Saturday, March 31, 2012

The Megaupload story

I've put together a few references to content as this story has unfolded since January 2012. I suspect that updating this page is going to be an ongoing process.

Nothing to hide over Dotcom donation, Banks says - 29 April 2012
ACT leader John Banks says he has nothing to hide over donations to his 2010 mayoral campaign. He said he welcomed an inquiry as questions swirl around what he knew about an alleged $50,000 donation from billionaire German Kim Dotcom. An official complaint will be lodged over claims by the Dotcom camp that they made a $50,000 donation that was later declared as anonymous, despite discussing it with Banks. When asked repeatedly if he knew that Dotcom had given him $50,000, Banks refused to answer.
Read full story

Dotcom's secret donation to Banks - 28 April 2012

Act leader John Banks asked for a $50,000 political donation to be split into two parts so it could be made anonymously, says Kim Dotcom and one other witness. Dotcom said the request was made on April 15, 2010, when Mr Banks was preparing to campaign for the Auckland mayoralty. He said there were at times three other people in the room while the donation was discussed - and Mr Banks rang later to thank him for it.

Megaupload data negotiations set to begin - 26 April 2012
The negotiations between Dotcom and six other associates are due to begin in a Virginia District Court as to the future of the 25 petabytes of data which is being held by hosting firm Carpathia.
Read full story

Dotcom trial may not occur - Judge - 21 April 2012
The criminal charges against Kim Dotcom in the United States may never get to trial, the judge overseeing the case has told the FBI after being told Dotcom's file-sharing company had never been formally served with criminal papers by the US.
Read full story

Megaupload: Erasing our servers as the US wants would deny us a fair trial - 7 April 2012
On Friday, Megaupload asked the Virginia judge overseeing its criminal copyright case to spare the data on its servers from deletion. Megaupload had leased 1,103 servers holding 25 petabytes of data from Carpathia Hosting, but it was unable to continue paying its bills after the government froze its assets.

Megaupload lawyer says case could affect other storage services - 5 April 2012
A verdict against Megaupload in the US would mean other cloud storage providers can be held criminally liable for illegal content stored by customers on their networks, a lawyer representing the shuttered file-sharing site said.
Read full story

Kim Dotcom's seized cars to be sold off - 4 April 2012
Cars seized following the January police raid against Megaupload founder Kim Dotcom’s rented Auckland mansion are to be sold off.
Read full story

Dotcom allowed back on the net - 2 April 2012
Judge David Harvey grants Kim Dotcom access to the internet, a 90-minute swim each day and two trips of four hours each a week to the studio. Crown lawyers, appearing for the US Department of Justice, expressed "a level of scepticism about the success'' of such a recording.
Read full story

Dotcom seeks bail order changes - 2 April 2012
Megaupload founder Kim Dotcom was back in court today seeking changes to his bail conditions that would allow him access to the internet, a swimming pool and a recording studio to finish his album. Crown lawyers are okay with first two requests but have concerns about the third.
Read full story

Dotcom set to fight for online access - 1 April 2012
Kim Dotcom is going back to court in a bid for access to the internet. In a challenge to bail conditions, Dotcom will tomorrow argue he needs email access to properly prepare his defence.
Read full story

Megaupload User Demands Return of Seized Content - 31 March 2012
Ohio man Kyle Goodwin wants U.S. District Judge Liam O’Grady, the judge overseeing the Megaupload prosecution, to order the preservation of the 25 petabytes of data the authorities seized in January.
Read full story

US accused of hampering Dotcom case - 30 March 2012
Megaupload lawyer Ira Rothken has accused the United States government of impeding the defence of copyright-accused Kim Dotcom by refusing to release frozen funds needed to gather defence evidence. A spokesman for the US Attorney for the Eastern District of Virginia, where the MegaUpload indictment was issued, suggested to CNet in an e-mail that the office didn't consider Rothken's requests reasonable.
Read full story

Hollywood studios line up to kick Kim Dotcom - 28 March 2012
Rights owners Microhits and Valcom launch civil copyright lawsuits against Megaupload
Read full story

Hollywood studios plan to sue internet users - 28 March 2012
Hollywood studios have signalled a global intent to sue those who contributed to putting copyrighted movies on Kim Dotcom's Megaupload website.
Read full story

Kim Dotcom's $60k allowance - 22 March 2012
Alleged internet pirate Kim Dotcom has been given $60,000 a month to live on while he battles extradition to the United States.
Read full story

New blog post - a Mega Conspiracy unveiled - 15 March 2012
It has been a couple of months since police swooped on Megaupload founder and alleged "Mega Conspiracy" member Kim Dotcom and his buddies in a sleepy suburb north of Auckland. The case has created media frenzy in New Zealand and it seems that every few days there has been some further development in this case.
Read full story

Megaupload criminal copyright case is 'fundamental shift' - 15 March 2012
Megaupload caused other file sharing sites to clean up acts and business to look at cloud risk management
Read full story

Dotcom: Immigration NZ unaware of Hong Kong court action - 14 March 2012
German millionaire Kim Dotcom was aware of pending court action against him in Hong Kong when he lodged his application to be a New Zealand resident, but Hong Kong law gagged him from telling Immigration New Zealand, official documents show. New Zealand Government investigating inconsistency between tests for residency and for purchase of sensitive land
Read full story

Papers reveal Dotcom's ultimatum to NZ officials - 14 March 2012
Dotcom's immigration agent, David Cooper, described him in application papers as a billionaire, a term immigration officials repeated in their own assessments. Cooper told AP that the description came from Dotcom himself. But subsequent asset seizures indicate Dotcom's wealth to be far less than $1 billion.
Read full story

Hollywood visitor quizzed on Dotcom - 11 March 2012
A Hollywood documentary maker says he was detained by Customs for more than an hour to be searched and quizzed after putting Kim Dotcom's address on his arrival card. He was carrying a "Free Kim Dotcom" shirt.
Read full story

New details of Kim Dotcom's convictions - 9 March 2012
German multi-millionaire Kim Dotcom was reportedly convicted of eight share trading offences in Hong Kong after being granted residency in New Zealand.
Read full story

Extradition request lodged for Kim Dotcom - 5 March 2012
The United States government has formally lodged a request to extradite alleged copyright pirate Kim Dotcom from New Zealand, a lawyer representing the US says.
Read full story

Prosecutors refuse to release Megaupload data - 2 March 2012
Folllowing Megaupload founder Kim Dotcom's successful defence against the latest US attempt to deny him bail on Tuesday before an extradition hearing in August, the focus of the case is likely to move to seized assets and data.
Read full story

New blog post - Megathis and megathat - 6 February 2012
It has been a few weeks since police swooped on "Mega Conspiracy" member Kim Dotcom and his buddies in a sleepy suburb north of Auckland. Since then we've seen the media chasing a story, and the politicians chasing the media.
Read full story

Megaupload attempting to get back online - 21 January 2012
Police arrested Kim Dotcom in an early morning swoop yesterday at his $30 million rented mansion in Coatesville, 30km north of Auckland. Dotcom and three others - Finn Batato, 38, and chief technical officer and co-founder Mathias Ortmann, 40, both from Germany, and Dutch national Bram van der Kolk, 29 - appeared in the North Shore District Court yesterday.
Read full story

KOHA - Better late than never

Tug of War
It seems that another chapter closes on the KOHA trade mark saga.

New Zealand trade mark application 819644 KOHA is the subject of a kind of tug-of-war between two  competing factions within the open source community that have fallen out with each other.

One of the parties is the Te Horowhenua Trust trading as the Horowhenua Library Trust. The Trust has a close relationship with the Horowhenua District Council. According to the Trust's frequently asked questions, the Council funds 85% of the Trust's operation and appoints Trustees.

Another of the parties is Progressive Technology Federal Systems, Inc. The company trades as LibLime. PTFS/LibLime is the applicant for the KOHA trade mark application.

There seemed to be something of a media storm over this issue back in November. At that stage the Intellectual Property Office of New Zealand (IPONZ) had allowed PTFS/LibLime's trade mark application. There was a three month period during which parties could challenge registration of the trade mark.

The Trust is now getting legal advice on this issue. It is presumably getting assistance with media statements as we no longer seem to be seeing the same level of hostility in press releases. The issue is perhaps settling down into a regular legal dispute over ownership of a brand. Which is what it always was.

The request

Joann Ransom of the Te Horowhenua Trust (trading as Horowhenua Library Trust) mentions in a 2 February 2012 blog post that a letter has been sent to the applicant for the New Zealand KOHA trade mark.

The letter requested assignment of the New Zealand trade mark application to the Trust. The letter threatened a formal opposition to the trade mark application unless the Trust received a reply by noon 1 February 2012.

This is not the only threat LibLime has received from the worldwide online KOHA user community of course. I covered a few of the more angry ones in an earlier blog post. There's Dave for example who tells LibLime they will "have all the Maori up in arms with the trademarking of a word that simply means in english 'free' or 'of no charge'".

First barrel

Sure enough, an opposition was filed on 2 February, but not by the Trust. Catalyst IT Limited lodged a formal application to oppose registration.

Catalyst claims the KOHA trade mark is owned by the Horowhenua Library Trust. KOHA, says Catalyst, was used by the Trust since 1999 with the first computer software release made in January 2000. It's not clear to me whether KOHA has been used as the name of product, the open source project itself, or both.

The listed grounds of opposition include:
  • use of KOHA by LibLime is likely to deceive or cause confusion
  • use of KOHA by by Liblime would be contrary to law and disentitled to protection in a court of justice
  • LibLime is not the true owner of KOHA
  • the KOHA trade mark application was made in bad faith
  • LibLime's KOHA trade mark is identical to the Trust's well known mark

The response

JoAnn Ransom published a further blog post on 16 February 2012.

LibLime did in fact come back with a response. The response advised that LibLime is considering organisations as possible candidates to hold the New Zealand trade mark. The response invited the Trust to submit a proposal which would be required to address a number of criteria set by LibLime.

JoAnn's post also mentioned that the Trust has "spent a number of years negotiating with PTFS[/LibLime] and would prefer now to trust a transparent and defined process conducted through IPONZ as to the proper ownership of the mark in New Zealand."

Sounds like an opposition to me.

Second barrel

Sure enough, by the time JoAnn had published her latest blog post, the Trust had already filed its own opposition to the KOHA trade mark application on 13 February 2012.

The grounds are very similar to those listed in Catalyst's opposition.

An additional twist is that the Trust has filed its own trade mark application for KOHA, allocated number 953837. The application was filed on 13 February 2012, the same day as the Trust opposed LibLime's application.

We never saw Dave's prediction of having "have all the Maori up in arms" come to pass when LibLime filed the earlier KOHA trade mark application. I think we are unlikely to see a similar uprising following the Trust's application.

What now?

It is now up to LibLime to file a formal response to both oppositions. It's a case of wait and see.

There is general agreement among commentators that the Trust should have acted a lot sooner to secure intellectual property rights for its project. The position is best summed up in a post by Nathan Willis, who says that:
"... it seems that the project would have been better equipped to cope with LibLime’s withdrawal from the community had the domain name, trademarks, and perhaps even copyrights been held by a trusted entity such as HLT. Taking those legal steps is something few projects seem to consider when things are running smoothly. They are no doubt time-consuming and tedious, perhaps even expensive. But so is trying to do them in a hurry, ten years after the project launches, with hostile players going after your name."
It is good to see that the Trust is finally taking those steps. In my view it is a case of better late than never.

Photo courtesy of author TimmyGUNZ under Creative Commons licence.

Monday, March 26, 2012

Copyright fee review

Last year New Zealand lawmakers amended the Copyright Act to introduce a three notice regime aimed at deterring file sharing that infringes copyright.

Rights owners send prescribed notices to Internet Protocol Address Providers (IPAPs), what I think of as traditional Internet Service Providers (ISPs). The IPAP is then required to validate the notice and send up to three infringement notices to the infringing account holder.

Under the current scheme an IPAP is allowed to charge a rights owner up to NZ$25 for processing a rights owner notice. The fee was originally set based on estimated costs from IPAPs. The fee was always going to be reviewed after the notice regime had been in force for six months.

Fee review

The Ministry of Economic Development (MED) has now issued a Fee Review discussion document. The MED is particularly seeking submissions from Internet Protocol Address Providers (IPAPs) and rights holders.

The closing date for submissions is 30 April 2012.

Industry reaction

I think we are going to see some diverse views on this topic.

Tony Eaton, head of the New Zealand branch of the Motion Picture Association (NZFact), will call for fees to be lowered or done away with altogether according to a recent article.

The MED is likely to receive many submissions from people other than IPAPs and rights holders.

InternetNZ chief executive Vikram Kumar for example sees no need for the fees to change. Another commentator, identified only as "Bob #42" states that "... [d]ownloading continues until we can get the content we want, when we want it".

MED clearly states that the scope of the review only includes the notice fee and its effect on the regime. MED does not intend to review the file sharing regime or associated regulations more generally.

Further steps

I think the review will provide interesting information about how the scheme is working generally. I guess that assumes that the primary submitters are rights owners and IPAPs. I hope the process is not derailed by Bob #42 and others like him.

Photo courtesy of author 401K under Creative Commons licence.

Friday, March 16, 2012

Cultural tips on New Zealand

NZ Map on an Apple
I came across this really interesting article on New Zealand, reproduced below. It's about New Zealanders and our approach to business.

The author notes that Kiwis are "conservative and perhaps even shy". I would add that Kiwis generally tend to undersell their abilities or product in business interactions.

Also noted is that "Respectful straight forward communication from the beginning of any business negotiations is essential". What the author is saying here is that Kiwis have a low tolerance for bullshit and overselling.

Thanks to my Twitter buddy Arlene Marom for bringing this to my attention.

The International Entrepreneur – Cultural Tips on New Zealand: An Interview with Kiwi International Business Development Expert, Ray Underell

This week’s business culture interview is about New Zealand. While New Zealand shares some cultural traits of its neighbor, Australia, this country is definitely unique and important in up-and-coming industries such as outdoor gear and high technology. New Zealand is an island nation that is always ready to stand up to international challenge. There are approximately 4 million Kiwis (New Zealanders) with a very diverse cultural make up, including citizens of European, Maori, Asian, and Pacific Island decent. The Auckland metropolitan area has two-thirds of the country’s population. New Zealand is also considered the Polynesian capital of the Pacific. Here is what International Business Development Consultant; Ray Underell had to say about his native culture:

What do you see as unique cultural characteristics of New Zealander’s that are reflected in New Zealand’s business culture?

New Zealanders share a similar mindset and character to our Australian friends & neighbors yet enjoy their distinction as being more conservative and perhaps even shy. That is of course until they are demonstrating their renowned capacity in the International Sports arena. Check out Rugby World Cup 2011, and or America’s Cup sailing. In New Zealand, the same competitive resilience and independent thought holds true in business culture and in particular their robust appetite for international trade. For instance, in 1984 New Zealand refused entry to the nation’s ports to American nuclear-powered and nuclear-armed ships. This was to demonstrate that New Zealand was against the use of nuclear materials and the country was dutifully punished by the United States with trade restrictions. As a result, New Zealand was forced to quickly establish other export markets. [These markets] expanded and included Asia. The New Zealanders tend to be internationally minded and a well-travelled society with approximately 3/4 million Kiwis living abroad.

In your opinion, what are New Zealand’s most competitive industries in world markets?

Recognized internationally, the New Zealand wine industry has expanded significantly over the past 20 years. Grape producing area has tripled from just 10,197 hectares in 2000 to 33,428 hectares in 2010. Vineyards now cover more than twice the surface area of any other horticultural crop in New Zealand. Reflecting the industry’s reputation as a provider of super-premium cool climate wines, exports have jumped from just US $88 million in 2000 to US $788 million in 2010. While the sector is still dominated by small wineries and relatively small growers, there has been a significant amount of international investment. The six largest companies account for approximately 55% of total wine production and 19% of total grape production.

New Zealand is strong in the agriculture, horticulture, forestry, fisheries, wood and paper products industries. New Zealand is also renowned for biotech research and development, particularly as it relates to agriculture.

What’s the best way to find potential New Zealand business contacts?

Making business contacts in New Zealand does not require an intermediary like it would in many other countries. Here are several organizations and website which can help you find business contacts in your industry:

New Zealand Trade and Enterprise assists Businesses Entrepreneurs with market knowledge and information on qualified opportunities

New Zealand Institute of Company Directors

New Zealand Chambers

Your country’s New Zealand Consul General to receive comprehensive information &  education

For American citizens, contact the American Chamber of Commerce , New Zealand Chamber, or Auckland Chamber     

What do you wish people knew about doing business in New Zealand before they arrive in country?

If you are traveling across the International dateline, try a night time flight so you can get a good sleep during your flight. You might otherwise suffer time loss in adjustment and lose a productive day’s business.

The majority of New Zealanders are approachable and extremely helpful/friendly assisting with directions.

New Zealanders are known for their humour!

Respectful straight forward communications from the beginning of any business negotiations is essential.

Researching organizations is mostly

Companies and Trade associations ‘industry specific’ are an easy search via

From your perspective, what’s the business climate like for entrepreneurs in New Zealand (supportive vs. unsupported, culturally accepted profession vs. not accepted, etc.)?

I think that New Zealand business culture is extremely supportive of entrepreneurship. This is a leading base for tax revenues. But it is challenging for entrepreneurs in early stages especially for those without capital- just as it is in other countries.

Photo courtesy of author JayVeeAre under Creative Commons licence.

Thursday, March 15, 2012

A Mega Conspiracy unveiled

Lesney Factory demolition  2010  E9
It has been a couple of months since police swooped on Megaupload founder and alleged "Mega Conspiracy" member Kim Dotcom and his buddies in a sleepy suburb north of Auckland. The case has created media frenzy in New Zealand and it seems that every few days there has been some further development in this case.

Since publishing this article on my firm's website I have had a media interview about the issue. You can listen to it here:

What was Megaupload?

Kim Dotcom and his buddies were operating what they called a "cyberlocker" site, a private data storage provider. What they were actually doing is a little unclear. His legal team would say he was operating some sort of safety deposit box. Prosecutors would say he was operating a digital crack house. The truth is probably somewhere in between.

The website worked a bit like this: An internet user uploaded a computer file. reproduced the file on at least one of its computer servers. generated a unique Uniform Resource Locator or URL for that file. The user, or someone else, could then download the file once given the URL.

The site claims to have had more than one billion visitors in its history, more than 180,000,000 registered users to date, an average of 50 million daily visits, and to account for approximately four percent of the total traffic on the Internet.

What's the problem?

According to a Grand Jury indictment filed Jan 5, 2012, Kim Dotcom and his pals were members of a "Mega Conspiracy"; alleged to be:
"a worldwide criminal organization whose members engaged in criminal copyright infringement and money laundering on a massive scale with estimated harm to copyright holders well in excess of [US]$500,000,000 and reported income in excess of [US]$175,000,000."
There will hopefully be a lot more detail forthcoming as to how those numbers are calculated.

The specific counts against Kim Dotcom and his pals include:

  • Conspiracy to commit racketeering
  • Conspiracy to commit copyright infringement
  • Conspiracy to commit money laundering
  • Criminal copyright infringement by distributing
  • Criminal copyright infringement by electronic means

A subsequent indictment filed in February claims that the Megaupload site had 66.6 million registered users as of January 2012 and just under 10 percent had ever uploaded a single file, suggesting most people used the site only to download infringing material. The new indictment also accuses the group of taking copyrighted material from sites such as Google's YouTube video service for use on Megaupload websites.

Conspiracy to commit copyright infringement

The conspiracy count makes for the most interesting reading. There is a lot of material in the original indictment, and further material expected. Some of the more interesting allegations are set out below.

Reproducing copyright works

The Mega Conspiracy operated a few websites. One of these, called, was for users who did not want to download whole copies of content. They could stream them. Just like YouTube. In fact, exactly like YouTube. The Mega Conspiracy is accused of reproducing copyrighted works directly from

One of the intercepted emails between conspirators Bram van der Kolk and Mathias Ortmann reads:
"Do we have a server available to continue downloading of the YouTube's vids? ... Kim just mentioned again that this has really [sic] priority." 
Reward payments

The Mega Conspiracy is alleged to have provided financial incentives for users to upload infringing copies of popular copyrighted works. The Conspiracy made payments to uploaders who were known to have uploaded infringing copies of coprighted works.

Bram van der Kolk commented on one of the users deemed eligible for payment as follows:
"Our old famous number one on MU, still some illegal files but I think he deserves a payment".
Failure to remove

Members of the Mega Conspiracy are accused of failing to delete infringing copies of copyrighted works from computer servers that they controlled, even when they were aware of the infringing material or the removal was specifically requested by the copyright holder.

There's this email from Kim Dotcom to Mathias Ortmann:
"Never delete files from private requests like this. I hope your current automated process catches such cases."
And there's this one from Dotcom to van der Kolk, Ortmann and Bencko:
"I told you many times not to delete links that are reported in batches of thousands from insignificant sources. I would say that those infringement reports from MEXICO of 14,000 links would fall into that category. And the fact that we lost significant revenue because of it justifies my reaction."
And this one:
"In the future please do not delete thousands of links at ones [sic] from a single source unless it comes from a major organization in the US."
Court Appearances

Alleged Mega Conspiracy members Kim Dotcom, Bram van der Kolk, Finn Batato and Mathias Ortmann were initially held in custody awaiting extradition to the United States. All are now out on bail. Dotcom was released under the usual conditions that he wear an electronic bracelet, that he travel no more than 80km from his home and that he not consume or possess illicit drugs. Two of the more interesting conditions are that he has no internet access and helicopter visits are banned.

Immediately before his arrest, Kim Dotcom managed to achieve the Number 1 ranking in Call of Duty: Modern Warfare 3. Playing under the gamertag MEGARACER, he is understood to have clocked up 185,353 kills after a mammoth 707 hours playing time. The session that finally took him to number 1 is reported to have lasted well over 7 hours. Since his incarceration he has dropped from the number 1 spot. His bail conditions prevent him from accessing the internet so he is unlikely to regain his crown.

During the arrest Dotcom and his bodyguard Wayne Tempero were found in a safe room together. The bodyguard originally faced three firearms charges. Police have dropped one of the charges involving unlawfully possessing a semi-automatic shotgun. Tempero has elected trial by jury for the other two charges involving possession of a pistol for an unlawful purpose.

The United States Government has filed extradition papers with the North Shore District Court naming Dotcom and his three associates. We expect the extradition hearing to be sometime in August this year. The extradition process will highlight the complex interaction between the criminal provisions of the New Zealand Copyright Act 1994, the New Zealand Extradition Act 1999 and a 1970 Treaty on Extradition between the USA and New Zealand.

The Ripple Effect

It has been interesting to watch the effect of Megaupload-related events on other cyber locker sites.

Filesonic has changed its policy. It has now disabled all sharing functionality. Account holders are able to access only those files they have uploaded themselves. Filesonic is making it clear, perhaps to US prosecutors, that it is primarily a file locker site rather than a file sharing site.

The Motion Picture Association of America filed a copyright lawsuit over a year ago against a cyberlocker. File-hosting service Hotfile, according to the MPAA, has made a business out of offering a stash box for people to store their pirated movies. Perhaps emboldened by the Megaupload case, the MPAA now wants the judge to make a quick summary judgement in the case, and rule against Hotfile due to its similarities to Megaupload.

And so it continues...

Out on bail, the latest news from Kim Dotcom is him negotiating with the US Department of Justice to reunite his users with their lost personal data. Apparently many US government officials were Megaupload users. The plot thickens.

Photo courtesy of author sludgegulper under Creative Commons licence.

Monday, March 12, 2012

Not so streamlined

Traffic Jam at ITO
Back in July 2011 the New Zealand and Australian Governments announced a streamlined process for securing patent rights in New Zealand and Australia.

Inventors in New Zealand and Australia were promised "a faster, cheaper and more streamlined trans-Tasman patent process". A single patent application and examination process for both countries, said the Ministers, will remove duplication, drive efficiencies and reduce costs, making it easier for businesses to protect their intellectual property in both countries.

Sapere Research Group prepared a paper towards the end of 2011 titled "Trans-Tasman harmonisation of intellectual property law regimes - the costs and benefits". The New Zealand Ministry of Economic Development (MED) commissioned the report in order to outline, and where possible quantify, the costs and benefits to the New Zealand economy of these proposals.

In an ideal world the assessment of costs and benefits would have preceded the decision to implement the streamlined process. I guess we are not living in an ideal world.

The conclusions in the report don't exactly align with the media statements of the benefits. The report concludes that:
"[a] single patent examination is unlikely to provide substantial cost savings to New Zealand businesses, and there is the potential risk if it results in a delay to prosecution of a New Zealand patent."
Increase in official fees

At the moment there is a fee difference between the Australian and New Zealand patent offices. Both countries are said to operate to cost recovery principles. The report anticipates that New Zealand fees will need to rise to the Australian level.

The proposal is that New Zealand will pay Australia a fee for service (and vice versa) for applications filed in New Zealand but examined in Australia. There is some uncertainty as to what these service fees will be. There is a possibility that the fees will be set on a full cost recovery basis.

Those applications for New Zealand patents that are examined in Australia would need to cover the higher Australian cost. This suggests that the New Zealand fee would need to rise to at least the Australian fee.

It is therefore inevitable, states the report, that New Zealand official fees for a New Zealand only patent will rise. For dual applications, IP Australia assumes that applicants will pay the sum of the fees of both offices. The report suggests that this ignores the economies of scope for the patent offices. Economies of scope would suggest that the additional official fee for the secondary country should be less than the full fee for a stand-alone application.

Ironically these economies of scope are cited as a key benefit of the proposal.

Examination delays

The report observes that a patent granted is much more valuable than a patent application. New Zealand businesses state that they want to be able to control the speed of grant. The loss of the ability to prosecute patents quickly in New Zealand, if that is what the applicant wants, would be a disbenefit.

The Intellectual Property Office of New Zealand (IPONZ), according to the report, examines patent applications within twenty working days while in Australia if takes fourteen months from request for examination. The report notes that timeframes must equalise with the merging of the system to avoid gaming or arbitrage. IPONZ has acknowledged that timeframes will lengthen as their workload changes.

Further steps

The report concludes that this proposal to harmonise the patent application process on a trans-Tasman basis is not a priority for New Zealand business. A single patent examination is unlikely to provide substantial cost savings to New Zealand applicants. Furthermore, there is a potential risk if it delays securing grant of a New Zealand patent.

Few of the patent attorneys or businesses spoken to could identify any benefits associated with the proposal, other than possibly some efficiency in processing at the patent office. But let's not allow the views of clients get in the way of policy.

Photo courtesy of author We Conscious under Creative Commons licence.

Wednesday, March 7, 2012

Our Highland steer

We have had cattle on our lifestyle block for a few years. They are supposed to be easy management. I can't say I've seen that side of them, but maybe that says more about us than the cattle.

We need to have at least two cattle at all times, so when one of them is ready for the freezer, we scurry around the region looking for a weaned 6-9 month calf. Weaned is good so it doesn’t have to be bottle-fed. Six to nine months of age is good because it can fit on my trailer for transportation to our place. Sometimes this is drama-free, sometimes not.

The lucky little guy or girl joins two others at our place, and then Mr Before-and-After can come and reduce the numbers back to two.

This system works pretty well. Except for one thing. Because we don’t raise them, the cattle never really get tame enough to lead around. However, they lose their natural fear of humans because they are in contact with us so often. The result is a small herd with a mind of its own.

After too much “mind of its own”, my wife came up with the idea of keeping tame cattle on the property that we can breed from. Maybe we could get a bull and a couple of tame heifers, or maybe just the heifers.

We did some research and decided that we liked the look of Highland cattle.

Sure enough, our neighbours Eileen and Ted were selling a Highland steer. Here was our opportunity to try the breed out. If we liked him we would get more of them. If we didn't like him, well there's always Mr Before-and-after…

Because we live less than a kilometer apart, we naively thought that Teddy could just trot down the lane to us, egged on by a carrot. Not so, we were told by Eileen & Ted.  We needed a stock truck.

On the morning we went to pick him up, I saw exactly why. The stock truck backed up to the end of the yards where Teddy was waiting.  The plan was that he would walk calmly along the race and into the back of the truck. We thought.

At that point things started to go a bit pear shaped. Teddy got a bit grumpy. He decided that he didn't want to be in the yards anymore. And he didn't want to go in the back of the truck.

So this animal - 1,000kg (2,200 lbs) of muscle and bone plus a couple of groin-gouging horns - just jumped out of the yards. Horns waving, eyes wide, nostrils flared.  Twice.

My 7 year old's eyes were just about popping out of his head. I felt like he looked.

Well, we eventually got him into the truck and to our place.  He burst out of our yards like, well, like a bull out of a gate. Our other two cattle came rushing over to see Teddy. Maybe they were coming over to investigate, or maybe they were trying to establish dominance over the newcomer. We had a couple of laughs as Teddy quickly made it clear that Teddy was the boss.

He has calmed down a lot over the last few months. Apparently. Not quite to the level where I feel I can hand feed him, but I've certainly seen others do it. Me? I still have too much respect for those horns.

Thursday, March 1, 2012

Alverson and the abstract idea

Ex Parte Alverson et al, No. 2010-008459 (BPAI Feb 15, 2012) involved a system and method providing business information to a contractor certification system for providing a performance assessment, technical evaluation and certification to assist a surety underwriting a building project.

Owner/inventor David J Alverson brought US Patent Application 10/634,504 before the Board of Patent Appeals and Interferences. The Examiner had rejected claims 1, 2 and 4-13 as being directed to non-statutory subject matter.

Claim 1 for example read as follows:
1. A contractor certification system for obtaining lines of credit for a building contractor comprising:

a. survey means comprising a questionnaire stored in a computer database, which is provided to selected candidates within different organizational levels of a building contractor's business for electronically gathering answers concerning information detailing business and financial practices, said answers being used for assessing business and financial practices of said contractor's practices by an independent third party, said financial practices being used to predicate risk ranking when securing lines of credit for said contractor's business, said business practice information comprising management structure, reporting structure, internal communications procedures, safety and labor management practices, said financial practice information comprising current projects, funding, gross margins and close out procedures;
b. said different organizational levels comprising at least one worker, foremen, project manager, engineer, and principal;
c. mapping means for studying said answers provided to said questionnaire on said computer database to select job site visits and candidates for interviews, said mapping means comprising examining and correlating said answers to determine matches, discrepancies and inadequate details;
d. on-location assessment means for determining business and financial practices at the contractor's operations, said assessment means comprising asking questions to each of said candidates selected through said mapping means and observing examples of the contractor's business practices and financial procedures, said assessment means further comprising visiting several active job sites at which said contractor is involved;
e. comparison means for assessing business and financial practices by way of software evaluation of results obtained from steps a-d, and electronically ranking the contractor in comparison with industry standards; and
f. reporting means for providing a grade indicative of said contractor's rank, said reporting means further comprising computer generation of a comparative report that provides a listing of key risk factors and highlights said business and financial practices and risk factors of said contractor in comparison of said risk factors, said risk factors comprising said operational structure, marketing of new projects, current projects, details of project execution, safety procedures,statutory compliance, project administration, mediation / arbitration procedures and past litigation.
Human thought and processing

The Examiner had objected that Claim 1 claims coverage of a human as an element of the system/apparatus per se. Since the broadest reasonable interpretation of the claimed invention as a whole encompasses a human being, the examiner objected that the claimed invention is directed to non-statutory subject matter.

The Appellants on the other hand argued that “Applicant's claims inextricably rely on numerous machines to process the survey results, determine the risk levels, and thereby calibrate the proper surety risk assessment.”

Claim 1, said the Appellants, passes the machine-or-transformation test.

Citing Bilski v. Kappos, 130 S.Ct. 3218, 3227-3228 (2010), the Board observed that abstract ideas are not patent eligible. Claim 1, said the Board, effectively covers an abstract idea because it incorporates human thought and processing to effect claim functions. The recited computer based solution activity is of insufficient cause to avoid preempting an abstraction under 35 U.S.C. § 101.

Significant part

The Board observed that simply adding a “computer aided” limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible. See Dealertrack v Huber Case No. 2009-1566 (my blog post).

There was nothing in the Specification that would support using a computer to provide anything more than a solution achieved more quickly, i.e., through the utilisation of a computer for performing calculations. In fact, said the Board, the Risk Technology item is described without mention of any computer implementation making the language generic to both human and a computer based solution.


The Appellants also argued unsuccessfully that the system of claim 1 transforms something because the result is “credible”.

The result of claim 1, said the Board, is that an entity receives a line of credit which does not physically transform that entity into something different. Having more access to credit is nothing more than an exercisable legal right, to be used or not used according to the entity’s financial needs and designs.

Further steps

The Board affirmed the rejection of the Examiner under 35 U.S.C. § 101.

Photo courtesy of authors and neighbours Al and Rose at The Crate Outdoors.
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