Amazon '1-click' patent: now Australia rules

This Kat, who enjoys the odd bit of online shopping, has been reading with interest the latest controversy over the Amazon ‘1-click’ ordering patent. Many readers will be aware that over the past decade there has been a long history of unsuccessful challenges to grants of the patent in the US, Canada and Europe. The most recent destination for battle has been Australia.

In September 1998, under the Patent Cooperation Treaty (PCT), Amazon filed a patent application for its ‘1-click’ ordering system (application no 94779/98) and claimed priority on the basis of earlier applications filed in the US in September 1997 and March 1998. After having undergone international preliminary examination under the PCT the application entered the national phase of processing in Australia in March 2000. The application passed examination and its acceptance was advertised in June 2003 (no 762175). Telstra Corporation Ltd (Telstra), one of Australia’s largest telecommunications and media companies, opposed the grant in September 2003 (filing its statement of grounds and particulars in December 2003). The proceedings would bumble on for almost eight years, with numerous requests (all granted) for extensions of time to serve evidence and for requests to adduce further evidence. Finally the matter came to a hearing in February 2011 and Hearing Officer Ed Knock gave his decision on 9 May 2011: Amazon.com, Inc [2011] APO 28.

Grounds of Opposition

Amazon’s patent application contained 141 claims. At the hearing, Telstra opposed the patent on two grounds: (a) the invention as claimed is not a patentable invention under subsection 18(1)(b) of the Patents Act (novelty and inventive step); and (b) the specification filed in respect of the complete application does not comply with subsections 40(2) and (3).

Specification

Under subsection 40(2) a complete specification must describe the invention fully, including the best method known to the applicant of performing it. Further, under subsection 40(3), the claim(s) must be clear and succinct and fairly based on the matter described in the specification.

Amazon’s specification was titled ‘Method and System for Placing a Purchase Order via a Communications Network’, and began by stating that ‘the present invention relates to a computer method and system for placing an order and, more particularly, to a method and system for ordering items over the Internet’. There are 141 claims, nine of which are independent (and have a matching consistory statement). The broadest claim is Claim 1 which reads:

‘1. A method for ordering an item using a client system, the method comprising:displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item: andin response to the indicated single action being performed, sending to a server system a request to order the identified item.’

Telstra objected to the scope of the claims and meaning of the expression ‘single action’. It argued that the term ‘single action’ was unclear, that it included within its scope more than one action, and that it might require qualification by the word ‘only’.

Hearing Officer Knock framed his discussion of the word ‘action’ after consultation with the Macquarie Dictionary and with the wording of the specification. For him a key characteristic (at [50]) was that a ‘single action generally refers to a single event received by a client system that indicates to place the order’. This was so even though a single action may be preceded by multiple physical movements of the purchaser (eg moving a mouse so that a mouse pointer is over a button or a double click). In relation to a possible requirement for a qualification by the use of ‘only’, Hearing Officer Knock was satisfied (at [52]) that ‘a “single action” is, as a matter of logic, only a single action, and its redundant use may even introduce a lack of clarity into the claims’ (emphasis in original). Accordingly, the Hearing Officer found (at [59]) that the specification satisfies the requirements of subsections 40(2) and (3).

Novelty

The test for determining whether the invention lacks novelty is the ‘reverse infringement test’ as set out in Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228 where Aickin J stated (at 235):

‘The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask whether the alleged anticipation would, if the patent were valid, constitute an infringement’.

Telstra relied on five instances of prior art to establish its ground of lack of novelty. These were:

(a) The Digicash ecash system;
(b) The Open Market Technical White Paper OM-TransactTM: Technical Overview;
(c) The Dr Dobbs Journal on-line article entitled ‘Implementing a Web-Shopping
Cart’;
(d) Telstra’s prior Australian patent application no 19173/97 (which concerned an
automated telephone connection system); and,
(e) A patent in the name of Hitachi.

The Hearing Officer considered each in turn (at [64] to [73]). He found (at [74]) that the claims 2, 3, 8 to 31, 33, 34 and 39 to 141 were novel, and that claims 1, 4 to 7, 32 and 35 to 38 were not novel in light of Australian Patent No 730431 (19173/97) in the name of Telstra.

Inventive Step

The effect of subsections 7(2) and (3) of the Act, in the case of applications filed before 1 April 2002, is that a claimed invention will lack an inventive step if it is obvious in the light of:

(a) common general knowledge; or,
(b) common general knowledge considered together with information in a single document or through doing a single act, provided that the document or act could reasonably be expected to have been ascertained, understood and regarded as relevant to work in the relevant art in the patent area by the person skilled in the art.

Hearing Officer Knock found (at [86] and [90]) that the common general knowledge included:

(a) the display of order or item information, or instructions or user inputs, for Internet ordering systems in the form of Web pages using HTML code, and the use of a web browser by the customer to access and interact with such displays; and,
(b) the use of the following means by a client system or device to select information or send instructions or requests to the server system, clicking a mouse button over a pre-defined area of displayed information, a sound generated by the user, use of a television remote control, depressing a key on a key pad, using a pointing device, and selection of a displayed indication.

On the basis of this evidence, claim 1 was found to lack an inventive step (at [92]). This was because there appeared to be nothing defined in the claim which was not merely common general knowledge, except for the feature relating to the ‘single action’. However, when expressed in relation to the problem to be solved, the Hearing Officer considered (at [91]) that as ‘a matter of simple logic’, this was an obvious solution to the problem of reducing the number of actions involved in placing an online order (with the ideal scenario being just one action).

However, the inventiveness of the particular manner in which that single action functionality was achieved was a somewhat different story. For Hearing Officer Knock, it seemed (at [93]) that the use of cookies for that purpose may involve an inventive step. There was no evidence of such an approach in any of the prior art, nor evidence that the skilled person at the time would have regarded this as an obvious approach. In particular, he stated (at [96]) that the use of cookies in this invention was ‘both an elegant and inventive way of achieving one action ordering functionality’. Accordingly, claims 3 and 62 to 141, which all included cookies, were found to involve an inventive step.

Conclusion

The Hearing Officer found that claims 1, 4 to 7, 32 and 35 to 38 lacked novelty and that claims 1, 2 and 4 to 61 lacked an inventive step in the light of prior art. Therefore, Amazon's patent application included 141 claims, 60 of which were deemed invalid. To be successful, a patent application must not contain any invalid claims.

As the specification clearly contained patentable subject matter, Amazon was allowed 60 days to propose suitable amendments to overcome these findings. If suitable amendments are not proposed within that time, the Hearing Officer will refuse the application.

Dr Mark Summerfield of Patentology notes that the broadest surviving claim is claim 3 which, if rewritten in independent form, can be expressed as follows:

‘A method for ordering an item using a client system, the method comprising:displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item: andin response to the indicated single action being performed, sending to a server system a request to order the identified item,wherein the server system uses an identifier sent along with the request to identify additional information needed to generate an order for the item, andwherein the identifier identifies the client system and the server system provides the identifier to the client system.

As far as this Kat are aware, this claim would be the broadest surviving claim of any of the ‘1-click’ patent family members.

The IPKat wonders how many more epic battles there can be over this one single patent.. Gven that it is now more than halfway through its 20 year duration, probably not many!

Merpel wonders whether Amazon could invent a way for her shop online but not have to pay for it …

Is that AFACT? Copyright federation pursues its quarry to High Court

Secondary liability on the internet is definitely the flavour of the month. Yesterday night the IPKat reported on the liability of a search engine for contributory infringement of copyright -- and this morning the spotlight turns on Australia, where the question whether internet service providers (ISPs) are liable for the acts of their subscribers is set to get the country's top judges scratching their heads as they seek the right answer.  Thanks to the Kat's friend Catherine M Lee, this weblog can bring you the following information:

"Are Australian ISPs liable for the copyright infringements of their subscribers? The High Court, the top court in Australia, may soon be asked to give an answer.

Proceedings between 34 members of AFACT (the Australian Federation Against Copyright Theft) and the ISP iiNet (the third largest ISP in Australia) have been ongoing for over two years and attracted considerable interest in Australia and overseas. AFACT had investigated copyright infringement occurring by means of a peer-to-peer system known as the BitTorrent protocol by subscribers and users of iiNet’s services. The information generated from these investigations was then sent to iiNet by AFACT, with a demand that iiNet take action to stop the infringements occurring, though the measures AFACT asked iiNet to take were not clearly stated. iiNet failed to take any steps to stop infringing conduct. Did this mean that iiNet had authorised the copyright infringement of certain users?

In November 2008, numerous AFACT members commenced legal proceedings against iiNet. The case came before Cowdroy J sitting in the Federal Court, commencing in October 2009 and lasting for 20 days. In February 2010, Cowdroy J found that iiNet did not authorise the infringements of copyright of the iiNet users. His Honour reached this conclusion following three primary findings: 

1. the mere provision of access to the internet was not the ‘means’ of authorising infringement. Rather, the ‘means’ by which the AFACT members’ copyright is infringed is an iiNet user’s use of the constituent parts of the BitTorrent system, something over which iiNet has no control or responsibility.
2. a scheme for notification, suspension and termination of customer accounts was not (in this instance) a relevant power to prevent copyright infringement or a reasonable step to take.
3. iiNet simply cannot be seen as sanctioning, approving or countenancing copyright infringement: iiNet has done no more than to provide an internet service to its users.

The AFACT members appealed to the Full Federal Court. This appeal was dismissed by the majority (Nicholas and Emmett JJ, Jagot J dissenting) in February 2011. However despite this, the AFACT members ended up in a stronger position than they were following the first instance decision of Cowdroy J. The main reasons for this were that: 

1. Emmett J in effect also ruled that, in certain circumstances, ISPs would be obliged to act on infringement notices when provided with ‘unequivocal and cogent evidence of the alleged primary acts of infringement by use of the … service in question’ or be considered to have authorised infringement (at [210]).
2. All the justices agreed that iiNet could not protect itself by claiming that it was a "Safe Harbour" for it did not have a policy to deal which allowed for termination of repeat infringers in appropriate circumstances (Emmett J at [272], Jagot J at [524], Nicholas J at [803]).

Nonetheless, on Thursday 24 March 2011, the members of AFACT indicated that they would seek leave to appeal to the High Court. In a press release issued on behalf of the Australian and US film studios, AFACT Executive Director Neil Gane suggested that the appeal would make the case that the Full Federal Court had incorrectly applied the legal test for authorisation and that iiNet did have sufficient knowledge of the acts of infringement committed by its subscribers.  iiNet's response to this move, reflected in its own media release of the same date, is that more litigation is not a solution and that it is time for the studios to work with the internet industry to make their works more readily and cheaply available online".

The IPKat looks forward to a High Court decision on the thorny issue of the responsibility for ISPs for copyright infringement committed by their subscribers in light of the new ISP provisions in the Copyright Act 1968 introduced as a result of the Australia-US Free Trade Agreement. Merpel however wonders whether it is a task for parliament and not the courts to make downloaders accountable for their infringing actions without imposing burdensome requirements on ISPs.

Sources

First instance ruling in Roadshow Films Pty Ltd v iiNet Ltd [2010] FCA 24 (4 February 2010) here

Appeal decision in Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 (24 February 2011) here

Coming to their Sensis: of Aussies, scams and the Yellow Peril

Scams of one sort or another have been frequent visitors to the IPKat's weblog recently.  Here's one all the way from Australia.  The IPKat thanks David Lancaster (Rouse Legal) for this note.  David acted for Sensis and Telstra.

Sensis Pty Ltd., Telstra Corporation Limited v Yellow Page Marketing B.V, WIPO Case No. D2011-0057 (here)

In Australia, the ‘Yellow Pages’ business directory is marketed and sold by Sensis Pty Ltd. Sensis is the exclusive licensee of numerous Australian trade mark registrations relating to Yellow Pages and the Walking Fingers Device, all of which are owned by Telstra Corporation Limited, Sensis being a wholly owned subsidiary of Telstra.

In May of last year, Sensis became aware of a scam operated by two companies -- Yellow Publishing Limited (an English company) and Yellow Page Marketing BV (‘YPM’), a Dutch company. These companies sent infringing faxes to Australian businesses, deceiving them into paying for registration with their ‘Yellow Page’ directory. YPM had also registered a number of domain names of the form ‘yellowpage-[location].com’, where the location was an Australian city or state (for example yellowpage-melbourne.com). 

Sensis I
Shortly after becoming aware of the scam, Telstra/Sensis (the complainants) filed a UDRP complaint in relation to ten domain names owned by YPM. A decision of a sole Panelist was given on 14 July 2010 as Sensis Pty Ltd, Telstra Corporation Limited v Yellow Page Marketing B.V, WIPO Case No. D2010-0817 (‘Sensis I’) (here). 

In Sensis I, the original Panel declined to order transfer of the domain names to the complainants. Why? Because they considered that, while the domain names were confusingly similar to the complainants’ YELLOW PAGES trade marks, the respondent had shown sufficient legitimate ‘fair’ use of the domain names to rebut the complainants’ allegations of lack of rights or legitimate interests. This was because the business directory services provided by the respondent were not restricted to Australia and could be accessed from countries outside Australia where YELLOW PAGES is either not registered or subject to fair descriptive use.

Given this finding, the original Panel in Sensis I did not consider the issue of bad faith registration and use. 

Sensis II
Following the outcome in Sensis I, the complainants refiled the complaint. The decision in the refiled case was given on 15 March 2011 and published as Sensis Pty Ltd, Telstra Corporation Limited v Yellow Page Marketing B.V, WIPO Case No. D2011-0057 (‘Sensis II’).

In Sensis II, a 3-member Panel decided that the case could be reheard because: 

·         Following the established principles in Grove Broadcasting Co. Ltd v Telesystems Communications Limited, WIPO Case No. D2000-0703 (here) and Creo Products Inc. v Website in Development, WIPO Case No. D2000-1490 (here), the case could be reheard on the basis that new evidence had come to light regarding the respondent’s conduct since the original complaint was filed in Sensis I.

·         The complainants did not have an opportunity to comment on the original Panel’s own online investigations in Sensis I. The Panel in Sensis II emphasised the importance of procedural fairness in WIPO administrative proceedings. Parties should be allowed to comment on investigations conducted by a Panel of its own initiative that concern ‘new or unanticipated factual or legal material…where that material could be dispositive and where it is reasonably subject to challenge or interpretation’. The parties were not given the opportunity to comment on the original Panel’s own Google and United States Patent and Trademark Office searches in Sensis I. The original Panel in Sensis I relied on these US-focused search results to demonstrate the generic nature of YELLOW PAGES without performing country-specific (i.e. Australia) Google searches, which would have given very different results.

Upon rehearing the case, the Panel in Sensis II ordered transfer of the domain names to the complainants, deciding that: 

·         They agreed with the original Panel in Sensis I regarding confusing similarity.

·         Contrary to the finding in Sensis I, the respondent did not have rights or legitimate interests in the domain names. The Panel in Sensis II did not accept that the respondent was making fair use of the complainants’ YELLOW PAGES mark. Although the respondent’s services could be accessed from outside Australia, new evidence suggested the respondent was operating, and targeting businesses, in Australia. Further, in contrast to the approach of the original Panel in Sensis I, whether YELLOW PAGES was generic in the United States was not relevant to the issue of ‘fair use’ in this case since the disputed domain names were Australia-centric and contained listings and advertisements paid for by local businesses in Australia.

·         The evidence, much of which only came to light after Sensis I, established that the respondent registered and used the domain names in bad faith, seeking to mislead internet users for commercial gain by causing confusion with the complainants’ YELLOW PAGES mark".

Once again, says the IPKat, we seem to find a situation in which the complained-of activity is clearly objectionable and deceptive, but the culprits are incredibly difficult to shift. He keeps wondering whether the checks and balances between (i) the need to protect trade marks and trade names, (ii) the need to protect bona fide registration and use of domain names and (iii) the need to safeguard the interests of consumers are in need of radical readjustment to meet the needs of the day.  Merpel adds, does anyone know much money the respondents have been making, and how much of it has been channelled back into the pockets of their victims?

Australians ask: what should we patent?

Though it never worked as a safety
hat for people learning to swim, this
great Australian invention soon
found an unexpected secondary use

The IPKat thanks his Antipodean friend Anna Feros for this link to today's media release from the Australian Government's Advisory Committee on Intellectual Property (ACIP), concerning ACIP's its report on patentable subject matter and its recommendations to amend the Patents Act 1990.  According to the media release, which is headed "What Should be Patented?",

Patent law should be amended to clarify what should and should not be patentable [What! Says Merpel -- won't that take all the fun out of Australian patent law?], an Advisory Council on Intellectual Property (ACIP) report has found. The report on patentable subject matter was released today [nb: it's dated December 2010] by the Chair of ACIP, Mr Leon Allen. 

“There has been recent debate in Australia on the patenting of genes, computer software and business methods”, Mr Allen said today. “Concern has been expressed that mere discoveries or abstract ideas are being patented, and that these patents are hampering access to important innovations and restricting the development of new products [Curiously enough, we Europeans have the same debate and concerns, despite the clarity of expression of the European Patent Convention's lists of (un)patentable subject matter which we've been working from since 1978]. Others say that unethical or offensive inventions can be patented.  ACIP’s recommendations provide a framework to deal with these concerns”.

In conducting the review ACIP received a number of submissions from stakeholders and consulted with them at public discussions in most major capital cities. Key recommendations of the report include: 

• codifying the established principles of patentability – so that an invention must be an artificially created state of affairs in the field of economic endeavour [this looks in principle like an imaginative way of combining the 'products found in nature' issue with 'industrial applicability'] 

• maintaining the current exclusion from patentability of human beings and biological processes for their generation – but not introducing any further specific exclusions [not because the current situation is perfect but because there's no convincing evidence that a shift in either direction would bring better results?]

• introducing a general exclusion from patentability of inventions whose commercial exploitation would be wholly offensive to the Australian public. 

The report also recommends including a statement of objectives in the Patents Act 1990 to outline its purpose, and changes to assist the Commissioner of Patents when applying the test for patentability. 

“ACIP has listened to the concerns of the community, business and other stakeholders, and has sought a balanced approach to take account of their diverse views and interests”, Mr Allen said".

You can read the whole report here.  In an amazing feat of symmetry, it's 95 pages long and has 95 footnotes.  The IPKat was interested in the reasoning behind the introduction of a statement of objectives.  The report says at p.3:

"If there is no statement of objectives within the patents legislation, its purpose must be uncovered through secondary sources such as reports to Government, second reading speeches and explanatory memoranda. A statement of objectives is preferable because it conveys the reasons behind Australia’s patent system more transparently. 

A statement of objectives would clarify the interaction between the patent system and competition policy. Including a statement of objectives in the Australian patents legislation would also bring it into line with the practice in other Australian legislation in which objectives clauses, either for a whole Act or a part of an Act, are used. Objectives clauses are also included in the patents legislation of other nations, including Japan, Korea, China, and in the New Zealand Patents Bill".

The Kat wonders how the statement of objectives would compare with the recitals that front Europe's Directives and Regulations, which sometimes seem tiresomely contradictory unless they are taken collectively as a general instruction to the court which interprets them to find the right balance on all occasions when called upon to do so. He also notes ACIP's endorsement of the manner in which the Australian courts have, without formal guidance but on the basis of their flexibility, steered a fairly satisfactory path to date between those things which are generally felt to be patentable and those which are not.

Great Australian inventions here