01 December 2013

Patent Office Enforces Tough New Evidence Extension Rules

Julie-Anne McCarthy and Bradley McCarthy v TRED Design Pty Ltd [2013] APO 57 (11 November 2013)

Time UpIn the first published decision of the Australian Patent Office relating to the new Raising the Bar regulations on extensions of time during opposition proceedings, an opponent has been denied an extension to file evidence in support of its opposition.  The decision confirms that the Office will be taking a hard line on applications for extensions.

In its June 2009 consultation paper, Resolving Patent Opposition Proceedings Faster [PDF, 198kB], IP Australia identified delays in opposition proceedings – with oppositions often running for between three and eight years – as one of the issues to be tackled under the Raising the Bar reforms.  Long delays were most commonly due to evidential time-frames, as a result of the Patent Office having only limited powers to refuse requests for extensions of time.

This changed when the Raising the Bar reforms, and in particular the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013, came into effect on 15 April 2013.  New Regulation 5.9 established a more rigorous test under which, unless exceptional circumstances apply, parties preparing evidence in the course of opposition proceedings must act promptly and diligently at all times, and make all reasonable efforts to comply with relevant time periods. 

Background – Why an Extension Was Needed

Patent application no. 2006301867 in the name of Julie-Anne McCarthy and Bradley McCarthy (‘McCarthy’) was opposed by TRED Design Pty Ltd (‘TRED’) on 1 February 2013.  Apparently, TRED’s Statement of Grounds and Particulars of opposition was inadequate, and it was twice directed to submit further and better particulars, which it did on 12 July 2013 and 30 August 2013.

In the meantime, the due date of 30 June 2013, for filing of evidence in support of the opposition, expired.  After some further correspondence on this issue, TRED applied on 4 September 2013 for an extension of time until 30 October 2013.  The application was refused, which led to a hearing and the decision which issued on 11 November 2013.

Initial Reasons for Refusal of Extension

It is worth setting out the main reasons given originally for refusing the extension request, because they give an indication of what will be expected of parties to opposition proceedings, and their attorneys/agents, under the new regulations.  I have highlighted in bold the parts of these passages in which the delegate made specific mention of the requirements set out in Reg 5.9.

While it is clear that experts have been retained and evidence gathering is underway, there is no indication of measures taken during the period of preparing further and better particulars in order to ensure timely filing of evidence. On the contrary, it appears from the request and accompanying declaration that efforts to gather evidence in support may have been suspended. Such a circumstance is considered to fall short of making all reasonable efforts to comply with the filing requirements.

The filing of a request for an extension of time under Regulation 5.9 (accompanied by the relevant fee) was made more than one month after the delegate for the Commissioner declined to extend the time period for filing evidence in support on their own initiative. I also note that the request was filed more than one month after the expiry of the period for evidence in support. As such, it is not clear that the opponent has made all reasonable efforts to comply with the filing requirements. It would appear pertinent that a party seeking an extension of time to file evidence after the completion of the evidence period make a request as soon as possible. Such action was not taken in the present case and there is no reasonable explanation for the delay in doing so.

It is also considered that a requirement of this criterion is that in detailing the efforts taken to ensure the timely filing of evidence, a party should provide information as to 'when' certain actions were done, 'how long' those actions took, and 'when and for how long' particular absences/lack of availability occurred. Statements of the request and declaration only refer to actions such as commencing preparation of evidence, sufficient completion of evidence in support for one witness, and unavailability of experts. As such, the opponent has not provided a detailed account of events in order to satisfy the Commissioner that prompt and diligent action occurred in the preparation of evidence, across the entire evidence period.

The Commissioner does not consider the provision of further and better particulars amounts to exceptional circumstances. The opponent did not comply with the first direction to file further and better particulars, and was subsequently provided with a second opportunity to file sufficient particulars. Directions to provide further and better particulars are common and arise due to the opponent’s failure to provide sufficient particulars at first instance.

Questions Raised About the New Regulation

In its submissions, TRED raised a number of specific questions to be addressed by the Hearing Officer:
  1. Is the Explanatory Statement which accompanied the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 relevant to the interpretation of the regulation?
  2. What is the relevance of the public interest in considering extensions of time?
  3. What is the difference between the ‘all reasonable efforts’ and ‘acting diligently and promptly’ legs of the test?
  4. Are the actions of patent attorneys relevant, or is it only the actions of the ‘party’ that should be considered?
  5. Should the provision in Reg 5.9 be construed broadly, as it is a remedial provision?
  6. Was it intended that extensions are hard to get?

Relevance of the Explanatory Statement

The Explanatory Statement explains the changes to the extension of time provisions in the following terms.

A major cause of protracted opposition proceedings is extensions to the various time periods for providing evidence. The law has developed in such a way as to significantly narrow the Commissioner’s discretion to disallow extensions. As a result, oppositions are normally subject to multiple extensions of time and extend over many years, contrary to the interest of the public and parties in resolving oppositions faster.

New subregulation 5.9(2) addresses this issue by introducing a new test for determining whether an extension of time for filing evidence is justified. The Commissioner will not be able to extend time periods unless at least one of these conditions was made out. The party seeking the extension will bear the onus of convincing the Commissioner of this. Once the conditions in subregulation 5.9(2) are met, the Commissioner still has the discretion to consider whether or not it is appropriate that an extension of time be granted. In applying the test, the Commissioner will not be required to give a direction to extend a period solely because of delays caused by an agent or a legal representative failing to act promptly or diligently, by difficulties in obtaining expert evidence that could have been anticipated and acted on or by attempts to settle the proceedings.

Where a party cannot satisfy the Commissioner that an extension is justified under the test, the Commissioner will not have the power to give a short extension to allow the filing of evidence immediately available or to validate evidence filed out of time.

Notably, this largely answers all of TRED’s remaining questions!

TRED’s attorney submitted that ‘[g]uidance for the interpretation is not to be reliant on the Explanatory Memoranda. According to the established principles of statutory interpretation and administrative law, no guidance should be sought in explanatory memoranda’ and that ‘the Explanatory Statement is a self-serving document which does not accurately reflect the Regulations as made.’

The Hearing Office had no difficulty disposing of this argument, since it is clearly incorrect.  As pointed out in the decision (at [22]), Section 13 of the Legislative Instruments Act 2003 and section 46 of the Acts Interpretation Act make it clear that the Interpretation Act applies to the interpretation of the Regulations. Section 15AB of the Interpretation Act states that reference may be made to the explanatory materials.

Relevance of Public Interest

One of the main reasons for the difficulty experienced by the Patent Office in refusing extensions of time under the former regulations was concern for the ‘public interest’.  In particular, if it was apparent that a serious opposition was underway, then all of the evidence provided by the parties was likely to be material to determining whether or not a patent could be validly granted.  Clearly, the public interest is not served by granting invalid patents or, indeed, by refusing to grant patents for genuinely worthy inventions.

However, the ‘public interest’ does not enter into the requirements set out in new Reg 5.9.  As the Hearing Officer determined (at [26]):

While it is true that many of the provisions introduced by the Raising the Bar Act are aimed at raising the standard of granted patents, the amendment to the extension of time provisions was clearly directed to speeding up oppositions. Broad assertions about the public interest cannot be used to sweep aside the words of the regulation and the statements in the Statement.

‘All Reasonable Efforts’ versus ‘Acting Diligently and Promptly’

While the Hearing Officer found (at [28]) that a person acting ‘reasonably’ would often also have acted ‘diligently and promptly’, it is nonetheless a requirement that both legs of the test be satisfied before an extension may be granted.  He noted that ‘the “reasonable” leg relates to “all relevant filing requirements”, whereas the “promptly and diligently” leg relates to the period for filing “the appropriate evidence”.’

Relevance of Patent Attorney Actions

The Hearing Officer found (quite sensibly) that where the regulation refers to ‘the party’, it should be interpreted as the ‘party and their attorney or agent’ (at [29]).

This is what I would expect.  We attorneys ‘stand in the shoes’ of our clients when we are instructed to act on their behalf.  It would be absurd if the person who is paid to apply their expertise in the conduct of a patent opposition should somehow be immune from meeting the express requirements of the Act and Regulations!

‘Remedial’ Provisions?

Traditionally, extension of time provisions (such as those in section 223 of the Patents Act 1990) have been viewed as ‘remedial’ in nature, and therefore interpreted generously.  There is, however, a clear difference between a provision intended to enable a party to recover from some unfortunate and unintended error or omission, and one which is designed to enable an extension of a period simply to allow additional time to complete ongoing preparations.

As the Hearing Officer noted (at [31]):

Regulation 5.9 is drafted in terms that clearly limit when the remedy of an extension of time will be available. It is not permissible to read those limitations out of the provision. I am satisfied that the correct approach is to apply the test that I have identified above, and not to impose any arbitrary limitations that are not found in the regulation.

Should Extensions be Hard to Get?

TRED’s attorneys submitted that ‘[i]t was not the intention of the amendments [to the regulations] to make extensions of time almost impossible to get, or even difficult. Rather, [it] was to ensure that progress was made throughout the proceedings.’

The Hearing Officer would have none of this.  It is clearly contrary to the stated intentions of IP Australia, from the June 2009 consultation paper, all the way through to the Amendment Regulations and the accompanying Explanatory Statement.  As stated at paragraph [33] of the decision, ‘[i]t is clear that there was an intention to reduce the number of extensions of time by introducing a new test. I think it is undeniable that the new regulations are intended to achieve far more than just making a satisfactory explanation of delay a mandatory requirement.’

Conclusion

Anybody involved in patent oppositions – and patent attorneys in particular – needs to be acutely aware that the rules have changed, and that ongoing diligent efforts are required to make progress in the preparation of evidence, with a view (as far as humanly possible) to avoiding the need for any extensions of time.

I should say that I am aware that extensions have been granted under the new rules, and that they are therefore not impossible to obtain.  However, it is a prerequisite for the grant of an extension that all reasonable efforts are made to meet the deadline, and that all persons involved in the process act promptly and diligently.

There are now three questions that a decision-maker in the Patent Office will need to consider when determining whether or not to allow an extension of time:
  1. Has the party (and their attorney or agent) made all reasonable efforts to comply with all relevant filing requirements?
  2. Was the failure to file the evidence in time despite the party (and their attorney or agent) acting promptly and diligently at all times to ensure the evidence is filed in time?
  3. Were there exceptional circumstances that warrant the extension?
An extension may be granted only if the answer to both of the first two questions is ‘yes’, or the answer to the third question is ‘yes’.  Otherwise, extensions will be denied.

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