IP Spotlight September 15

The overall Index rank of the top ten countries is largely dominated by the US and Europe. However, this year, together with Singapore at #8 (second year in a row), the Republic of Korea made it into the Index at #10 (up from #11), which means two Asian countries now make up the top 10. Australia came in at #23 (up from #24) and New Zealand at #26. Hong Kong came in at #11 (up from #13), China #14 (second year in a row), Japan at #16 (down from 15#), Malaysia at #33, Vietnam at #42, Thailand at #44, India at #48, and the Philippines at #50. The ongoing rise of Asian economies in this innovation index highlights the importance of securing IP rights in this region. The index is a result of a collaboration between Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO). The full Index can be found here.

GLOBAL I NNOVAT ION I NDEX 2020 TOP 30

Country / Economy

Overall GII rank

Switzerland

1 2 3 4 5 6 7 8 9

Sweden

United States of America

United Kingdom

Netherlands

Denmark

Finland

Singapore Germany

THE GLOBAL INNOVATION INDEX 2020 DEMONSTRATES THE CONTINUED RISE OF ASIAN ECONOMIES IN THE INNOVATION SPHERE

Republic of Korea Hong Kong, China

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

France Israel China Ireland Japan Canada Austria Norway Iceland Belgium Australia

Luxembourg

Czech Republic

Estonia

New Zealand

Malta

Italy

Cyprus

Spain

CRAIG HUMPHRIS Principal

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The ACCC recently chalked up another victory as part of a recent spate of enforcement efforts targeted at online businesses in the wake of its Digital Platform Inquiry which concluded last year. The overarching lesson here is quite simple. If you are not transparent in your dealings with consumers (and this includes telling them some of the facts but not all of them), whether intentionally or not, then you may be engaging in misleading or deceptive conduct in breach of the Australian Consumer Law. In this recent case, HealthEngine’s misleading conduct and business practices cost it $2.9 million in penalties. As the ACCC’s chairman, Rod Sims put it: These penalties and other orders should serve as an important reminder to all businesses that if they are not upfront with how they will use consumers’ data, they risk breaching the Australian Consumer Law. BACKGROUND HealthEngine operates a website that allows users to search and book medical and health-related appointments with health practices that choose to participate. The ACCC began investigating complaints regarding HealthEngine’s practices on its website in July 2018, and matters came to a head in August 2019 when it launched Federal Court proceedings based broadly on the following allegations: – – HealthEngine had manipulated the user reviews it published in several ways – – it had mispresented to consumers why it did not publish a rating for some health practices – – it misled consumers into thinking that their personal information would stay with HealthEngine, but in fact, consumers’ non-clinical information was being sent to insurance brokers. HealthEngine admitted certain contraventions of the Australian Consumer Law and cooperated with the ACCC investigation.

SO WHAT D I D HEALTHENG I NE DO WRONG? The relevant conduct relates to HealthEngine’s activities between April 2014 and June 2018. HealthEngine’s impugned conduct relates to three different aspects of its website; user reviews, practice ratings and referrals to insurance brokers. USER REV I EWS HealthEngine sent a follow-up survey to users who had booked appointments through the platform, to determine whether they would recommend the relevant health practice to others. – – did not publish negative reviews it received (including disregarding reviews where the user indicated that they would not recommend the health practice to others) – – effectively “sanitised” other reviews by editing the feedback to remove negative comments, changing the meaning of others and/or embellishing them – – sent users who had submitted a review an email with a link to their published review and a note explaining that it may have been modified, with no further explanation. The ACCC’s obvious concern here was that this practice created an inaccurate impression of consumers’ experiences at the various health practices on HealthEngine, and that other consumers may have relied on these manipulated reviews when making their own appointments through the platform. HEALTH PRACT I CE RAT I NGS HealthEngine also used the information from the survey above to calculate and publish ratings for health practices. If 80% or more of users answered that they would recommend the practice to others, then HealthEngine published a rating for that practice. For practices that did not reach the 80% threshold, HealthEngine either indicated that there was no rating or that there was insufficient data to calculate one. Clearly HealthEngine had the data to publish a rating but chose not to do so where the 80% threshold had not been met. The ACCC’s concern here was that, again, the conduct was likely to create a more positive impression of the health practices on HealthEngine’s website. In processing these user reviews, HealthEngine:

IS YOUR ONLINE PLATFORM TRANSPARENT ENOUGH? Three lessons learned from the HealthEngine Case

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REFERRALS TO I NSURANCE BROKERS HealthEngine made commissions from referring its users to a network of private health insurance brokers. As part of earning its commission, it would send brokers personal (but non- clinical) information (including name, date of birth, contact details, and type of health practice visited) to allow their brokers to make direct contact with the user. The process was voluntary, in the sense that personal information was only provided to brokers where a user ticked a box agreeing to be contacted about health insurance. That said, HealthEngine’s explanation on its website did not make it adequately clear that: – – a third party insurance broker (rather than HealthEngine) would provide the relevant services to users – – the user’s personal information would be sent to a third party insurance broker. OUTCOME HealthEngine cooperated with the ACCC’s investigation and admitted certain contraventions of the Australian Consumer Law. The parties reached agreement as to the orders they considered the court should make and, after considering the parties’ joint submissions, the court made the orders proposed by the parties. The financial penalties took into account the period over which the conduct occurred, whether financial loss was suffered by consumers, HealthEngine’s financial gain resulting from the conduct, whether HealthEngine had intended to mislead consumers, and its recent revenue figures. HealthEngine’s largest penalty related to the insurance broker referrals. This conduct attracted a penalty of $1.4 million, suggesting that the ACCC is seeking to deter other businesses who are less than transparent about how they handle their users’ personal information. The penalty for manipulating user reviews was agreed at $1.2 million and the penalty for publishing misleading health practice ratings was $300,000.

HOW WE CAN HELP We routinely advise businesses that operate online platforms on their compliance obligations under the Australian Consumer Law. If you have any questions specific to your business and its activities, please don’t hesitate to give one of our team a call.

In addition to these heavy financial penalties, HealthEngine also agreed (and was ordered) to:

– – arrange for an annual independent review of its compliance program to be undertaken for 3 years – – contact users whose personal information was provided to insurance brokers to explain the situation and provide them an opportunity to request the relevant broker delete their information. The Court also ordered HealthEngine to contribute $50,000 towards the ACCC’s costs (in addition to absorbing its own costs). LESSONS In some ways, the compliance risks for online platforms are greater than traditional “brick and mortar” businesses. The way you conduct your business is out there for everyone to see, including the ACCC. – – be clear and transparent in their explanations and policies (including privacy policies) about how their customers’ personal information will be collected and handled, and to whom it will be disclosed – – avoid implementing practices and building algorithms and other mechanisms (such as the ratings system used by HealthEngine) that distort the truth or only tell part of the story – – be honest and open in their dealings with customers generally. This recent case highlights the importance for business who provide online platforms to:

ADRIAN HUBER Special Counsel

ALEX CHUBB Special Counsel

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Depending on what material is missing, filing a declaration from a suitable person skilled in the relevant art may go some way to having the missing material allowed into the complete specification. For example, if one or more pages of the drawings are missing, a declaration filed by a suitable person skilled in the art attesting that, based on their reading of just the part of the complete specification that was filed, they would conceive of the drawings desired to be added, that may be acceptable and any request to amend the specification to add the drawings allowed. Whilst this could be a less expensive approach, depending on the time required in locating such a suitable PSA, and one likely to be successful, there may be a question regarding the legitimacy of the resulting declaration, if the drawings contain details not present in the description. The missing material could be included in the specification of a divisional patent application filed from the application. There is a risk in such an approach, however, in that any claims incorporating matter disclosed only in the missing material (and not already in the complete specification) would be provided with the date of filing of the divisional patent application. The priority date of the claims of such an application should not be affected by the inclusion of the missing material provided they continue to be based on the material that was already in the specification. The final option, and likely the best if available, is to rely on an “incorporation by reference” statement. If this is not already your practice, then we suggest you adopt such a measure. When preparing the complete specification, we recommend including a paragraph along the lines of: “The present application claims priority from [relevant jurisdiction] Patent Application No. [number], the contents of which are incorporated herein by reference in their entirety.” If the material missing from the complete application was included in the priority application, then you may be able to rely on such a statement to have the complete specification amended to include it, as it was already referenced. So, there are options to help you resolve such a nightmarish scenario should it arise, depending, as always, on the particular circumstances of the case.

A well drafted priority specification will, as a rule, include a description of the invention, a set of claims outlining the scope of patent protection being sought, and a set of drawings. Although it is rare, on occasion not all of these things will find their way into the complete specification. There will be page(s) of missing material, which can be a problem. In this regard, in Australia at least and amongst other things, a complete patent specification is required to disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art, disclose the best method known to the applicant of performing the invention, and - where it relates to an application for a standard patent - end with claims defining the invention. It can be difficult to satisfy these requirements if one or more pages of the complete specification, which was intended to be there, is/are not actually filed with the application. Although this is a nightmarish scenario, in Australia at least there are some options that may be available to potentially remedy the situation and get the missing material added into the complete specification. These include, requesting an extension of time to file what is missing, filing a declaration from a suitable person skilled in the relevant art, filing a divisional patent application, and seeking to have what is missing included by reference. Provided that the failure to include the missing material in the complete specification was not intentional, then depending on the circumstances of the failure it may be possible to obtain an extension of time do so, and add the material to the complete specification of the application. In this regard, IP Australia may grant an extension of time for doing a relevant act, such as including the missing material, if the failure to do that act within the required time was because of an error or omission by the person concerned or by his or her agent or attorney, or circumstances beyond the control of the person concerned. When requesting the extension of time, late fees are required to be paid, and a declaration (by a person having knowledge of the pertinent events) outlining the reason(s) the act was not done needs to be filed. There is no guarantee that the requested extension of time will be allowed, making this a potentially uncertain, complicated, and expensive path to follow.

OOPS! WHAT HAPPENED TO PAGES X AND Y? Lessons for patent drafting

One recurring nightmare (of which there are many) that keeps patent attorneys awake at night, is that of filing a patent specification with pages missing. This is a particular concern at the complete filing stage of the patenting process, where a complete patent specification is prepared, typically based on a priority specification, and which hopefully includes all the good things in the priority specification relating to the invention, plus some additional things that may be appropriate to include as well.

CHRIS JUHASZ Principal

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I S AN ADVERT I SEMENT PR IOR TO THE PR IOR I TY DATE A SECRET USE OF AN I NVENT ION? In Australia, an invention may only be granted a patent if, at the priority of the patent application, the invention is novel and possesses an inventive step over the disclosure of the prior art. As is well known, a public use or disclosure by the applicant or inventor of the invention prior to the filing of the patent application will cause the invention to be not novel and therefore, not entitled to be granted a patent. Such use of the invention prior to filing the patent application also includes the concept of secret use, where the use of invention is conducted secretly by the applicant. Such use of the invention in secret may result in a longer monopoly than the statutory 20 year period provided by patent laws, since the applicant may enjoy a period of de facto monopoly through the secret use before the priority date. This is seen as a breaking of the patent bargain where the applicant is granted a monopoly right in the invention, in return for meeting the corresponding obligation of the public disclosure of the invention. However, the question of whether advertising an invention for sale prior to the priority date of a patent application has not, until now, been addressed in Australia. The Australian Federal Court decision of Southern Cross Mining Services Pty Ltd v Mickala Mining Maintenance Pty Ltd [2020] FCA 1064 (27 July 2020) addressed such a question.

As a result, the patentee is said to have enjoyed a period, before the filing of the patent application, during which it has derived a commercial benefit of placing an advertisement for the sale of products with the object of bringing about a sale of products embodying the invention as claimed without disclosing the essential integers of the claims for the invention. Thus, the patentee was provided with a de facto extension of the patent term by securing private advantage without the corresponding public disclosure as the price of the grant of the monopoly [emphasis in original]. Although it was not explicitly argued by Mickala, the main contention appeared to be that, by not identifying all the essential features of the invention in the advertisement, that SCM engaged in concealment of those essential features, thus enlivening the “secret use” provision available under section 18(1A)(d) of the Patents Act 1990 that

Southern Cross Mining Services Pty Ltd (SCM) filed and was granted Australian innovation patent No. 2013100095 for a low voltage LED “Lighting Tower”. The patent application claims an earliest priority date of 30 January 2013 and was certified on 28 March 2014. SCM commenced patent infringement action against Mickala Mining Maintenance Pty Ltd (Mickala). In response, Mickala file proceedings against SCM for revocation of the patent. In an application to amend their grounds for pleading for revocation of the patent, Mickala has sought to test the bounds of secret use in Australia against the patent. In their application, Mickala identified an advertisement by SCM published in a trade journal on 8 January 2012 (more than 12 months prior to the priority date of the patent) and argued that the advertisement listed by SCM amounted advertisement was to bring about a sale of one or more lighting towers made in accordance with the alleged invention. The advertisement was argued by Mickala to embody all the essential features of the invention (even though these were not disclosed in the advertisement) merely by touting the virtues of the lighting tower in the advertisement, at 64-65: The pleaded facts are that Southern Cross secretly used the pleaded invention by causing the advertisement to appear in the AMSJ on or before 8 January 2012 and the object of so placing the advertisement was to bring about a sale of products (one or more lighting towers) made in accordance with the pleaded invention (that is, embodying the essential integers). to secret use of the invention in Australia since the object of the

the invention is not a patentable invention and the patent must be revoked.

BRINGING SECRET USE INTO THE L IGHT Secret use in Australian patent law

HOW I S SECRET USE DEF I NED

The relevant “use” engaging the statutory conception of “not secretly used” in section 18(1A)(d) is understood as taking a step from which it can be concluded that the patentee has, before the priority date, “reaped commercial benefit from what was done before the priority date”.

The following article considers a recent Australian Federal Court decision concerning secret use as a ground of patent revocation in Australia.

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Therefore, in summary, when submitting arguments that a patent is susceptible to revocation by virtue of being secretly used prior to the priority date, it is essential to: – – identify that the actual commercial benefit obtained by the patentee rises to the level of an extension of the patent monopoly – – that the prior use was use of the invention “as claimed”, taking all the essential features of the claims – – establish that the prior use of the invention was kept secret by deliberate concealment of the use by the patentee. Prior secret use of an invention is neatly Beecham Group Ltd [1974] AC 646] of this matter, discussed by Greenwood J here at [70] & affirmed at [83], being where the inventor has reaped a commercial benefit from a de facto monopoly owing to his or her concealment of the essential features of the invention … “Concealment gives rise to the de facto monopoly which enables the commercial benefit to be extracted or reaped : Greenwood J at [83]. Please contact Wrays should you have any questions regarding the operation of secret use as a ground of patent revocation in Australia. summed up by Lord Diplock’s discussion in [ Bristol‑Myers Co v

However, Mickala did not present that argument in their pleadings or oral submissions and, also, did not make any pleadings as the commercial benefit obtained by SCM from the advertisement prior to the priority date of the patent. WAS THERE PR IOR SECRET USE? Without any arguments being presented by Mickala of the actual commercial benefit obtained by SCM from the advertisement, nor any submissions that withholding the details of the essential features of the invention from the advertisement equated to deliberate concealment by SCM, Mickala’s pleadings as to prior secret use of the invention by virtue of the advertisement were ultimately rejected and the application to amend the revocation pleadings were refused. Greenwood J left open the possibility for Mickala to revert to the court with revised pleadings directed to Greenwood J’s observations in the judgement including that “using an invention as claimed, before the priority date, so as to obtain or extract a commercial benefit from the exercise of a de facto monopoly (as those concepts are understood according to the authorities), might be capable of being pleaded where a step was taken engaging a public act, but

“ In Australia, an invention may only be granted a patent if, at the priority of the patent application, the invention is novel and possesses an inventive step over the disclosure of the prior art. ”

SCM also mused that, as affirmed by Azuko, since making a patented article prior to the priority date was not an extension of the patent term, it was difficult to see how placing an advertisement in relation to the invention could be regarded as having “secretly used” the invention. In reply, Mickala argued that, to the extent SCM has not disclosed such integers (or others) of the claims, then SCM has kept aspects of the invention “secret” within the understanding of the term “secretly used” in s ection18(1A)(d) in the patent area before the priority date in relation to innovation patents, and therefore the patent ought to be revoked. COMMERCI AL BENEF I T? Greenwood J discusses at [114] that the commercial benefit which could possibly be obtained by SCM was that sales would be able to be made after the priority date (it was not suggested that SCM made sales before the priority date) sooner than it would have made those sales, had the advertisements been placed on or after the priority date.

patentee’s deliberate concealment of the essential features of the invention – – The concealment must be an act of deliberate concealment. Therefore, to seek revocation of a patent, it must be precisely particularised in the pleadings as to the commercial benefit obtained by the patentee by using the invention in secret prior to the filing date of the patent application. In the present application, Mickala argued that the placement of the advertisement, coupled with the stated object of bringing about sales, was in fact the equivalent of a sale (despite that no actual sales were alleged to have been made) prior to the priority date and thus constituted secret use of the invention. SCM’s position in response to the advertisement is understood to be that the advertisement does not disclose “all the inner workings of the machine” such as whether the alternator of the Lighting Tower is a low voltage alternator; whether the low voltage alternator has a voltage output of less than 50V; whether such an alternator is connected directly to a shaft of the engine; and other such matters.

Prior discussion of secret use by Gyles J in Azuko Pty Ltd v Old Digger Pty Ltd [2001] FCA 1079; (2001) 52 IPR 75 has established that making and stockpiling a patented invention prior to the priority date of the patent, does not constitute secret use of the invention since it does not amount to any de facto extension of the patent term. This decision by Greenwood J re- examines the nature of the term “secret” in “secret use” and affirms that the term “secretly used” means deliberately concealed which is consistent with the dominant understanding of the term “secret” and the derivative adverb “secretly”. Therefore, to succeed in revocation of a patent on the grounds that it is not a patentable invention by virtue of the patentee secretly using the invention prior to the priority date, each of the following must be satisfied: patentee has derived a commercial benefit by doing something with the invention that produces the benefit – – The use must be use of the invention “as claimed”, taking all the essential features of the claims – – The commercial benefit gained must – – There must be a use of the innovation in the sense that the

where concealment of essential features from that public act also occurred”.

PHIL BURNS Senior Associate

be an exercise of a de facto monopoly arising out of the

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About Wrays

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