24 February 2011

New Zealand’s Drop-Dead Divisional Deadline

Baxter Healthcare SA [2011] NZIPOPAT 2 (4 February 2011)
American Aerogel Corporation [2011] NZIPOPAT 3 (4 February 2011)


Here is something that anybody who files and/or prosecutes patent applications in New Zealand should know: the deadline for filing a divisional application is the date on which a Notice of Acceptance is issued on the parent case.

Here is something else that these same people should know: this deadline cannot be extended.

Let us be absolutely clear about this – not at all… not ever… not in any circumstances!

And under the current New Zealand Patent Office practice, the Notice of Acceptance is issued once the examiner determines that there are no outstanding objections to the grant of the patent.  So, once a response is filed that may place the application in order for acceptance, it is best to assume that there will be no warning of the divisional filing deadline.

In other words, if the applicant wishes to file a divisional application, they had better do so no later than the day on which they file a response placing the application in order for acceptance.

Two decisions recently issued by the New Zealand Patent Office are a sobering reminder of the hazards of failing to consider the need for a divisional application before filing a response.

DIVISIONAL APPLICATIONS AND THE NZ PATENTS ACT 1953

The current New Zealand Patents Act is now somewhat long in the tooth, and could not exactly be said to be a model of clarity or elegance in its provision for divisional applications.

Subsection 12(5) of the Act reads:

Regulations made under this Act may make provision for securing that where, at any time after an application or specification has been filed under this Act and before acceptance of the complete specification a fresh application or specification is filed in respect of any part of the subject matter of the first mentioned application or specification, the Commissioner may on request direct that the fresh application or specification shall be antedated to a date not earlier than the date of filing of the first mentioned application or specification.

Our astute readers will recognise that this does not actually provide for the filing of divisional applications.  Instead it provides ‘permission’ for the Patents Regulations to provide for the filing of divisional applications at any time after filing the parent application and prior to the parent application being accepted.

So divisional applications may or may not be allowed, within these time constraints, depending upon whether the Regulations make such provision.  Fortunately, they do – Subregulation 23(1) reads:

Where an applicant has made an application for a patent, and, before the acceptance of the complete specification, makes a fresh application for a patent for matter included in the first mentioned application or in any specification filed in pursuance thereof, the Commissioner may direct that the fresh application or any specification filed in pursuance thereof shall be ante-dated to a date not earlier than the date of filing of the first mentioned application or specification if the applicant includes in the fresh application a request to that effect.

Again, our astute readers will note that the wording of this regulation closely follows the wording of subsection 12(5) of the Act.

This might seem a little convoluted, but largely immaterial.  As it happens, however, it is not at all immaterial.  It turns out to be vitally important to determine whether the time constraints are actually implemented by the Act or by the Regulations.

EXTENSION OF TIME PROVISIONS

The general extension-of-time provisions are to be found in Regulation 168 of the New Zealand Patents Regulations, in the following terms:

The times prescribed by these regulations for doing any act, or taking any proceeding thereunder, other than [certain times not presently relevant], may be extended by the Commissioner, if he thinks fit, upon such notice to the parties and upon such terms as he may direct, and such extension may be granted although the time has expired for doing the act or taking the proceeding.

This is quite an expansive provision, which allows the Commissioner of Patents a wide discretion.  However, that discretion is limited in its application to ‘times prescribed by these regulations’.

THE RECENT DECISIONS

Baxter Healthcare SA (‘Baxter’) and American Aerogel Corporation (‘Aerogel’) are both foreign applicants who used the services of the Australian-based firm of Cullens to file their patent applications in New Zealand.

In both cases, unfortunate and unintended sequences of events resulted in the applications being accepted prior to the filing of desired divisional applications.  Consequently, the divisional applications were filed out-of-time, and were not able to claim the benefit of the original applications’ filing and priority dates.  Rather, each was considered to be a legitimate non-divisional application, with an earliest priority equivalent to its own filing date.

This is, of course, generally fatal to the claims of the later application, since the parent application was previously published, and is novelty-destroying prior art.

The matters ended up proceeding to hearings, and the applicants’ representatives put forward two different lines of argument in an effort to salvage the divisional applications.
Correction of the Applications or the Register
In an original and creative approach, it was argued that Section 88 of the Act is applicable to these circumstances.  This section provides a broad discretion for the Commissioner to correct any errors or omissions that may exist in the Register of Patents, or in a variety of documents relating to patent applications.  This provision has been successfully invoked, for example, to add a convention priority claim to an application that was inadvertently filed as a non-convention without the claim to priority.  The error or omission in such cases is the missing details of the priority application.

There had been a previous unsuccessful attempt (in Fisher & Paykel Limited [1995] NZIPOPAT 6) to recover from similar circumstances by requesting ‘correction’, under Section 88, of the Notice of Acceptance, to replace the date of acceptance with a later date, after the date of filing of the late divisional.  This failed, not least because there was no mistake in the Notice of Acceptance – the date on the Notice was, without doubt, the date upon which it had actually been signed by the Commissioner, accepting the application!  Furthermore, the Notice of Acceptance does not fall within the specified categories of correctable documents listed in Section 88.

In the recent cases, it seems that an argument was made attempting to distinguish the circumstances from Fisher & Paykel by seeking correction of the register, rather than a document such as the Notice of Acceptance,  to change the filing date of the late divisional to a date prior to the acceptance date of the earlier application.  This was also unsuccessful, because again there was no error to be corrected.  The register correctly recorded the date upon which the intended divisional applications were actually filed.
Extension of Time
As far as we are aware, it has been considered settled for a very long time that Regulation 168 allows only for extensions to times prescribed in the Regulations, and that the time for filing of a divisional application is prescribed in subsection 12(5) of the Act.  Therefore, in these circumstances, a Regulation 168 extension is precluded.

The applicants’ representatives presented what seems to us to be an ingenious case.  They argued that subsection 12(5) is merely an ‘empowering’ provision, and the actual substantive requirements for a valid divisional application are indeed prescribed in the Regulations.  The Assistant Commissioner, regrettably, did not agree (e.g. at paragraph [36] of Baxter Healthcare):

I agree … that section 12(5) is an empowering provision which allows the drafting of regulations to allow antedating of certain fresh applications.  However, as I understand it, section 12(5) puts a limitation on any regulation(s) drafted in pursuance of its provisions to the effect that any such regulation may only apply to a “fresh application” which is filed before acceptance of the parent application. The section, in my opinion, does not envisage or foreshadow the possibility of this time limit (before acceptance of the complete specification) being extended by regulation or by any other means.

Accordingly, no extension could be granted.

COMMENTS AND PROSPECTIVE CHANGES TO THE LAW

Subsection 20(1) of the Act provides for acceptance of a patent application to be postponed, upon request.  A postponement cannot extend beyond the period normally allowed to achieve acceptance of the application, but nonetheless places control of the acceptance date back in the hands of the applicant.  If there is any possibility that a divisional application may be required, the postponement mechanism can be used to prevent acceptance of the application until such time as the applicant withdraws the postponement request, i.e. after any divisional has been filed.

The new Patents Bill, which is currently awaiting its second reading in the New Zealand parliament, and subsequent enactment into law, seems unlikely to improve the situation regarding divisional applications.  Clause 33 of the Bill, as it currently stands, concerns the making of divisional applications, and not only retains the requirement that a divisional be filed prior to acceptance of the parent, but also prohibits the filing of ‘chains’ of divisionals, i.e. a divisional application will only be permitted to claim priority from its immediate parent.  Regulations will not be drafted until the Act is finalised and ready to pass into law, and it is therefore not known at this stage whether more generous extension of time provisions will be available.  Fortunately, Clause 71 of the Bill retains the existing provision for requesting postponement of acceptance (although the exact details are also subject to the eventual content of the Regulations).

The take-home message is that great care must be taken in the management of divisional applications in New Zealand, and this does not seem likely to change under the new law.

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