Monday, 23 August 2010

Latest patent case - SARU sued for infringement

CBS Evening News carries a revealing story on the effect of the backlog of 700,000 patent applications awaiting examination at the US Patent and Trade Mark Office (USPTO) - "It represents innovations trapped in this agency that otherwise could be creating jobs" - at a time when the US and, let's face it, world economy needs it most.

CIPRO, the South African patent office, which registers around 12,000 patents and 30,000 trade marks per year year suffers its own backlogs. Although improvements have been reported recently, trade mark applications typically take several years to become registered. Patents, on the other hand, are granted relatively quickly in South Africa, primarily because substantive examination does not take place.

South Africa operates a deposit system for patents; patents are not examined for novelty, obviousness or utility. Consequently, the strength of patent rights are often only tested when the patent is relied on in an infringement case. This also means that a number of cases get embroiled in costly and time consuming pre-merit patent amendment squabbles. This latest patent case between Audiosport International (Pty) Ltd v Soundsure CC and the SA Rugby Union is an example of one of these pre merit squabbles, involving a dispute over a broadcast system.

During November 2008 Audiosport instituted an action for damages against the respondents based on their infringement prior to the expiration their patent. The respondents defended the action counterclaiming for the revocation of the patent on the grounds that it was invalid for lack of novelty or lack of an inventive step. The respondents relied on two prior art documents, US patent no 4, 097, 809 and US patent no 2, 710, 345. The case deals not with the merits of the counterclaim or the infringement but about whether Audiosport could amend their expired patent to more clearly avoid the prior art and lengthy arguments about invalidity at the main hearing. The respondents opposed the amendment on the basis that it was not possible to amend an expired patent.

The Judge concluded that after the term of a patent has expired a patent does not cease to have legal force and effect (he held that for purposes of a claim for damages for infringement the patent still has legal force) and held therefore the other provisions of the Act relating to revocation and amendment continue to apply. In other words, Audiosport could amend their expired patent.

The case, arguably, would not have been necessary if a patent examination system was in place prior to grant. Whilst there are very good reasons why RSA must have a deposit system, the case does illustrate that amending patents can lead to delays and increased costs in enforcing a patent right in South Africa. Thus while the RSA patent system does not suffer the delay problems of the US system, it does somewhat defer issues to the enforcement stage. One way of avoiding this delay (if the patent is also applied for in the US or Europe) would be to amend a patent earlier taking the benefit of examination reports from those Registries and without the scrutiny of an alleged infringer's legal counsel.

Getting back to the CBS story, it is noteworthy that the USPTO recognises the direct correlation between its own delays, innovation and job creation. A reminder of just how important patent and trade mark offices are.

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