According to Rule 34.42(3) of the Federal Court Rules 2011, in a proceeding for infringement of a standard patent, the statement of claim must include particulars of the alleged infringements that specify ‘which of the claims of the complete specification are alleged to be infringed’ and give ‘at least one instance of each type of infringement alleged’.
On the one hand, this rule reduces the burden on the applicant (and, indeed, on the court and the respondent) by requiring only a single instance of each type of infringement, rather than all instances of each type. On the other hand, it raises the questions of what constitutes a ‘type of infringement’, and how much detail is required of each ‘instance’.
the onus lies with the applicant to ensure that the scope of its intended case has been particularised according to the rule.
The task of the applicant at trial is to prove its case on infringement in relation to the specific instances set out in its particulars. If successful, it may then be able to extend the court’s findings to additional acts of the same type for the purposes of assessing the quantum of pecuniary relief, but it should not expect to extend liability to additional types of infringement that were not originally particularised. While the court identified specific cases in which this may have occurred in the past, it was concerned not to allow a situation to develop ‘where there is a risk that a hearing on liability is seen as little more than a staging post on the way to yet another hearing to determine new substantive questions of infringement beyond the type or types of infringement particularised and already ruled on’ (at ).
A lack of sufficient detail in the particulars is therefore not only unfair to the respondent (i.e. Telstra), which is entitled to adequate notice of the case it will be expected to answer at trial, but is also liable to result in inefficiencies and complications at later stages of the proceedings.
The two Australian patents identified in Upaid's suit are AU 770646 and AU 2008203853. In order to illustrate the deficiencies in its particulars, it is sufficient to look at claim 1 of the ‘853 patent as an example.
Broadly speaking, claim 1 provides for an authorised communications network user to make payments for services based upon a preconfigured payment mechanism which utilises a financial network which is separate from the communications network. An example might be a subscriber with a mobile phone being able to register credit card details with their network operator, and then subsequently charge payments to the registered credit card using their mobile phone.
settling charges to the account by one of a plurality of transaction providers in accordance with at least one settlement rule, said charging and settling performed utilizing at least one financial network, separate from the at least one communication network.
The claimed invention therefore includes a number of specific requirements, such as the use of ‘payment rules’ for authorising and charging accounts, the reception of ‘an instruction’ via the communication network, and the use of ‘settlement rules’ for charging and settling via a ‘financial network’. In order to succeed in its infringement case, Upaid must establish the presence of all of the elements of this claim in the accused acts by Telstra.
(ii) to acquire goods and services from Telstra or third party merchants through Telstra’s BigPond portal.
(b) Telstra offers and supplies the services particularised in paragraph 1(a) above on its pre-paid and post-paid service plans for use on basic mobile phones, smartphones and tablets. Such service plans are available for purchase on Telstra’s website at www.telstra.com.au and at Telstra shops located in every State and Territory of Australia.
(c) Telstra supplies such services to individual and corporate customers.
(d) Upaid is unable, prior to discovery and inspection herein, to provide further details of all of Telstra’s aforesaid infringing conduct but at the trial of this proceeding will rely upon and claim relief in respect of all such conduct.
In the face of a request from Telstra for ‘further and better’ particulars, Upaid sent a letter in September 2013 in which it set out various examples of Telstra service options which it asserts correspond with the specific features of its patent claims.
Telstra submits that the giving of these examples illustrates that there are multiple potentially infringing methods, rather than a single method by which different services (or a different combination of services) are provided. The method by which Telstra provides a service or combination of services differs according to the features of the service or combination of services being provided. Telstra also submits that, where Upaid identified “transaction providers” and a “financial network” as including Telstra’s acquiring bank and Visa (and, in some cases, the customer’s issuing bank), it is clear that the acts of third parties are relied on. Telstra submits that Upaid should give particulars of the legal basis for attributing liability to Telstra in respect of third party acts. I accept those submissions.
Upaid’s obligation is not merely to provide examples of infringement but to particularise an instance of each type of infringement alleged. The present indications are that it has not done so.
Compliance with the requirements of r 34.42(3) is not an unnecessary task. In my view, such compliance will serve to clarify the issues that are likely to be in dispute in the present case.
Conclusion – Challenges for NPEs?
None of this establishes that Telstra does not infringe any of Upaid’s Australian patent claims. What it means, however, is that Upaid will need to set out its allegations in greater detail if it wishes to proceed with its case against Telstra.
And while the court has been critical of the the lack of precision in Upaid’s pleadings, this does not mean that Upaid is a ‘patent troll’, that its case necessarily lacks merit, or that it has commenced proceedings merely to pressure Telstra to settle.
However, there is no question that Upaid is an NPE, and it is possible that this, in itself, raises the barriers to successfully asserting patent infringement claims in the Australian Federal Court. In patent cases involving disputes between active competitors, adequacy of the patentee’s particulars is rarely an issue. A practising company can be expected to have a good understanding of the technology employed by its competitors – after all, it is undoubtedly providing similar goods and services itself. An NPE, however, may have less comprehension of the technical operations of the accused infringer, and may therefore be more likely to rely upon inference and observation of end results as a basis for its allegations. Upaid’s experience demonstrates that this may not be sufficient.
As for the US position, it is my understanding that NPEs and patent trolls in that country frequently commence litigation on the basis of very broad characterisations of the respondent’s allegedly infringing conduct. As can be seen in this case, there is absolutely no way that such imprecision would be tolerated by the Federal Court in Australia.
It will therefore be interesting to see whether the key provisions of the Goodlatte bill will also be passed by the US Senate and, if so, what effect the requirements for greater specificity in pleading infringement actually have in practice. If the standards in the US were to be raised anywhere close to those imposed by the Australian Federal Court upon Upaid – and if the costs of dealing with insufficient pleadings were to be borne, as here, by the applicant – life could become much more difficult, and less profitable, for patent trolls!
IP Australia needs more transparency. Examiners need to be able to explain their decisions clearly and logically with sufficient support of facts and the provisions.
OK, here's what's wrong with patent examination at IP Australia.
Several years ago the foreign examination reports (FERs) from Europe and US were became easily accessible for examiners through 'file wrapper' and epoline. So now examiners have a wealth of information about how other offices are examining essentially the same patent application. In theory applicants get higher quality more efficient patent examination because the examiner focuses on only the best arguments/citations.
The IPA exec saw this (i.e. the easy accessibility for FERs) as a golden opportunity to increase productivity of examiners. So the examiner productivity targets were gradually increased, with the concession examiners were now allowed to report that "I agree with the FER" without providing their own reasoning.
There is nothing wrong with this approach if the examiner has done a thorough examination and come to exactly the same conclusion as the FER (i.e. the US or European examiner). It is indeed efficient both from the examiner and the applicant point of view.
However, this is not how examination is actually being performed by some examiners. You see, there is a significant proportion of examiners who will simply agree with one (or all) FERs every single examination report. These examiners will agree with FERs even when they are: a) clearly wrong, b) subtly wrong, and/or c) inconsistent with Australian law.
Now I here you say, "surely IPA has a quality system in place to prevent this kind of examination?". And this is where it all gets a bit fiendish.
IPA has indeed instituted a quality review system. There are two problems with the quality review system. Firstly, the quality reviewers are given only a relatively brief amount of time to assess the quality of the randomly sampled examinations (on average about 1 hour per examination). Secondly, a significant proportion of the quality reviewers are formerly the examiners who would routinely write "I agree with the FER" examination reports.
The result is that the 'quality review' results in trivial errors in examination reports being picked up, while the substantial issues (e.g. a FER being relied upon in the examination report being wrong) are overlooked.
This has been going on for a few years now. It is difficult to convey how insidious the long-term effects of such poor examination is having on IPA and their reputation, and more importantly the Australian economy.
And it is getting worse. The rot is spreading.
Whereas before, a small number of 'bad apple' examiners was merely managed/tolerated, these 'bad apples' are now being promoted! And this mindless, rubber-stamping, "I agree with the FER" approach, will thus become more and more prevalent. The examiners trying to do a good job are being completely demoralised by the monster that has been created. To add insult to injury, the rubber-stamping examiners also tend to do a lot of overtime thus getting paid significantly more to produce more and more rubbish!
Well they kind of are, but the message is not being sent clearly. See applicants are happy when one of their patent applications gets examined by a 'bad apple'. The examiner's 'arguments' are trivially easy to overcome, thus resulting in a broader claim than would otherwise have been possible. The applicants thus send the vague message to IPA that generally they want more rigorous examination (so their competitors' patents are put under scrutiny), but will rarely complain about specific examples of poor examination they have experienced.
internal politics at IPA is bad enough you say, although i suspect some examiners decisions have also been affected by political pressures from outside of IPA.
my examiners did a terrible job at clarifying the law. We think that either the examiners were poorly trained or that they have been corrupted by politics in IPA.
If you're complaining about business method/software patents it is probably not the examiner's fault. The law is, as yet, unresolved (see current appeals of RPL and Research Affiliates). If you're not happy with the detail of explanation in the examiner's report you can always push it into a hearing.
in my case it was the examiners fault. the law has nothing to do with their absurd reasoning.
OK, what's the application number? I'll have a look on e-dossier.
Thanks @arachne. Your comments tally closely with my own experience of the process in recent years. I suspect, however, that you are a little better acquainted than I am with the actual internal processes at IP Australia!
I would add only a couple of brief comments. First, I do not think we can expect any quality review system to address this problem. An hour per review is actually quite a long time -- longer, in some cases, than the examiner would actually have spent preparing the report.
But the purpose of quality review is not to reproduce the work that the examiner already did (or should have done). It is to assess whether the examination was conducted in accordance with the relevant quality standards. And so long as the 'effective' use of FERs remains elevated to the status of being one of the four key principles upon which national examination is based, this is not going to be a strong basis for an adverse quality review finding.
As an aside relevant to other comments, I note that 'transparency of decision making to reinforce confidence in examination' is another of the four pillars of national examination. Although I do not want to take the argument up again here, a lack of transparency in relation to 'manner of manufacture', including at the level of hearings, has certainly been an issue in recent years. And you only have to read some of the comments here (even if you disagree with them) to see that this has undermined the confidence that some applicants have in the examination process.
Secondly, I share your concerns about the lack of a clear message from the patent professions. However, this is no simple matter. As practising attorneys, our role (indeed, our obligation under the Code of Conduct) is to act in the interests of our clients. Thus, for example, I will not, and cannot, ever come out publicly complaining about poor quality examination of a client's application, resulting in potentially over-broad claims. Privately, of course I will advise my clients in relation to concerns about quality of search and examination, and the impact that may have on the validity of a granted patent. But if a fully-informed client decides to pursue broad (though not clearly invalid) claims, it is my role to act as their agent and advocate in implementing those instructions. And that is what you will see on the public record.
You prosecuted a single patent application; a single application that you insist on keeping anonymous (lest we find out that the examiner was entirely reasonable??). You got a few adverse reports from an examiner who stood his ground on a matter in which he believed. You press your case and eventually you will reach a compromise with the examiner on what you both believe to be a valid and fair patent. If you were dealing with a genuinely unreasonable examiner, then the option of going to hearing is available wherein a different and completely independent hearing officer will decide upon the case. The Australian examination process is incredibly fair to the applicant (probably too much so), especially when compared to the US.
And you have the gall to accuse the examiner of corruption?!?! Just wow.
Whatever. It's not like you don't use profanity in your twitter feed.
This isn't Twitter. And while Twitter is a different kind of community, in which I am consciously more informal, there are most certainly words I do not use there!
i do not accuse people of corruption or incompetence just because they disagree with me.
i have read and understood every provision in the examiners manual, i and my attorneys know when the examiners are being dodgy and nonsensical.