21 April 2014

The Hard Line on Extensions of Time in Patent Oppositions

Minute to MidnightSince the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 came into effect on 15 April 2013, new, stricter, rules have applied to parties hoping to obtain an extension of a time period for filing evidence in an Australian patent opposition.

As of the time of writing this article there have been seven published Patent Office rulings on extension requests decided under the new regulations.

Unsurprisingly, considering that an express intention of the new rules was to raise the bar on extensions of time, five of the seven requests considered under the new regulations have been refused. 

However, while the situation looks grim for parties requiring additional time to prepare opposition evidence, things are not as bad as the published decisions might suggest.  By definition, it is typically the most contentious cases that proceed to a hearing and a written decision.  I am aware of a number of recent cases in which extensions of time have been granted, under both the new and old rules, without any need to request a hearing.  Naturally, the majority of clearly worthy applications for extensions will be granted without fuss or fanfare. 

And, as I explain below, there is much to be learned from the failures of those parties that have had to take their requests to a hearing!

Attorneys Must Act Promptly and Diligently

One of the earliest published decisions to apply the new rules was Julie-Anne McCarthy and Bradley McCarthy v TRED Design Pty Ltd [2013] APO 57 (11 November 2013), which I wrote about late last year.  In that case, a request for an extension of time was refused because the opponent’s attorneys had failed to meet the standards of making all reasonable efforts to comply with all relevant filing requirements, and of acting promptly and diligently at all times to ensure the evidence is filed in time. 

Furthermore, the need to prepare and file an amended Statement of Grounds and Particulars of opposition (because the originally-filed statement was inadequate) was not considered to constitute ‘exceptional circumstances’ that would justify an extension of time.

Experts Must Act Promptly and Diligently

In Merial Limited v Novartis AG [2013] APO 65 (5 December 2013) the patent applicant, Novartis, had requested an extension of time of two months to complete its evidence in answer to the evidence in support filed by the opponent, Merial.  Novartis had filed part of its evidence, in the form of a first declaration by its expert witness Dr James Rowe, during the initial three-month period allowed.  It had then obtained a first extension of time, of three months, during which three further declarations of Dr Rowe were filed.  The further extension was required to enable Novartis to file a fifth and final declaration of Dr Rowe.

The Patent Office initially proposed to grant the request, however Merial objected and requested a hearing.  Before the hearing, the fifth declaration was filed, and Novartis informed the Commissioner that this completed its evidence in answer.  This meant that Novartis essentially required only a one-month extension of time.  Despite this, the request for an extension was denied, on the basis that Novartis had failed to make all reasonable efforts to comply with all relevant filing requirements, and had not acted promptly and diligently at all times to ensure the evidence was filed in time.  The primary reason for this failure was the absence of Dr Rowe on an overseas vacation for nearly two months, during the three-month extended period obtained by Novartis.

Two aspects of the Merial decisions are particularly notable:
  1. the hearing officer considered the entire conduct of Novartis during the opposition, and not just the events leading up the extension request at issue, which appears to be the correct approach under the new regulations;
  2. as a result, the fact that Novartis was aware of the expected absence of Dr Rowe from the outset, and nonetheless failed to make suitable arrangements (such as engaging a different expert, or if Dr Rowe were the only reasonable option ‘making better use of the expert during his absence from Australia…’ (at [20]), meant that Novartis had not made reasonable efforts, or acted promptly and diligently at all times.
Yes, you read that correctly – the Patent Office considers that experts, once engaged, should be expected to work while on vacation, if that is what it takes to meet the evidentiary deadlines!  Something to bear in mid if you are ever asked to act as an expert in an Australian opposition, I would say.

Settlement Discussions Are No Excuse, and Consent is Irrelevant

In Fonterra Co-operative Group Limited v Meiji Dairies Corporation [2014] APO 11 (21 February 2014), evidence in support had been filed by the opponent, Fonterra, and evidence in answer had been filed by the patent applicant, Meiji.  Since the ‘old’ regulations applied to the evidentiary stages (though not to a request for an extension of time), Fonterra had the option of filing evidence in reply within three months (under the new regulations, this period is reduced to two months). 

After evaluating the evidence in answer, Fonterra made two decisions: to file evidence in reply; and to formulate and put forward a settlement proposal to Meiji.  The settlement proposal led to a delay of nearly two months, and was ultimately rejected by Meiji.  Fonterra consequently requested a one-month extension to file evidence in reply, to which Meiji consented. 

The evidence was, in fact, filed within the period requested.  However, in the meantime, the Commissioner concluded that she was not satisfied with the reasons given for requiring an extension, and proposed to refuse the request, leading to a hearing at the request of Fonterra.

The existence of ongoing settlement discussions was expressly mentioned in the Explanatory Statement to the new regulations as a matter which, in itself, would not justify an extension of time.  The hearing officer thus denied the extension request on the basis that ‘viewed objectively’ (i.e. noting the lengthy delay, and ignoring settlement discussions as a reason) Fonterra had failed to act promptly and diligently.

Clearly there is an expectation that (regardless of expense) evidence preparation must continue in parallel with any settlement discussions.  Consent of the other party to an extension is not a relevant consideration.

Ignorance or Confusion is No Excuse

Another factor in the Fonterra case was a degree of confusion and misunderstanding about which version of the regulations applied to the extension request.  The evidence indicated that Fonterra’s were under the impression that because the ‘old’ three-month evidentiary period applied, the ‘old’ extension rules would also apply.  However, this is not how the transitional provisions operate.

However, the resulting confusion was not considered to be an ‘exceptional circumstance’ that would justify an extension.

Effect of Proposed Amendments is No Excuse

In Innovia Security Pty Ltd v Visual Physics LLC [2014] APO 15 (5 March 2014) the preparation of evidence in reply by the opponent, Innovia, was complicated by the fact that the patent applicant, Visual Physics, had requested an amendment to its claims in the course of preparing its evidence in answer.

Innovia argued that the opposition should be stayed pending a final decision on the amendments since, presumably, this could affect the specific case to be made out by the opponent (or, potentially, lead to a settlement).  Visual Physics opposed this request, and the Patent Office determined that the scope of the requested amendments did not justify a delay in the filing of evidence.

There were delays in the preparation of evidence in reply, which were said to be due partly to dealing with the issue of the amendments.  However, the hearing officer nonetheless found that Innovia had failed to act promptly and diligently at all times.  Furthermore, the failure of the Patent Office to grant a stay of the opposition was not an error, or an exceptional circumstance, that would justify an extension.

Patent Attorney Privilege is No Excuse for Lack of Detail

In Sportingbet Australia v Tabcorp International Pty Ltd [2014] APO 21 (11 April 2014) Tabcorp, the patent applicant, sought an extension in which to file its evidence in answer.  As in Merial, the Commissioner was satisfied (albeit after requesting, and receiving, additional information from Tabcorp) that an extension was justified, however Sportingbet objected.

The evidence in support of the opposition consisted of 325 pages of expert evidence, 730 pages of exhibited material, and 67 prior art documents (2963 pages).  Tabcorp provided a week-by-week chronology of the activities that were ongoing internally, and by its external attorneys, during the evidence period between 21 September 2013 and 24 December 2013.  However, this chronology did not go into detail of exactly what tasks were carried out, and by whom, during each individual week.

Ultimately, the hearing officer ruled that ‘the information provided by Tabcorp is insufficient to establish that it acted promptly and diligently in its review of the [evidence in support] or in its approach to engaging experts’, and therefore refused the extension.  Tabcorp had argued that to provide the degree of detail suggested would involve revealing information created for the dominant purpose of providing advice, and therefore protected under the patent attorney privilege provisions of the Patents Act 1990

However, the hearing officer noted that ‘a party may provide the necessary information in the manner of their choice’, and ‘may redact sensitive details, or summarise the information.’  But a party may not use privilege (actually, the hearing officer used the word ‘confidential’ which is not quite the same thing) to avoid providing the details required to support a request for an extension of time.

Engage Experts Early

The cases in which extensions of time have been granted seem to me to be less instructive than the failures.  In Shelford Services Pty Limited v Baylor Research Institute [2014] APO 20 (3 April 2014) the patent applicant, Baylor, sought an extension of time to file evidence in answer in circumstances in which the opponent, Shelford, had obtained three extensions of time to serve/file evidence in support under the old regulations (i.e. when extensions were easier to obtain).

In this case, a three-month extension was granted.

There is little in the decision to indicate exactly why Baylor received more generous treatment than, say, Tabcorp.  The volume of evidence in support seems to have been a factor, though at around 300 pages it is clearly dwarfed by that in the Sportingbet case.  The fact that Shelford added seven prior art documents in its evidence, which had not been identified in its statement of grounds and particulars, also seems to have been a factor.

However, if there is anything to be gleaned from Shelford it is that engaging experts as early as possible in the process may be helpful if an extension is subsequently required.  It seems that once Baylor realised that Shelford would not be filing evidence in support before 15 April 2013, and therefore that any extension of time it might need would have to be obtained under the new rules, it immediately commenced a search for expert witnesses. In the event, this took until the end of August 2013, and there was evidence that Shelford had encountered similar difficulties in retaining experts in the particular field of the invention.  Overall, this seems to have been the greatest influencing factor on the hearing officer.

I note, however, that this case was probably strongly influenced by the particular circumstances in which the applicant found itself.  To be denied an extension of time, when the opponent had spent so long on its evidence in support, would have been manifestly unfair!

Sometimes Amendments Will Be ‘Exceptional’

I am able to conclude even less of general interest from ExxonMobil Upstream Research Company v Shell Internationale Research Maatschappij B.V. [2014] APO 22 (15 April 2014).  In this case, the opponent, ExxonMobil, filed its evidence in support following a number of extensions of time under the old rules.  The patent applicant, Shell, filed a request to amend its claims on the day before its evidence in answer was due. 

Shell did not file any evidence.  Instead, it requested a stay of the opposition pending a final decision on the amendments.  A stay was granted 19 days after the deadline for filing evidence in answer had passed.  However, the Commissioner’s delegate noted that an evidence period must remain active until a stay is effected.  Shell therefore requested an extension of time to cover the gap between the end of the evidence period and the commencement of the stay.  ExxonMobil objected.

It seems clear that Shell had not acted promptly and diligently in preparing its evidence, and instead had been focusing on the alternative strategy of amending its application.  It therefore could not make out this requirement for an extension of time.

However, the hearing officer determined that the circumstances were ‘exceptional’, in that the considerations regarding the appropriateness of a stay should prevail over the requirements for ‘reasonable efforts’ and ‘diligence’.  In fact, the hearing officer considered that the correct approach would be to back-date the stay to the date of filing the amendments, so that a extension was not required.  However, given that a different decision has already been made on the basis that an extension could be granted, he determined that the ‘exceptional circumstances’ provision should apply.

What I get from this is that the Patent Office is not averse to amendments that may resolve an opposition, or reduce the number of issues to be addressed, but that parties will need to be careful in future that they do not delay the preparation of evidence on the assumption that the opposition will be stayed.

Conclusion – A Brave New World of Extensions?

Clearly, it is now more difficult to obtain extensions of time in oppositions than in the past.  There is much to be learned about what not to do from some of the sorry tales above!

However, some of these decisions seem a little unfair.  Tabcorp, it seems to me, has been somewhat hard done by, particularly in view of the sheer volume of materials it was faced with, and the fact that the Patent Office initially proposed to grant its extension request.  Novatis, likewise, might well feel that defeat was snatched from the jaws of victory!  Fonterra’s case is also unfortunate, given that by the time its extension request came to be heard and decided it has already filed the proposed evidence.

I suspect that it is only a matter of time before one of these particularly tough decisions is appealed, and reviewed in light of more general considerations of administrative law and natural justice.  Only then will we really start to get a true picture of just how much power IP Australia has to deny extensions of time under the new provisions.

In the meantime, be prompt, be diligent, make reasonable efforts, and be careful out there!

Image Copyright (c) 123RF Stock Photos

6 comments:

Mark Summerfield said...

I feel less sorry for Tabcorp. They failed to provide the detail to explain away their lack of progress. Shelford could demonstrate their issues with finding an expert, Tabcorp didn't have a similar excuse and the number of pages / documents issue is a bit a red herring, if you ask me.

I would have liked them to get up Spring Racing Carnival being an exceptional circumstance though! I'm sure we could have expanded it such that the profession could have had a bit of a holiday in October/November.

Mark Summerfield said...

You may have a point, although I think that in principle a week-by-week chronology should be sufficient. The problem may be too much focus on process and not enough on progress. If Tabcorp were able to show, for example, that its experts were working through the 67 prior art documents at the rate of, say. five per week, and that, given their other work commitments, this was reasonable and diligent, that might have sufficed.


It is worth bearing in mind, of course, that the issue under Reg 5.9 is not whether the period allowed for preparation of evidence is, or should be, sufficient. Sportingbet had a total of four months in extensions (under the old regulations), which I note was not expressly tabulated in the chronology given in the decision. Accounting for the fact that they would have known of their intentions to oppose before filing the Notice of Opposition, they arguably had at least a year to prepare their case and evidence, which makes Tabcorp's three months appear quite paltry!


But even if it is clear that addressing evidence in support might reasonably require well in excess of three months, the onus under Reg 5.9 is still on the applicant to show prompt and diligent action throughout the period in question. If you do this, and the time is nonetheless insufficient, then you should get your extension.


I do think, however, that there is currently a lack of consistency in some of the decisions being made (and I am taking into account granted extensions that do not make it to hearings and written decisions). In that context, I still think Tabcorp got the rough end of the stick relative to some other cases. The real winner there is Sportingbet, for objecting!

Mark Summerfield said...

Sportingbet did what any patent attorney would probably recommend at the moment, object to a proposed allowance of an extension of time. The fact that their conduct under the previous Regs wouldn't pass muster now just means that Tabcorp get the raw end of the deal.


But Tabcorp's attorneys would have known they were going to find it difficult to get an EOT and probably aren't surprised at the decision!


Agree that a bit more detail on how they were reviewing matters over the three months (with perhaps an indication that the prior art review had commenced in advance) would probably have got them their EOT (based on Shelford).

Mark Summerfield said...

Thanks for your comment. Until I did a little research for this article, I had always assumed that a US 'patent agent' was essentially equivalent to an Australian (or UK, or NZ, or... there are many other similar jurisdictions) patent attorney.


There are, however, grey areas for Australian patent attorneys in relation to providing advice. We are authorised under the Patents Act to advise on 'patents, trade marks, designs, plant breeders rights, and any related matters.' That last one is as vague and potentially ambiguous as you might imagine! It is widely understood to include copyright advice only insofar as it relates to the statutory overlap with registered design rights. Whether, and to what extent, it includes advice on such things as licensing or sale/transfer of registered IP rights is an open question, and probably depends on the circumstances. My own approach is to hand off all but the very simplest of such cases to one of my lawyer colleagues, if only because our clients deserve the very best advice we can provide to them.


As in the US, any lawyer can be an IP litigator, or indeed do anything in relation to IP rights with the sole exception of drafting patent specifications in a professional capacity, which is the one exclusive prerogative of registered patent attorneys.


Lawyers are bound uder their own regulatory and ethical regime to practice only in areas in which they have suitable expertise but, as with any self-regulating system, there will always be some who over-estimate their abilities! I have on more than one occasion been called upon to clean up after a solicitor who found themselves out of their depth after becoming involved in a patent or trade mark opposition. Not that this was necessarily the result of bad faith - sometimes a matter that starts out simply enough, e.g. with something as basic as filing a trade mark application, ends up becoming unexpectedly complicated!

Mark Summerfield said...

Good luck - the reason for doing this in the UK was access to justice. Unfortunately most patent agents are not cheaper than their UK counterparts so it has not worked as well as it might. I have been litigating in the UK as a patent agent and the biggest problem is finding the training that the British barristers get by serving pupillages. If you are prepared to offer economic services in good faith then go for it

Mark Summerfield said...

Thanks for your comment, Barbara.


I do not expect for one moment that an Australian 'patent attorney litigator' would charge any less than we currently do as patent attorneys. Indeed, with extra skills and certifications under our belts, we might be inclined to charge more.


However, that is not where I see the savings to clients. In Australia, the court of first instance for any form of patent-related litigation is almost always the Federal Court of Australia. State courts do not generally have jurisdiction, and we have no cheaper specialist courts (and probably never will -- there is not enough patent litigation here to justify it).


Going to Federal Court with the aim of winning typically means taking a 'team'. In the matters I have been involved with in the past couple of years, this has meant up to five people: senior and junior counsel, two solicitors (typically a partner and an associate), and a patent attorney specialising in the relevant technology area.


If the patent attorney could be granted a litigator certificate, or equivalent, then the size of that team could be reduced by at least one, perhaps two. Of course, the patent attorney might be spending extra time on junior solicitor/counsel work, but a lot of time could be saved on communications across the team, and full team conferences would be quite a lot cheaper (the total hourly rate for a five-member team to meet is frightening to consider!)


There would probably also be scope for some more creative billing structures, e.g. different rates for different types of work, or a flat rate for the basic tasks required for running of a case, with hourly rates charged only for specific 'patent attorney/litigator' work.


Currently, however, there is no impetus to create a litigator certification for patent attorneys in Australia. As far as I am aware, I am the only one to have raised it.

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