Patent Office Told: Factual Matters Preclude Summary Dismissal

Preference Manufacturing (Aust) Pty Ltd and Commissioner of Patents and Breezway Australia (Holdings) Pty Ltd (Joined Party) [2012] AATA 393 (27 June 2012)

Practice and procedure – opposition to the allowance of an amendment of notice of entitlement summarily dismissed – whether matter capable of being determined summarily

In the latest development in a dispute which could turn out to be a great expenditure of time, money and public resources for little substantive effect, the Administrative Appeals Tribunal (AAT) has ruled that a delegate of the Australian Commissioner of Patents was wrong to summarily dismiss an opposition to a request to correct a document which was filed in the course of prosecution of a patent application.

According to the AAT’s decision (at [22]), there were ‘factual matters that warranted investigation and proper consideration’, and it was therefore inappropriate for the opposition to be dismissed without submission of evidence or argument, and without (if requested) conducting a hearing.

The erroneous document in question is a ‘Notice of Entitlement’.  For readers unfamiliar with Australian patent procedures, this is a statement which must be filed by, or on behalf of, a patent applicant before the Patent Office can issue a patent.  The statement explains the basis upon which the ‘nominated person’ (i.e. the applicant for the patent) gains the rights required for it to be the legitimate owner of the patent.  Usually this is by some chain of assignment, or other contractual provision (such as employment) leading back to the original inventor(s).

Significantly, the Patent Office does not verify the content of the Notice of Entitlement.  It is up to the applicant to ensure that the statement it makes is true and correct.  And if the Notice does contain errors, this is not necessarily fatal to the resulting patent.  Ultimately, the validity of the grant depends only upon whether the patentee was actually entitled to the patent at the time of issue, even if the basis for entitlement is different from that set out in the Notice.

So if a patentee says there are errors in its Notice of Entitlement, and it would like to correct them, there is (on the face of it, at least) no obvious objection to such a request.

That was certainly the view that the delegate took when he dismissed an opposition to a request to amend the Notice of Entitlement on patent no. 2007201165, which was applied for by, and granted to, Breezway Australia (Holdings) Pty Ltd (see Preference Manufacturing (Aust) Pty Ltd v Breezway Australia (Holdings) Pty Ltd [2011] APO 81).

The patent in question was divisional of application no. 2002342406 (the ‘parent patent’), which was originally filed in the name of Breezway Australia Pty Ltd – note the absence of ‘(Holdings)’ in this name, i.e. it is a different company and separate legal entity.

CHRONOLOGY

Based on the original Patent Office decision, the AAT decision, and the Australian Patent Office records, it appears that the relevant chronology is as follows:

1. the original applicant (and patentee) of the parent patent (filed 25 November 2002) was Breezway Australia Pty Ltd;
2. at some point it seems that rights in the invention, and all associated patent rights, have been assigned to Breezway Australia (Holdings) Pty Ltd, although at this stage it is not clear when this occurred;
3. the applicant was named in the divisional Patent Request (dated 16 March 2007) as Breezway Australia (Holdings) Pty Ltd;
4. the Notice of Entitlement (dated 3 April 2009) was signed on behalf of the applicant, Breezway Australia (Holdings) Pty Ltd, but purported to set out the basis upon which the distinct company Breezway Australia Pty Ltd was entitled to be the patent-holder;
5. this inconsistency was not identified by the attorney, the applicant, or the patent examiner, so the patent proceeded to issue; and
6. more recently (on 3 May 2012) Breezway filed a request to record an assignment of the parent patent to Breezway Australia (Holdings) Pty Ltd – this request must have been accompanied by some documentary evidence of the transfer, since it was allowed four days later.

The most likely explanation for this error (and the one given by the attorneys representing Breezway – though not supported by evidence) is that the relevant content of the Notice of Entitlement on the divisional application was copied from the parent case, although the applicant had changed in the meantime.

In making its request to amend the Notice, Breezway Australia (Holdings) Pty Ltd explained itself by stating the purpose of the amendment was to correct a clerical error or an obvious mistake (more specifically, the obvious mistake being the result of a clerical error).  As we shall see, this may itself have been a error – of judgement, at least!

CLERICAL ERRORS & OBVIOUS MISTAKES

When amending a patent specification, it is beneficial to be able to demonstrate that there has been a clerical error or obvious mistake, since this enables amendments to be made which might otherwise not be permissible, such as adding subject matter, or broadening claims after acceptance (see section 102(3) of the Patents Act 1990).

However, a Notice of Entitlement falls into the category of ‘other filed documents’ (see section 104(1)), which may be amended for any purpose including (but not limited to):

1. removing a lawful ground of objection to the request or specification, whether that objection is raised in the course of an examination or re-examination or otherwise; or
2. correcting a clerical error or an obvious mistake.

There are no express prohibitions on amendments to ‘other filed documents’, either in section 102, or in the Regulations.  There is therefore no clear benefit in explaining a request as being for the purpose of correcting a clerical error or an obvious mistake.  One might just as well state baldly that the document contains a error, and the amendment corrects it.

In this case, Preference Manufacturing (Aust) Pty Ltd (‘Preference’) opposed the amendment, effectively on the basis that Breezway had not established the existence of a clerical error or obvious mistake.  Breezway applied for the opposition to be dismissed, on the basis that it had no reasonable prospects of success.

THE PATENT OFFICE DECISION

Before the Patent Office, the parties were in agreement that the Patents Act and Regulations do not expressly specify any grounds for opposing an amendment to ‘any other filed document’.  As the delegate saw the matter (at [24]):

The question before me is whether the establishment of a clerical error or an obvious mistake is an allowability criteria or the basis of granting leave to amend under section 104, and whether it constitutes a ground of opposition.

On this basis, he quite rightly concluded that establishing a clerical error or an obvious mistake is not a requirement, since the list of purposes in section 104(1) is not exhaustive.  Amendments may be made for any purpose. 

Therefore the delegate dismissed the opposition.  Preference appealed to the AAT.

THE AAT DECISION

The AAT disagreed with the delegate’s decision.  We must say that the Tribunal’s reasoning is a little convoluted in places, but what it appears to come down to is that the general legislative scheme allows for amendments to be opposed, and this must have some purpose.  If, in the absence of any express grounds, there can never be a basis for a successful opposition, then the opposition provisions would be pointless.  As the Tribunal put it (at [18]):

The delegate had no discretion [when considering the original amendment request] however, as it seems to me, the position was different once Preference filed its notice of opposition. Subject only to the question of summary dismissal of the opposition, the Commissioner was obliged to determine the opposition, by holding a hearing in accordance with Reg. 5.12 and considering such evidence as the parties put on. Implicit in the statutory scheme is recognition that it is open to an opponent to demonstrate why, in a case such as the present, amendment of another document ought not be allowed despite the Commissioner’s original view. It is open to an opponent to demonstrate that the factual basis on which an amendment is sought is not made out.

This seems reasonable, although the Tribunal appears to have persisted in the view that the cause of the error is somehow relevant (at [22]):

… Preference had two points of apparent factual substance – the discordance in entitlement details between the two applications and the absence of evidence that raised a prima facie case that there was a clerical error or obvious mistake to be corrected. It may well be that Breezway (Holdings) can and will present evidence that explains the discordance and circumstances that demonstrate error or mistake at a hearing. But I do not consider that the matter was capable of being determined summarily; there were factual matters that warranted investigation and proper consideration.

We would argue that the real issue in a case such as this is not why an alleged error occurred, but simply whether the amended Notice of Entitlement would now be materially correct in all respects.  If the amended Notice remains erroneous, then the Office should not allow the amendment.  However, if it is a correct reflection of the applicant’s entitlement at the relevant time, then it should be amended to correct the record, and the manner in which the error occurred would (in the absence of fraud or some other egregious conduct) be irrelevant.

However, given the consistent reappearance of the question of a ‘clerical error or obvious mistake’, we have to wonder whether the patentee would have been better off if it had never mentioned the words!

VALIDITY OF THE PATENT

Clearly an error was made somewhere along the path taken by Breezway’s divisional application, whether this was in the original naming of the applicant, or in the preparation of the Notice of Entitlement, or otherwise. 

However, a Notice of Entitlement does not actually assign or transfer rights.  It is simply a declaration made by the applicant to the Patent Office stating the basis upon which it is entitled to be the proprietor of the granted patent.

Regardless of what is actually stated in the Notice of Entitlement, the validity of the patent is only in doubt if one of the following conditions applies:

1. the party to which the patent is actually granted is not the true owner on the day of issue – section 138(3)(a) of the Patents Act; and/or
2. the applicant knowingly filed a false Notice of Entitlement, so as to obtain the patent for itself by fraud, false suggestion or misrepresentation – section 138(3)(d) of the Patents Act.

Other than this, errors in the Notice of Entitlement are irrelevant to validity of the patent.  Not only is there no clear ground to refuse a request to amend in order to correct such an error (regardless of its cause), it is plainly in the public interest that the correction be allowed, so that the public record reflects the true chain of title.

CONCLUSION

Ultimately, if Preference’s real objective is to invalidate the patent, it will have to do so by filing an application for revocation in the Federal Court of Australia on one or both of the two grounds noted above.  Even if it succeeds in its opposition to Breezway’s amendment request, the end result will simply be that the erroneous Notice of Entitlement will remain uncorrected.  The status of the patent itself (whatever that may be) will be unchanged.

The bottom line is that Breezway says that the Notice of Entitlement as originally filed contains errors, and it wishes to correct those errors.  In the absence of any evidence to the contrary, it should be allowed to do so.  The cause of the errors, and the question of whether or not there is some underlying defect in the patent itself, are irrelevant to the amendment application, and can only be addressed by the Federal Court under section 138.

Tags: Amendments, Appeal, Entitlement