Barokes Wines sought an innovation patent from the Australian government for technology it developed to produce wine in a can. A prominent packaging manufacturer challenged the patent and then successfully exploited a legal provision in the patent laws to delay the hearing of the challenge and avoid a conclusive decision from the Patent Office for at least eighteen months. This delay caused great uncertainty for Barokes and risked the viability of its Australian operations.
Barokes Wines had patented its Vinsafe technology, which is a complex three stage process that incorporates a number of vital elements to successfully deliver wine in a can.
The challenge to this patent by a large packaging company ensured a delay in Barokes being able to license its technology and enjoy home-grown revenue. Indeed the loss to the Company was estimated to be millions of dollars and the likelihood that it would have to relocate its operation offshore was very real. At the same time, Barokes had achieved a number of patents in other markets, including 25 European countries, as well as Japan, Singapore, New Zealand and South Africa.
In 2005, Australia was in the grip of a wine glut and constantly searching for new markets and ways to present its wines. Legislators were aware that small businesses were not able to exploit their innovative developments. Our challenge was to show them that small businesses, like Barokes, simply could not match the costly, legal techniques of larger, publicly listed companies.
These organisations had access to considerable amounts of shareholder funds which they put to legitimate, parliamentary sanctioned, delaying tactics. We needed that to change.
Hill & Knowlton conducted extensive research into the Australian wine industry and patent system.
With Australia experiencing a wine glut and constantly searching for new markets and ways to present its wines, it was clear that we needed to emphasise the effect the delays to the patent hearing would have on Australia’s iconic wine industry and its markets.
As well, with a strong history of quirky Australian wine developments – the wine cask was developed here in 1965 and improved with a twist tap for easy dispensing in 1969 – it was clear that we needed to fight to uphold the Australian footprint on this area.
Additionally, we became aware of the sting of Australian innovations which were taken over by overseas organisations.
Our research into parliamentary debates and the history of the patent system revealed that the legislation had not done what it was established to do. It was not enabling small business to profit from its innovative developments.
Background to Patent Legislation
When the innovation patent legislation was introduced in May 2001, it was done amidst government concerns that Australian ideas were being lost to the rest of the world. The patent legislation was said to stimulate research and development in small businesses by making patents cheaper and easier to get.
The delaying campaign Barokes Wines faced is known colloquially as ‘deep pocketing’. That is, a large company uses the considerable shareholder funds available to it to exploit legal processes and tie up the limited financial resources and time available to smaller companies.
The Barokes Wine example suggested that despite the intention of the legislation, small companies were prevented from using the patent system to effectively protect innovation. The process was too slow and too costly.
Current Impediments in the Legislation
The present innovation patent system provides that anyone may challenge or oppose the grant of the innovation patent at the Patent Office. If the Patent Office or the patentee tried to stop a delaying strategy, the third party could simply file a new challenge or opposition at the Patent Office. This would recommence the proceedings.
Barokes Example; A Risk to Australian Industry
The wine glut, combined with the strong Australian dollar, was expected to make it more difficult to export excess wine. Consequently commentators had been calling for innovative ways to sell wine to developing markets.
Australia’s wine drinkers were in decline! Can you believe it?
As wine drinkers age, their numbers are not being replaced with younger drinkers who, after formative years consuming sweet, carbonated soft drinks have graduated to canned, sweeter ready-to-drink mixed alcohol products. To this end, Barokes range of wines has been specifically constructed for the ‘can generation’ (18-39 year olds) and provides an opportunity for them to experience wine. These new consumers will in time progress to more complex wines.
Wine in the can was the answer!
Not surprisingly there are major and well recognised Australian wine brands which were keen to use Barokes Wines’ Vinsafe technology and expertise. Clearly there needed to be a workable solution that freed the Australian wine industry to make use of the Barokes Wines expertise.
o Patent Office, to bring about an early hearing
o Minister for Small Business. Minister Fran Bailey, who is also a Victorian with an office just down the road from Barokes, is also a proud promoter of the interests of small business. We knew that she would be keen to champion the rights of small business, without appearing to take sides in a business spat. We needed her office to be aware of the impediments small businesses like Barokes faced, and also the risks they posed to Barokes being viable in Australia.
o Minister for Industry. This ministry has jurisdiction of the Patent Office. The task was to make them aware of the delays, legal as they were, without appearing to threaten or compromise them. They needed to know that the system was not working. They also needed to know that while Australia was allowing delaying tactics to stop Barokes having its full patent, other countries did not have the same problem.
o Parliamentary Committee Inquiry into Science and Innovation. This committee makes recommendations on the legislation and was a vital second tier influence in ensuring our messages were being heard. Barokes made a submission to this committee’s inquiry in to pathways to innovation, and assisted the Committee secretariat in formulating relevant questions to put to those appearing before it.
Victorian Ministers for Business – As Barokes is a Victorian based business, the strategy was to get these politicians and departments to put pressure on the Federal bodies to ensure certainty for Australian businesses.
Victorian Small Business Ombudsman - As part of our secondary tactic, we engaged this office for two reasons:
1. To put pressure on federal counterparts for an early resolution to the patent issues
2. To act as a mediator with the challenging company, should we not be successful in achieving the early hearing. We wanted to be able to reach some resolution with the Company so that we could operate in Australia, un challenged.
Wine Industry Groups
Business and Industry Associations. The message was that the Innovation legislation was not working and risked the viability of small businesses and risked losing its innovative projects to overseas.
Business media. Informed of the ludicrous situation of the patent delays. Updated them each time Barokes was awarded another overseas patent – highlighting that this Australian company did not have a patent in the country in which the innovation was born.
1. Use political, media and industry pressure to bring about an early resolution to the patent hearing.
2. A back up in case that should fail. Secured agreements from those political influencers that they would assist in bringing the challenging company to the table in order to reach an amicable and sensible solution to this issue.
As well as highlighting the deficiencies in the patent system, we also wanted to differentiate Barokes from its challenger. We made it clear in all written and verbal messages that Barokes Wines is not simply a can filler. We followed with other supporting messages that included:
− As a wine making company it has a vested interest in maintaining the quality of Australian wine at all stages of the production process. It understands the need to safeguard the integrity of the reputation of Australia’s wine industry, as well as the unique historical, cultural and philosophical links our leading brand name industry has with wine packaging innovation.
− We should be concerned that attempts to prohibit this well credentialed wine company from protecting and licensing technology it developed puts the quality control aspects of this emerging market at great risk.
− Further, the delay in having the patent matter resolved may force Barokes to shift operations offshore.
− Barokes is in discussions with overseas intermediaries.
Armed with our research, we prepared a three page brief which highlighted the deficiencies in the patent system and the risk to Australia’s wine industry. We sent this to all identified influencers and stakeholders and asked them to let the powers in Canberra know they were concerned.
We made a lengthy submission to the Parliamentary Committee of Inquiry which also included our recommendations for improving the patent system.
We exploited any Victorian connections in the Federal Parliament, even if those members were not directly involved with the wine industry, science and innovation or exports.
Media were kept informed of successes in achieving patents overseas juxtaposed with the embarrassment of uncertainty in Australia.
We were engaged in July 2005. Success came within four weeks.
Result 1. Patent hearing brought forward. Less than a month after Hill & Knowlton put its plan into action, significant awareness of the issues was raised amongst government and industry key influencers and an early hearing was held on the Patent issue. This brought certainty to the company and also saved it considerable expense in protracted legal lobbying.
Result 2. Patent Awarded. In mid December 2005, Barokes were awarded their Australian patent.
Result 3. No appeal by challenger. In early 2006, Barokes was informed that the patent would not be challenged in higher courts, as had been threatened.
Result 4. Recognition by Government, In February 2006, Barokes held a luncheon at parliament house Canberra hosted by the Minister of Small Business, Fran Bailey. To the surprise of seasoned parliament house lunchers, nineteen of the twenty acceptances actually arrived. Barokes CEO, Greg Stokes spoke about the product and the experience of a small company achieving export success. He did not get to sit down and eat his meal as the guests – all members of parliament – sought his opinion on a range of issues related to patents and protection of intellectual property. Mr Stokes is now widely consulted by MP’s keen to learn from the Barokes experience.
At all levels, this was a successful campaign. The delayed hearing was brought forward and Barokes was awarded its full patent by the allotted time of the end of December 2005. As well, the much threatened appeal by the challenger did not take place.
Knowledge of the Barokes name as a leader in wine innovation, and as an export achiever has penetrated high levels of government, industry and media.