Appeal ‘Incompetent’ – Is This A Problem With Patent Opposition in Australia?

The Australian Patents Act 1990 provides for a pre-grant opposition process.  Specifically, once an application has passed examination, and is accepted, there is a three-month period during which anybody may file an objection, i.e. ‘opposition’, to the grant of a patent.  This allows third parties, such as competitors of the patent applicant, to raise prior art and/or new arguments or grounds for rejection, that may not have been readily available to the examiner.  Opposition provides an additional mechanism for preventing invalid patents from being granted.

Opposition proceedings can be quite involved, although they are generally much simpler and cheaper than court action.  The objecting party, i.e. the ‘opponent’, is required to file a Statement of Grounds and Particulars, outlining the basis for the opposition, so that the applicant can understand, at an early stage, the case it will be required to answer.  Subsequently the opponent must file its evidence in support of the opposition, which may include prior art documents or other information, and/or written testimony of expert witnesses that is relevant to the validity of the accepted patent claims.  The applicant then has an opportunity to file its own answering evidence, and finally the opponent may file further evidence, strictly limited to addressing new issues raised in the applicant’s evidence.

The opposition then typically proceeds to a hearing before an officer at the Australian Patent Office, following which a written decision is issued.  There are a few possible outcomes from an opposition.  At the two extremes, the opposition may be dismissed (i.e. the opponent’s case is found to fail completely) or may be upheld (i.e. all of the opposed claims may be found irredeemably invalid).  However, many cases fall somewhere between these two extremes, with an opposition being only partly successful, and/or the Hearing Officer finding that successful grounds of opposition might nonetheless be overcome by some form of amendment to the patent specification and claims.

An example of this last type of outcome is the subject of a recent decision of the Federal Court of Australia in Merck Sharpe & Dohme (Australia) Pty Ltd v Genentech Inc [2016] FCA 324, which highlights a potential pitfall of the pre-grant opposition process in Australia.  In particular, there are cases in which amendments may be legitimately made that result in claims that are nonetheless potentially invalid, but which cannot be effectively challenged prior to the patent being granted.

How the Problem Arose

In the recent case, following a successful opposition by the opponent (Merck) on grounds of, inter alia, lack of novelty, the applicant (Genentech) was given 60 days within which to propose amendments in order to overcome the successful grounds: Merck, Sharpe & Dohme (Australia) Pty Ltd. v Genentech, Inc. [2014] APO 6.  Genentech duly filed its proposed amendments within the period allowed. 

Genentech’s amendments included incorporating additional limitations into its independent claims.  The added features were supported by the full description of the invention in the specification, but had not been considered during the original opposition proceedings.

The allowability of amendments is determined by section 102 of the Patents Act.  In short, an amendment will be allowable after acceptance of an application so long as:

1. the resulting claims are supported by the specification prior to amendment; and
2. the scope of the claims after amendment falls within their scope prior to the amendment (i.e. broadening amendments are not permitted).

Given that the amended claims were supported in the description, and were narrowing in scope (i.e. they added new limitations to the broadest claims), the Hearing Officer found that they were allowable: Merck, Sharpe & Dohme (Australia) Pty Ltd. v Genentech, Inc. [2015] APO 19.

The Hearing Officer also found the amendments sufficient to overcome the successful grounds of opposition, however Merck considered that the amended claims were still invalid.  But there was a problem: Merck’s outstanding objections to the amended claims were based on prior art grounds not argued in the original opposition proceedings.  Lack of novelty and lack of inventive step are not grounds upon which an amendment can be refused.  Furthermore, the Hearing Officer found that it was not open to Merck to raise additional grounds of opposition to the amended claims that had not been pursued in the original proceedings, stating (at [16]) that:

The earlier decision in opposition proceedings is a final decision on the accepted application, which determines all issues capable of determination at the time and decides them once and for all. In this regard, the earlier decision is to be taken as dealing with and deciding the grounds of opposition generally, rather than only the specific grounds particularised, argued or pressed by the opponent in the earlier opposition hearing. (Citations omitted.)

Merck appealed to the Federal Court of Australia.

Appeal ‘Incompetent’

In an interesting move, the Commissioner of Patents filed a notice of objection as to competency, essentially contending that the Federal Court lacked jurisdiction to hear Merck’s appeal.

The court (Justice Rares) agreed with the Hearing Officer that it was not open to Merck to pursue new grounds of opposition to the amended claims at the hearing in relation to the amendments, and with the Commissioner that the appeal was incompetent.  In particular, the court found that the appropriate – and, in effect, only – opportunity to appeal the outcome of the principal opposition proceedings was following the first decision in which Genentech’s claims had been found invalid, but capable of amendment in order to overcome the successful grounds (at [68]):

The flaw in Merck’s argument is that it assumed that all of the claims that the delegate concluded in the first decision … lacked novelty, and therefore, they could not be amended to overcome the lack of novelty. The argument simply ignored the delegate’s decision that the claims could be amended to overcome the deficiencies in respect of lack of novelty. That decision was unfavourable to Merck. That determination could, and indeed had to, be challenged by Merck on an appeal … against the first decision.

Harsh Outcome for the Opponent?

The court’s finding is not as harsh on Merck as it might at first appear to be.  In this particular case, Genentech’s amendments to its independent claims consisted of incorporating features from dependent claims which could have been explicitly attacked during the original opposition proceedings.  Apparently, however, the parties agreed that the opposition could be decided based upon consideration of only the independent claims, and so the additional features of the corresponding dependent claims were never considered.  It appears that this may have been a strategic error on Merck’s part. 
 
However, I cannot see that the position is any different if the amendments involve incorporating into the claims new limitations from the full description of the invention, even though it would be difficult for an opponent to predict the nature of such amendments during the normal course of opposition proceedings.  To make matters worse, any appeal from the original opposition decision must be filed within 21 days, which is less than the 60 days normally allowed for amendments to be proposed.  The opponent’s only opportunity to appeal may therefore arise before the content of the proposed amendments is even known.  The Federal Court can, however, grant an extension of the time to appeal, and this would perhaps be a circumstance in which such an extension might be granted.

Conclusion – Appeal Not Always the Best Option?

The bottom line is simple enough.  If an opponent does not like the Patent Office’s decision in an opposition – including a case in which the original grounds are wholly successful, but the applicant is granted an opportunity to amend – it is necessary to appeal that decision, and very risky to wait for amendments to be proposed and a final determination to be made. 
 
By extension, it is advisable in the course of an opposition to consider not only the validity of the accepted claims, but also whether there are any amendments that the applicant might be able to make in a effort to overcome the grounds of opposition.  For example, by identifying prior art that discloses not only the subject matter covered by the accepted claims, but also further features disclosed in the patent specification, an opponent might be able to avoid a decision in which the applicant is granted an opportunity to amend.
 
As a practical matter, however, there may be cases in which the best strategy is simply to wait for the amended application to be granted, and then apply to the Federal Court for revocation of the resulting patent.  Allowing the patent to proceed to grant may not be a viable option for an opponent who is potentially infringing the granted claims, but in case where infringement is not an immediate concern a revocation action may be little different in cost or complexity from an appeal against the opposition decision.
 
But no matter how you look at it, the possibility of amendment to overcome grounds of invalidity has the potential to cause an otherwise orderly opposition to come apart, at least for the opponent.  And that is a problem to which I do not see any easy or obvious solution.

Tags: Amendments, Appeal, Australia, Novelty, Obviousness, Opposition