Acres Gaming, Inc. v Bally Gaming, Inc - [2005] APO 19

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 761822 in the name of Acres Gaming, Inc.

Title: Method for Operating Gaming Devices

Action: Application by Bally Gaming, Inc. for an extension of time under Regulation 5.10(2) to serve evidence in support, and objection thereto by Acres Gaming, Inc.

Decision: Issued 15 April 2005
Abstract

The opponent cited the withdrawal of an expert witness and the need to locate and retain further declarants as a major reason for needing the extension of time.
The extension of time to serve evidence in support under regulation 5.10(2) was granted. The opponent had provided a satisfactory explanation of the need for the extension sought. The public interest in having the opposition determined on its merits, together with the interests of the opponent, also favoured the granting of the extension of time.
Costs awarded against the objector.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 761882 in the name of Acres Gaming, Inc. and an application under Regulation 5.10(2) for an extension of time to serve evidence in support of an opposition, by Bally Gaming, Inc.

BACKGROUND

Patent application 761882 in the name of Acres Gaming, Inc. (Acres) was filed on 28 April 1999 and advertised accepted on 12 June 2003. A notice of opposition to the grant of the patent was filed by Bally Gaming, Inc. (Bally) on 11 September 2003. A statement of ground and particulars was served on 11 December 2003, and amendments to this were allowed on 18 June 2004.
Bally applied for four extensions of time in which to serve evidence in support, and these were granted without objection. Acres has objected to the latest request to extend the time for service of evidence in support to 11 May 2005.
The matter was heard in Canberra on 24 March 2005. Mr Greg Noonan, patent attorney of Freehills Patent & Trade Mark Attorneys, Melbourne, appeared by telephone on behalf of Bally. Mr Boris Golja, patent attorney of Wray & Associates, Perth, appeared by telephone on behalf of Acres. Both parties filed written submissions prior to the hearing.
THE APPLICATION FOR AN EXTENSION OF TIME
The circumstances in which, and the grounds upon which the application for extension of time was made are given as follows:
“Since our last application for an extension of time, we have received executed declarations from three experts (first second and third experts) plus an executed declaration from the British Library and my own declaration is ready for execution. In our last application for an extension of time, we indicated that our second expert to whom we sent the draft questionnaire, indicated he was no longer available to complete the questionnaire. We were only advised of his withdrawal on 17 November 2004, even though he was sent the questionnaire back in July and had reviewed some of the main prior art some time before that. Until 17 November 2004, he was prompted on several occasions to get back to us and always indicated he would do so. To date he has only provided some evidence on the state of common general knowledge but has not commented on the available prior art. At the time it was decided to proceed with evidence from the first expert who had been provided with the questionnaire as well as a third expert who had not been provided with the relevant prior art but had provided his own comments as to the state of common general knowledge. This third expert was not provided with the relevant prior art because he had advised that he had serious time constraints. This third expert has now indicated that he would be available to review some of the relevant prior art and provide evidence thereon. Accordingly, further time is required for the third expert to read the prior art and to provide evidence thereon. Additionally, since the loss of our second expert (other than in providing evidence on matters of common general knowledge) we have identified and retained another expert (fourth expert) who has recently confirmed that he is available to assist us. Further time is required to provide him with the necessary materials which will be attended to next week, to receive his advice, and to prepare evidence.”
SUBMISSIONS
Both parties provided written submissions prior to the hearing, and I will refer to these where appropriate in the body of my decision. At the hearing, Acres argued that the application for an extension of time did not fully explain the reasons why an extension was needed, and Bally’s submissions focussed on providing the missing explanation.
DECISION
The law on extensions of time
The requirements for granting an extension of time to serve evidence in support are set out in regulation 5.10(2) which states:
(2)       The Commissioner may:
(a)       on the application of a party in the approved form; and
(b)       on such reasonable terms (if any) as the Commissioner specifies;
extend the time within which the party may take a step prescribed in this chapter, not being a step that is taken under regulation 5.3 or paragraph 5.4(1)(a).
This provision must be read in conjunction with regulation 5.10(5):
(5)       The Commissioner must not … grant an application under subregulation (2) ... unless the Commissioner:
           ...
(c)       ...
(i)        gives the parties a reasonable opportunity to make representations   concerning the application or proposed action; and
(ii)is reasonably satisfied that a direction, an extension of time or the serving of further evidence is appropriate in all the circumstances.
The Federal Court has considered the requirements of regulation 5.10 in Ferocem Pty Limited v. Commissioner of Patents (1994) 28 IPR 243, A Goninan and Co Ltd v Commissioner of Patents and Another (1997) 38 IPR 213, and National Starch & Chemical Company v Commissioner of Patents (2001) 50 IPR 398. The principles arising from these decisions have been set out and followed in numerous patent office decisions relating to regulation 5.10, and may be summarised as follows:
(a)The broad discretion afforded by Regulation 5.10 cannot be reduced to insistence on imperative compliance with particular requirements;
(b)The exercise of this discretionary power requires proper, genuine and realistic consideration of all the relevant aspects that pertain to the application;
(c)The provision of a satisfactory explanation of the delay is a relevant consideration, but is not mandatory;
(d)The public interest in determining a serious opposition on its merits is a relevant consideration and must be balanced with the requirement that matters before the patent office should be dealt with in an efficient, orderly manner and not be unduly prolonged;
(e)The interests of the opponent, the applicant and any other parties are a relevant consideration.
In summary, it is clear from these decisions that the Commissioner, having given both parties the opportunity to make representations, may grant an extension only if reasonably satisfied that it is appropriate in all of the circumstances.
Explanation of the delay
The major reason provided by the opponent for the extension has been the recent withdrawal of a second expert. From comments made at the hearing, it would appear that the second expert had been unable or unwilling to assist with the preparation of evidence for several months, despite indicating that they would help. Mr Noonan explained that the expert “…suddenly decided in November that he was unavailable”, and that the withdrawal “…was somewhat of a setback”. Bally have sought to obtain evidence from other experts when it became evident that the second expert would be unable to assist.
Mr Golja argued that the opponent has not provided any satisfactory explanation as to why the declarants have not yet served any evidence at all, or why they would require a further three months in which to do so. In his view, the period of the extension sought is even more unsatisfactory when “it was reasonable for the applicant to infer that the evidence …referred to in the fourth extension…was close to finalisation”.
A similar factual situation was discussed in Dominion Mining Ltd v M.I.M. Holdings Ltd and Highlands Gold Properties Pty Ltd [1997] APO 27 (11 June 1997), where problems with access to declarants was one of the reasons justifying the grant of an extension. It was stated at page 3 that:
“I accept the withdrawal of declarants, at this stage of the proceedings, would cause significant disruption to the applicant’s preparation of evidence in answer. This factor could entitle the applicant to an extension of time.”
I consider this to be an analogous situation. Clearly, the inability of the opponent to obtain evidence from an uncooperative witness must be considered deleterious to the progress of their case. In my opinion this has resulted in Bally encountering real difficulties over the past 3 months that necessitate the need for an extension of time. In the context of the current extension, this appears to be a reasonable explanation for the delay. However, I share the applicant’s concern about progress so far, as eighteen months have passed since the filing of the notice of opposition, and as of the date of the hearing no evidence had yet been served.
As further justification for the delay, Mr Noonan explained that it was “…unfortunate that a lot of time has elapsed” but that this was “…the inevitable outcome of a series of Federal Court decisions that have arisen in recent times”. I was referred to the decisions of Minnesota Mining & Manufacturing Company v Tyco Electronics Pty Ltd [2002] FCAFC 315 and Gambro Pty Ltd & Anor v Fresenius Medical Care Australia Pty Ltd [2004] FCA 323. The Full Court in 3M v Tyco said the following at [45]:
“[45] The manner in which the evidence of some of the experts in the present case was bought into existence suggests that relatively little weight should be given to certain of that evidence. For example, witnesses were provided with a copy of the Patent. They were either provided with a large number of other documents or found them in response to the task that was set them. That is hardly calculated to result in objective evidence as to what the hypothetical uninventive but skilled worker would have done. To give the Patent to a prospective witness is tantamount to leading the witness. Further, unless the other documents were part of the common general knowledge in Australia before the Priority Date, they are not relevant to any question of obviousness.”
According to Mr Noonan, this has “…complicated the business of preparing evidence in patent oppositions”, which now require “…considerably more time and a degree more formality than [in] past days”.
In response, Mr Golja submitted that the opponent “…would’ve been aware of these cases for quite some time…and that being the case, it’s still not clear how this impacts on evidence that seemed to be close to completion at the time of the application for the fourth extension of time”.
It appears that Bally’s decision to gather evidence in a particular fashion on the assumption that it could be relied upon in an appeal has prevailed over any concern regarding the actual progress of the evidentiary stages. As Mr Golja observed, one should be pursuing the service of evidence expeditiously, and not be focussed on future proceedings which may never arise. The Commissioner has an expectation that parties to an opposition proceeding will prepare their evidence in a timely manner and allocate sufficient resources to ensure that this is done. In this instance, notwithstanding that certain difficulties have arisen, I would expect eighteen months to be sufficient time in which to serve evidence.
While there is no material before me positively establishing that Bally has endeavoured to move expeditiously to compile its evidence in support, it has established to my satisfaction that significant impediments existed which militated against them doing so. On balance, I believe Bally have shown that they have experienced difficulties of a kind which justify the need for the extension of time presently sought.
The public interest
The public interest has two components. The first requires that a serious opposition should be dealt with on its merits rather than shut out because of a failure in procedure. The second factor requires that proceedings before the Commissioner should be conducted in an efficient and expeditious manner.
Opponents, and particularly their statements of grounds and particulars and evidence in support, are an important source for reducing the risk of granting invalid patents. In the present case, Bally has served a statement of grounds and particulars outlining four grounds for the opposition. These include that the invention is not patentable, not novel, does not involve an inventive step and does not comply with section 40 of the Patents Act. The particulars are both numerous and detailed, and there are 11 items of prior art information cited.
In my opinion the statement of grounds and particulars suggests that a serious opposition is in train. It is also apparent that expert evidence would be required to establish the state of the art and the relevant common general knowledge for the grounds of novelty and inventive step. Consequently, I consider that the filing of evidence in support would clearly be of significance for a proper determination of the opposition.
My conclusion on this point is supported by the decisions in Acres Gaming, Inc and IGT (Australia) Pty Limited v Aristocrat Technologies Australia Pty Ltd [2003] APO 19 and Boral Resources (NSW) Pty Limited v BST Holdings Pty Limited [2003] APO 46. For these reasons refusal of the extension would not be in the public interest.
The orderly progress of opposition proceedings is also an important factor relevant to the public interest. Mr Golja submitted that the opponent has not demonstrated diligence in serving evidence. The views of the full bench of the Federal Court in Genetics Institute Inc v Kirin-Amgen Inc, 44 IPR 257 provide some guidance on this issue. Paragraph 19 is particularly apposite:
“As the parties in the present case accepted, the purpose of pre-grant opposition proceedings is to provide a swift and economical means of settling disputes that would otherwise need to be dealt with by the courts in more expensive and time consuming post-grant litigation; that is, to decrease the occasion for costly revocation proceedings by ensuring that bad patents do not proceed to grant. This purpose is reflected in the explanation by the Minister for Science for the Federal Government’s policy decision to retain pre-grant opposition proceedings in Australia, despite the recommendation of the 1984 Industrial Property Advisory Committee Report Patents, Innovation and Competition in Australia (IPAC report) that they be abolished (recommendation 29): (1986) 56 No 47 Official Journal of Patents, Trade Marks and Designs 1475.”
I agree that proceedings should not be unnecessarily protracted. The opponent has previously had four extensions of time, and I am mindful that, if granted, a fifth extension would cause a further delay of three months before the substantive hearing. Though no evidence has yet been filed, Mr Noonan assured me that “…matters are quite on track for completion of all of the evidence within the extension of time sought” and that he was “quite confident” of finalising the evidence by 11 May 2005.
Overall, I consider the public interest in providing Bally with an opportunity to serve relevant evidence that would allow a more just determination of the opposition outweighs any delay in the opposition proceedings.
Interests of the Parties
The interests of the opponent clearly lie in obtaining the extension. Given that to date no evidence at all has been served, I believe it would be exceedingly difficult for Bally to effectively argue its case without any evidence to support their grounds of opposition.
At the hearing, Mr Golja argued that there was no guarantee that the opponent, even with this extension, could complete the service of evidence in support. They had not displayed due diligence so far, and any extension, if granted, would unnecessarily protract the proceedings. I accept that Acres could be disadvantaged by a further protraction of proceedings if I were to grant the extension now sought. Nevertheless, there is nothing before me to suggest that such a protraction would have the same undue effect on Acres as the effect on Bally if they were denied the opportunity to fully state their case.
On balance, I think the interests of the opponent in having the opportunity to present relevant evidence that would allow the opposition to be decided on its merits outweighs the interests of the applicant in these circumstances. While I agree with the applicant that their interests are an increasingly relevant factor given the length of delay, I am not satisfied that they outweigh all other considerations at this stage.
CONCLUSION
I have found that on balance Bally has provided a satisfactory explanation of the need for a further extension of time. On the understanding that evidence in support is now well underway and almost certain to be completed within the period requested by the opponent, the interests of the opponent and the public both weigh heavily towards the grant of the extension. I am therefore satisfied that an extension of time is appropriate in all the circumstances.
Accordingly, I grant the applicant Bally an extension of time from 11 February 2005 to 11 May 2005.
COSTS
Both parties submitted that costs should be awarded in their favour. The power of the Commissioner to award costs is discretionary, so I must take into account all relevant considerations.
In matters before the Commissioner, costs usually follow the event. Bally has succeeded in obtaining an extension of time under regulation 5.10(2), and in these circumstances, I consider it appropriate to award costs against Acres.
R. W. J. Finzi
Delegate of the Commissioner of Patents
15 April 2005
Patent attorneys for the applicant: Wray & Associates, Perth
Patent attorneys for the opponent: Freehills Patent & Trade Mark Attorneys, Melbourne