10 November 2013

Lost In Transition – Opposition, Appeal and Amendment

Suntory Holdings Ltd v Commissioner of Patents [2013] FCA 999 (2 October 2013)

Thumbs UpThe Federal Court of Australia has, for the first time, considered the effect of reforms to the mechanisms for amending a patent application during appeals from decisions of the Commissioner of Patents which where introduced earlier this year by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.  Unfortunately for patent applicant Suntory Holdings Ltd, the changes in the law mean that its previous efforts to amend its application through the Patent Office have been in vain, and it will now have to start again by applying to the court.

Ironically, the reforms were intended to ensure that application to amend in the course of an appeal could be handled more efficiently.  This should be the case in the future, however Suntory has fallen victim to bad timing, and been caught out by the transitional provisions of the Raising the Bar Act.

The same transitional provisions bit Euroceltique S.A. earlier this year, although in that case the patent applicant did not elect to appeal the Commissioner’s decision to the Federal Court.

I have to say, though, that it is not entirely clear to me what Suntory was hoping to achieve by the requested amendments.  It is even less clear why it appealed the Commissioner’s refusal of its application to amend.  I am not complaining, however, since early judicial consideration of the Raising the Bar reforms is helpful to all of us in confirming that they operate as intended!

Amendments & Appeals – the Problem With the Former Law

In the past, while the court could order amendments to a granted patent, under section 105 of the Patents Act 1990, only the Commissioner of Patents had the power to amend an application prior to grant, under section 104.  Furthermore, if a decision of the Commissioner in relation to an application was appealed to the Federal Court, there was nothing in the Act prohibiting the Patent Office from processing an amendment request, in parallel with the court proceedings.

To give a concrete example, suppose that a patent application were opposed, and the Patent Office issued a decision that was partly unfavourable to the applicant, i.e. some claims were found invalid, while others were found to be valid.  Further, suppose that one of the parties to the opposition then appealed the decision to the Federal Court.  Potentially, either party might have grounds for appeal – the applicant might want to challenge the findings against the ‘invalid’ claims, while the opponent might want to challenge the findings in favour of the ‘valid’ claims.  So far, so straightforward.

Now, suppose the applicant wanted to amend the application.  It might, for example, accept at least some of the findings of invalidity, and wish to delete the invalid claims from the application so that they do not need to be considered again on appeal.  This, you would think, is a good thing, because it may reduce the issues to be dealt with by the court.

Under the former law, however, there were two problems with this scenario.

First, there was an efficiency problem – since only the Commissioner could consider a request to amend an application before grant of a patent, the amendment request had to proceed in the Patent Office at the same time as the appeal before the Federal Court.  Should the court stay the appeal proceedings pending a decision on the amendment, or should the Patent Office stay the amendment proceedings pending a decision by the court which might itself shed light on the allowability of the amendments?  Having two potentially interdependent proceedings taking place in parallel is clearly inefficient, particularly since any decision of the Commissioner on the amendment request is itself subject to a potential appeal to the Federal Court.

Second, there was a question as to whether the amendments, even if allowed, could have any effect on the Federal Court appeal proceedings.  There is some persuasive authority to the effect that any appeal for judicial reconsideration of an executive decision of the Commissioner of Patents must be based upon exactly the same facts that were originally before the Commissioner (‘…hearing an appeal against a decision of an administrator by exercising for the first time the judicial power of the Commonwealth in the original jurisdiction leads one to conclude that the Court is dealing with the same subject matter as was dealt with by the Commissioner’: New England Biolabs Inc v F Hoffmann-La Roche AG [2004] FCAFC 213, at [45]).

If so, then even if the application were to be amended by the Patent Office, the court would still have to reconsider the opposition on the basis of the application as it was prior to the amendment.

All in all, then, the situation was rather unsatisfactory!

The ‘Fix’ – Raising the Bar Reforms

The Raising the Bar Act introduced two new provisions to address the above problem:
  1. new subsection 105(1A) states that ‘if an appeal is made to the Federal Court against a decision or direction of the Commissioner in relation to a patent application, the Federal Court may, on the application of the applicant for the patent, by order direct the amendment of the patent request or the complete specification in the manner specified in the order’; and
  2. new section 112A bars the making of amendments, except by the court under section 105, when an appeal is underway and has not yet been finally disposed of.
Together, the provisions allow the court to order amendments in the course of an appeal, and prohibit the Patent Office from making any amendments, except when ordered to do so by the court.  Problem solved!

Suntory’s Dilemma

Suntory’s situation was very similar to the hypothetical example given above.  It was the applicant of a patent application which was opposed by DSM Nutritional Products, LLC (‘DSM’).  On 16 November 2012, the opposition was decided, with certain claims being found to lack novelty and fair basis.  As is usual where the Hearing Officer considers the deficiencies can be overcome, Suntory was given 60 days within which to amend its application.

On 7 December 2012, i.e. long before the expiry of the 60 day period for amendment, DSM appealed to the Federal Court.  Suntory, however, proceeded to amend in accordance with the Patent Office direction, by applying, in 15 January 2013, to delete the claims that had been found invalid.  As I have already indicated, it is not clear to me why it did so, when the opposition was already under appeal.  (Perhaps Suntory was concerned that if it allowed the 60 day period to pass without filing an application to amend, then the opportunity would be lost regardless of the outcome of the appeal.  If so, then I believe it was mistaken.)

To cut a slightly longer story short, even though the Raising the Bar reforms would not come into effect until 15 April 2013, the Commissioner refused the amendment request.  Her reason for doing so was based on the transitional provision for s 112A, which applies to ‘requests for amendments made before 15 April 2013 if the Commissioner had not dealt with the request on or before that day’ (emphasis added).  The Commissioner’s argument was that ‘dealt with’ means finally dealt with, i.e. actually having completed the prescribed steps, and made a final decision to refuse or allow the amendment request.

Suntory appealed, arguing that ‘dealt with’ means, in effect, ‘commenced to deal with’.

The court did not accept Suntory’s submissions, finding that (at [33]):

…a request has not been “dealt with” by the Commissioner until the Commissioner has followed the process prescribed by the Regulations and has allowed, or refused to allow, the amendment. This construction does not involve imputing the word “finally” into the text, as Suntory contended would be necessary.

In reaching this conclusion, the court referred with approval to the reasoning of Deputy Commissioner Philip Spann, at paragraphs [16]-[18] of the Euroceltique case earlier this year.

Conclusion – Section 105 & 112A Reforms Confirmed

The court clearly found that s 112A is effective, as intended, to prevent an amendment from being made to a patent application which is subject to an appeal from a decision or direction of the Commissioner, other than by order of the court under s 105, as of 15 April 2013.

The provision is not complex, controversial or unclear, so this is not a surprising outcome.  It is comforting, all the same, to have its effect confirmed by the court.

While the construction of subsection 105(1A) was not directly at issue in the case, it is mentioned a number of times in the context of its interrelationship with s 112A, and there are strong indications (e.g. at paragraph [35]) that the court appreciates and approves of its intended purpose.

This will no doubt be of some comfort to Suntory, which will surely now make its application to amend directly to the Federal Court in the course of the appeal proceedings, under the provisions of subsection 105(1A).

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