

$590

$590

$2150 $1860* If the application contains 30 pages or less including the request form: Electronic filings filed in PDF format via ePCT* $323 $280* Electronic filings filed in XML format via ePCT* $485 $420*

GARY COX Chairman & Principal

$820

$820

2. International preliminary handling Fee*

$323

$280*

Plus, for each page in the application in excess of 30 sheets (per page)*:

$24

$21*

*Indicates a fee decrease

We will keep you updated on future developments.

4. Cost of preparing certified copy of basic document (per document 5. Copies of specifications cited in the International Search Report (per copy)

$50

$50

DONNA MEREDITH Associate

$50

$50

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Two settings were critical to the ACCC’s case: “Web & App Activity” and “Location History”. The ACCC alleged that there were users who, acting reasonably, would have been led into thinking that, with Location History “off”, Google would not obtain, retain and use personal data about a user’s location. However, in fact, users also needed to navigate to another setting – “Web & App Activity” – and then select “Don’t save my Web & App Activity to my Google Account” in order to prevent location data from being saved to their Google account. In short, unless users turned both settings off, Google would continue to collect and use their personal location data – and the ACCC alleged that this was not made clear to users during the relevant two year period. By failing to make it clear that “Location History” was not the only setting relevant to Google’s collection and use of location data, the Federal Court found that Google had misled some users and had contravened a number of provisions of the ACL. The ACCC is seeking declarations, pecuniary penalties, publications orders, and compliance orders against Google. These penalties and other orders will be determined by the Federal Court at a later date.

THE INTERACTION BETWEEN CONSUMER PROTECTION AND DATA PRIVACY While the ACCC’s core function is to protect and enforce competition and consumer protection legislation, the ACCC’s proceedings against Google – and the Court’s findings – demonstrate the important interaction between consumer protection and data privacy protection. Indeed, data privacy appears to be an area of increasing interest for the ACCC. In 2019, the ACCC commenced proceedings against HealthEngine, the operator of a website that allows users to book medical appointments. One aspect of the ACCC’s case was that HealthEngine did not make it adequately clear on its website that, if a user agreed to be contacted about health insurance, that user’s personal information would be sent to a third party insurance broker. HealthEngine admitted certain contraventions of the ACL and was ordered to pay a penalty of $2.9 million in total ($1.4 million of which related to the broker referrals). You can read our article about the HealthEngine case click here . The ACCC has also commenced separate proceedings in the Federal Court against Google LLC, alleging that it misled Australian consumers when it failed to properly inform them about its plans to start combining personal information in consumers’ Google accounts with information about those individuals’ activities on non-Google sites that used Google technology to display ads. The ACCC is also alleging that Google misled consumers about a related change to its privacy policy. These recent cases demonstrate the emergence of the ACCC as an active regulator in relation to privacy and data protection issues, insofar as those issues give rise to consumer protection concerns.

WHAT DOES THIS MEAN FOR YOU?

The Court’s decision demonstrates the importance of transparency when companies notify consumers about their collection and use of location information, as well as personal information more generally.

FEDERAL COURT FINDS GOOGLE MISLED USERS ABOUT COLLECTION AND USE OF LOCATION DATA

Following the Court’s decision, ACCC Chairman Rod Sims said:

“Today’s decision is an important step to make sure digital platforms are up front with consumers about what is happening with their data and what they can do to protect it. … “Companies that collect information must explain their settings clearly and transparently so consumers are not misled. Consumers should not be kept in the dark when it comes to the collection of their personal location data.”

HOW WE CAN HELP

In a decision handed down on 16 April 2021, the Federal Court of Australia found that Google LLC and Google Australia Pty Ltd (Google) misled some users of Android devices about the collection of their personal location data over a two year period.

WHAT HAPPENED?

We routinely advise businesses that operate online platforms on their compliance obligations under the ACL and the Privacy Act. If you have any questions specific to your business and its activities, please do not hesitate to give one of our team a call.

The Australian Competition and Consumer Commission (ACCC) commenced proceedings against Google in 2019, alleging that Google had contravened various provisions of the Australian Consumer Law (ACL) relating to misleading and deceptive conduct. In particular, the ACCC alleged that between January 2017 and December 2018, certain users of mobile devices with Android operating systems were misled about Google’s collection and use of their location data by reason of the content of various screens those users saw on their devices.

Moving forward, companies which collect, use and/or disclose user data and personal information via a digital platform should ensure that their terms of use, collection notices and privacy policies clearly explain the effect of disabling or enabling various settings, so that users are fully informed about the fate of their data and the options available to them to protect it.

ALEXANDRA CHUBB Special Counsel

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In Phoenix, on the matter of whether the applicant had made a genuine attempt to address the findings of the interim decision, the Hearing Officer found that it had been made. However, the applicant’s attempt was characterised as “misconceived” and it may be that this is a borderline case. In another decision, Ipsen Pharma S.A.S v Allergan, Inc [2013] APO 50 (29 August 2013), the applicant had not made a genuine attempt to address findings in the interim decision and there did not appear to be any patentable subject matter in the application. That application was refused. On amendment strategy, a business decision needs to be made. If the application is not crucial to the business IP strategy, taking a cautious approach to amendment is recommended. That is, it may be better, for example, to base the amendment on an allowable claim or on a feature not addressed at all in the interim decision. Opponents are at a disadvantage here because the opposition process does not allow forecasting of amendments, let alone “out of left field” amendments, based on the description as opposed to the claims. An opponent may complain but if the findings of the interim decision are addressed, the opponent will fail, a result that could in itself be prejudicial in a future infringement proceeding. In a more important case, it may be worth taking the risk of a minimalist amendment but clear submissions supporting allowability of the amendment need to be made. Those submissions cannot run contrary to the interim decision. If a case is sufficiently important and findings in the interim decision need to be contested, and noting the Patent Office approach of giving interim decisions a wide construction, an appeal is likely the better course to adopt. For opponents, there is a comment option during amendment proceedings and advantage can be taken of that. Where there is arguable subject matter, it may be better not to contest the amendment (other than in simple terms) and appeal may also be the better option. A business decision needs to be made. KEY TAKEAWAYS

The counter to this is that the scope of an amendment is often contentious and opponents will wish to see significant narrowing of the claims when receiving a favourable interim decision. An opponent, in this situation, will not hesitate to make the submission that an amendment is unresponsive to the opposition decision. What happens then, especially as for some years now, filing a divisional application during an opposition has not been an available strategy? In these situations, the Hearing Officer – who decides the opposition – has discretion to decide whether an amendment is responsive to the opposition decision in a final determination. A risk taken by an applicant taking a minimal approach to amendment is that it will be seen as non- responsive and this will need to be rebutted in a further hearing, likely to be on the papers under Australian practice. The discretion on acceptability of an amendment to resolve an opposition currently appears to be exercised beneficially to the applicant. An example is the recent Patent Office decision in Phoenix Contact GmbH & Co KG v Pivot Electronics Pty Ltd [2021] APO 16 (29 March 2021) (“Phoenix”). The subject matter of the patent is not especially relevant. Suffice to say that the applicant combined two claims (claims 1 and 3), each of which had been found to lack an inventive step. Whilst the interim decision had not addressed claim 3 in detail, a broad finding of lack of inventive step had been made. However, it could be inferred – from reasoning in the previous decision – that amended claim 1 would lack an inventive step. On inference, explanation of an interim decision appears to be acceptable practice at the Patents Office. However, it carries some risk that – if subjected to judicial review – the decision could be challenged as being made after the Hearing Officer’s decision making power is exhausted on making of an interim decision, i.e. ultra vires. However, Hearing Officers typically take care here and a judicial review will rarely be worth seeking as it is unlikely that the substantive ground of invalidity will be addressed in a judicial review proceeding. An appeal would, subject to business case, be the better approach – though noting the time limit from the date of the interim decision for filing such an appeal.

AUSTRALIAN PATENT OPPOSITION DECISIONS AND AMENDMENT: TWO BITES AT THE CHERRY?

Patent opposition decisions in Australia may have three results: refusal of the opposed application, dismissal of the opposition and allowance subject to amendment.

The last situation is the most common in practice and acceptability of the amendment in resolving the opposition is decided in a final determination. Less common is an opposition to amendment which, generally, has low prospects for success. An ”interim” decision on the opposition, made by a Hearing Officer at the Patents Office of IP Australia, outlines the timeframe, typically 2 or 3 months, allowed for amendment at the very end. What is best practice for the amendment step? There may be a temptation to read the interim decision narrowly and propose a “minimal” amendment in response to the interim decision. Such an approach has pros and cons. Excessive narrowing of the claims is undesirable because the opposition has presumably been filed to address a freedom to operate issue. It does not make sense for the applicant to make an infringement case more difficult to establish.

RICHARD BADDELEY Principal

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KEY RESULTS FROM THE AUSTRALIAN INTELLECTUAL PROPERTY REPORT FOR 2020

In 2020, the US remained the major source for patent applications, with US applicants named on 45 per cent of all foreign applications in Australia.

Fig 3: Top 5 Foreign Counties of Origin for Standrd Patent Applicantions in 2020

2020 was a year like no other, but in the midst of it all there was a great deal happening in the Australian intellectual property space, as shown by IP Australia’s Australian Intellectual Property Report for 2020. In 2020, trade mark applications in Australia soared whilst Australian standard patents dipped by 2%. The number of information and communication technologies patent filings in Australia and the PCT route reflect the global trend of increased investment in consumer technology.

PATENT F I L I NGS I N 2020 Overall, IP Australia received 29,293 standard patent applications, including divisional applications, a 2% fall from 2019. International patent applicants were responsible for 92% of the total applications filed in Australia with Australian residents responsible for just 8% of total filings in 2020. The top 5 international applicants filing into Australia originate from the information and communication technologies sector (See Figure 1). This is consistent with the number of PCT applications filed in 2020 with China-based telecoms giant Huawei Technologies coming in as the top PCT filer in 2020 with 5,464 published PCT applications and the computer technology and digital communication sectors accounting for 17.5% of published PCT applications in 2020.

13,122

236

231

194

161

TRADE MARK FILINGS IN 2020

In 2020, a total of 81,702 trade mark applications were filed in Australia, an increase of 8% from 2019.

International trade mark applicants were responsible for 37% of the total applications filed in Australia with Australian residents responsible for 63% of total trade mark filings in 2020. These numbers also reflect the top Madrid filers in 2020 with Novartis in first place followed by Huawei Technologies. 2

Fig 4: Top 5 International Trade Mark Applicants in 2020

Fig 5: Top 5 International Trade Mark Applicants in 2020

144

Bluescope Steel 215

Novartis AG

186

70

Australia Blue Moon Hero 125

Fig 1: Top 5 International Patent Applications in 2020

Fig 2: Top 5 Domestic Patent Applicants Filing into Australia in 2020

Huawei Technologies

Amazon Technologies

Aristocrat Technologies Australia 119

Coles Group 105

Apple 103

236

Aristocrat Technologies 99

Pinnacle Liquor Group 96

LG Electronics

69

435

Johnson & Johnson

CSIRO 48

Guangdong Oppo Mobile Telecommunications

231

0

50

100

150

200

250

Huawei Technologies

Breville 24

The University of Sydney 20 Monash University 18

LOUISA KING IP Search Expert

194

161

Apple

Qualcom

0

20

40

60

80

100

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About Wrays

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