Incorporation of Patent and Trade Marks Attorneys

Attorneys Inc. Legislation Are we there yet? Implementing Incorporation Once the decision was made to go ahead with incorporation, it was necessary to decide how it would be implemented. The presentation will discuss What has been done so far in implementing incorporation. What still needs to be done to put the legislation in place. The timeframes involved.

Options - Attorneys Inc. No notification or registration Notification of company Registration of company 3 options were considered to allow companies to do patent attorney work: Option 1 provides for a model which would allow companies to act as patent attorneys without any notification or registration requirements. Under option 1, the Designated Manager would not be aware at any one time which companies are acting as patent attorneys. However, this option would impose minimal administrative burden on the companies acting as patent attorneys and the Designated Manager. Option 2 would require companies to notify the Designated Manager that the company will be acting as a patent attorney. Option 2 is concerned with the obligations of patent attorney directors. Option 3 would require companies to be required to be registered patent attorneys before they act as a patent attorney. Option 3 is concerned with the company as a whole. Under options 2 and 3, various levels of control are provided for, but both would have the Designated Manager aware of which patent attorneys are acting through a company.

Option 1: no notification or registration Pros Few legislative changes No extra obligations on Designated Manager Very few additional obligations on company Cons No transparency on companies acting as attorneys If the company does not have an attorney director (for any period), company cannot act or describe itself as an attorney Misconduct action only against individuals, not against company Option 1 would allow a company to act and describe itself as a patent attorney if it has one patent attorney director. There is no requirement that a company notify the Designated Manager or be a registered patent attorney itself. This model is similar to that contained in reg 8 of the Regulations issued by the Institute of Chartered Accountants of Australia As well as allowing a company who has a patent attorney director to act, or describe itself, as a patent attorney, option 1: makes patent attorney directors responsible for the conduct of the officers and employees of the company when providing services as a patent attorney; only allows the officers and employees of the company to prepare a specification, or a document relating to an amendment of a specification, if the officer or employee is acting under the instructions or supervision of a registered patent attorney or the amendment is directed by a court order; makes it clear that officers and employees of the company who are registered patent attorneys must still comply with their statutory obligations and that they retain their privileges. Advantages The advantages of this option are that: it requires very few amendments to the Patents Act; it imposes no additional obligations on the Designated Manager; it imposes very few additional administrative obligations on companies that want to act as patent attorneys. Disadvantages The disadvantages of this option are that: it will not be clear which companies are acting as patent attorneys; action can only be taken against an employee or officer of a company who is a registered patent attorney for unsatisfactory or unprofessional conduct and not the company; if the company does not have a patent attorney director, the company cannot act as a patent attorney no matter how short the period of absence (this would not cover periods where, for example, a director is on annual leave - however, if the company has no other officers or employees who are registered patent attorneys, the non-patent attorney employees and officers may not be able to prepare specifications and document relating to an amendment of a specification during that period)

Option 2: notification of company Pros List of companies acting as attorneys Mechanism to deal with absence of attorney director Cons Greater administrative burden on companies Additional obligations on Designated Manager Under option 2, a company that proposes to act as a patent attorney must have at least one patent attorney director and must notify the Designated Manager before starting to act as a patent attorney. Such companies would be known as incorporated patent attorneys. Option 2 is based on the requirements of the Model Bill for the legal profession. As well as the patent attorney director and initial notification requirements, this option: requires an incorporated patent attorney to notify the Designated Manager if it ceases to act as a patent attorney; specifies the consequences of not having a patent attorney director for more than 7 days (or as extended by the Designated Manager); only allows the officers and employees of the company to prepare a specification, or a document relating to an amendment of a specification, if the officer or employee is acting under the instructions or supervision of a registered patent attorney or the amendment is directed by a court order; makes it clear that officers and employees of a company that acts as a patent attorney who are themselves registered patent attorneys must comply with their statutory obligations and that they retain their privileges. Advantages The advantages of this option are that: there will be a complete list of companies that act as a patent attorney; it contains a mechanism to deal with the circumstances where a company does not have patent attorney director for a period. Disadvantages The disadvantages of this option are that: it places a greater administrative burden on companies that want to act as patent attorneys (although not as much as when the companies are required to be registered themselves); it imposes further obligations on the Designated Manager.

Option 3: registration of company Pros Certainty as to companies acting as attorneys Similar to other statutory licensing schemes More direct control over companies (eg companies registration as an attorney can be cancelled) Behaviour of whole company considered Cons Greatest administrative burden on companies Maximum obligations on Designated Manager Option 3 would require a company to be a registered patent attorney before it may describe itself, or act, as a patent attorney. Similar regimes apply to customs brokers under the Customs Act 1901 and to tax agents under the Income Tax Assessment Act 1936. (Note that these regimes also require partnerships to be registered). As well as requiring a company to be a registered patent attorney, this option: allows a company to apply to become a registered patent attorney; allows the Designated Manager, based on specified criteria, to determine whether the company should be a registered patent attorney; requires a company that is a registered patent attorney to notify the Designated Manager of certain matters; allows the Designated Manager to cancel or suspend a company’s registration; and only allows the officers and employees of the company to do prepare a specification, or a document relating to an amendment of a specification, if the officer or employee is acting under the instructions or supervision of a registered patent attorney or the amendment is directed by a court order; make it clear that officers and employees of a company that is a registered patent attorney who are themselves registered patent attorneys must comply with their statutory obligations and that they retain their privileges. Advantages The advantages of this option are that: it provides certainty as to the companies who can act as patent attorneys; it is similar to other statutory licensing regimes; it provides more direct control over the company (eg the company’s registration can be cancelled); and it allows the behaviour and state of the whole company to be considered when registering or suspending or cancelling registration. Disadvantages The disadvantages of this option are that: it possibly imposes more administrative burden on companies who are registered patent attorneys; it imposes further obligations on the Designated Manager.

Notification of company Preferred option Notification of company based on the Model Bill for the Legal Profession The preferred option was selected in consultation with representatives of IPTA and FICPI. The model was then put out to broader public consultation: Consultation paper – Incorporation of Patent and Trade Marks Attorneys, October 2007 Position paper - Overview of responses to the public consultation paper, Incorporation of Patent and Trade Marks Attorneys, December 2007

Notification of company Incorporated patent attorney Patent attorney director Company must notify Designated Manager That it acts as an attorney That it ceases to act as an attorney Consequences of not having a patent attorney director A company that proposes to act as a patent attorney must have at least one patent attorney director and must notify the Designated Manager before starting to act as a patent attorney. Such companies will be known as incorporated patent attorneys. As well as the patent attorney director and initial notification requirements, this model: requires an incorporated patent attorney to notify the Designated Manager if it ceases to act as a patent attorney; specifies the consequences of not having a patent attorney director for more than seven days; only allows the officers and employees of the company to prepare a specification, or a document relating to an amendment of a specification, if the officer or employee is acting under the instructions or supervision of a registered patent attorney or the amendment is directed by a court order; and

Obligations - attorney director Responsible for management of patent attorney services provided by the company Same obligations under company law as any other director Obligations of patent and trade marks attorney directors Patent or trade marks attorney director responsible for management of the company and in particular the discipline and professional obligation aspects. Nothing in the Patents or Trade Marks Acts derogates from the obligations or liabilities of a director of an incorporated patent or trade marks practice under any other law.

Obligations – individual attorneys Must comply with statutory obligations Retain privileges Code of conduct applies Retain personal responsibility for discipline and complaints Obligations of individual patent and trade marks attorneys The following responsibilities apply to individual patent and trade marks attorneys regardless of the legal entity within which they practice. officers and employees of a company that act as an attorney who are themselves registered attorneys must comply with their statutory obligations and they retain their privileges. This is despite the fact that a client is the client of the company rather than of the individual attorney. the Code of Conduct will apply to all individual attorneys. individual patent and trade marks attorneys retain personal responsibility for discipline and complaints and this would be the case whether they are directors, employees or have another role in the company;

Professional Indemnity Insurance Will apply to all patent and trade marks attorneys With some exceptions In-house attorneys Non-practising attorneys From Position Paper on Incorporation of Patent and Trade Marks Attorneys, December 2007: IP Australia recognises that a significant proportion of patent and trade marks attorney work is undertaken within law firms which also offer other services across a wide spectrum of legal advice and advocacy. It is appreciated from comments received that these offices have in place reasonable PII cover. This cover is supplied by a range of providers located in Australia and overseas. It is not intended that any legislative changes would impact on these insurance partnerships, which in some cases have a long history. Within this context of entity PII cover, it is not proposed that registered practising patent attorneys employed by entities with suitable insurance cover also have individual PII cover. To satisfy any proposed registration requirement, patent attorneys may, however, need to state the name of the insurer, policy number of policy expiry date. Dual cover was also raised as an issue where a lawyer employed by a legal firm is also a trade marks attorney. This would not be an issue as long as the PII cover already in place provides for work in the trade marks area of the practice. Otherwise, the firm will need to ensure that the PII cover is extended to ensure that it does to be compliant with these proposals. IP Australia is cognizant of the impact of a mandated PII scheme on a limited number of small scale patent and trade marks practitioners and “retired practicing” attorneys. PII will be additional cost burden in circumstances where professional indemnity insurance is not currently a consideration for reasons given in one or two submissions mentioned above. At the same time, however, professional indemnity insurance should be a relevant business practice consideration when a person is in the business of giving expert advice and people are relying and acting on that advice. This is particularly so in circumstances where that advice is being given for a consideration and may have an adverse impact of the financial affairs of the person seeking the advice. The Australian community also expects that where government sees a role in regulating working arrangements of relevant professions (see above for some examples), an informed public would also expect that there be in place suitable remedies through which action could be taken to seek recourse when circumstances dictate. Notwithstanding the size of a patent or trade marks attorney’s practice, all practicing attorneys providing advice to the public should have in place PII to suit their practicing situation. For this reason, IP Australia will, in the spirit of seeking to mandate the requirement for practising patent and trade marks attorneys to hold PII cover on non onerous legislative basis, reconsider the need to legislate for a minimum PII cover[1]. The level of cover may be left to individuals or firms to decide upon in consultation with their selected insurance agent and their business risk assessment profile. [1] The consultation paper suggested a minimum cover of $500,000.

Next Steps - Legislation Policy Approval Legislative Change Photo: ‘salty steps’ by Grant McDonald.

Approval to introduce legislation Drafting Instructions Policy Approval Legislative Bid Prime Minister or Cabinet Exposure Draft Bill Support material Approval to introduce legislation Legislative Bid Minister bids for place on the legislation program for next sittings. Parliamentary Business Committee sets the Legislation Program. T, A, B and C category bills. Drafting Instructions Written instructions from IP Australia to OPC Policy Approval Need approval from the Prime Minister. Agreement of affected portfolio Ministers required (Treasurer and Attorney General) Draft Bill Bill drafted by Office of Parliamentary Council (OPC) Need approval from Prime Minister or Cabinet for exposure draft of bill. IP Australia prepares support material such as Explanatory Memorandum, 2nd Reading Speech. Introduction and passage of Bill through Parliament

Are we there yet?

Thank you Brendan Bourke phone: 02 6283 2148 email: Brendan.Bourke@ipaustralia.gov.au