"Beefing" up your patent application - amendments through the courts

What you need to know

• In any appeal from a decision of the Commissioner of Patents regarding the validity of a patent application, the Federal Court can make an interim decision which provides the applicant with an opportunity to overcome the Court's validity findings through amendments.
• Provided that the Court does not make final orders, the Court will have jurisdiction to hear any subsequent amendment application.
• The Court's power to allow an amendment is discretionary. In exercising its discretion, the Court will consider a variety of factors including, risk of potential difficulties, delay, the absence of full and frank disclosure, and the applicant's conduct.

What you need to do

• In any appeal of opposition proceedings to the Federal Court, an applicant should ask the Court not to issue a final decision on validity in the first instance. Rather, the applicant should request some time to consider the reasons and apply to the Court to make any necessary amendments.
• Applicants will then be able to apply to the same Judge to amend the patent application. This enables the amendment application to be dealt with in a cost and time effective manner.
• In exercising its discretion to allow an amendment, the Court will consider any findings of invalidity by international bodies and amendments made to respond to those findings. However, those findings will only be applicable for delay purposes where the finding made by the international body is relevant to the equivalent ground under Australian patent law.
• An applicant applying to amend a patent application must be sure to provide full and frank disclosure in doing so.

Background 

On 1 June 2010, two US corporations Cargill Inc and Branhaven LLC (collectively, Branhaven) co-applied to patent a method of using DNA analysis to identify commercially favourable traits in cattle (Application).

Meat and Livestock Australia Limited and Dairy Australia Limited (collectively, MLA) opposed the Application before the Commissioner of Patents. The opposition was largely unsuccessful and MLA appealed to the Federal Court.

In a decision dated 9 February 2018 (First Decision), Justice Beach rejected most of MLA's grounds of appeal but did conclude that some claims lacked clarity, definition and utility. However, Justice Beach did not make any final orders and indicated that, if appropriate amendments were made, his concerns would fall away. 

Branhaven subsequently applied to amend the Application and MLA opposed the amendments. Given the novel legal issues involved in the proceedings, the Court invited the Commissioner of Patents to appear and the Commissioner did so.

Challenge to court's jurisdiction on amendment

At the outset, MLA submitted that Justice Beach lacked the jurisdiction or power to entertain the amendment application because the appeal had already been finally determined in his Honour's First Decision.

His Honour rejected this argument. Justice Beach made clear that the First Decision did not involve a final decision or determination as his reasons expressly stated that the question of amendments remained open. Therefore, MLA's claims that his Honour's power had been exhausted was an incorrect characterisation of his Honour's First Decision.

His Honour further clarified that, in exercising its powers, the Court is carrying out the same task as the Commissioner. Since it is a long-standing practice that the Commissioner will not refuse an application where the objections raised can be cured by amendment, the Court should proceed on the same basis.

This is consistent with section 105(1A) of the Patents Act 1990 (Cth) which empowers the Court to order amendments to a patent application on application from the patentee. His Honour noted that the section does not define a specific time in which the amendment application must be made. Thus, Branhaven was entitled to apply to the Court, and the Court was entitled to deal with the amendment, during the course of the appeal proceedings (which his Honour had already stated were not closed).

On this basis, his Honour firmly rejected MLA's claims that he did not have the jurisdiction to issue judgment on the amendment application.

The amendments were allowable under section 102

MLA also submitted that the proposed amendments were not 'allowable' under section 102 of the Patents Act. Since the Application was filed before the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), Justice Beach considered the substance disclosed test and assessed the validity of the amended claims before rejecting MLA's arguments on this point.

Discretionary factors (section 105(1A))

Justice Beach concluded that, irrespective of whether amendments are allowable, the Court nevertheless retains a broad discretion to refuse those amendments. In exercising this discretion, there are a variety of factors the Court will take into account. These include knowledge of risk of potential difficulties, delay, absence of full and frank disclosure and the applicant's conduct (for example, seeking to take unfair advantage of an application expected to require amendment).

MLA argued that Branhaven had been prosecuting equivalent applications internationally and in those foreign proceedings, lack of clarity and utility objections had been made. Therefore, Branhaven was on notice that its Australian Application required amendment but it had delayed in seeking that amendment until after the First Decision.

While foreign examiners had raised clarity and utility objections, the equivalent patent application in other jurisdictions had proceeded to grant with broader claims. Having considered the history in each foreign proceedings, Justice Beach stated:

His Honour also held that the relevant lens of inquiry was the extent to which the outcome of the foreign proceedings informed Branhaven of a potential invalidity risk under Australian law. In this case, Justice Beach found that the foreign objections provided little insight into how Branhaven could have amended its Australian application.

MLA also argued that Branhaven had failed to provide full and frank disclosure. In particular, Branhaven did not disclose all relevant matters in its evidence in support of the amendments and opposed MLA's applications for discovery of relevant documents. However, Branhaven was ultimately compelled to discover documents and waived privilege in some further materials, Branhaven had also provided extensive material in annexures (even if it was not expressly addressed in the affidavit). Therefore, his Honour concluded that Branhaven had cumulatively provided full and frank disclosure.

Finally, MLA alleged that Branhaven had taken unfair advantage by maintaining broad claims that it knew were questionable and pursued a licensing strategy to monetise its potential asset. Importantly, the only evidence of this strategy before the Court was that Branhaven had been negotiating with MLA to resolve the dispute including payment of licence fees. In this negotiation MLA was insisting on more extensive amendments than were ultimately ordered and no licence was ever entered into (therefore, there was no disadvantage).

In concluding that there was no unfair advantage, Justice Beach made clear that there was nothing improper in seeking to secure the broadest claims possible when making an application, or drafting claims in a manner that would be difficult for other parties to work around. Indeed, he stated that this was consistent with "…plain vanilla legitimate commercial activity" for an applicant.

Therefore, Justice Beach elected to exercise his discretion under section 105(1A) to allow the amendments.

Conclusion

In appeals from opposition proceedings, the Court has the power to issue an interim decision on validity and provide the applicant with the opportunity to amend its application to address any concerns raised. Therefore, applicants before the Court, should expressly request that any decision be made on an interim basis such that the applicant has the opportunity to review the Court's reasoning and, if possible, amend their patent application to overcome any validity issues. This process provides an efficient and cost effective process as the amendment application will be heard by a Judge that has already been educated on the technology at issue and has an in-depth understanding of the validity issues.

Even if an applicant is given an opportunity to propose amendments, the Court nevertheless retains the discretion to reject the amendments. In exercising this discretion, the Court will consider the conduct of the patentee including, delay, full and frank disclosure and unfair conduct.

While applicants should be vigilant in ensuring that they prosecute any necessary amendments as quickly as possible, notification of a validity concern on an equivalent foreign patent in foreign proceedings will not amount to delay in Australia if the notification did not constitute a validity issue under Australian law.

Finally, to minimise any risk of an amendment being disallowed, applicants must provide full and frank disclosure of all relevant matters.

Authors: Rhea Nair, Graduate; and Nina Fitzgerald, Partner.