E-commerce patent casts shadow over Aust-US trade

A controversial e-commerce patent granted in Australia late last year could have an unexpected impact on trade with the United States according to NSW Liberal senator, John Tierney. It's alleged that the patent's owner, IP lawyer Edward Pool, told Australian trade officials in Washington he may use United States customs authorities to help enforce his claim in Australia.

A controversial e-commerce patent granted in Australia late last year could have an unexpected impact on trade with the United States according to NSW Liberal senator, John Tierney.

It's alleged that the patent's owner, IP lawyer Edward Pool, told Australian trade officials in Washington he may use United States customs authorities to help enforce his claim in Australia.

Tierney, Deputy Chair of the Senate Standing Committee on Communications and Information Technology, has asked the Department of Foreign Affairs and Trade (DFAT) to produce an e-mail Pool is alleged to have sent to one of its officers in Washington.

Pool "apparently made threats to search and seize Australian goods" said Tierney. It's understood that the e-mail was sent after the patent was sealed late last year.

The senator said he had only had been privy to a "bald statement" on the e-mail, leaving questions on how such an intervention might be granted by US authorities. However it's fair to presume that Pool would target goods traded using e-commerce systems he believed were in violation of the patent.

The patent Pool has filed in 32 countries -- under his own name or that of his company, Canada-based D.E. Technologies -- has been followed by howls of protest in each jurisdiction in which it has been granted including the United States, New Zealand and most recently Australia. Critics argued the patent was overly broad, opportunistic and lacked uniqueness.

It described a framework for a software design that electronically automates paper transactions involved in international commerce.

The patent was first submitted to IP Australia (application number 758864) early in 2003 but the alarm over its entrance into the Australasian region wasn't raised until July when D.E. Technologies began attempting to extract in some cases up to US$25,000 in royalties from New Zealand e-commerce companies.

The outrage spread across the Tasman, and business and political figures began a last-minute charge to block the patent in Australia, which was close to being sealed by local intellectual property authority IP Australia.

A vocal opponent of the patent, Matthew Tutaki, head of business development with Web technology firm Syntropy Systems, applied to IP Australia to extend a period set aside to challenge the patent with just days to spare. Tierney also raised the patent in a speech to the Senate, describing it as "predatory".

Australia's Advisory Council on Intellectual Property (ACIP) was also instructed to consider the patent's impact in its review of the way Australia handles business system patents.

Ultimately, the challenge failed and the patent was sealed in September. Tutaki had publicly discussed mounting a legal challenge to the patent in the high court but later dropped the idea due to concerns about raising money to fund the case.

The recommendations of that review were handed to Parliamentary secretary to the Minister for Industry and Tourism, Warren Entsch, late in February.

"Concerns have been raised internationally whether business system patents actually encourage innovation, and whether governments have been granting patents for truly novel ideas," said Entsch at the time.

ACIP found little hard evidence that such patents suppress or encourage innovation. The committee recommended that business systems remain patentable "for the time being".

Entsch is still considering the committee's recommendations.