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Australia stalls bid to patent e-commerce

A patent claim by a US company that would effectively force Australian businesses to pay royalties on any Internet business transaction has been blocked at the last minute by Australian authorities

A controversial patent claim that could force Australian businesses to pay millions in royalty fees to conduct business over the Internet has been caught at the eleventh hour.

The deputy commissioner of patents, Janet Werner, said administrator IP Australia was preparing to seal the patent, but received an application to extend a cooling-off period in which interested parties are given the opportunity to challenge a submission.

"We've received an application requesting us to extend that period... if that's granted then an application to oppose the patent will be considered," said Werner.

This effectively means that Delaware-based D.E. Technologies -- which filed the patent application -- can't enforce it until the patent commissioner has decided whether to extend the cooling off period.

D.E. Technologies filed the application, to patent a broad framework for software design allowing international electronic transactions over the Internet, with IP Australia in 1999. IP Australia granted the application in April this year, beginning a three-month period in which the patent could be challenged by other parties.

"We were just about to proceed to sealing off the patent when an application for an extension of time to file a notice of opposition was filed," said Werner.

A vocal opponent of the patent, Matthew Tutaki, head of business development with Web technology firm Syntropy Systems, said technically the patent leaves every company conducting business transactions across Australia's borders over the Internet liable to be slugged with a royalty fee.

Werner said that "as far as IP Australia is aware" the patent is legally sound, but pointed to the recent challenge as a possible deal-breaker.

According to Werner, challenges to the patent could be made on the grounds that the ideas it contains are not new, inventive or are already held by another entity.

Critics of the IP Australia say the patent should never have been granted in the first place. Tutaki claims that IP Australia shouldn't have granted "a patent with this much effect on the Australian economy, international trade and whole industries" or handed the rights of ownership of e-commerce in this country to a foreign company.

Werner said IP Australia had no mandate to test the commercial impacts of patent applications.

"It's not our function to look at that; we look at whether the application for invention is new, and whether it's inventive, and whether the applicant has fully described what the invention is," said Werner.

The commissioner will decide on the extension application within the next two weeks.


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