17 June 2012

Australian Patent Office Discretion in Opposition Proceedings

Alcon Research, Ltd v Sylentis S.A.U. [2012] APO 55 (29 May 2012)
BHP Billiton Worsley Alumina Pty Ltd v Alcoa of Australia Limited [2012] APO 60 (13 June 2012)
Gallus Ferd, Ruesch AG v Strork Prints B.V. [2012] APO 46 (2 May 2012)
Neste Oil Oyj v BP International Limited [2012] APO 20 (1 February 2012)
BP International Limited v Neste Oil Oyj [2012] APO 40 (28 March 2012)

Patent Office practice and procedure – Regulation 5.10 – extensions of time and other conduct of opposition proceedings – exercise of discretion – satisfactory explanations – significance of evidence and public interest in oppositions being considered on merit

Discretion advisedRegulation 5.10 of the Australian Patents Regulations 1991 gives wide-ranging discretionary powers to the Patent Office for directing the conduct of opposition proceedings.  In particular, the regulations provide for time limits – such as those applying to the service of evidence – to be extended, and for parties to apply to serve additional evidence in appropriate circumstances.

A number of recent decisions by delegates of the Commissioner or Patents highlight the factors which the Office will currently take into account when deciding whether or not to exercise discretion in favour of a party to an opposition.  The major considerations are:
  1. whether the party requesting the exercise of discretion, e.g. to extend a time period, or to allow service of further evidence, has provided an adequate explanation of its reasons for requiring the indulgence; and
  2. whether there is a probability that the exercise of the discretion as requested will have a significant impact on the outcome of the opposition.
It is not necessary that the party provide a ‘full and frank’ disclosure of all of the circumstances leading to the requirement for the exercise of discretion.  Nor is it necessary to establish any particular likelihood that the exercise would be determinative of the outcome of the opposition.

Nonetheless, any party seeking a favourable hearing from the Patent Office in an application relating to the conduct of opposition proceedings would be well-advised to make sure they have both of the above points well covered.  This advice is illustrated by the following recent examples.

GENERAL PRINCIPLES

The considerations for deciding whether to grant an extension of time (or, indeed, exercise any other discretionary power) under regulation 5.10 are generally drawn from the Federal Court decisions in Ferocem Pty Limited v Commissioner of Patents [1994] FCA 981, A Goninan and Co Ltd v Commissioner of Patents [1997] FCA 424, and National Starch & Chemical Company v Commissioner of Patents [2001] FCA 33. The relevant considerations arising from these decisions were summarised by the delegate in the recent Alcon decision (at [3]) as follows:

(a) The broad discretion afforded by regulation 5.10 cannot be reduced to insistence on imperative compliance with particular requirements;

(b) The reasons why the evidence was not served earlier is a relevant consideration, but a satisfactory explanation is not a mandatory requirement;

(c) The public interest in determining a serious opposition on its merits is a relevant consideration and must be balanced with the requirement that matters before the Patent Office should be dealt with in an efficient, orderly manner and not be unduly prolonged;

(d) The public interest is assessed by forming a view as to the nature of the evidence to be adduced, and the significance of that evidence for the opposition proceedings. The nature and significance of the evidence is assessed having regard to any relevant material available, not just the evidence already on file;

(e) The interests of the opponent, the applicant and any other parties are a relevant consideration.
Furthermore, as the delegate explained (at [4]):

It is clear that an extension of time is a discretion, and a party seeking an extension needs to place before the Commissioner sufficient information to allow the Commissioner to exercise the discretion. The information should include the reason for the delay, and the nature and significance of the evidence. While the disclosure required is not of the “full and frank” type required by section 223, it is not correct to assume that extensions can be granted as a matter of course. If the party seeking the extension does not provide sufficient justification, the extension cannot be granted.

The five cases discussed below demonstrate the application of these principles.

Alcon v Sylentis

The decision of the Commissioner’s delegate in the application by Alcon for an extension of time to serve evidence in support of its opposition to a patent application by Sylentis is a rare example of a case in which the request was refused.  It is therefore perhaps the most instructive of the recent cases, in that it provides a clear example of what not to do!

Evidence in support was originally due to be served by 2 March 2011.  Several extensions of time were subsequently allowed, extending the due date to 2 March 2012.  Eventually, Sylentis objected to a further application for an extension until 2 June 2012.

According to Alcon’s explanations, between June 2011 and March 2012 experiments were developed and conducted to evaluate treatments relating to the claimed invention. Two experts' declarations relating to these experiments had already been served.

Alcon indicated in its application that it required additional time to adduce further expert evidence.  The precise nature of this evidence was unclear, but the delegate concluded that it was most likely to be related, at least in part, to the relevance of a particular prior art document.  While the experimental evidence had (in the delegate’s words) 'taken a long time because it has taken a long time', Alcon provided no explanation for why the additional evidence it now proposed to adduce could not have been commenced earlier, e.g. in parallel with the experiments.  Other proposed evidence 'requiring further Experts to clarify issues in light of the experimental results' clearly could not have been obtained earlier, however the delegate found that 'there is ambiguity as to what that evidence is' (at [10]).

According to the Federal Court in Goninan, a delegate is not permitted to ‘regard the absence of any proper explanation as being such a powerful consideration that it obviated the need to address the nature and significance of the evidence upon which Goninan wished to rely in the opposition proceedings.’  Thus it is necessary to consider, together, both the explanation and the nature of the evidence, and to weigh these up in reaching a decision.  Naturally, this is not possible if information is lacking in relation to one or the other.

In Alcon’s case, the delegate found (at [11]-[12]) that in relation to the various items of proposed further evidence, there was either:
  1. a reasonable explanation for delay, but a lack of detail regarding the nature of the proposed evidence; or
  2. a reasonable indication that the evidence would be of significance to the outcome, but a lack of any adequate explanation of the delay.
As a result, the request for a further extension was refused.

However, as has been the usual practice in the past, the opponent was allowed one week within which to serve any evidence which may be immediately to hand.  The delegate also pointed put that the refusal of the extension does not prevent the opponent from making a further, more informative, application for an extension of time.

Notably, the week conceded by the delegate allowed the opponent until 5 June 2012, i.e. three days longer than the period initially requested, and refused!  So even a doomed request for an extension is plainly worth making!

BHP v Alcoa

In this case, BHP (the opponent) made an application for an extension of time to serve evidence in reply, from 28 March 2012 to 28 June 2012.  Written submissions in relation to the extension were filed by both parties on 26 April 2012.  The delegate issued a decision on 13 June 2012.  In the meantime, however, evidence in reply had been completed on 24 April 2012.

The patent applicant (Alcoa) submitted – wrongly – that BHP was required to make a ‘full and frank disclosure’ of the reasons and circumstances for the delay.  The applicant’s citation to the Ferocem case in support of this proposition in fact referred to the decision of the delegate of the Commissioner which was on appeal to the Federal Court, and – as the delegate in this case rightly pointed out (at [5]) represents a view that the court rejected.

This decision is therefore a further confirmation – if any were needed – that the ‘full and frank’ standrd of disclosure does not apply to applications under Regulation 5.10.

In this case, BHP’s explanation for the delay was lengthy and detailed.  The evidence had been served, so its nature was apparent, and plainly related to the disputed ground of inventive step.  On balance, therefore, the delegate concluded that the extension should be allowed.

Gallus Ferd, RĂ¼esch v Stork Prints

The opponent (Gallus) had sought, and obtained, a first extension of time of three months to serve evidence in support, from 23 November 2011 to 23 February 2012.  This decision relates to a second application, for a further extension until 23 May 2012.

As explained by the delegate (at [16]) the Opponent relied on the judgement of the Full Federal Court in Minnesota Mining & Manufacturing Co v Tyco Electronics Pty Ltd [2002] FCAFC 315 by way of explanation for the lengthy process it had adopted in gathering its expert evidence.  In particular, the Tyco case raised the issue that expert witnesses may be ‘tainted’ by hindsight analysis if they are provided with a copy of the patent specification before providing an opinion regarding matters pertinent to assessing inventive step.  It has therefore become common practice to adopt a ‘staged’ approach to expert evidence, in which the expert is first asked to provide an opinion on various relevant matters prior to reviewing the patent specification, and then subsequently asked for further opinion on matters requiring knowledge of the content of the specification.

The delegate expressed the view (at [18]) that:

…following this line of action does not necessarily in and of itself translate to a delay in the proceedings and to use this modus operandi as an excuse for the delay is not justifiable. As the Commissioner is not bound by the rules of evidence, opponents desirous of following this protocol should factor in time constraints and plan their opposition accordingly.

With all due respect to the delegate, this is an extremely unrealistic view.  It is not the opponent’s fault that the Full Federal Court adopted such a harsh line on the credibility of expert evidence, and it is bad enough that parties are put to the additional expense involved in the staged approach, without also having it held against them by the Patent Office.  It is short-sighted to adopt a lower standard of evidence preparation in Patent Office proceedings, when the outcome (either way) may be subject to appeal to the Federal Court.  Once ‘tainted’, an expert witness loses credibility for all subsequent related proceedings, and it would border on negligence for any patent attorney in this country to fail to advise an opponent of the high desirability of preparing evidence to Federal Court standards in the first instance.

Nonetheless, despite what was described as ‘only vague detail regarding the evidence being prepared by the declarant’, the delegate further reasoned (at [21]):

It appears that the evidence will address matters of common general knowledge, the construction of citations and possibly the construction of the specification. Such evidence is usually of assistance in deciding an opposition, so it is likely that it will be significant. I am satisfied that the public interest favours allowing the extension of time.

On balance, therefore, the delegate determined that it would be appropriate to grant the twisted extension of time, but also warned the opponent that, a year having passed since the opposition was first filed, any further extension request would require a very good explanation!

BP v Neste Oil

Two decision in this matter relate to requests to serve further evidence, rather than requests for extensions of time, however the same general principles apply, both being governed by subregulation 5.10(5).

BP had opposed an application by Neste Oil, and had completed its evidence in support of the opposition on 10 September 2010.  On 12 September 2011 Neste requested leave to amend the specification, although this is not relevant to the decisions at hand.  On 21 October 2011, Neste wrote to the Patent Office requesting that it direct BP to provide ‘further and better particulars’ of its opposition.  Neste’s concern related to the fact that a number of prior art documents referenced in BP’s Statement of Grounds and Particulars (or English translations thereof) had not been included in the evidence in support, as is customary.  It was therefore not clear to Neste whether BP was still proposing to rely on these documents.

BP, for its part, claimed that the first time this omission came to its attention was when it received a letter from the Commissioner on 31 October 2011 regarding the provision of further and better particulars.  It quickly moved to file copies of the missing documents by way of an application to serve further evidence made on 3 November 2011, and to serve certified translations of certain foreign language documents by way of a further application on 21 December 2011.  The two decisions (of 1 February 2012 and 28 March 2012 respectively) relate to the two separate requests.

No explanation has been provided for the delay in serving copies of the documents relied upon in the opponent’s particulars, other than this having been an ‘inadvertent oversight’ on the part of the opponent.  As the delegate (quite rightly) notes in the second decision (at [13]):

I cannot understand the way the opponent is preparing their evidence in support. To my mind, it is a normal practice for the declarant to exhibit copies of the documents they refer to. Additionally, any foreign language documents are translated in English and exhibited along with the related verification certificates. In the present case, the opponent has had two opportunities for completing their evidence in support. At the first opportunity, they failed to file copies of any of the document referred in the Jackson declaration. At the second opportunity, they neither included certified translations of [certain foreign-language documents], nor foreshadowed the filing of those translations at a later date. It appears from the correspondence on file that the present request to serve further evidence was filed in response to a query from the applicant. It is also not apparent why the verified translation of the non-English documents were not obtained by the opponent before serving their evidence in support. In view of the above, I cannot conclude that the opponent has provided a satisfactory explanation of the delay.

Nonetheless, the delegate’s assessment of the documents was that they looked, upon brief review, to be highly relevant to the grounds of opposition, and thus the public interest in the opposition being considered on its merits weighed in favour of allowing its inclusion in the evidence.

Interestingly, although it is normal for costs to be awarded in favour of a successful party to Patent Office proceedings, the delegate in this case declined to award costs against the patent application, on the basis that the opponent should not be ‘rewarded’ (nor the applicant penalised) for its lack of diligence.

CONCLUSION

The discretion of the Patent Office to refuse even the most remotely meritorious requests for extensions of time, and other forms of discretion, under Regulation 5.10, has been substantially curtailed over the years by the Federal Court in decisions such as Ferocem and Goninan.  One gets the impression from the way in which some of these recent decisions are worded that the discretion is exercised somewhat grudgingly in many cases!

IP Australia has made no secret of the fact that it is sometimes frustrated that the conduct of parties in opposition proceedings frequently results in excessive delays, and that it has every intention of amending the Regulations to address this issue as part of the implementation of the Raising the Bar reforms.

From April 2013 it is likely that both the explanation for any delay, and the significance of the evidence being adduced, will need to meet more stringent standards to obtain Patent Office agreement to exercise its discretion in favour of a requester.  Opponents and applicants alike would be well-advised to start preparing now for this anticipated change, which is likely to impact many ongoing oppositions.

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