IP SPOTLIGHT MAY 11

IP SPOTLIGHT NEWS FROM AUSTRALIA

11 May 2020

STRONG LINK BETWEEN IP RIGHTS AND BUSINESS PROFITABILITY

IP Australia has recently published the results of its first longitudinal research project on the impact of IP rights on Australian business profitability as part of its annual 8th edition of the Australian Intellectual Property Report 2020. The report can be found here . It is no surprise to Wrays that the study finds that ownership of

Longitudinal Research Data (IPLORD) with the Business Longitudinal Analysis Data Environment (BLADE). BLADE is a comprehensive database sourced from the Australian Taxation Office (ATO), the ABS and other government agencies, integrating administrative, tax and IP records at the individual firm level. While we tend to think of start-up companies as being the engine of innovation in Australia, the study finds that, on average, it is older, more established businesses with larger numbers of employees who are more likely to actively engage with Australia’s IP system and obtain IP rights. The highest percentage of businesses holding IP rights are in the Wholesale Trade, Manufacturing and Information Media and Telecommunications industries.

Until now, the economic impact of holding patent, trade mark and design rights on Australian firms and industries has been limited by a lack of available information about how these rights were used. The study provides several insights into the types of Australian firms that utilise the IP system, the industry sectors in which IP rights are most concentrated, and the impact on business profitability, measured in terms of profit per invested capital and profit per employee. The longitudinal study was commissioned by the Office of the Chief Economist (OCE) at IP Australia in collaboration with the Australian Bureau of Statistics (ABS). The dataset on which the study is based extends over a 15 year period from the beginning of FY01/02 to FY15/16 and is the result of an integration of IP Australia’s Intellectual Property

patents, trade marks and designs is strongly and positively associated with profitability.

WITNESSING DOCUMENTS VIA AUDIO VIDEO LINK IS NOW ALLOWED IN NSW DURING COVID-19

Taking effect from 22 April 2020, the Electronic Transactions Regulation 2017 (NSW) has been amended to include new provisions (i.e. Schedule 1 Response to COVID-19 pandemic) relating to witnessing and attestation of

This would include some of the frequently used video conferencing applications such as Skype and Zoom. The types of documents to which the new regime applies include: – – a will; – – a power of attorney or an enduring power of attorney; – – a deed or agreement; – – an enduring guardianship appointment; – – an affidavit, including an annexure or exhibit to the affidavit; and – – a statutory declaration. Where an audio video link is used for witnessing, the person witnessing must: – – observe the person signing the document sign the document in real time, – – attest or otherwise confirm the signature was witnessed by signing the document or a copy of the document, – – be reasonably satisfied the document the witness signs is the same document, or a copy of the document signed by the signatory; and – – endorse the document, or the copy of the document, with a statement:

(i) specifying the method used to witness the signature of the signatory, and (ii) that the document was witnessed in accordance with the regulation. The witness may sign a counterpart of the document, or a signed and scanned copy of the document sent by the signatory, as soon as practicable after witnessing the signature. In addition, the wording of the required endorsement may be to the effect of: the document was signed in counterpart and witnessed over audio visual link in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017. If you would like more information about the regulation, please contact our specialists.

According to the study, simply holding one type of IP right is no guarantee for increasing business profitability. The study shows that there is no marked effect on business profitability if the business only owns a registered trade mark. In a world where brands are often the most valuable asset of a company (think NIKE, Uber and Coca Cola), this finding seemed counterintuitive and surprised me the most. Interestingly, however, firms that only own registered designs appear to have the highest profit ratio over invested capital on average, at 10.2%. Looks obviously count! The fashion industry has certainly been taking advantage of the registered design system – Australian-based fashion house Zimmerman Wear and Magi Enterprises (better known to fashionistas as KOOKAÏ Australia) were ranked first and second amongst Australian design applicants in 2019, in good company with Louis Vuitton and Cartier who were amongst the top five foreign design applicants. Generally, in comparison with businesses who do not own any IP rights, business profitability is markedly higher for businesses who own a combination of IP rights, such as patents and designs, or patents and trade marks, and especially a combination of patents, trade marks and designs. Unfortunately, the report does not name these successful businesses. But based on these findings, the ownership of a range of IP rights as a marker for a profitable business is obviously a desirable attribute for any Australian company, when looking to attract investment and partnerships.

In most cases, the positive link between business profitability and ownership of a combination of IP rights would seem to suggest that these businesses have a commercialisation plan that marries protection of technological innovations (patents) with marketing (trade marks) and product aesthetics (design). The positive link between profitability and ownership of a range of IP rights reinforces our long held view that IP rights are an essential commercial tool to enable businesses to optimise the value of their technological innovation. Wrays IP professionals, including patent and trade mark attorneys, IP lawyers and corporate advisory specialists are well-placed to deliver end-to-end solutions for our Australian, New Zealand and international clients at any point along their innovation cycle.

documents during the COVID-19 pandemic.

The new regime allows:

– – witnessing of a signature by audio visual link; and – – performing arrangements in relation to witnessing and attestation of documents (e.g. confirming the identity of the signatory, or swearing or affirming the contents of an affidavit) by audio visual link. For the purpose of the new Schedule, ‘audio video link’ means: technology that enables continuous and contemporaneous audio and visual communication between persons at different places, including video conferencing.

MARY TURONEK Principal

JUDITH MILLER Commercial National Practice Leader

JAYDEN LEE Associate

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It is with no doubt that we expect innovator companies to advocate for option 2, citing reasons of earlier transparency being in the interest of the public good, whereas generic and biosimilar manufacturers will advocate for option 1, citing the need to protect proprietary confidential information. Regardless of which option is adopted by the TGA, these reforms will change the landscape and the starting point for pharmaceutical patent disputes. The reforms will bring the TGA system closer to those adopted by Health Canada, the European Medicines Agency and Medsafe New Zealand which already have greater transparency. Earlier notification will allow innovator companies time to seek assurances from the generic sponsor and if an assurance is not provided, time to seek further information on the generic’s potential infringement by way of a discovery action. The TGA has requested feedback on these two options by 9 June 2020 and it is understood that this new notice scheme will be implemented in early 2021. It is unclear whether these new measures will apply retrospectively to

and seek an urgent interlocutory injunction to prevent the launch and listing on the Pharmaceutical Benefits Scheme (PBS), which results in a price drop of 25% in the subsidized price of the innovator’s product. THE PROPOSED REFORMS The TGA is entertaining proposed changes to provide much earlier notification to innovators that a competitor is seeking registration of a generic or biosimilar product which references the data of the innovator’s product. The changes will reduce the degree of discretion currently with sponsors of generic or biosimilar products in determining whether a relevant valid patent exists, and if so, whether the product would infringe the patent. THE TGA I S CONS I DER I NG TWO OPT IONS . Option 1 – Provide early notification to the innovator of a generic or biosimilar application, regardless of whether or not the applicant believes that marketing of its generic product would infringe one or more relevant patents. However, Option 1 still gives the applicant some degree of discretion as to whether a relevant patent exists and we question whether option 1 goes far enough in achieving the government’s objective of bringing in more transparency into the process. Option 2 seeks to remove that discretion. Option 2 – Early notification for all generic and biosimilar applications regardless of the applicant’s belief as to the existence of any relevant patent(s) and even if the applicant considers that no valid patent claim would be infringed by the marketing of its product.

The reforms were published in February 2019 in the consultation paper 1 . A total of 39 submissions received from government, industry and interest groups were published by the TGA in April 2020. The Federal Government approved the implementation of measures to enhance transparency for prescription medicines on 8 April 2020. The TGA is now seeking feedback on options for implementing the proposed Prescription medicines transparency measures by 9 June 2020. THE CURRENT PROCESS I N AUSTRAL I A The TGA does not disclose information about the submission or acceptance of an application for evaluation of a prescription medicine. The information is only disclosed publicly after the medicine has been listed on the Australian Register of Therapeutic Goods (ARTG). It is usually only upon listing on the ARTG that an innovator company will be made aware of the planned launch of a competitor’s generic or biosimilar. If a sponsor for a generic or biosimilar seeks to rely on safety or efficacy data for a reference, it must certify under section 26B of the Therapeutic Goods Act 1989 that it either believes on reasonable grounds that its product will not infringe a valid claim of a relevant patent or it has notified the patentee. Given this large degree of discretion, in practice this means sponsors seeking marketing approval for a generic or biosimilar, do not notify the innovator of their application. This leaves little time for the innovator to act once it is aware of a generic’s approval on the ARTG The paper can be found here .

TGA UPDATE

Proposed changes to enhance transparency of the evaluation of prescription medicines in Australia

approval applications filed before implementation of this scheme.

CRAIG HUMPHRIS Principal

This paper considers the proposed reforms to generic and biosimilar medicine applications and potential effect on pharmaceutical patent litigation in Australia. The reforms relate to greater transparency of information pertaining to medicines under evaluation by the Therapeutic Goods Administration (TGA).

1 Consultation: Whether the TGA should publish that a prescription medicine is under evaluation, TGA, February 2019.

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MINERAL PROCESSING PATENTS Both a cautionary and reassuring tale

The problem for the growing nickel reliant industries, such as stainless steel production, was (and still is) the fact that nickel sulfide reserves are declining. The consequent increase in the nickel price made laterite nickel an interesting proposition despite the technical difficulties. NECESS I TY I S THE MOTHER OF I NVENT ION I S I T NOT? Such conditions were fertile ground for entrepreneurs and for technical people keen to solve the myriad of problems presented by nickel laterite ores. The 1990s and early 2000s saw a slew of patent applications being filed directed to nickel laterite flow sheets, or to specific aspects of those flowsheets. The basic technology employed by each of the Bulong, Cawse and Murrin Murrin projects was a high pressure, high temperature concentrated sulfuric acid leach (HPAL) of a ground laterite ore, after which efforts were made to recover the valuable metals (typically nickel and cobalt) extracted from the ore. The technology had been developed originally by Sherritt Gordon Mines Ltd (as they were at the time) and has been used in respect of nickel ores at Moa Bay in Cuba since the 1950s. However, each of the local players gave their own spin to the process in an effort to increase efficiencies and to deal with the specific circumstances in Western Australia and the specific nature of our ores. The original patent applications filed by the Western Australian operators were directed to aspects of the technology that included: – – Solvent extraction techniques to recover largely pure nickel and cobalt streams from the HPAL liquor; – – Selective precipitation of nickel and cobalt, utilising magnesium oxide; and – – The precipitation of a mixed metal hydroxide intermediate product with subsequent re-leaching as a means of removing impurities. WHAT ’S THE POI NT OF A PATENT? Patenting a technique or process can provide a significant boost for a young mining company that is trying to stand out from the crowd, that is trying to create a sustainable competitive advantage, and ultimately seeking to attract investment and build value.

I like to look at patents as an insurance policy over all the R&D time, effort and money expended to create something and build your business. Of course, patents are ultimately a right to exclude others from what you have patented. If that is a new, and technically, environmentally and/or economically attractive mineral processing route or technique that only you, or your licensee can benefit from, that’s a good thing. BUT D I DN ’ T WESTERN AUSTRAL I A’S N I CKEL LATER I TE PLAYS FA I L? Some did fail (in their original incarnations, for their original owners), but not all. Anaconda Nickel’s Murrin Murrin project is still running today despite some early and well known technical challenges. Anaconda changed their name to Minara Resources and is now one of Australia’s largest nickel and cobalt producers (being presently wholly owned by Glencore). And whilst a patent can definitely provide each of the above advantages, if the underlying resource continues to confound those trying to extract value, and the economics don’t (or maybe never did) add up, then even a rock-solid patent won’t necessarily save the project. For example, it’s well known that at Bulong they discovered only at the final plant stage after months of operation that the volume of concentrated sulfuric acid required was even greater than initially anticipated (and that could be sourced locally from WMC) and it became necessary to import it. Rather than being the be-all and end-all, your intellectual property strategy needs to be just one part of, and be perfectly aligned with, a mining business’ overall strategy. It is worthwhile noting that even those projects that were ultimately unsuccessful often resulted in the patents and associated know-how being sold off – realising at least some value for the original owners and allowing the technology to live another life elsewhere.

One thing that continues to surprise me is that I’m often asked by those I meet at networking functions whether mineral processing flowsheets, and the technologies employed in them, are patentable. The short answer is, of course, Yes! I began my career as a patent and trade mark attorney in 1989 upon leaving university. By the early-1990s I was registered and was lucky enough to begin to specialise in chemistry, process engineering and mineral processing patents. In 1997 I became responsible for Wrays’ chemical patents group. This timing, and the fact that I was based in Perth, Western Australia, ensured that I was right amongst a flurry of mineral processing flowsheet/technology developments.

N I CKEL LATER I TES – THE NEXT B IG TH I NG? The developments I’m referring to were born of Australia’s three big nickel laterite plays of the 90s, being Bulong (Resolute Resources), Cawse (Centaur Mining) and Murrin Murrin (Minara Resources Limited). Each project came with their own high profile entrepreneur, amongst them ‘Diamond’ Joe Gutnick at Centaur and Andrew Forrest, in an early, slightly less successful incarnation, at Minara (or Anaconda as they were at the time). Nickel laterites are nickel oxide ores, and are (and have been historically) notoriously difficult to process. This is particularly so when compared with the more commonly relied upon nickel sulfide ores. Nickel laterite nickel grades are typically low, often around 1%, and in Western Australia they come with fine clays that generally make processing the ores difficult, clogging up autoclaves and heaps.

PETER CAPORN Principal

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About Wrays

Wrays is one of the largest independent IP specialist firms in Australia – bringing together the right combination of experts to protect, grow and defend our client’s intellectual property assets locally and globally for 100 years.

And when you combine our passion for achieving the best result with our broad capability across the IP spectrum, it’s our clients who enjoy the benefits. In day-to-day reality, this means bringing the right people in the room every time and working together across disciplines to deliver what’s needed.

It doesn’t stop there. Through our extensive local and global networks, we can connect clients with like-minded experts who deliver supporting services, such as private equity, tax advisors, corporate and employment law, as well as IP specialists around the world servicing other jurisdictions. wrays.com.au

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