IP SPOTLIGHT JULY 21

SPAM ACT The Act prohibits a person or a body corporate from sending, or causing to be sent, a commercial electronic message, which has an Australian link (e.g. the message originates in Australia, the recipient is physically in Australia when the message is accessed and etc.) or is not a designated commercial electronic message (i.e. a message that contains no more than facts and some other information as prescribed by the Act), unless the person can prove that: – – the relevant recipient consented to receiving such message – – the person did not know and could not, with reasonable diligence, have ascertained that the message had an Australian link – – the person sent out the message by mistake. Contraventions of the above prohibition may result in the relevant person or body corporate being ordered to pay a civil penalty and, in the case of a penalty imposed under an infringement notice from ACMA, the amount depends on the number of contraventions (i.e. the number of messages that have been sent). – – if the notice is in relation to more than 1 but fewer than 50 contraventions, $4,200 multiplied by the number of contraventions is imposed – – if the notice is in relation to 50 or more alleged contraventions, $210,000 is imposed. Repeat corporate offenders may face penalties of up to $2.22 million a day. As noted above, Woolworths contravened the Act across multiple days and, for each day, ACMA has applied the above calculation based on the number of contraventions occurred during that day. Accordingly, ACMA imposed $163,800 for a day where there have been 39 contraventions and $210,000 for each of the other 4 days where there have been more than 50 contraventions. For example, in the case of a body corporate:

KEY TAKEAWAYS In order to avoid such heavy penalties, businesses should: – – have the necessary systems, processes and procedures in place to ensure that requests from consumers to unsubscribe are recorded and enacted – – run frequent tests to ensure that their systems do not send advertising materials to those consumers who have unsubscribed – – implement a plan and mechanism to immediately detect and respond to any failure in complying with the Act. In addition, businesses should also note that the Australian Privacy Principles expressly prohibit an organisation from using personal information it holds for direct marketing except for limited circumstances. Accordingly, a business in contravention of the Act may also find the itself in breach of the Privacy Act 1988 (Cth).

WOOLWORTHS FINED OVER $1M FOR CONTRAVENTION OF THE AUSTRALIAN SPAM ACT

If you would like more information about the Act, please contact our specialists at Wrays.

JUDITH MILLER Commercial National Practice Leader

Woolworths, one of the largest supermarket chains in Australia, has been fined $1,003,800 for its repeated breaches (more than 5 million) of the SPAM Act 2003 (Cth) (Act) between October 2018 and July 2019.

BACKGROUND The infringement notice issued by ACMA stated that ACMA had reasonable grounds to believe that Woolworths, in contravention of the Act, had sent a significant number of commercial electronic messages to electronic addresses more than 5 business days after the relevant recipients withdrew their consent. In particular, from 30 May 2020 to 3 June 2020, Woolworths sent 798 such messages, which were purported to offer to supply or advertise or promote goods sold by Woolworths.

JAYDEN LEE Associate

This is the largest fine ever issued by the Australian Communications and Media Authority (ACMA).

Woolworths alleged that these contraventions occurred due to a system failure.

Additionally, in a 3-year court-enforceable undertaking, Woolworths agreed to:

– – appointing an independent consultant to review its systems, processes and procedures, make improvements, and report to ACMA – – conducting training and reporting all non-compliance it identifies to ACMA for the term of the undertaking.

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“ The trade agreement is an active recognition by China that it must step up its enforcement of IP rights to become a trusted world player in the development of pharmaceutical products. ”

THE CHINA-US TRADE AGREEMENT AND ITS IMPACT ON PATENT LAW

China signed Phase I of a multi-part trade agreement with the US on 15 January 2020 ( The Economic and Trade Agreement between the USA and the PRC 1 ). The Intellectual Property aspects are covered in Chapter 1 of the Agreement. As a result, there will be developments in Chinese patent law to bring the enforcement of intellectual property matters closer to those seen in the US legal system. This will impact the ability of Australian companies to gain and protect IP in China, particularly in the area of pharmaceuticals. Of particular interest in the patent law space, is Article 1.10 of the Agreement where China has agreed to the use of supplemental data, developed after the filing date, to address patentability objections, including objections based on sufficiency of disclosure and inventive step. The supplemental data can be used during patent examination proceedings, patent review proceedings, and judicial proceedings. This will assist in the prosecution of patent applications, particularly those where significant developments in the invention were made after the filing date. Article 1.12 of the Agreement introduces the implementation of a patent term extension framework for pharmaceutical patents, where delays in the marketing approval process impact the effective term. These adjustments give up to a five-year extension, with the final patent term limited to 14 years from the date of marketing approval in China. Such extension of term facilities are currently available in jurisdictions such as Australia, the US, Japan and Europe.

The process for resolving patent disputes has also been touched on in Article 1.11. The trade agreement requires China to create an “effective mechanism for early resolution of patent disputes”, but it remains to be seen how China develops and implements such a system. It is in China’s interests to expedite the patent dispute resolution process, as this could encourage more pharmaceutical investment in China. China has also agreed to “effective and expeditious” enforcement actions related to counterfeit pharmaceuticals and to publish information related to the measurable results of its enforcement actions (Article 1.18). The trade agreement is an active recognition by China that it must step up its enforcement of IP rights to become a trusted world player in the development of pharmaceutical products. Many IP users have expressed concerns over working in the Chinese pharmaceutical space; however, the amendments stemming from the trade agreement will go far to reassure investors that the necessary mechanisms are in place to gain and protect their IP.

DR PENNY FARBEY Senior Associate

1 https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/01/15/US-China-Trade-Agreement_1-14-20.pd

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ELECTRONIC EXECUTION OF DOCUMENTS BY COMPANIES IS NOW ALLOWED UNDER THE AUSTRALIAN CORPORATIONS ACT

Taking effect from 6 May 2020, the operation of section 127(1) of the Corporations Act 2001 (Cth) has been modified by the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 to temporarily allow electronic execution of documents by companies for the next 6 months after the effective date. The category of persons who may execute a document on behalf of a company without a seal (and benefit from the statutory assumption that the document has been duly executed by the company) remains unchanged. To recap, a document may be executed: – – by 2 directors of the company – – by a director and a company secretary of the company – – for a proprietary company that has a sole director who is also the sole company secretary, that director. With the recent amendments, however, the definition of ‘document’ has been extended to include a document in electronic form. This would include common document formats such as Microsoft Word documents and PDFs. As a result, a document in electronic form (e.g. a PDF) can be executed by a company without a common seal by each person: – – signing a copy or counterpart of the document that is in a physical form (i.e. a print-out of the PDF) – – using electronic communication which reliably identifies the person and indicates the person’s intention in respect of the contents of the document (e.g. by affixing the person’s signature in the execution block and expressly stating in the document the person’s intention to be bound by the document).

In both cases, the copy, counterpart or electronic communication must include the entire contents of the document, but does not need to include the signature of another person signing. Some of the ways in which a document may now be signed electronically (albeit until the Determination expires) include: – – pasting a copy of a signature into a document – – signing a PDF on a tablet, smartphone or laptop using a stylus or finger – – cloud-based signature platforms like DocuSign. The Determination does not expressly state that it applies to execution of deeds. However, section 127(3) of the Corporations Act states that ‘a company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2)’. Accordingly, as the Determination purports to amend section 127(1), in our view, a deed can also be executed electronically by a company, provided that it is expressed to be executed as a deed in accordance with section 127(1). If you would like more information about the regulation, please contact our specialists.

ADRIAN HUBER Special Counsel

JAYDEN LEE Associate

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For example, as it is possible to define chemical compounds using systematic names, it could be argued that referring to a chemical structure within a claim is not absolutely necessary to define the invention. If such an argument were judicially upheld, it would be necessary to draft claims containing long lists of systematic names, counter to the need for clarity, succinctness and the ability to easily comprehend the scope of the monopoly claimed. Secondly, the new grounds for refusal of post-acceptance amendments, and for invalidity during re-examination, opposition or revocation were given immediate retrospective effect upon any patent or patent application with an examination request date or filing date on or after 15 April 2013, and to any innovation patent granted or certified, or any innovation patent application filed on or after 15 April 2013, on the basis that they should apply to “patents and patent applications that were always required to comply with subsection 40(3A) of the Patents Act”. 9 Thus, in the period intervening between 15 April 2013 and 26 February 2020 there will have ensued a large number of IP rights now subject to grounds for invalidity that were not previously available after the date they were accepted, granted or certified. In pursuing “the objective of increasing certainty in the validity of granted patents” our lawmakers have introduced a considerable degree of uncertainty not only in the validity of IP rights, including granted ones, to which the new provisions apply retrospectively, but also in the interpretation of the rather poorly drafted Section 40(3A) itself. These changes were no doubt made with the best of intentions. However, we intend to monitor the development of their judicial interpretation closely, while refraining from saying anything about the road to Hell.

Whilst it is clearly desirable to align the grounds for assessing the validity of a patent before grant with those available afterwards, ironically, it appears that in addressing the drafting oversight, these new measures have potential consequences that run counter to the objective of increasing certainty in the validity of granted patents. 2 Firstly, we find it almost impossible to imagine a circumstance where cross-references to extrinsic information are absolutely necessary to define the invention. This could lead to the undesirable drafting of claims incorporating enormous passages of the description, large diagrams, or charts, resulting in claims that are many pages in length. Fortunately, Examination practice at IP Australia 3 indicates that the Office considers references to spectra for chemical compositions, drawings for apparatus and Sequence ID numbers for nucleotide and protein sequences to be allowable for the time being. Furthermore, in accordance with established case law, 3,4 the Office allows the use of reference numerals in a claim that refer to features in a drawing, graphic or photograph, provided these are used merely to illustrate features that are otherwise defined generically. Even where a claim recites “as herein defined” , and the reference is to a clearly and specifically defined term in the specification, the Office follows well established jurisprudence 6,7 and invokes the Dictionary Principle, regarding such claims as allowable. 8 Nevertheless, Section 40(3A) plainly states that the claims “must not rely on references to descriptions, drawings, graphics or photographs” , leading to considerable concern that it might be interpreted judicially as prohibiting any claim containing a drawing, graphic or photograph in the context of opposition and revocation proceedings for which this ground is now available. Such an undesirable result would require substantial practice changes and produce considerable uncertainty as to the strength of many existing patent rights.

RIDING THE OMNIBUS ON THE ROAD TO HELL AN UPDATE ON OMNIBUS PATENT CLAIMS IN AUSTRALIA

The Intellectual Property (Productivity Commission Response part 2 and other

Section 40(3A) of the Act states that (emphasis added): “The claim or claims must not rely on references to descriptions, drawings, graphics or photographs unless absolutely necessary to define the invention.” The intent of Section 40(3A), as originally introduced by the Raising the Bar Act 2012 (Raising the Bar Act), was to abolish “omnibus” claims, which are a form of claim that refer to other parts of the patent specification to define the monopoly. However, despite this intention, in a rare moment of candour the Explanatory Memorandum to the Bill stated at [262] that: “… due to drafting oversight the Raising the Bar Act only allowed this requirement to be considered and reported on during examination of standard and innovation patent applications.”

Measures) Bill 2019 (the Bill) received Royal assent on 26 February 2020, resulting in the introduction of amendments to The Patents Act 1990 (Cth), (the Act ), to include cross references to Section 40(3A) with the effect that Section 40(3A) is now available as a ground for refusal of amendments after acceptance or grant, and as a ground for invalidity during re-examination, opposition or revocation proceedings.

DR DANIEL BECK Attorney

3 http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm at Chapter 2.23.9.5A 4 Rodi and Wienenbergen A.G. v Henry Showell Ltd. (1969) RPC 367 at page 378 5 Philips Electronic and Associated Industries Ltd Patent (1987) RPC 244

6 British Thomson-Houston Company Ld. v Corona Lamp Works Ld. (1922) 39 RPC49 at page 67 7 Minerals Separation North America Corporation v Noranda Mines Ltd. (1952) 69 RPC 81 at page 93 8 Vide supra – Reference 2 9 Explanatory Memorandum to the Intellectual Property (Productivity Commission Response part 2 and other Measures) Bill 2019, at [267]-[268]

2 Explanatory Memorandum to the Intellectual Property (Productivity Commission Response part 2 and other Measures) Bill 2019, at [268]

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