Defending Against the Licence to Infringe – Grounds of Opposition

Razer Industries Pty Ltd v Robert R. Law [2010] APO 13 (13 August 2010)

Opposition to application for a licence under Regulation 22.21 – request for dismissal – whether opposition should be dismissed – available grounds of opposition – whether objection to proposed licence terms is a valid ground.

ABSTRACT

This is a Patent Office decision of a Delegate of the Commissioner, Greg Powell, relating to an opposition to an application for what we recently loosely called a "licence to infinge" a restored patent.  It is a handy guide to any patentee that may find themselves in this position as to how to go about defending against the grant of such a licence.

BACKGROUND

Robert R Law ("Law") is the proprietor of Australian Patent No. 784051 ("the patent"), which relates to a scraper blade arrangement for a conveyor belt cleaner (shown left).

Annual renewal fees are due on 27 September each year in order to maintain the patent.  However Law failed to make the payment in 2007, as a result of which the patent ceased.  On 17 August 2009, Law applied for a 23-month extension of time under Section 223 of the Patents Act 1990, in order to pay the fees due in 2007 and 2008.  The requested extension was allowed unopposed, and was granted on 27 October 2009, so that the patent was reinstated.
 

In a previous article, we discussed the provisions available in these types of circumstances enabling third parties to apply to the Commissioner of Patents for a licence to exploit a patented invention.  Razer Industries Pty Ltd ("Razer") applied for such a licence on 18 February 2010.

Law exercised his right to oppose the grant of a licence to Razer which, in turn, requested that Law's opposition be dismissed.  This decision relates to the dismissal request, and is of interest primarily for its discussion of the possible grounds of opposition to an application for a licence under Regulation 22.21, and also for its summary of the principles applying to summary dismissal of oppositions.

DISMISSAL OF OPPOSITION

It is established that the Commissioner of Patents should treat an application for dismissal of an opposition in much the same manner as an application for summary judgement is treated by the courts. The relevant principles were set out in Les Laboratoires Servier v Apotex Pty Ltd [2008] APO 11, and again recently applied in Wyeth v Sepracor, Inc [2010] APO 5, and may be summarised as follows (see Delegate's decision at [10]):

1. An opposition may be dismissed if it is considered to have no reasonable prospects of success.
2. It is necessary to consider whether the issue to be decided is real, as opposed to fanciful.
3. A dismissal will generally be inappropriate where expert evidence is required to determine an issue.
4. Evidence of an “ambivalent character” will generally be sufficient to establish a reasonable prospect of success.

While the Delegate found that certain of the patentee's particulars of opposition left "a lot to be desired in the sense that their relevance is not immediately apparent", the nature of the patentee's case was sufficiently clear, and could not be said to be "merely fanciful", or to have "no reasonable prospects of success" (at [26]).

Razer had objected to Law having failed to provide any "material facts" in relation to some of the grounds of opposition, however the Delegate found that this would exceed the requirements of a statement of grounds and particulars (at [23]-[24]).

On this basis, the Delegate declined to dismiss any of the grounds of opposition pressed by Law, noting that this did not mean that the opposition would necessarily succeed, but that this was a matter to be decided at the substantive hearing rather than by summary dismissal (at [28]).

GROUNDS OF OPPOSITION

A variety of Patent Office decisions are subject to opposition, and in many cases the available grounds of opposition are expressly set out or circumscribed. For example:

1. opposition to the grant of a standard patent, in which the available grounds are exhaustively defined in Section 59 of the Patents Act 1990;
2. opposition to the extension of term of a pharmaceutical patent, based only on the grounds set out in Section 75;
3. opposition to an innovation patent, limited to the grounds set out in Section 101M; and
4. opposition to a request to amend a patent specification or other filed document, limited by Regulation 5.3(4) to the grounds defined by Section 102.

However, the grounds for opposing the grant of a licence are not defined in the Act or Regulations, although, as the Deputy Commissioner noted in HRC Project Design Pty Ltd v Orford Pty Ltd [1997] APO 12, "they clearly must relate to the basis for granting a licence."

Law managed to devise seven distinct grounds of opposition (a further two grounds were withdrawn at the hearing). These were (at [14]):

1. that Razer did not exploit (or take definite steps by way of contract or otherwise to exploit) the patented invention during the relevant period of cessation of the patent;
2. that Razer did not avail itself of, or take definite steps by contract or otherwise to avail itself of, the patented invention during the relevant period;
3. that any exploitation etc of the invention by Razor during the relevant period was not because of Law's failure to pay renewal fees;
4. that Razer is not entitled to protection or compensation;
5. that the Commissioner cannot be reasonably satisfied that a licence should be granted;
6. that the Commissioner does not have the power to grant a licence in the terms sought by Razer; and
7. that the terms of the licence sought by Razer are not reasonable and, therefore, the Commissioner should not grant a licence on those terms or at all.

The first three grounds either overlap with, or contradict, one another, depending on how the facts pan out.  The first asserts that Razer did not do anything during the relevant period that would entitle it to a licence. The second asserts that, even if Razer did exploit the invention during the relevant period, this was only because it was already doing so prior to the commencement of that period. The third asserts that, even if Razer commenced doing something that might entitle it to a licence during the relevant period, it did not do so as a result of the patentee's failure to maintain the patent.

The fourth and fifth grounds relate to the criteria to be applied by the Commissioner in determining whether the grant of a licence is justified.

It was generally agreed between the parties, and by the Delegate, that the first five grounds were legitimate grounds of opposition.

The sixth and seventh grounds relate to the specific terms of the licence. Razer objected that, since the licence, and its terms, were matters between the applicant and the Commissioner, these were not a legitimate basis for opposition. The Delegate disagreed, pointing out that if the grant of a licence was purely a matter between the licence applicant and the Commissioner, no provision would have been made for opposition, and that the specific terms of a licence had previously been considered, in the HRC case, in the context of an opposition.

The Delegate therefore concluded that "it must follow that an objection to the terms can be a ground of the opposition" (at [20]).

COMMENT

It is clear that an opposition will be dismissed, without proceeding to a substantive hearing, only in rare cases in which no reasonable case has been stated.  However, opponents should take note that while particulars of opposition are not required to establish "material facts", or to present detailed arguments, they should be sufficient to make clear the nature of the opposition case, and for their relevance to the grounds of opposition to be apparent.

This decision has also confirmed that objection to the proposed licence terms is a valid ground of opposition to the grant of a licence under subsection 223(9) and Regulation 22.21.

Finally, we note that there is more to this dispute than meets the eye.  Comments in the Delegate's decision indicate that there are other parties involved, there are infringement proceedings on foot in the Federal Court, and that there was a pre-existing relationship between Law, Razer and the other involved parties.  We have not heard the last of this matter!

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Before You Go…

Thank you for reading this article to the end – I hope you enjoyed it, and found it useful.  Almost every article I post here takes a few hours of my time to research and write, and I have never felt the need to ask for anything in return.

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The task itself is straightforward and web-based – I am asking participants to compare pairs of patent claims and evaluate their relative scope, using an online application that I have designed and implemented over the past few months.  No special knowledge is required beyond the ability to read and understand patent claims in technical fields with which you are familiar.  You might even find it to be fun!

There is more information on the project website, at claimscopeproject.net.  In particular, you can read:

1. a detailed description of the study, its goals and benefits; and
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Thank you for considering this request!

Mark Summerfield

Tags: Australia, Extensions of time, Intervening rights