The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Tuesday, 19 September 2017

Never Too Late: If you missed the IPKat Last Week!

Been away and want to catch up with last week's IP news? No problem! As always, the IPKat is here to bring you a quick summary, here’s the 163rd edition of Never Too Late.

Quenching my thirst for the latest IP info!
Neil considers that one way to view the discussion set out by Sanford Grossman and Oliver Hart in their 1986 article, "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration" is to ask: when should one contract with a supplier for a good or service and when should one vertically integrate it by acquisition? He considers how, in addressing this questions, they treat IP matters quite differently. 

It has been confirmed that the complainant who filed the constitutional complaint against the ratification of the UPC Agreement in Germany was the attorney Ingve Stjerna. Stjerna has long been a vocal critic of the Unified Patent Court, and the complaint reflects some of his earlier criticisms.

The European Commission has set out its principles for the political dialogue on intellectual property (and various other issues including the use of data) in the Brexit negotiations.

Katfriend Darren Meale provides an analysis of a recent decision relating to UK unregistered design rights (UKUDR): Neptune v DeVOL Kitchens [2017] EWHC 2172. In particular, he notes that as well as giving a clear illustration of a UKUDR in action, the case also firmly answers an important question about the scope of UKUDR following the amendment of the law in 2014.

Advocate General (AG) Szpunar has provided his Opinion in relation to VCAST Limited v R.T.I. SpA, C-265/16, a the reference for a preliminary ruling to the Court of Justice of the European Union (CJEU) from the Turin Court of First Instance. The AG affirmed that EU law prohibits a commercial undertaking from providing private individuals with cloud computing services for the remote video recording of private copies of works protected by copyright.

Katfriend Darren Meale follows up on Kat Rosie’s announcement that the European Commission had set out its principles for the political dialogue on intellectual property in the Brexit negotiations. He explains the EU Commissions position and how that measures up against the UK’s position.

Neil reports on the 6th Annual Singapore IP Week event organised by the Intellectual Property Office of Singapore, IP Academy, IPOS-International and IP ValueLab. With 3,000 participants taking part in various programs, the highlight event was the two-day Global Forum on Intellectual Property: Ideas to Assets.

On September 19th and 20th, the National University of Singapore will host the Design Law Reform Conference at its Bukit Timah Campus, the conference will discuss the current state of play of design protection at national and international levels.

Plus our weekly round-up posts: Friday Fantasies and Around the IP Blogs.

Never Too Late 162 [week ending Sunday 27 August] Book Review: Economics of the Internet I France: "Photoshop decree" coming up soon I Is there a role for the tort of unlawful means in patent law? I Around the IP blogs!
Never Too Late 161 [week ending Sunday 20 August]  Italian Supreme Court issues groundbreaking decision on punitive damages, opening the door for IP claims | TILTing Perspectives 2017 | Freedom of panorama in Portugal: content and scope of the exception | When "mayo" is not mayonnaise, yet still is mayonnaise: All a matter of the label? | Friday Fantasies

Never Too Late 160 [week ending Sunday 13 August] Scottish court “vaporized” trade mark invalidity appeal | Battle of the free trade mark databases – Global Brand Database versus TMview | An Improved Improver? - Part 3. | Netflix weather report: sunny today, possibility of rain clouds tomorrow? | Roger in troubled Waters 

Never Too Late 159 [week ending Sunday 6 August] Cross-undertaking in damages - Napp Pharmaceuticals v Sandoz Limited | In memoriam of June Foray: the greatest screen voice whom you probably never heard of, but likely heard | UK Supreme Court holds that grey market sales can be criminal offence | New administrative notice-and-takedown procedure in Greece | Are you XKING kidding me? Making sense of trade mark conflict in the EUTM system | The challenge of protecting a database without a sui generis right, this time from Singapore | France: costs of blocking injunctions to be borne by internet intermediaries | INTA Trademark Administrators and Practitioners Meeting--early bird registration ends August 4th | TILTing Perspectives 2017 (First Part: Online Enforcement and Black Box Tinkering) | France: 13 million in damages awarded for linking to downloadable copyright works | Monday Miscellany, Sunday Surprises

Photo credit: wabisabi2015

Special interview with the Chief Executive of the Intellectual Property Office of Singapore on new one billion dollar innovation fund (and more)

The IPKat recently had the privilege of submitting written questions to Mr. Daren Tang, Chief Executive of the Intellectual Property Office of Singapore (IPOS), in connection with the launch of a one-billion dollar Makara Innovation Fund (MIF), Southeast Asia’s first private equity investment fund that sources IP-driven companies internationally and capitalises on cross-border regional expansion. Set out below is the full text of this interview.

1. Mr. Tang, I have had the pleasure of reading the IPOS media release, "One-Billion Dollar Innovation Fund Launched in Singapore to Drive Enterprise Growth for our Future Economy” How would you summarize the main points of this initiative?

The concept behind the Makara Innovation Fund arose from two challenges that we see at IPOS regarding innovation in Asia. The first is how our economies can support innovative enterprises that are seeking to grow. When start-ups and innovation-driven enterprises are scaling up, they need access to capital and markets. In Asia, there is no lack of growth funds, but they tend to be concentrated in the early and mature stages, leaving a gap in the middle. Moreover, Asian funds still tend to be focused on the more traditional investment themes like infrastructure, resources and property, rather than on innovation.

The second is how to use IP to drive economic growth and prosperity. While there has been a tremendous growth in the number of IP filings in Asia that must translate into actual economic and social impact. IPOS has broadened its focus to include IP commercialisation, and our energies will be on helping our companies to use IP to drive enterprise growth.

With these in mind, we worked with private equity firm Makara Capital to design a fund that was somewhat different. Instead of start-ups, the MIF will target 10 to 15 companies in the $30 - $150 million range. These companies need to have good IP, but equally important is a good business model and ability to execute. The MIF will provide them with smart and patient capital, and connection with the relevant networks and expertise for growth and expansion through IP. Lastly, the MIF’s focus is not just local, but also innovative foreign enterprises that have an interest in using Singapore to access Asian growth markets.

Ultimately, what IPOS hopes to see is the presence of more financing options in Singapore for innovative enterprises, and we would welcome the chance to work with other financiers who share our perspective of IP as a strategy for enterprise growth.

2. Can you specify in further detail what you mean when you speak of "Singapore's innovation system"?

At IPOS, we have a very clear view that innovation is the process of getting ideas to the market because that is where there will be economic and social impact. So when we talk about an innovation ecosystem, we are really talking about how to build the right expertise, structures, processes and stakeholders for this to happen. We have been fortunate that quite a number of these elements are already present in Singapore – a strong R&D sector, a key finance hub, top-class business and regulatory environment, and highly-ranked judicial, legal and IP regimes. Other elements, for example, our desire to double the number of IP experts, or be a design hub by 2025, are in the making. What is likely to be the bigger challenge is to adjust the alignment of these various elements towards enterprise growth through innovation and IP.

3. While Singapore can rightly be said to punch above its weight in commerce and finance, still, it is a small island state. Aren't you concerned that in taking on IP creation, protection and commercialization, you may be overextending what can reasonably be expected from an initiative of this kind?

In a world of intangible assets, small can be beautiful. Singapore is indeed just an island state, but the same factors that have allowed us to prosper by servicing global flows of capital, trade and investment will also serve us well in positioning ourselves as a centre for IP commercialisation. What are some of these? As highlighted earlier, our strong legal and judicial system, status as an R&D and finance hub, top-class IP regime, neutrality and credibility. However, you are right in pointing out that our small market size is a major constraint.

But we have also always been a gateway into South-east Asia and beyond because of our proximity to these markets. And beyond this part of the world, one of the trends we are seeing is that innovation is increasingly becoming open and global. The process of transforming ideas into assets, products and services has become distributed along established and emerging innovation centres in the world. If Singapore can be one of the nodes along a global innovation supply chain, helping ideas access capital and markets in our part of the world, coupled with the ability to quickly adapt and react to changes, then perhaps we can overcome our limitations.

4. There is a recurring debate in talking about innovation: Is the private sector or the government better placed to be the main driver. The initiative emphasizes the role of government; why do you believe that this is the preferred approach?

Actually we see this particular initiative as far more driven by the private sector than in some of the other things that we are doing, for example, in building IP expertise. This is because we believe that private equity, which is much closer to the market than us and has the expertise to grow enterprises, is in a much better place to make the appropriate investment decisions. That said, there is a role for government to play in the innovation space, and that is to introduce the right policies and build the broader ecosystem.

Building an ecosystem may mean that governments sometimes provide funding to get an industry started. A common area not just in Singapore, but around the world, is in R&D. In the case of Singapore, we are investing S$19 billion (or about 1% of our GDP) on R&D over the next five years under the Research, Innovation, and Enterprise (RIE) 2020 plan. As major contributors and recipients of public R&D funds, public agencies should take the lead to develop policies, programmes, and capabilities to boost value capture. Lastly, a lot of work in this area relies on private-public partnerships, because that is how the ideas or IP that is generated from publicly funded R&D can be translated into marketable products and services.

5. The report mentions that one your goals is to strengthen your manpower capabilities to enhance your IP expertise. To what extent do you expect that achieving the goals of the initiative will be accomplished by local skills and talent, and to what extent will you need to rely on contributions from foreigners?

IP skills and expertise is in growing demand in Asia, and requires time and experience to build up. This means that while we want to grow local skills and talent, there will always be space for foreigners to contribute to this highly specialised area. There are a number of areas where we see strong demand over the next few years, but essentially, they tend to revolve around the IP commercialisation space. The challenge here is to take someone who has expertise in a technical area, say law or technology, and help this person develop enough business acumen and sense to understand IP not just from a technical or legal angle, but from a strategic business angle. Good IP managers or consultants who can do this will find themselves with many opportunities to do interesting work in Asia.

Other growth areas will be in the productisation space – people who are expert in translating intangible assets into products. These would be the technology transfer managers and IP brokers. Lastly, we see an opportunity for persons who are experienced in IP financing – whether it is IP valuation, insurance or others who can help monetise IP, and understand how to play around IP as an asset class in itself.

In terms of supporting the development of local expertise, one interesting programme is the one we have launched with the Singapore University of Social Sciences to provide post-graduate training leading up to a Master of IP and Innovation Management. This course, which recently saw its first intake of 24 students, is tailored for working adults who will remain gainfully employed throughout the course, and with a curriculum that focuses on practice and skills through case studies and solving real problems, rather than just knowledge transfer. And of course, it is open to both locals and foreigners. So we do see opportunities for both locals and foreigners to bring their skills and experience into this space, and ultimately support the growing needs of the innovation ecosystem in Singapore.

6. For someone who is not from Singapore, how will he be able to take part in this initiative?

We aim to grow the number of IP professionals to 1,000 by 2020, and most of the work opportunities in this area is not subject to restrictions. That said, in the area of patent prosecutions, foreigners who want to be part of the patent bar will have to sit for and pass the required exams. The same applies for legal advisory work – there are local bar requirements, just like there are in many other countries. For accountants dabbling in IP valuation, there will likewise be the usual requirements of applying to those seeking recognition as local professionals. Beyond these, work in the other areas are not subject to government mandated professional restrictions, and the training courses offered by the local universities offer places to foreign students too.

For those who are involved in IP training in your respective home countries, IPOS is open to engaging overseas partners to co-develop and recognise IP professional certifications and programmes, co-organise Community-of-Practice (COP) sessions to share best practices and case studies, host internships and exchanges for our IP professionals, or even invite guest lecturers to instruct at the graduate programmes. We welcome firms, service providers or financiers to establish themselves here in Singapore and be part of the innovation ecosystem.

7. It so happens that we are both great lovers of tea. What do you recommend to IPKat tea aficionados on their next visit to Singapore?

Tea is so much a part of Asian culture that we sometimes take it for granted, and may not understand the richness of its history and culture. That is why I wrote a book on tea (under a pseudonym), which is unfortunately out of print, but which I am attempting to get a second re-print. Anyway, for first time visitors to Singapore, it may be interesting for a start to try tea as the locals consume it – with sweetened condensed or evaporated milk. It’s quite ubiquitous – you can find it almost everywhere but a decent version to try is the one at Toast Box (there is one at the ground floor food court where IPOS is located). You can try that with kaya toast, a local coconut jam on toasted bread.

There are also tea-shops in Chinatown which serve Chinese tea the traditional way, but you can find these in other parts of Asia as well, so for a more interesting and unique take on tea, I would strongly recommend a trip to Tea Bone Zen Mind. It is housed in a stunningly conserved Peranakan (Straits-born Chinese) shophouse at 98 Emerald Hill and draws on tea traditions from all over the world to present tea with a modern and refreshing twist. I have to say that I’m always partial to the Taiwanese oolongs like the Four Seasons, Lishan, Shan Linxi and Deer Valley, which are all really lovely, as are the oolong and fruit combinations like Apple or Lychee Oolong. If you can afford the time, they also do a 3-course tea tasting, accompanied with tidbits and snacks.

Life is short, so drink good tea.

Photo on lower right by Haneburger, released to the public domain

Monday, 18 September 2017

Conference Report: Zurich IP Retreat 2017 - Patents and Hindsight (Part II)

The second part of this conference report on the 2017 Zurich IP Retreat - Patents and Hindsight summarizes the panels on the closest prior art and the definition of the problem (to be solved). Part I of the conference report is here.

Closest Prior Art

This panel, the third in the conference and the last on Friday, looked at the closest prior art and how hindsight might influence the choice of the starting point for the assessment of inventive step.

Dana Beldimann (Professor, Bucerius Law School, Hamburg, Germany, and UC Hastings College, San Francisco, USA) briefly introduced the framework for obviousness analysis under US law. For an invention to be patentable under 35 USC § 103, it must contribute more than obvious advances to the state of the art. There is no concept of “the” closest prior art in US law. The “analogous prior art” must be considered as a whole. Prior art is analogous if it belongs to the same field of endeavor, or if not, is “reasonably pertinent“ to the particular problem, so that it logically would have commended itself to the inventor's attention (Circuit Check Inc. v. QXQ Inc. (Fed. Cir. 2015)). The analogous prior art can comprise multiple references, except in chemical and pharmaceutical fields, where there must be a lead-compound.

Beldimann, Brändle, Wilming, Hoyng, Bausch, Blumer (3rd panel)
References may only be combined when there is a justification to do so. The justification lies in teaching, suggestion or motivation (TSM) to combine or modify references and must be found in the prior art. The TSM standard is the main safeguard against hindsight bias. KSR International Co. v. Teleflex (US Sup. Ct. 2007) held that the TSM test is a helpful insight into reasons to combine, but should not be treated as a “rigid mandatory formula”. In addition to TSM, common sense can also constitute a path to proving obviousness, since a skilled person may “be able to fit the teachings of multiple patents together like pieces of a puzzle”. KSR v. Teflex may lead to a larger influence of hindsight than the traditional TSM test. There is some pushback from the CAFC. In Circuit Check v. QXQ, the CAFC held: “An alleged infringer should not be able to transform all systems and methods within the common knowledge into analogous prior art simply by stating that anyone would have known of such a system or method. The question is not whether simple concepts such as rock carvings, engraved signage, or Prussian Blue dye are within the knowledge of lay people or even within the knowledge of a person of ordinary skill in the art. Rather, the question is whether an inventor would look to this particular art to solve the particular problem at hand.”

Dieter Brändle (President, Federal Patent Court, Switzerland) noted that patentees always complain about hindsight when the patent is found lacking inventive step. Since the court must rely on references introduced by the parties, the choice of prior art is not determined by the court. Only what the parties present to the court can be considered.

A patent must have inventive step irrespective of the starting point of the analysis. The law requires that the invention is inventive over the entire prior art. If a patent is found inventive starting from one prior art reference, it must be assessed whether it is also inventive starting from another starting point, if such starting point is alleged. Unless a reference can be excluded “right away” as a valid starting point, it must be accepted as starting point. The selection of the starting point is not subject to hindsight bias; the hindsight bias only comes into play in the third step of the PSA, when it is assessed whether the skilled person would have modified the starting point such as to arrive at the claimed invention.

Willem A. Hoyng (Attorney, Hoyng, Rokh, Monegier, Amsterdam, the Netherlands) reminded everybody that the PSA is not found in the European Patent Convention. It is a tool developed by the European Patent Office to deal with its massive case load. It may be useful, but it is artificial and may also lead to wrong results. The choice of “the” closest prior art is often arbitrary. Courts should not be obliged to follow the PSA, which in fact there are not according to UK, German and Dutch case law.
Art. 56 EPC requires consideration of the whole prior art. That whole prior art may give indications (pointers) towards the invention or away from the invention. Closest Prior Art and PSA may have a tendency towards obviousness if not applied correctly. So one should consider the art as a whole and how much incentive gives the art as a whole the skilled person to come to the invention and what is his/her expectation of success. Incentive and expectation of success should be communicative vessels when deciding the obviousness question.

Willem ended his presentation with the statement that he considered the way the EPO deals with Art. 54(3) EPC a big problem which leads to multiple patents for the same invention (and – via divisionals – unacceptable uncertainty of third parties). Why can EPO and Dutch courts not read “the content of European patent application” broader? The skilled person should always read (when reading for Art. 54(3) EPC purposes) with the common general knowledge and consider each combination with the common general knowledge as disclosed. This would avoid the grant of multiple divisionals for essentially the same invention.

What you get for writing the conference report - an elephant
Thorsten Bausch (Patent Attorney, Hoffman Eitle, Munich, Germany) reiterated that Germany does not have a concept of closest prior art, but the Bundesgerichtshof demands that the starting point for inventive step analysis must be justified (BGH, 16 December 2008 - X ZR 89/07 – “Olanzapine”). If, for example, a document discloses 200 compounds, it is impermissible to take one of the compounds and argue that its formulation as a sustained release formulation was obvious when there were no specific reasons ex ante for the skilled person to choose this compound among the many disclosed.
Torsten’s conclusion from the unavoidability of a certain hindsight bias is that judges should be twice as careful and cautious before revoking a patent for lack of inventive step. On the other hand hindsight bias may favour the patentee when it comes to questions of claim construction and the doctrine of equivalents, as the interpretation of the claim with knowledge of the infringing embodiment may lead to a broader interpretation, and equivalents may be found obvious once they were employed.

Fritz Blumer (Member of the Legal Board of Appeal, EPO) stated that the case law of the Board of Appeals of the EPO emphasized continuously that hindsight should be avoided in the choice of the closest prior art. “[…] in order to avoid ex-post facto considerations, the closest state of the art is not generally that merely showing superficially the most similarities, but rather that conceived for solving the same primary problem or aiming at the same objective as the claimed invention and which requires the minimum of structural and functional modifications.” (T 026/04). Fritz gave an example of an invention of a multilayer panel for aircraft interiors. D1 discloses a panel for aircraft interiors, but with a different layer sequence. D2 discloses a panel for furniture with a layer sequence like the claimed one. The “same purpose” criteria should lead to the choice of D1 as closest prior art. Choosing D2 is likely based on hindsight and may lead to difficulties in formulating the objective problem (“alternative use for furniture panels” is hardly satisfactory).

The prior art should not be read with the invention in mind (T 970/004, cons. 4.1.2). Similar to the point made by Peter Meier-Beck and Thorsten Bausch, Fritz cautioned that one should not “pick and choose” from a prior art reference unless there were good reasons why the skilled person would choose the specific disclosure over another.

During the ensuing discussion, Robin Jacob interjected that it should be up to the attacker of the validity of a patent to choose the starting point from which he or she wants to attack the patent. Graham Ashley prefers using the term “relevant starting point” rather than “closest prior art”. One can start from several references, but the attacker needs to justify why he wants to start from each one of them. Similarly, Rian Kalden added that there could be several starting points, but not 30. There must be a justification for a specific starting point. Katherine J. Strandburg pointed out that the PSA starting from a single closest prior art reference assumed a cumulative view of innovation, which was not necessarily correct. Innovation may also consist of thinking about a problem. Dieter Stauder made the sensible point that many granted patents were never practiced and only a small fraction ever litigated. The case load at the EPO required a standardized approach for examination that was simple and predictable. Courts, on the other hand, are not and should not be bound by it.

Objective Technical Problem

Fritz Blumer reminded everybody that the PSA was not cast in stone, although in practice it was ruling. Rule 42(1)(c) EPC also requires a description of “the advantageous effect of the invention with reference to the prior art” in the patent application. The PSA goes back to the very beginning of the operations of the EPO (see T 1/80 of 1981). The definition of the objective problem to be solved is a moving target. When the closest prior art changes – for example after the introduction of claim limitations – the problem to be solved also changes.

Dirk Szynka explains the prior art
Dirk Szynka (Patent Attorney, König, Szynka, Tilmann, von Renesse, Munich, Germany) opined that the problem the problem to be solved is particularly prone to hindsight bias because it does exist only with knowledge of the claimed invention, as it is derived from the effects of the differences between the subject matter of the claim and the closest prior art. The choice of the spring board document (on which the problem is based) is very important. The more sophisticated approaches (e.g., BGH, 5 October 2016, X ZR 78/14 – “Opto-Bauelement”) require looking at the technical effect of the springboard reference. However, everyday practice of the first instance and the examination proceedings tend to identify a spring board document based on a more arithmetical maximum structural identity which can lead to an objective patent problem quite independent from the patent description and the original technical approach therein and may often lead to hindsight.

If one starts from a document that is not related to the problem or effect of the invention but the argument clearly leads to obviousness, it’s hard to justify disregarding it. After all, the law requires consideration of all prior art.

From Dirk’s point of view, the main practical hindsight problem is, however, the tendency to be observed in the EPO but also in German proceedings, to formulate a “concrete” technical problem by comparing a spring board document and a claim. Such argumentations explicitly seek to avoid a too “abstract”, “artificial” or “empty” problem. In his opinion the recognition of disadvantages of the prior art is a first step of the invention (if not clearly induced by the prior art or the technical knowledge of the skilled person). This approach is also supported by the Board of Appeal case law, e.g. T 835/00, and, more recently, BGH,  13 January 2015, X ZR 41/13 – “Quetiapin” and BGH, 11. November 2014, X ZR 128/09 – “Repaglinid”. Accordingly, a “general and neutral” technical problem must be chosen which must not contain elements of the solution and, further, no elements found in the elaboration thereof.

Katherine Strandburg (Professor, NYU Law, New York, USA) added that US law knows no requirement to identify a problem to be solved. Identifying or framing a problem can itself be inventive. The problem solved by the invention may play a role in the definition of the analogous prior art, because it must be reasonably pertinent to the problem. KSR v. Teleflex repudiates a narrow approach to problem definition. The problem is not limited to the problem this particular patentee tried to solve. The problem can motivate the skilled person to look at other prior art that was not designed to solve that problem.

Whether hindsight leads to “wrong” decisions is ultimately not clear. Policy should decide which inventions deserve protection, and this should be informed by the outcomes – does the protection of these inventions lead to welfare gains?

Katherine wondered whether the “fundamental attribution error”[1], i.e., our tendency to explain someone's behaviour based on internal factors, such as personality or disposition, and to underestimate the influence that situational factors have, might help the patentee. In the case of obviousness assessments, the fundamental attribution error may lead to an attribution of the invention to the effort and creativity of the inventor, rather than situational factors (state of the field). It may therefore lead to a finding of non-obviousness and counteract hindsight bias.

During the discussion, Christoph Ann (Professor, Technical University of Munich, Germany) said we should hear more about biases other than hindsight if we want to reach unbiased judgments. Stefan Bechtold (Professor, ETH Zurich, Switzerland) pointed out that if hindsight bias had the same magnitude across the board, it was not a huge issue from a policy perspective. If, however, it had different effects in different cases, it was problematic. We simply do not know which one it is.

There was much more at this conference, but the format of a blog post prohibit an exhaustive summary. I therefore will not report the findings of the panels on expert testimony and technically qualified judges, claim construction and the broader perspective (yes, hindsight plays a role in copyright, too!). All in all a very enjoyable conference with contributions from a broad range of highly qualified speakers. And the dinner was excellent, too.

[1] Ross, The intuitive psychologist and his shortcomings: Distortions in the attribution process, in: Berkowitz (ed.), Advances in experimental social psychology (Vol. 10), New York 1977, 173-220.

Conference Report: Zurich IP Retreat 2017 - Patents and Hindsight (Part I)

The first Zurich IP Retreat was held on Friday/Saturday 8/9 September 2017 on the shores of lake Zurich, organized by INGRES and ETH Zurich, in honour of Dr. Dieter Brändle, the first President of the Swiss Federal Patent Court who will retire at the end of 2017. It brought together opinion leaders in the law of innovation and technology from all over the world, including judges, litigators, patent attorneys, in-house lawyers and academics, to discuss one of the fundamental problems in patent law: the need to assess the prior art, and most notably inventive step (non-obviousness), without hindsight and knowledge of the invention. Is this even possible from a psychological perspective? Likely how successful are the approaches to avoid hindsight bias developed in different jurisdictions? Presentations and panel discussions over the course of two short days shed some light on these questions.

Psychological Dimensions

The opening presentation and the first panel looked at hindsight bias from a psychological perspective.

Aileen Oeberst (Professor, University of Mainz, Germany) gave an overview of the psychological research on hindsight bias. “Hindsight bias” has two components: on the one hand, after the event is known, it appears more inevitable than before the event (“It had to happen”). On the other hand, it appears more foreseeable than it actually was (“I knew it all along”).[1] A third aspect is that the event distorts the memory – after the event, one even remembers (falsely) that the one predicted the event. Since this latter aspect seems not to play a role in the context of patent law, it is not further addressed. Which aspect of hindsight bias is more important in the context of obviousness assessments in patent law is an unresearched question. It is potentially important because the underlying process informs which debiasing strategies, if any, could be successful. Prof. Oeberst also raised the question whether knowledge of an invention is more alike an “event” or almanac knowledge, which are the categories commonly studied in hindsight experiments, and hinted that it might not fit into either of these categories.

Aileen Oeberst
Hindsight bias is a very robust phenomenon with small to mediate effect sizes.[2] Small effect sizes may still have an important effect on binary choice if the decider is on the threshold; i.e., in close cases. Whether domain expertise can safeguard against hindsight bias is not entirely clear, experts – specifically judges – are certainly not immune to hindsight bias.[3] Deliberation in groups does not seem to reliably reduce hindsight bias, but the research is limited and restricted to small groups (three people).

Debiasing hindsight bias is generally considered very difficult.[4] Instructions to “ignore the ex post knowledge” are useless.[5] The best strategy is to withhold the knowledge of the outcome from the decision maker, but this may not be feasible for obviousness assessments. Short of shielding the decision maker from information, “consider the opposite” strategies show promise.[6] It is, however, important that the decision maker comes up with his or her own reasons why the opposite may have happened. It is therefore unclear whether advocacy demonstrating reasons for other outcomes is a successful strategy for debiasing.

Greg Mandel (Professor, Temple University Law School, USA) summarized his original research on hindsight bias in patent law.[7] Mandel found, in an experimental study with mock jurors, a strong effect of hindsight bias. While only between 23% and 49% of participants (depending on scenario) found that a solution to the technical problem presented – with a selection of pertinent prior art – was obvious when they did not know the patented solution, 59% to 85% found the solution obvious when they were aware of it. In other words, about a third more decision makers found the invention obvious when they were aware of it versus those who were only told of the problem, despite having been informed of the same prior art references. Standard jury instructions for patent cases and explanation of the “teaching suggestion motivation” test did not reduce hindsight bias.

Marco Kleine (Senior Research Fellow, MPI for Innovation and Competition, Munich, Germany) added some thoughts from an experimental economist’s perspective, but had to admit that the economic research in this area largely relied on the psychological studies introduced by Prof. Oeberst. Several studies indicate that hindsight bias increases over time,[8] which might be important when obviousness is judged years after the invention was made. The type of ex post information matters – almanac questions exhibit greater hindsight bias than real world events or case scenarios.

Mark Schweizer (President elect, Federal Patent Court, Switzerland) added that people tend to incorrectly believe that others are more susceptible to cognitive biases than they are themselves (“bias blind spot”). Cognitive sophistication, as measured by SAT (Scholastic Aptitude Test) and the Cognitive Reflection Test (CRT) does not reduce the bias blind spot.[9] In other words, smart people also believe they are less susceptible to biases than others, but are in fact equally biased.

Avoiding Hindsight Bias In Patentability Assessment Around The World

The second panel sought to show which approaches to reduce hindsight bias different jurisdictions had developed.
Szepler, Yu, Klett, Arnold, Kalden, Bremi, O'Malley, Meier-Beck, Ashley (2nd Panel)

Graham Ashley (Chair, EPO Board of Appeal) briefly summarized the EPO’s problem-solution approach (PSA).[10] Selection of the closest prior art is done with knowledge of the invention, potentially introducing hindsight bias. The attempt to avoid this is the requirement that the prior art must address the same or a similar problem than the invention. A critique of having a “closest” prior art, i.e., conducting inventive step assessment only starting from one prior art document, is that the invention must be inventive over the entire state of the art (Article 56 EPC), so it should be irrelevant what the starting point is.

When defining the objective problem to be solved, care must be taken that the problem is defined as achieving the effect of the distinguishing features, not the distinguishing features. If the distinguishing feature is X, the problem is not to find X, but how to achieve the effect that X has.

Another safeguard against hindsight bias is a strong emphasis on whether the skilled person “would” have found the solution. The “would” question has three aspects: (i) would the skilled person having started from D1 (= closest prior art) have actually considered D2; (ii) would he or she actually found the solution in D2; and (iii) would the skilled person have applied the suggested solution to the teaching of D1? Graham explained that “his” Board of Appeal often sketched the argument for inventive step as well as against inventive step, assuming first that the invention is based on inventive step, then assuming that it is not based on inventive step. Whichever argument reads more convincingly prevails.

Peter Meier-Beck (Presiding Judge, 10th [Patent] Senate, Federal Court of Justice, Germany) emphasized that a retrospective view cannot be avoided, but one should strive to avoid being biased. There is a risk to read into the text what one has only learned subsequently. It is essential that any piece of prior art is read in its own context. Reducing the reading to elements or paragraphs which are or seem to be similar or close to the invention is highly dangerous and seduces to interpreting the text in accordance with an understanding which is predetermined by the patent in suit, i.e. by hindsight.

Starting the analysis by determining the closest piece of prior art is also highly dangerous. We need to know the invention to determine what is the closest piece of prior art. But ante inventionem the skilled person does not necessarily know the most promising springboard. Taking this springboard for granted is pure hindsight. Defining the problem by determining the difference between the invention and the closest piece of prior art is also hindsight. Sometimes it is plausible that the skilled person would have tried to solve that problem, sometimes the problem construed that way may be artificial.

Of course, we need some reduction of the complexity of prior art to find a reasonable starting point. But is makes sense to ask the question whether the starting point was realistic ante inventionem and whether it was plausible that a skilled person would have tried to solve a problem which is the result of our hindsight-led “problem construction” and not mentioned in a prior art document.  It is not enough that the skilled person could have started from the closest prior art, it is required that he or she would have – a similar question like the one posed in the third step of the PSA, but now posed in a different context, namely the choice of the starting point for the development that led to the invention.

Kathleen M. O’Malley (Judge, Court of Appeals for the Federal Circuit, USA) explained that currently, there were three avenues to challenge patents in the United States – through the District Courts up to the CAFC, through the International Trade Commission, and through the USPTO Patent and Trademark Appeal Boards (PTAB) to the CAFC. The approaches in the different venues were not necessarily congruent, which leads to problems. The PTAB has been instructed to “get rid of bad patents” – it has been told to be (hindsight) biased. PTAB combine a lot of references in finding obviousness, unlike District Courts. They also do not consider secondary, objective criteria, that traditionally plays an important role in obviousness determinations in US law.

Hindsight bias is particularly difficult to deal with in patent cases. In other cases, the court can limit the information the jury receives, e.g., changes to product design after an injury occurred. This is not possible in patent cases; the jury must know the invention. O’Malley believes that (constitutionally mandated) twelve-member juries lead to better decisions, as the discussion becomes more nuanced and violations of jury instructions less likely.

Additional “biases” may be introduced by attorneys. Counsel for patentee tries to paint the inventor as heroic and sympathetic. Copying, which is considered a secondary indication of inventiveness, often helps the patentee.

Relevant prior art may also be from related fields, not necessarily from the same field as the invention. There is not necessarily a “closest” prior art except in chemical/pharmaceutical cases, where the assessment must start from a lead compound. Expert evidence is used to understand what the prior art actually taught back at the priority date.

It is important to show that there was motivation to combine references. Such motivation can come from outside the field of the invention. Another important consideration is whether there was a reasonable expectation of success. Teaching away, often difficult to prove, may safeguard against hindsight bias.

Secondary evidence such as a surprising effect of the new feature, a longfelt need, scepticism in the field and failed attempts by others to solve the same problem (ideally by the defendant), industry praise, commercial success and copying areimportant elements of hindsight analysis and help avoiding hindsight bias.

Inventions in technological fields that are familiar to the general public may be found obvious more readily, while complex technology makes a combination of references seem less obvious to a jury of lay people.

Rian Kalden (Judge, The Court of Appeal of The Hague, Netherlands) notes that hindsight affects inventive step by definition, because the judge is supposed to go back in time before the contribution by the invention was known. This assessment requires knowledge of the contribution.
Simple solutions to difficult problems are often underappreciated. Dutch courts generally employ the the PSA, but it is not required. Cases are often framed in PSA terms by the lawyers. One criticism is that the PSA is not suitable for “problem inventions”, where the creative act lies in defining the problem. Well – if it is not suitable, do not use the PSA, it is not required by law. While the PSA may not be immune to hindsight bias, neither are other approaches.

One safeguard against hindsight bias is that under the PSA, the closest prior art must be a document that skilled person would actually have looked at – in the same field, trying to solve the same problem. The closest prior art may only be from a different field of technology if there is a good reason choose it. One should not simply count the number of identical features – this may be decisive only when there are several realistic starting points.

Formulating the objective problem determines the outcome of the case. The great risk of the PSA is formulating the wrong problem – such as including a feature of the invention in the problem to be solved rather than an effect of that feature. The objective problem must not contain any pointers to the solution. There is almost always disagreement on the formulation of the problem to be solved between the parties. Judges need to be very careful. If the closest prior art is the same as in the application, the problem should be the same as the one formulated in the application, too. However, if the closest prior art is different, the objective problem will be different, too.

Would the skilled person have arrived at the solution at the priority date? Only a combination of two documents, possibly with common general knowledge (CGK), is allowed. A combination of more than two documents is an indication of inventiveness. No combination with just any other document that happens to share the missing feature is sufficient. There must be a pointer to the document to be combined and an incentive to find it, read it and use it. Not everything that can be found will be found. If the title and abstract of a reference point to another direction, the skilled person will probably not read it. Is there a reasonable expectation of success that the disclosed solution will work? Generally yes, unless there is teaching away and there are other options without teaching away.

Hindsight may also favour patentees, when further positive effects of the invention are found only after the filing date. It is difficult to ignore such effects, but they should be ignored. The plausibility test requires that the effect must be made plausible in the application for subsequent evidence to be considered and seeks to safeguard against this form of hindsight bias.

Richard Arnold (Judge, Patents Court, UK) explained that English law is clear – hindsight bias must be avoided when assessing obviousness. Moulton LJ, in British Westinghouse Co v Braulik (1910) 27 RPC 209, 230, states “I confess that I view with suspicion arguments to the effect that a new combination, bringing with it new and important consequences in the shape of practical machines, is not an invention, because, when it has once been established, it is easy to show how it might be arrived at by starting from something known, and taking a series of apparently easy steps. This ex post facto analysis of invention is unfair to the inventors and, in my opinion, it is not countenanced by English Patent Law.”

In Mölnlycke AB v Procter & Gamble Ltd [1994] RPC 49, 113 Sir Donald Nicholls VC emphasized the importance of considering secondary (contemporary) evidence to avoid hindsight bias: “What with hindsight seems plain and obvious often was not so seen at the time. It is for this reason that contemporary events can be of evidential assistance when testing the experts’ primary evidence. … Secondary evidence of this type has its place and the importance, or weight, to be attached to it will vary from case to case.”

Technip France SA’s Patent [2004] RPC 46 at [15] reminds everybody that the reasons an expert gives for obviousness, not his or her conclusions, are most important.  Similarly, SmithKline Beecham plc v Apotex Europe Ltd [2005] FSR 23 at [53] teaches that not sympathy towards the expert, but the fundamental reasons for their opinions should determine the credibility of experts.

MedImune Ltd v Novartis Pharmaceuticals UK Ltd [2011] EWHC 1669 (Pat) at [118] teaches that “sequential unmasking” should be used in the instruction of experts. First, the expert should only consider the prior art, then the priority documents and only finally the patent(s). HTC Corp v Gemalto SA [2014] RPC 9 at [274] cautions that this is not always possible and not required by law.

In Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2010] RPC 33 at [77], [79] Jacob LJ exhorts the benefits of secondary evidence: “It generally only comes into play when one is considering the question ‘if it was obvious, why was it not done before?’ That question itself can have many answers showing it was nothing to do with the invention, … . But once all other reasons have been discounted and the problem is shown to have been long-standing and solved by the invention, secondary evidence can and often does, play an important role. If a useful development was, in hindsight, seemingly obvious for years and the apparently straightforward technical step from the prior art simply was not taken, then there is likely to have been an invention. … “

The attacker may rely on any prior art, even completely obscure references. This is hindsight, but not bias. The law allows this kind of hindsight for sound policy reasons.

Ritscher, Brändle, Stauder
Dariusz Szleper (Attorney, Paris, France) explains that hindsight bias is only explicitly addressed in French judgments since about 15 years ago under the influence of the PSA. He points out that the wording of Article 56 EPC in French is not precisely the same as in English (“ne découle pas d'une manière évidente” versus “is not obvious”).

It is not clear whether judges discuss the problem of hindsight bias in chambers, because French judgments are very concise, making it difficult to assess the underlying reasoning. Assessment of inventive step is considered a question of fact, outside the scope of appellate review, so appellate courts hardly ever, if at all, address the issue. Dariusz cannot find traces of the problem in the written opinions. During legal conferences, it is emphasized that the PSA is applied in France and whether the skilled person “would” find the solution, not whether he or she “could”, is relevant. While the reasoning may be opaque, the final outcome of French cases is often similar to those in other jurisdictions.

Dariusz concluded by adding that motivational biases such as the French “egalitarian mood”, which considers patentees to be asking for too much, may disfavour patentees.

Kathrin Klett (Presiding Judge, 2nd Civil Chamber, Federal Supreme Court, Switzerland) reminded everybody that hindsight bias is a general problem, not limited to patent cases. It plays an important role in liability cases in the assessment of negligence (foreseeability of damage).

The Swiss Federal Supreme Court has not developed specific methods or approaches to avoid hindsight in patent law. It has always been aware, however, of the saying that knowledge after the event is always easy and problems solved present no difficulties. An invention involves inventive step when the solution is beyond the the zone situated in between the state of the art and what a person skilled in the art on the basis of his knowledge and skills would have found with only minimal mental effort. The formula differs from the legal practice of the EPO, but is designed to mean essentially the same.[11]

The choice of the starting point for the assessment of inventive step should be irrelevant, as the invention must be inventive starting from any reference. Therefore, an appeal based on the argument that the lower court chose the wrong starting point will be unsuccessful. It is the definition of the person or the team skilled in the art, their knowledge and specific technical skills at the priority date which are crucial for the decision whether the claimed technical solution was obvious or not. This seems to Kathrin Klett not so much a question of law, but of the expert knowledge guided by the appropriate questions.

Xiang Yu (Professor, Huazhong University of Sience & Technology, Wuhan, China) explained that under Chinese law, inventive step requires that compared to the prior art, the invention has prominent substantive features and provides notable progress. The assessment of inventive step is a three-step test. First, the prior art has to be determined. It must be from the same or similar technical field, which is defined increasingly narrow. Secondly, the distinguishing features must be identified. There was a risk that the examiner fails to look at the solution as a whole and misses the gist of the invention. Thirdly, it must be assessed whether the solution as such, not the distinguishing features alone, are obvious to the skilled person.

Chinese knows a figure of speech for hindsight bias – “Zhuge Liang after the fact” (“事后诸葛亮”), Zhuge Liang being a famous prime minister of ancient China known for his great wisdom and resourcefulness. To avoid hindsight bias, market success may be considered as secondary evidence for lack of obviousness.

[1] Blank, Nestler, von Collani & Fischer, How many hindsight biases are there?, Cognition 2008, 1408-1440.
[2] Guilbault , Bryant , Brockway & Posavac, A Meta-Analysis of Research on Hindsight Bias, Basic and Applied Social Psychology 2004, 103-117.
[3] Oeberst & Goeckenjan, When being wise after the event results in injustice: Evidence for hindsight bias in judges’ negligence assessments, Psychology, Public Policy, and Law 2016, 271-279.
[4] Giroux, Coburn, Harley, Connolly & Bernstein, Hindsight Bias and Law, Zeitschrift für Psychologie 2016, 190-203.
[5] Kelman, Fallas & Folger, Decomposing Hindsight Bias, Journal of Risk and Uncertainty 1998, 251-269.
[6] Roese & Vohs, Hindsight Bias, Perspectives on Psychological Science 2012, 411-426.
[7] Mandel, Patently Non-Obvious: Empirical Demonstration that the Hindsight Bias Renders Patent Decisions Irrational, Ohio State Law Journal 2006, 1391-1453.
[8] Bryant & Guilbault, “I Knew It All Along” Eventually: The Development of Hindsight Bias in Reaction to the Clinton Impeachment Verdict, Basic and Applied Social Psychology 2002, 27-41.
[9] West, Meserve & Stanovich, Cognitive sophistication does not attenuate the bias blind spot, Journal of Personality and Social Psychology 2012, 506-519.
[10] EPO, Guidelines for Examination in the European Patent Office, November 2016, Part G, Chapter VII, Section 5.
[11] Sutter, Der bundesgerichtliche Begriff des Erfinderischen, sic! 2004, S. 469 sqq., 472.

Does Allergan's Saint Regis Mohawk Tribe transactional move "rip off consumers"?

Senator Sherrod Brown (D-OH)

On Friday, US Senator Sherrod Brown (Democrat-Ohio) said Allergan's transfer of six patents covering its medicinal product Restasis (for the treatment of dry-eyes) to the Saint Regis Mohawk Tribe "rips off consumers".

Earlier this month Allergan said it transferred all of its Orange Book listed patents to the Saint Regis Mohawk Tribe who would in turn exclusively licence back its patents to Allergan.  In exchange, the Tribe receives $13.75 million upon execution and is eligible to receive $15 million in annual royalties.  Those might seem like impressive figures, but not when compared to the annual income Restasis generates - a cool ~ $1.5 billion - which makes it Allergan's second biggest selling drug after Botox.  Those figures are expected to increase, with patent expiry in 2024.

Why this transactional dance?  Allergan's position is that by virtue of the Mowhawk Tribe's sovereign status, their ownership of the patents puts them beyond the reach of the Patent Trial and Appeal Board (PTAB).  This doesn't mean, argued Allergan, that their patents could not be challenged in federal court and it would have no effect on their pending abbreviated new drug application (ANDA) patent litigation (recently subject to a five day trial in the Eastern District of Texas).  

What it does mean is that the Mowhawk Tribe would be filing a motion to dismiss all on-going inter partes reviews (IPRs) against the Restasis patents on the basis of the tribe's sovereign immunity.

This move isn't new.  Recent cases involving universities' claims of sovereign immunity resulted in the successful dismissal of IPRs - see Neochord v University of Maryland (Case IPR2016-00208) and Covidien  v University of Florida Research Foundation (IPR2016-01274-6)

Living in rural New York State and Canada, the Mowhawk Tribe is a community of approximately 13,000 and is part of the Iroquois Nation (read about the tribe's culture and history here).  According to Allergan's press release, the Tribe and its counsel approached Allergan with the deal.  But according to this New York Times article, the Mowhawk Tribe's general counsel, Dale White, said it was a Dallas law firm called Shore Chan DePumpo that first approached the tribe with the proposal.  Shore Chan DePumpo also represented the University of Florida in its IPR sovereign immunity challenge.  It wasn't the tribe's first deal with technology patents, according to the New York Times, but it was their first with pharma patents.

Allergan's Chief Legal Officer, Bob Bailey, stated that
"We are impressed with the Tribe's thoughtful and enterprising approach, which will allow them to achieve their goals of self-reliance and help them address the most urgent needs in their community."
The Saint Regis Mowhawk Tribal Council commented that:
"This is a viable and sound opportunity for the Saint Regis Mohawk Tribe to enter into the patent, technology and research sector as part of our overall economic diversification strategy. We realize that we cannot depend solely on casino revenues and, in order for us to be self-reliant, we must enter into diverse business sectors to address the chronically unmet needs of the Akwesasne community; such as housing, employment, education, healthcare, cultural and language preservation."
Teva, who is challenging the patents, said that the move was
"a new an unusual way for a company to try to delay access to high quality and affordable generic alternatives".  
But Brent Saunders, the CEO of Allergan, explained in an interview with Fortune that the deal was a move to avoid the "double jeopardy" of concurrent venues (a problem that faces patentees in numerous jurisdictions, but arguably more so in the US with the introduction of IPRs following the America Invents Act in 2011).  And with the high percentage of invalidation in IPR proceedings, who wouldn't take the opportunity to shield their blockbuster patents from that venue?

Critics have said that the move should fail because a company should not be able to shield its patents from review.  The response, of course, being that they cannot completely shield their patents from any review - they will still be subject to federal court and the realm of Hatch-Waxman litigation (at least in this case).  So the patents are, for now, not completely immune to the attack as stated by Allergan's press release (although a different deal and parties could take a different position which could make the sovereign immunity v federal court position a bit murkier).

In the meantime, what seems clear is that this move is another flag to Congress that the IPR regime needs to be re-examined.  Senator Brown, however, stated that he would look into how Congress can "close loopholes that drug companies exploit to avoid competition".  But perhaps a more holistic view as to all the issues in play is in order...

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