02 August 2010

Well-Known Innovation Patent Takes the Next Step... Just!

Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd (Administrator Appointed) [2010] FCA 465 (13 May 2010)

Patent Opposition - Appeal to the Federal Court of Australia - outcome when neither the original opponent nor the Commissioner of Patents appears and no evidence before the court

ABSTRACT

An opponent was successful in opposition proceedings before the Patent Office in having all claims of an accepted patent application rejected as lacking an inventive step.  However, when the applicant appealed the opposition decision, the opponent was unable (due to financial circumstances) to participate in the appeal proceedings before the Federal Court of Australia.

As in similar previous cases, the court was unable to uphold any ground of opposition in the absence of any relevant evidence having actually been adduced during the proceedings.

Therefore the appeal was allowed, and the patent proceeded to grant.

BACKGROUND

Many of our readers, particularly in Australia, will be familiar with the dispute between Delnorth Pty Ltd and Dura-Post (Aust) Pty Ltd, over the validity and infringement (by Dura-Post) of a number of innovation patents (owned by Delnorth) relating to flexible roadside posts.

The saga of Delnorth and Dura-Post now appears to be drawing to a close, with Dura-Post having been placed under Administration (the most recent related decision of the Federal Court of Australia issued on 25 June 2010).  Much has been written about the decisions in the Federal Court and on appeal before the Full Federal Court, which have settled the law regarding the test for "innovative step", ie the lower level of "inventiveness" required of a valid innovation patent claim.

The full story in review will be the subject of a separate posting in the near future.  Today we wish only to highlight a relatively recent decision of the Federal Court relating not to the (in)famous innovation patents, but to their "standard" equivalent, Australian Patent no. 2004249786.

Relationship between Delnorth's innovation and standard patents

Delnorth originally filed Australian standard patent application no. 2004249786 on 10 June 2004, claiming priority from a provisional application filed on 23 June 2003.  Over a period between 2005 and 2006, a number of innovation patent applications were filed, each of which was a divisional of the standard application.  All of the innovation patents were examined and certified, and three of them formed the basis of the infringement actions against Dura-Post.

Throughout this period, the standard patent application remained pending.  As we have discussed previously, there is a prohibition on double patenting under the Australian law, which seeks to prevent the grant to one party of two patents having claims of substantially identical scope.  This prohibition applies as between innovation patents and standard patents, as well as between patents of the same type.

Therefore a single proprietor cannot simultaneously possess granted innovation and standard patents for the same invention.  However, there is no prohibition on maintaining a pending application in parallel with a granted innovation patent, and then either waiting for the innovation patent to expire (at the end of its eight-year maximum term, or earlier if renewal fees are not paid) or formally requesting that it be cancelled.  Once this has happened, the standard patent application is no longer barred from proceeding to grant.

In this case, Delnorth was successful in having its standard patent application accepted, including some claims that were identical with claims of one or more of the innovation patents.  Dura-Post opposed grant of the patent, under Australia's pre-grant opposition system, on various grounds, including lack of inventive step.

Outcome of opposition in the Patent Office

The evidence before the Patent Office in the opposition proceedings was unusually extensive, and of relatively high quality, largely because the majority of that evidence had originally been prepared for the court proceedings relating to the innovation patents.

The Patent Office decision is reported in Delnorth Pty Ltd v Dura-Post (Australia) Pty Ltd (2009) 81 IPR 396.  It is 257 paragraphs in length, and we will save further discussion for a later article.

It is sufficient for present purposes to point out only that the Commissioner's Delegate found in favour of the opponent on the grounds of lack of inventive step, ie all claims were found to be obvious.

This will perhaps be unsurprising to those familiar with the Delnorth innovation patent cases.

Delnorth appealed the opposition decision to the Federal Court of Australia.

EVENTS BEFORE THE FEDERAL COURT

In an appeal to an opposition decision, the parties are generally the same as those appearing before the Patent Office, ie the patent application and the opponent.  The opponent is responsible for placing before the court evidence regarding the unpatentability of the opposed claims.  The Commissioner of Patents is also entitled to appear, but is under no obligation to do so.

In this case, the Commissioner indicated in May 2009 that she did not intend to appear, but that all of the evidence submitted to the Patent Office would be made available if needed.

The court called the parties to a directions hearing on 15 April 2010, at which time it was informed that Dura-Post had been placed under administration.  Delnorth immediately sought orders to the effect that the appeal be allowed and the patent application proceed to grant.  The court gave Dura-Post a few days to consider its response, after which it withdrew all objections to grant of the patent.  The Commissioner confirmed that she would not be exercising her right to appear.

This left the court in the position of having no evidence before it relating to the obviousness, or otherwise, of the opposed claims.

THE OUTCOME - PATENT PROCEEDS TO GRANT

This is not the first time such circumstances have arisen, but it is a good reminder of a number of established principles that determine the outcome in these cases (paragraph [14] of the decision, citing Cadbury Schweppes Plc v Effem Foods Pty Ltd [2006] FCA 1267):
  1. an appeal from an opposition decision by the Patent Office is a hearing de novo by the court, ie all issues are considered anew based on evidence and submissions made to the court, and without deference to the outcome before the Office;
  2. the only evidence that can be taken into consideration is that adduced at the gearing before the court;
  3. there is no obligation upon the patent applicant to put into evidence any of the materials that were before the Patent Office; and
  4. where neither the opponent nor the Commissioner appears, and there is no relevant evidence before the court, there is no basis upon which the court can uphold any ground of opposition.
As a result, the appeal must be allowed, and the patent proceed to grant.

Delnorth's patent no. 2004249786 was sealed on 27 May 2010.

COMMENT

When a successful opponent fails to defend an appeal of a favorable opposition decision, it is likely that the appeal will be allowed, and the patent will be granted as if it were never opposed.

Indeed, the court in Cadbury-Schweppes expressly recognised (at [17]) that, in substance the position on appeal with no opponent present is just as if there had been no opposition to grant in the first place.  It also noted, however (at [20]), that this does nothing to foreclose the question of validity of the patent in any future proceedings.

So Delnorth has its patent, but how confident can it be that this patent is enforceable, when in the only substantive decision issued on all of the available evidence, the Patent Office found all claims to be invalid for obviousness?

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