Patent protection for computer system architecture: EPO Appeal Board Decision T 1658/15 “Universal merchant platform for payment authentication”

Author´s headnotes:

  1. In the assessment of inventive step, the business person is just as fictional as the skilled person of Article 56 EPC. The notion of the skilled person is an artificial one; that is the price paid for an objective assessment. So it is too with the business person, who represents an abstraction or shorthand for a separation of business considerations from technical. A real business person, a real technically-skilled person, or a real inventor does not hold such considerations separately from one another.
  2. Outsourcing a commercial transaction such as the authentication of an online purchase transaction to a different computing device cannot in all cases be abstracted to a purely business activity because it may encompass technical aspects such as the use of plug-ins and servers.
  3. If a prima-facie technical prejudice existed at the relevant date against the outsourcing of a commercial transaction such as the authentication of an online purchase transaction to a different computing device, then this outsourcing involves an inventive step.

The patent application allowed by the decision T 1658/15 of the Technical Boards of Appeal of 29 November 2016 relates to online payment systems.

To complete an online purchase transaction in such systems, the buyer has to be authenticated. The online store passes information about the intended transaction to the credit-card company, which handles the task of ensuring the buyer is entitled to use the chosen payment instrument, and which informs the online shop of the outcome of the authentication procedure. The technical implementation of this authentication involves the server of the online shop communicating with the computer of the credit-card company. This communication is according to the prior art handled by a “plug-in” in the merchant server, a piece of software specific to the particular authenticating authority and to the needs of the authentication process. Different plug-ins are provided for different payment instruments. The update and maintenance of these different authentication plug-ins requires substantial resources of the operator of the merchant server.

To overcome these problems, the claimed invention in the decided case provides a separate computer called “merchant authentication processing system” (MAPS) handling the interface functionality with the authenticating servers, which was previously handled by the corresponding plug-ins of the merchant server. The invention thus replaces the three-machine prior art (buyer computer, merchant server, authenticating server) with a four-machine system (buyer computer, merchant server, authenticating server, and merchant authentication processing system). The invention thus differs from the prior art in the system architecture, namely replacing the several plug-ins for different payment instruments at the merchant server by a separate merchant authentication processing system. The advantage achieved by the invention is to reduce the service costs for the merchant. In addition, the operator of the merchant authentication processing system can offer this service to several different merchants and thus enjoy economies of scale for operating the authentication interface service for the authentication process.

According to the established case law of the EPO (following T 0641/00: Two identities/COMVIK) only technical features of an invention comprising technical and non-technical features can contribute to the inventive step. The technical features are separated from the non-technical features. The non-technical features are implied as being known to the skilled person and only the technical features are compared with the closest prior art. It is then assessed which technical problem is solved by the distinguishing technical features and whether or not this technical solution of the technical problem would have been obvious for the skilled person at the priority date of the application.

This approach often results in a novel and non-obvious technical concept to be divided into a novel and non-obvious concept itself, which is deemed non-technical, lying in the field of business or organization, and the distinguishing technical features, which are regarded only as straightforward technical (mostly software) implementation, which is obvious for the technically skilled person leading to the refusal of the patent application. The “Comvik-Approach” thus often unduly reduces the chances of success of computer-implemented inventions compared to inventions in other technical fields.

The decision discussed here provides an approach to overcome this problem: As the skilled person is a hypothetical construction for assessing inventive step, so should be the the business person or organisation expert providing the non-obvious, but non-technical concept. This business person in the Board´s view “represents an abstraction or shorthand for a separation of business considerations from technical” and as such should – different from a real business person – not have any technical knowledge or capability for technical considerations. The Board states:

“Thus, the notional business person might not do things a real business person would. He would not require the use of the internet, wireless, or XXXX processors. This approach ensures that, in line with the Comvik principle, all the technical matter, including known or even notorious matter, is considered for obviousness and can contribute to inventive step.

Similarly, the notional business person might do things that a real business person would not, such as include requirements that go against business thinking at the time – a sort of business prejudice, as is alleged in this case (see below). If this were not the case, business requirements would need to be evaluated and would contribute to inventive step, contrary to the Comvik principle.”

Applying these principles to the concrete case, the Board finds “that the transaction authentication in the present case cannot be abstracted to a purely business activity because it has aspects such as the use of plug-ins and servers.” Therefore, “the decision to centralise the plug-ins in a separate server that can be accessed by several merchant servers, in order to simplify installation and maintenance and reduce load, should be considered a technical matter”.

The Board considered that it might have been obvious for the skilled person seeking to simplify the merchant server or the installation or updating of plug-ins to locate the authentication interface functionality at a separate server that could be accessed by various merchants’ servers. On the other hand, at the priority date of the application a number of technical considerations spoke against relocation of the plug-ins, as increased latency, increased bandwidth requirements and security considerations. On balance, the Board concluded, there existed “a prima facie case for technical prejudice” against relocating the plug-ins to a separate server and the invention thus is to be regarded as involving an inventive step.

According to the Board´s decision, the selection of a favorable system architecture for a particular technical issue is thus to be regarded as a patentable invention if its technical implementation is not obvious even if such system architecture may be regarded obvious from a business perspective.

The technical problem solved by the claimed invention in the decided case can thus not simply be formulated as “to reduce the maintenance and update requirements of the merchant server” as this would be not a technical, but a commercial problem. The business person intending to solve this commercial problem would in turn formulate for the technically skilled person the technical problem “to provide a technical solution to reduce maintenance and update requirements of the merchant server”. The skilled person would thus consider – independently from any business considerations – different options to solve this technical problem, including amendments at the level of the merchant server itself as well as changes of the system architecture. As the Board found, the provision of the particular system architecture of the claimed invention, namely to provide a separate merchant authentication processing system handling the interface functionality with the authenticating servers, was not obvious for the skilled person at the priority date.

This decision may also prove to be helpful for inventors seeking to obtain patent protection in Europe for distributed or serverless applications based on distributed-ledger or blockchain technologies if the application of these technologies for the particular task was not technically obvious at the respective priority date.

CRISPR EP Update: Oral hearing at EPO in opposition case against Broad patent is scheduled for 16 January 2018. Preliminary opinion negative for Broad

The patent dispute about the revolutionary CRISPR-Cas9 gene-editing technology between the Broad Institute (jointly operated by Harvard and MIT) on the one side and UC Berkeley on the other side is of great interest in the biotech community.

In the US, the Broad Institute prevailed in the interference hearing at the USPTO. The UC Berkeley has meanwhile filed an appeal to the CAFC.

In Europe, the first patent of UC Berkeley has very recently been granted by the EPO.

As in the US, however, the Broad Institute has been the first one to get a patent issued in Europe, namely EP 2 771 468. Against this patent, 9 oppositions have been filed, most of which appear to be so-called strawman oppositions.

With office communication of April 19, the EPO has now scheduled oral proceedings at the EPO main building at 16 January 2018. In the preliminary opinion issued together with the summons to the oral hearing, the oppisition division takes the non-binding provisional view that the opposition is expected to be successful on the ground of added matter (claims 1 and 2) and the ground of lack of novelty (claims 1-6 and 9-17). Even though the EPO emphasizes the non-binding nature of such provisional opinions, it is in most cases very difficult for the party negatively affected by the opinion to reverse the view of the opposition division. It will thus be tough for the Broad Institute to repeat its success in the US in Europe.

CRISPR EP Update: Berkeley EP patent application close to grant

EPO by sporst

While the CRISPR-cas9 patent fight between the Broad Institute (“Team Zhang”) and the UC Berkeley (“Team Doudna”) in the US saw its first hearing at the USPTO´s Patent Trial and Appeal Board on December 5, the UC Berkeley has only a few days later received good news from the European Patent Office. An Office Action from December 8, 2016 indicated allowability of broad claims for its European patent application (publication number EP 2 800 811). Claim 1 reads as follows:

 

1. A method of modifying a target DNA, the method comprising contacting the target DNA with a complex comprising:
(a) a Cas9 polypeptide and
(b) a single-molecule DNA-targeting RNA comprising:
(i) a DNA-targeting segment comprising a nucleotide sequence that is complementary to a sequence in the target DNA, and
(ii) a protein-binding segment that interacts with said Cas9 polypeptide, wherein
the protein-binding segment comprises two complementary stretches of nucleotides that
hybridize to form a double stranded RNA (dsRNA) duplex,
wherein said two complementary stretches of nucleotides are covalently linked
by intervening nucleotides,
wherein said contacting is in vitro or in a cell ex vivo; and
wherein said modifying is cleavage of the target DNA.

A restriction to either eukaryotic or procaryotic cells seems not to be present. The contacting of the target DNA to be modyfied by the method, however, according to the claim has to take place in vitro or in a cell ex vivo. 

A notice of allowance from the EPO (communication under Rule 71(3) EPC) can be expected soon.

 

Disclaimer: Neither I myself nor the patent firm Betten & Resch, of which I am a partner, is involved in any patent cases relating to CRISPR-cas9 technology.

(picture by sporst)

New decision of the German Federal Patent Court: Payor bears the risk of missing deadline before the GPTO if GPTO does not use direct debiting mandate

Official headnote of the decision 7 W (pat) 29/15 of the 7th Senate (legal senate) of the GPTO dated May 12, 2016:

If a patent office fee is payed by a direct debiting mandate, the date of receipt of the mandate is according to § 2 No. 4 PatKostZV (Rules on payment of patent fees) regarded as the day of payment of the fee only if the mandated amount is withdrawn by the Federal Account on behalf of the Patent Office. According to this regulation the debtor alone bears the risk that, for whatever reasons, the amount is not withdrawn. This is true also if the amount has not been withdrawn because the Patent Office does not make use of the direct debiting mandate close to the due date. 

In the case to be decided by the court an opponent filed an opposition against a German patent on October 7, 2011, i.e. on the last day of the opposition period, and paid the statutory opposition fee of EUR 200 by means of a direct debit mandate. The GPTO, however, did not make use of the direct debit mandate, allegedly because it was not forwarded to the accounting office. Only after initiation of an insolvency procedure with respect to the opponent on November 25, 2011, which was communicated to the GPTO on December 6, 2011, did the GPTO accounting office take notice of the direct debiting mandate, but could no longer make use of it due to the insolvency. On December 20, 2011 (date of receipt) the opposition fee was paid to the GPTO by remittance with the authorization of the insolvency administrator.

The GPTO decided on June 25, 2015 that the opposition is deemed not having been filed due to failure to pay the opposition fee within the prescribed deadline.

The opponent appealed to the Federal Patent Court (FPC), which, however, rejected the appeal with the following reasoning:

According to the court, prereqisite of the “privileged” payment date of the receipt of the direct debit authorization is the actual withdrawal of the authorized amount by the GPTO. The withdrawal was no longer possible upon initiation of the insolvency proceedings on November 25, 2011. In the courtś view the fact that the GPTO had sufficient time to withdraw the money between October 7, 2011 and November 24, 2011 (i.e. about 7 weeks, whereas this procedure according to the statement of the GPTO typically takes about 2-3 weeks) does not change this general rule as long as by the delay general principles of the rule of law are not violated. The fact that the opponent is not responsible for these delays could only taken into account in abreinstatement procedure which, however, is not available in case of missing the opposition deadline. In addition, the court reasoned the opponent could use other possible payment methods avoiding this risk. The remittance received by the GPTO on December 20, 2011 was regarded as too late.

The Federal Patent Court allowed further appeal (Rechtsbeschwerde) to the Federal Court of Justice (FCJ).

Personal comment:

I hope that the opponent will lodge further appeal with the FCJ and that the decision will be revised upon appeal.

In my view, the decision unduely shifts the burden of the settlement risk of a payment of GPTO fees completely to parties of proceedings before the GPTO, be it opponents against a patent grant of a third party or patent applicants itself having to pay annuity fees or the like. This is true in particular for the formulation of the official headnote, which generalizes the individual case decided by the court to a general responsibility of parties before the GPTO using fee payment by direct debit authorization to bear the risk if any failure of the office to use the authorization to withdraw the fee.

Strict deadlines in patent proceedings serve the purpose of legal certainty for the involved parties as well as for the public, e.g. the public has a right to know whether a patent grant has been opposed to or not. Strict deadlines for fee payments can serve the same purpose as in the case of annuity fees, where the public needs to know whether or not a patent lapses or not. Payment of procedural fees as filing fees, opposition fees etc., however, are irrelevant for legal certainty but mainly serve the purpose of contributing to the procedural costs of the office.

Therefore it should be sufficient if the involved party of proceedings before the GPTO has timely and in accordance with the procedural rules initiated payment of the correct amount. Any delay caused by the office should not be to the disadvantage of the involved party. This should be particularly true in the decided case in which not a withdrawal attempt of the GPTO failed, because the GPTO never undertook such attempt, and the opponent has actualy made payment of the opposition fee after initiation of the insovolvency proceedings, albeit inevitably after expiry of the opposition deadline.

The reference of the FPC to other payment methods avoiding this risk is not helpful either. According to the rules on payment of patent fees there are in total four ways to pay fees to the GPTO (and the FPC):

1. Direct debit authorization (according to SEPA procedural rules). This payment method is the most popular one.

2. Remittance. The deadline is met only if the GPTO receives the money in time. The delay risk thus is also borne by the debtor.

3. Cash payment to the cashier of the GPTO.

4. Cash payment at a bank to the benefit of the corresponding Federal Account of the GPTO.

As the payment methods of direct debit authorization and remittance are unpredictable and thus not “save” to meet a GPTO or FPC deadline, the discussed decision and in particular the very gneral official headnote thus has the consequence that careful applicants and their patent attorneys have to pay patent fees (wish can be substantial for large applicants) using less “privileged” routes, namely to use cash only. This cannot be the intention of an important government agency in 2016 !

An innovative solution in addition to a reversal of the decision at the FCJ would instead be to allow payment in the cryptocurrency bitcoin, where a payment confirmation is received within about 60 minutes.

 

Amicus curiae brief in the case G1/15 of the Enlarged Board of Appeal of the EPO

I herewith publish my amicus curiae brief, which I filed on February 27, 2016 in the case G1/15 of the Enlarged Board of Appeal of the EPO relating to the issue of so-called “poisonous divisionals” under the EPC (photograph by sporst):  

 

This amicus curiae brief is submitted in accordance with Art. 10 of the Rules of Procedure of the Enlarged Board of Appeal providing observations on question 5 of the questions referred to the Enlarged Board of Appeal by the Technical Board of Appeal 3.3.06 in the case T 0557/13, pending as G1/15. The opinions expressed in the brief are my own and do not necessarily reflect the views of Betten & Resch or any of its clients.

1.Introduction

The case G1/15 relates to the issue of self-collision between parent and divisional applications as mutual prior art documents under Art. 54(3) EPC, a situation which became notorious as “toxic divisional” or “poisonous divisional” problem. Surprisingly, this issue has come up for the first time only in September 2012 with the still singular Appeal Board decision T 1496/11, despite the large number of divisional applications pending or having been granted under the EPC since it coming into force in 1978.

The “toxic” situation occurs when of two related European patent applications EP1, EP2 (either parent or divisional) both claiming the same priority date P of an earlier application (either national or European) one application (e.g. EP1) comprises a patent claim containing a generalization with respect to the priority application such that the claim of EP1 as a whole cannot validly claim the priority date P of the earlier application and at the same time EP2 comprises a specific embodiment which can validly claim the priority date P. The specific embodiment of EP2 validly claiming priority P thus is novelty-destroying prior art under Art. 54(3) for the generalized claim of EP1 not enjoying priority P.

In the case T 1496/11 (referring decision T 0557/13, Reasons 15.1.7) claim 1 of the parent patent was directed to a security document including a security device which comprised a functionally defined “feature (10) which can be inspected, enhanced or optically varied by the optical lens when …“. The priority document disclosed only a “printed or embossed” feature for this purpose. The board concluded (Reasons, 2.1) that the claimed subject-matter had been generalized by omitting the more specific indication and thus encompassed security devices including features produced by other means. Hence, it did not constitute the same invention as that set out in the priority document (Article 87(1) EPC). Consequently, the subject-matter of claim 1 was found to be only entitled to the filing date of the parent application upon which the patent had been granted. The board went on to conclude that the subject-matter of claim 1 lacked novelty under Article 54(3) EPC over an embodiment disclosed in its published European divisional application. This embodiment was identically disclosed in the priority document and was hence entitled to the claimed priority date. Therefore it anticipated the subject-matter of claim 1 of the parent patent, which was not entitled to the priority.

As the situation that a priority application contains one or multiple specific embodiments and relatively narrow claims and a later European or PCT patent application has broader claims is rather common for users of the patent system due to continuous improvements of the claimed invention, the conclusion is obvious that poisonous parent or divisional applications “killing” their relatives are rather common and threaten a substantial number of European patents, in particular if national invalidity courts would follow T 1496/11 in applying Art. 54(3) EPC to parent/divisional applications.

One possibility to avoid this highly undesirable situation for patent owners is to entitle the generalized claim partial priorities such that those parts of the claimed scope which are disclosed in the priority document can enjoy its priority and the remainder of the claimed scope enjoys the priority of the filing date. The specific example enjoying the earlier priority date thus anticipates only those parts of the generalized claim which validly claims the same priority, thus not forming novelty-destroying prior art under Art. 54(3) EPC. Or, in the words used in the referring decision T 0557/13, a “generic OR-claim” encompassing alternative subject-matter by virtue of one or more generic expressions or otherwise may be entitled to partial priority. This solution to the toxic divisional problem is dealt with in questions 1 – 4 of G1/15. The present amicus curiae brief, however, focuses exclusively on the general question of whether or not parent and divisional applications can be mutual prior art under Art. 54(3) EPC at all, that is, question 5 of G1/15, which reads as follows:

5. If an affirmative answer is given to question 1, may subject-matter disclosed in a parent or divisional application of a European patent application be cited as state of the art under Article 54(3) EPC against subject-matter disclosed in the priority document and encompassed as an alternative in a generic “OR”-claim of the said European patent application or of the patent granted thereon?

In my view, question 5 should be answered independent from the answers to questions 1 – 4, and it should be answered in the negative. Both issues – partial priorities and the application of Art. 54(3) to parent/divisional applications – are very important as such, but not necessarily dependent on each other. Allowing partial priorities under the “conceptual approach“ suggested in T 1127/00 to distinguishing “a limited number of clearly defined subject-matters” as required by decision G2/98 is essential not only to establish novelty of an EP application having a generic “OR”-claim over a specific embodiment contained in its divisional or parent application, but also over such specific embodiment contained in its national or European priority application. The eligibility to partial priorities under the “conceptual approach“ is therefore to be affirmed. Conversely, the eligibility of divisional/parent applications or patents as prior art under Art. 54(3) EPC is a fundamental question of patent law under the EPC, which should be clarified by the Enlarged Board of the Appeal, also in order to serve as precedence for national invalidity courts in Europe.

2. Applying Art. 54(3) EPC to parent/divisional applications is inconsistent with the right to file divisional applications

According to Art. 76(1) EPC

(1)    A European divisional application shall be filed directly with the European Patent Office in accordance with the Implementing Regulations. It may be filed only in respect of subject-matter which does not extend beyond the content of the earlier application as filed; in so far as this requirement is complied with, the divisional application shall be deemed to have been filed on the date of filing of the earlier application and shall enjoy any right of priority.

This provision prescribes the right of the applicant of a European patent application to file a divisional application, which shall enjoy any right of priority of the parent application. Likewise, under Art. 4G of the Paris Convention

(1) If the examination reveals that an application for a patent contains more than one invention, the applicant may divide the application into a certain number of divisional applications and preserve as the date of each the date of the initial application and the benefit of the right of priority, if any.

(2) The applicant may also, on his own initiative, divide a patent application and preserve as the date of each divisional application the date of the initial application and the benefit of the right of priority, if any. Each country of the Union shall have the right to determine the conditions under which such division shall be authorized.

an applicant has the explicit right to a divisional application, either according to paragraph (1) in response to a non-unity objection of the patent examiner or according to paragraph (2) in his/her own right. The EPC constitutes, according to its preamble, a “special agreement within the meaning of Article 19 of the Paris Convention“. Hence, it shall not contravene the basic principles concerning priority laid down in the Paris Convention (Referring decision T 0557/13, Reasons 12.1; G 2/98, Reasons, 3).

It is very clear that a specific example or embodiment in the description of a European patent application cannot be cited as prior art under Art. 54(3) for a generalized claim (generic-OR-claim) in the very same application, even if the specific example can validly claim an earlier priority date as the generalized claim. Art. 76 (1) EPC as well as Art. 4G of the Paris Convention give the applicant the right to file a divisional application under the same conditions (same filing date, dame priority date) as the parent application. If the act of making use of this right through filing a divisional application retroactively creates prior art not present before and posing a high risk of invalidating not only the divisional but also the patent application, the applicant cannot properly enjoy this right to a divisional application but is at least partly deprived of the right to a patent for his/her invention disclosed to the public. The applicant should with respect to novelty over the prior art of the invention disclosed in the patent application not be in a worse position after filing the divisional application than before filing it. Applying Art. 54(3) EPC to parent/divisional applications is thus inconsistent with the right of the applicant to file divisional applications according to Art. 76 EPC as well as Art. 4G of the Paris Convention and therefore could in my view not have been the intention of the drafters of the EPC.

3. Applying Art. 54(3) EPC to parent/divisional applications is inconsistent with the purpose of Art. 54(3) EPC

Art. 54 EPC defines the prior art when assessing novelty and inventive step of European patent applications:

Article 54 EPC (Novelty)

(2) The state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application.

(3) Additionally, the content of European patent applications as filed, the dates of filing of which are prior to the date referred to in paragraph 2 and which were published on or after that date, shall be considered as comprised in the state of the art.

It recites two types of prior art, namely prepublished prior art according to Art. 54(2) EPC and fictional prior art (“shall be considered as comprised in the state of the art”) according to Art. 54(3) EPC. The latter is only relevant for the establishment of novelty but irrelevant for judging inventive step (Art. 56 EPC).

From the wording of the provision (“the content of European patent applications”) it is not clear, whether or not parent or divisional applications of a European patent application under consideration should be regarded as part of that fictional prior art.

The purpose of Art. 54(3) EPC is to avoid double patenting, that is to ensure that only the first applicant filing an application directed to the same subject-matter will be granted a patent. This can be directly seen from the travaux préparatoires to both the EPC 1973 and the EPC 2000 (detailed discussion and references enclosed in the amicus curiae brief of Vossius & Partner dated November 17, 2015, pages 4 – 7):

The Chairman then summarized the discussion stressing that the basic idea was that only one patent could be granted for one invention.” (Travaux préparatoires to the EPC 1973, document 9081/IV/63-E-Final, page 69, fifth paragraph)

Article 54(3) EPC contains a legal fiction (…). The purpose of this provision is to include European prior rights into the state of the art in order to preclude double patenting.” (Travaux préparatoires to the EPC 2000, document CA/PL 17/99 e, page 1, items 1 to 2).

This was also confirmed by Enlarged Board of Appeal in its decisions G 1/03 (Reasons, 2.2.2) of April 8, 2004 and in G 2/98 (Reasons, 8.1) of May 31, 2001.

One should keep in mind, however, that with the formulation of Art. 54(3) EPC the “prior claim approach” to double patenting (which was e.g. applied in German patent law before the introduction of the EPC and the accompanying harmonization of substantive European patent law) was replaced by the “whole content approach”, which excludes from patent protection everything which was disclosed in an earlier filed, later published EP application. Therefore only the first inventor to file a patent application has the right to the patent to the disclosure in this application and later applicants are precluded from obtaining a patent therefor.

Applying Art. 54(3) to parent or divisional applications is contrary to the purpose of avoiding double patenting also according to the “whole content approach” for the following reasons:

(i) Double patenting in parent/divisional applications is handled in the examination proceedings at the EPO by refusing a divisional application if it claims the same subject-matter as a pending parent application or a granted parent patent, as confirmed by the Enlarged Board of Appeal in its decision G 1/05 (Reasons, 13.4):

“The Board accepts that the principle of prohibition of double patenting exists on the basis that an applicant has no legitimate interest in proceedings leading to the grant of a second patent for the same subject-matter if he already possesses one granted patent therefor. Therefore, the Enlarged Board finds nothing objectionable in the established practice of the EPO that amendments to a divisional application are objected to and refused when the amended divisional application claims the same subject-matter as a pending parent application or a granted parent patent.”

That is, to avoid double patenting between parent/divisional applications, the later examined application is refused based on the principle of avoiding double patenting applying the “prior claim approach”, but not through the application of Art. 54(3) EPC.

(ii) The effect of applying Art. 54(3) to parent/divisional applications does not serve the purpose of preventing double patenting. Four different cases can be distinguished:

(1)    The parent/divisional applications EP1, EP2 do not claim earlier priority dates such that the effective filing date of both applications is the actual filing date, which is by definition identical for both applications. They therefore cannot form prior art to each other under Art. 54(3) EPC, requiring an earlier date of one application, even if the claimed subject-matter is identical. In this case double patenting would be possible even when applying Art. 54(3) EPC to parent/divisional applications.

(2)    Both parent/divisional applications EP1, EP2 claim earlier priority date P. The claims of both applications are identical and both can validly claim priority P. Again, the applications cannot form prior art to each other under Art. 54(3) EPC, even though the claimed subject-matter is identical. Therefore double patenting likewise cannot be prevented by application of Art. 54(3) EPC to parent/divisional applications.

(3)    Both parent/divisional applications EP1, EP2 claim earlier priority date P. The claims of both applications are identical, but generalized with respect to priority application P such that both EP1 and EP2 cannot validly claim priority P but only the respective filing dates EP1 = EP2. Assuming that both applications EP1 and EP2 contain the same embodiment validly claiming priority P (the typical situation), then both applications form prior art to each other under Art. 54(3) EPC and none of it survives, even if the applicant would withdraw one of the applications after its publication. Again, not double patenting would be prevented by application of Art. 54(3) EPC, but both applications would be invalidated even if the applicant would itself avoid double protection by withdrawing one of the applications.

(4)    Both parent/divisional applications EP1, EP2 claim earlier priority date P. The claims of both applications are not identical, EP1 being generalized with respect to priority application P such that EP1 cannot validly claim priority P, but EP2 can. Then EP2 would form prior art under Art. 54(3) EPC with respect to EP1, but not vice versa. Therefore EP2 would survive, but not EP1. Thus, one application would be eliminated, but because the claims are different. The effect again is contrary to avoiding double patenting.

In conclusion, the application of Art. 54(3) to parent/divisional applications of the European patent application under consideration is in clear contradiction to the purpose of this provision to avoid double patenting.

4. Self-collision between parent and divisional applications in other jurisdictions

1) USA:

According to 35 U.S.C. § 102 (a) (2) an earlier filed and later published patent application (prior application) directed to the same invention is only to be regarded as prior art, if it names another inventor. Therefore, self-collision between parent and divisional applications is explicitly excluded (Report of the Tegernsee experts group: Treatment of conflicting applications; September 24, 2012, paragraphs 64 – 65, enclosed to this brief)

2) Japan:

According to Article 29-2 of the Japanese Patent Act an earlier filed and later published patent application (prior application) directed to the same invention (using the “whole content approach”) as the invention under consideration is regarded as novelty-destroying prior art with the explicit exceptions that the inventor or applicant (at the time of filing) are identical. Therefore, parent and divisional applications are excluded from the prior art effect of earlier filed and later published applications (Report of the Tegernsee experts group, paragraphs 39 – 48)

3) Germany:

The provision of § 3 (2) German Patent Act (PatG) is worded as Art. 54(3) EPC, thus leaving it open whether or not parent/divisional applications can form novelty-destroying prior art. There are to date no FCJ decisions in which divisional applications have been cited as prior art for parent applications/patents or vice versa. According to § 39 German Patent Act (PatG) the division of a pending patent application into a parent application and a divisional application (the latter pending at the same stage of the procedure as the parent application) is regarded primarily as a procedural act dividing one application procedure into two separate procedures (“Schulte”, PatG, 9th edition, § 39, No. 10 – 13). § 39 (3) German Patent Act also speaks of a “declaration of division”, indicating the focus on the procedural aspect of a divisional application.

This focus on the procedural aspect gives rise to the following considerations: As in all jurisdictions, in German (as in European) patent law a specific example or embodiment in the description of a patent application cannot be cited as prior art for a generalized claim (generic-OR-claim) in the very same application, even if the specific example can validly claim an earlier priority date and the generalized claim cannot. If the filing of a divisional application is mainly a procedural act dividing one application procedure into two separate procedures, the declaration of division should not change the prior art status of the content of the original (combined) patent application. It would be a surprising result at least that new prior art should be created retroactively by the act of dividing one application procedure into two procedures. Based on these considerations, parent and divisional applications should not be regarded as prior art with respect to each other under German Patent Act.

5. Conclusion

In summary, parent and divisional applications should not be regarded as prior art under Art. 54(3) EPC to each other, independent from the practice of entitlement to partial priorities.

Applying Art. 54(3) EPC to parent and divisional applications of the patent application under consideration is not consistent with the purpose of Art. 4 G of the Paris Convention and Art. 76(1) EPC giving the applicant the right to divisional applications. If this right carries the risk that the parent application is invalidated by the divisional application or vice versa, the provisions are not appropriate and sufficient to provide the applicant this right.

Applying Art. 54(3) EPC to parent and divisional applications is also not consistent with the purpose of Art. 54(3), i.e. to avoid double patenting in the sense that only the first inventor to disclose an invention has the right to the patent.

As the intensive discussion about “poisonous” or “toxic” divisionals has shown, the application of Art. 54(3) EPC to parent and divisional applications exposes applicants and patentees under the EPC to a considerable invalidity risk. Conversely, no purpose or positive effect thereof can be recognized. Question 5 of the referral should therefore be answered in the negative.

Alexander Esslinger

Enclosure:    Report of the Tegernsee experts group: Treatment of conflicting applications; September 24, 2012

The Bass-Spangenberg patent validity attacks: A new patent monetization model. Soon to be expected in Europe under the UPC ?

The activities of non-practicing entities (NPE´s; by some referred to as “patent trolls”) trying to make money by acquiring and enforcing patents against third parties are still very controversially discussed in the US as well as in Europe. Taking up criticism that NPE´s would threaten innocent operating companies with enforcement of allegedly invalid patents, in early 2015, well-known hedge-fund manager Kylie Bass together with IP expert Erich Spangenberg devised a new patent-monetization strategy based not on patent enforcement but on challenging the validity of essential patents of target companies in the pharmaceutical area. Putting into place an aptly named “Coalition for affordable drugs” (CFAD), they targeted high-priced patented drugs. The strategy is to look for publicly traded pharmaceutical companies the value of which is substantially dependent on a low number of patents which, based on a first analysis, have questionable validity. Then they challenge the validity of these patents by way of the newly introduced, allegedly fast and low-cost (compared to a full patent trial in the US) inter partes review (IPR) process at the Patent Trial and Appeal Board (PTAB) of the USPTO, which had quickly gained a reputation of high invalidation rates. To make sure that – besides the effect of reduced prices for the patented drugs in case of success – the fund investors receive a return on investment, Bass and Spangenberg short-sell stock of the targeted pharmaceutical companies. In case the attacks on the validity of the patent(s) of such company create considerable uncertainty in the financial markets, this results in falling stock prices and thus profits for the investors. How successful the strategy turns out to be in the courtroom cannot yet be judged, since the 30 initiated IPR proceedings (by 18 December 2015) all started only in 2015 and are still pending, but it certainly was big news in the US IP monetization community. The pharmaceutical industry understandably is less enthusiastic.

There is already speculation to extend this patent monetization strategy to companies outside the pharmaceutical industry. A company qualifies as a potential target for a Bass-Spangenberg attack if the following requirements are fulfilled:

  • The company is publicly traded and is large enough that a liquid market of its stock exists
  • The validity of one or a small number of patents has large impact on the overall (future) profits of the company and therefore its share price
  • The validity of these patents is questionable

The second requirement apparently rules out most companies in the telecoms area, as the validity of a single patent has not much effect because products and services in these technologies typically use hundreds or thousands of patents. Sadly, innovative enterprises heavily relying on a single or a small number of patented products are particularly vulnerable.

One precondition for this strategy was the novel availability of a relatively fast and low-cost stand-alone (i.e. independent of an infringement lawsuit) inter-partes procedure to challenge the validity of a granted patent. Such proceedings, however, are long established in Germany as well Europe-wide in the form of opposition or nullity proceedings. Thus, the strategy should in principle work on this side of the Atlantic, too. While the German market alone may be too small to sufficiently affect the share price of generally globally acting pharmaceutical company, a patent loss with effect for Europe as a whole should be sufficient to have a visible effect on share prices. Opposition procedures have the disadvantage of the strict nine-month deadline after publication of patent grant such that patents in later stages (which often are the more profitable ones) can only be attacked in various national courts.

Here the UPC may provide a new opportunity to patent validity challenge investors. The validity of European patents, which have not been opted out of the UPC, can be attacked in with single action before the central division of the Unified Patent Court. The court practice and the invalidation statistics are of course not yet known. But at least there could a great potential for creating uncertainty, which alone can drive down share prices. Such uncertainty is only reinforced by the considerable publicity to be expected for earlier important cases under the new UPC.

Companies considering itself possible targets of such central invalidity attacks could avoid these by making sure to opt-out from the UPC its essential patent rights from the first day the UPC enters into force, since after an invalidation action has been launched against a patent, opting out this patent is no longer possible. In order to make sure that the opting out takes effect right with the UPC coming into force a so-called “sunrise period” has been introduced, allowing patentees to file requests for opt-out before the start of the UPC, having effect on its first day of operation.

CRISPR Update: 9 Oppositions filed against first granted European CRISPR-Cas9 patent

The revolutionary CRISPR-Cas9 gene editing method is presently the hottest issue in molecular biology. The scientists Jennifer Doudna of UC Berkely, Emmanuelle Charpentier of the Max-Planck Institute for Infection Biology in Berlin and Feng Zhang of the Broad Institute (jointly operated by the MIT and Harvard University) are regarded as pioneers in this field and areeach involved in start-up companies commercializing the new technology.

In parallel a dispute about who owns the IP related to this scientific breakthrough has evolved. Interference proceedings are pending before the USPTO to decide ownership of the technology.

Meanwhile Mr. Zhang and the Broad Institute obtained four granted patents in Europe by means of an ultra-fast prosecution procedure between February 11 and September 2, 2015. The 9-months opposition period against the first grated patent EP 2 771 468 expired on November 11 and nine oppositions have been filed (according to the EPO patent register on November 13, 2015). The opponents are:

  1. CRISPR Therapeutics AG
  2. Novozymes A/S
  3. Boxall Intellectual Property Management Ltd.
  4. Sarittarius Intellectual Property
  5. Regimbeau
  6. Mr. George Schlich
  7. Dr. Martin Grund
  8. Mr. Harvey Adams
  9. Dr. Ulrich Storz

The first opponent in the list is the company co-founded by Emanuelle Charpentier for commercializing the gene editing technology, opponent 2 is a Danish biotech company, opponents 3 to 5 are IP law firms and opponents 6 to 9 are patent attorneys from the UK or Germany. It is not unlikely that opponents 3 to 9 are so-called “strawman opponents”, i.e. acting for a different party wishing not to be named in the proceedings. Such strawman oppositions are explicitly allowed under EPO case law and are quite common if the “real opponent” e.g. wishes not to endanger ongoing cooperation with the patentee.

Despite much interest of the biotech community in the case, a first instance decision of the opposition division cannot be expected earlier than in about two years, in particular in view of the huge amount of evidence filed by the opponents.