Amgen, Inc. v Genentech, Inc
[2016] APO 15
•16 March 2016
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Amgen, Inc. v Genentech, Inc [2016] APO 15
Patent Application: 2007325316
Title:IL-17A/F heterodimeric polypeptides and therapeutic uses thereof
Patent Applicant: Genentech, Inc.
Opponent: Amgen, Inc.
Delegate: Dr N.R. Madsen
Decision Date: 16 March 2016
Hearing Date: Written submissions completed on 29 January 2016
Catchwords: PATENTS – opposition to the grant of a patent under section 59 – award of costs – applicant requests withdrawal of opposed application while a divisional application is pending – Commissioner refusal to consent to withdrawal under the operation of paragraph 141(1)(b) – application and divisional application withdrawn shortly before hearing – Schedule 8 costs awarded against the applicant – opponent requests variation of scale to incorporate actual costs due to actions of applicant – actual costs awarded at a reduction of 50% of total costs incurred in relevant period in recognition of particular circumstances
Representation: Patent attorney for the applicant: Griffith Hack
Patent attorney for the opponent: Wrays
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2007325316
Title:IL-17A/F heterodimeric polypeptides and therapeutic uses thereof
Patent Applicant: Genentech, Inc.
Date of Decision: 16 March 2016
DECISION
I award costs according to Schedule 8 against Genentech, Inc.
I apply a variation to the scale of costs for actual costs occurred by the opponent in the period 18 June 2015 to 23 October 2015, to the value of 50% of the total of those actual costs.
REASONS FOR DECISION
Background
Patent application 2007325316 was filed as an application under the Patent Cooperation Treaty on 20 November 2007. The applicant is Genentech, Inc. (the applicant). The application was examined and accepted and subsequently opposed by Amgen, Inc. (the opponent).
During the opposition proceedings, evidence in support was filed after which time the applicant amended the specification. These amendments were allowed on 6 November 2014. On 5 December 2014 the applicant again amended the specification. This later request to amend was withdrawn on 9 February 2015. No evidence in answer was filed and subsequently there was also no evidence in reply filed.
The opponent sought that the matter be heard at which time the applicant sought to withdraw the opposed application. Consent of the Commissioner in accordance with section 141 of the Patents Act was not provided for this withdrawal for reasons related to a pending divisional application. The applicant was provided an opportunity to withdraw the opposed application and divisional application or to provide undertakings as to the prosecution of the divisional application. No response was received from the applicant until three days after the opponent filed their written summary of submissions in preparation for the substantive hearing. At this point the applicant withdrew both the opposed application and the divisional application.
The law
Awarding of Costs
The power of the Commissioner to award costs is a discretionary power arising from section 210 of the Patents Act and regulation 22.8 of the Patents Regulations. Being discretionary it follows that in executing the power, one must determine and take into account all relevant considerations.
In the normal event, in patent opposition matters costs are awarded according to the scale of costs specified in Schedule 8 of the regulations. Relevantly to the present application, where proceedings are discontinued through the withdrawal of the patent application, it will often be appropriate for the Commissioner to conclude that the applicant has “effectively surrendered” to the opponent and an award of costs may be made, save any consideration related to the conduct of the parties. Such an award will not be automatic and will depend upon the circumstances (Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27).
The Commissioner will not depart from an award of costs on the basis of Schedule 8 unless the circumstances clearly warrant doing so (Colgate-Palmolive Co and another v Cussons Pty Ltd, 28 IPR 561). A departure from this normal award may occur "when the justice of the case so requires or where there may be some special or unusual feature in the case" (Re Wilcox; Ex parte Venture Industries Pty Ltd and Others, 141 ALR 727).
Relevant to the present matter, it is clear that such a departure may be appropriate where the conduct of one (or both) of the parties suggests that variation of the scale is appropriate. In this regard it is necessary to consider the degree to which a party has engaged in for example, misconduct such as unnecessary protraction in proceedings which may disentitle them “to the beneficial exercise of the discretion” (Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [69]). Similarly misconduct that causes lost time and wasted money, or abuse of process would be considered entirely unreasonable (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 at 279-280) and lead to a variation of costs on an indemnity basis. Importantly conduct need not be misconduct per se, but conduct that may be seen to have brought about or substantially contributed to the costs being considered (Keddie v Foxall (1955) ALR 835, the note in 30 ALJ 27, Weir Pumps v CML Pumps 2 IPR 129 at page 154).
In such circumstances it will be necessary to search for a "fair estimate" (H Lundbeck A/S v Alphapharm Pty Ltd (No 2) [2009] FCAFC 118 at [12] and [14]) of the variation to the scale of an award. Such an assessment will necessarily be based on the particular facts as a whole, recognising that "the assessment will often be rough and ready" having the virtues of “fairness and reasonableness” (Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]).
Withdrawal of an Opposed Application
Amendment to section 141 of the Patents Act brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 gives the Commissioner the power to refuse to consent to withdrawal of an opposed patent application. Relevantly paragraph 141(1)(b) now states:
(1) A patent application, other than a PCT application, may be withdrawn if all of the following conditions are met:
…
(b) if the application has been opposed under section 59 – the Commissioner has consented to the withdrawal;
…The Explanatory Memorandum in respect of section 141(1)(b) that accompanied the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (2012) in parliament stated:
“…withdrawal can be used to side-step opposition proceedings. Where an application has been opposed, an applicant can withdraw the opposed application and pursue the invention in a divisional application.
This allows the applicant to avoid the scrutiny of opposition proceedings whilst continuing to pursue the opposed invention in the divisional application. This frustrates the public interest in early determination of an application. It can also put an opponent to the unnecessary expense of having to prepare for an opposition that does not proceed, then having to monitor and possibly oppose the divisional application.
… The Commissioner can then refuse withdrawal of an opposed application where the applicant has filed a divisional application claiming the same, or substantially the same, invention (a “continuation divisional”).”
The Present Circumstances
As discussed, after initially amending the specification and then seeking to further amend the specification, the applicant sought withdrawal of the application. At the time of initially seeking withdrawal there was a co-pending divisional application claiming similar subject matter that was yet to be examined. The following is a timeline of key events relating to the prosecution of the present opposition matter.
09 Aug 2013 Opponent files Notice of Opposition 08 Nov 2013 Opponent files Statement of Grounds and Particulars 10 Feb 2014 Opponent files and completes their Evidence in Support 08 May 2014 Applicants seeks to amend specification and seeks a stay in proceedings for prosecution of amendments 30 May 2014 Stay directed by Commissioner 28 Aug 2014 Amendments advertised for opposition purposes 06 Nov 2014 Amendments of 8 May 2014 allowed and incorporated into specification, parties advised Evidence in Answer due 6 December 2014 05 Dec 2014 Applicant seeks to again amend the specification and seeks another stay in proceedings for prosecution of amendments 29 Jan 2015 Commissioner refuses to grant a stay of proceedings 09 Feb 2015 Applicant withdraws amendment of 5 December 2014 in favour of already allowed amendments of 8 May 2014 13 Feb 2015 Opponent seeks the matter be heard as no Evidence in Answer is filed 25 Feb 2015 Applicant seeks to withdraw the application in preference of a divisional application 02 Mar 2015 Commissioner refuses to consent to withdrawal of the application 26 Mar 2015 Commissioner seeks hearing dates from the parties 30 Mar 2015 Applicant writes to the Commissioner asserting that consent should be provided for withdrawal of the application under section 141 02 Apr 2015 Commissioner again refuses to consent to withdrawal suggesting that the applicant must provide an undertaking that “the divisional application will not be amended or further divisional applications filed to claim an invention substantially the same as or within the scope of the claims of the opposed application”. An opportunity to be heard on the issue is provided by the Commissioner 20 May 2015 Adverse examination report issued on divisional application 11 Jun 2015 Commissioner writes to applicant to ask whether they wished to be heard regarding the withdrawal request. Seven days is provided for a response 06 Jul 2015 No response having been received, the Commissioner seeks dates for a hearing of the opposition 10 Sep 2015 Opponent provides hearing availability 14 Oct 2015 Commissioner advises that a hearing will take place on 5 November 2015 16 Oct 2015 Opponent confirms attendance at the hearing 23 Oct 2015 Opponent files a written summary of submissions in preparation for the hearing and provides the same to the applicant 26 Oct 2015 Applicant withdraws application and divisional application
In view of the nature of the withdrawal of the opposed application, the opponent seeks an award of costs in accordance with Schedule 8 of the Patents Regulations, together with a variation to the award to the extent that certain costs were thrown away in preparation of the opponent’s case. Regarding an award of costs, both parties filed primary and responding submissions which were completed on 29 January 2016.
Costs according to Schedule 8
The opponent submitted that “As the Patent Applicant “effectively surrendered” to the Opponent, the Opponent seeks an award of cost applicable under Schedule 8 of the Patents Regulations in so far as the award is applicable to the all of items 1, 2, 4 and 11”. These costs relate respectively to the Notice of Opposition, the Statement of Grounds and Particulars, Evidence in Support and the Preparation of a case for hearing. The opponent also identified the payment of the Notice of Opposition Fee. In response the applicant submitted that “the opponent has been successful” and that they do “not propose to resist an award of costs” in accordance with Schedule 8.
The opponent has clearly incurred all of the identified costs. In particular the opponent has prepared for the hearing by filing their written summary of submissions, an exercise that according to their filed account, has incurred significant actual costs. I see no circumstances that would provide reason for the Commissioner to deviate from the normal practice of an award of costs in accordance with Schedule 8 resulting from the “effective surrender”. I hereby award costs against the applicant in accordance with Schedule 8.
Variation to the Scale
The opponent also seeks variation of the award applicable in regard to the preparation of the case for hearing. They submit that the amount specified in Schedule 8 provides “inadequate recompense” for the work done in the present circumstances. In short, the opponent points to the opportunity provided to the applicant in March and April of 2015 to resolve the opposition by withdrawal which was ultimately met with silence until the application and divisional application was withdrawn on 26 October 2015. The opponent submits that in this regard, the applicant “has acted so unreasonably that it should wear the costs of this action on an indemnity basis”.
Brief reference is also made to the public interest in economy and efficiency in oppositions. The opponent suggests that an award of costs against the applicant in the present case is a deterrent for the kind of conduct engaged in by the applicant. In this regard, it is clear that any finding in regard to the conduct of the applicant will weigh similarly in regard to an award of costs when considering the public interest. Thus I will simply proceed to consider in detail, the conduct of the applicant in deciding whether to vary the scale of costs.
Does the conduct of the applicant warrant a variation to the scale?
The relevant actions of the applicant identified by the parties’ submissions are those that relate to the request to withdraw the opposed patent application. The applicant initially sought to withdraw the opposed application on 25 February 2015. On 2 March 2015 a delegate of the Commissioner issued a letter refusing to consent to withdrawal, then on 26 March 2015 a letter was sent to the parties seeking appropriate dates for a hearing. The applicant again sought to withdraw the application on 30 March 2015 arguing that the present situation would not amount to “side-stepping” of opposition proceedings. A delegate responded to this request again refusing to consent to withdrawal unless the applicant provided a certain undertaking, and invited the applicant to request to be heard regarding the refusal to provide consent.
On 11 June 2015 a delegate of the Commissioner again wrote to the applicant to provide a final opportunity for the applicant to be heard regarding consent for withdrawal. Seven days were provided for the applicant to respond. No response was received and the substantive opposition matter was subsequently set for a hearing. In setting the hearing for 5 November 2015 there was no correspondence received from the applicant. In fact there was no correspondence received from the applicant in relation to the opposition from 30 March 2015 until their request to withdraw both the opposed application and the divisional application on 26 October 2015.
Regarding their actions the applicant argues it has “not frustrated the opposition” and has only “exercised its legislative rights”, pointing to the fact that the matter did not proceed to a hearing and thereby incur even further expense, and that the circumstances represent “sensible portfolio management decisions”. Responding the opponent suggested that the saving of costs and decisions of portfolio management may apply to the applicant but it remains that the particular actions “forced costs to be wasted” by the opponent. Both parties point to previous decisions of the Patent Office, Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27 and Sterling Drug Inc v Boots Company PLC 35 IPR 630, in making their arguments.
In Sterling (supra), the Commissioner’s delegate concluded that the scale of costs can be varied to allow the recovery of costs reasonably and properly incurred, if the schedule provides inadequate recompense. The circumstances of Sterling relate to an opposition to a proposed amendment whereby after numerous extensions of time to file evidence in answer, the applicant withdrew the request to amend after filing a new request for a second amendment. The delegate concluded that the applicant had frustrated proceedings, but did not order a variation in the scale because there was no evidence that the opponent had incurred any unusual expenses. The applicant in the present matter argues that their conduct is to be distinguished from Sterling as it has not frustrated the opposition proceedings. Importantly I note in the present matter there is evidence provided by the opponent of unusual expense so it is clear that I must determine whether the conduct of the applicant accords with that discussed in Sterling as warranting a variation in the scale.
In Sensis (supra), an opposition matter was set to be heard following the failure of the applicant to file evidence in answer. About two months before the hearing the applicant withdrew the opposed application in favour of a divisional application filed shortly before withdrawal. The Deputy Commissioner decided that the circumstance of filing a divisional immediately before the application was withdrawn was unusual[1], and that an award over the scale was warranted as indemnity for costs given the effect of the applicant’s conduct. Here the conduct was essentially an apparent frustration of the opponent’s interests in determination of the opposition in the face of an “effective surrender”. In that case, the opponent sought full costs to a value in excess of $50000. The Deputy Commissioner sought fit to take the particular circumstances into account and award a variation to the scale of only $3000.
[1] In Sensis the filing of a divisional and subsequent withdrawal of the opposed application occurred before amendments to the legislation brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 which gave the Commissioner the power to refuse to consent to such withdrawal.
The applicant argues that the present circumstances are distinguished from these decisions such that their principles should not be applied to result in a variation to the scale of costs. Firstly it is clear from both Sterling and Sensis that the fact that the applicant’s actions fall within their legislative right does not save conduct which is unusual and results in unnecessary expense. Regarding assertions of the opponent that the applicant’s conduct was “highly unusual”, “misconduct” or “an abuse of process” or “frustrated the opposition process” the applicant notes:
“The Applicant took steps to amend the claims of the co-pending divisional application to differentiate the claims for the claims of the Opposed Application…”
“…the Applicant took steps to resolve the Opposition so that the parties and the Patent Office were not required to attribute further time and resources to it...”
“Shortly after the hearing date was set the Applicant took the extra step of simultaneously withdrawing both the Opposed Application and the co-pending divisional application to ensure final resolution, even though [they had originally considered this step unnecessary]…”
“Applicant should not be criticised for wishing to receive and consider an Opponent’s submissions before making a decision to withdraw an opposed application…”
“The Applicant did not intentionally draw out the matter to force the Opponent to incur costs unnecessarily…”
“Clearly the opponent is no more out of pocket that it would have been if this opposition had progressed to a hearing…”“The Applicant did not engage in any [conduct that was calculated to occasion unnecessary expense]…”
It is clear that the applicant had formed an intention to withdraw the application early in 2015. This intention clearly remained in place until at least April. Following the letter from the delegate of the Commissioner on 2 April 2015 refusing to consent to withdrawal without an undertaking, an adverse examination report was issued in respect of the divisional application (20 May 2015). The Commissioner then again wrote to the applicant on 11 June 2015 asking whether they wished to be heard regarding the withdrawal request. No request to be heard was received. At this point it appears reasonable to me that the applicant should be in a position to make an informed determination of the appropriate manner in which to prosecute the relevant applications. Here, the applicant was well aware of the Commissioner’s position regarding withdrawal under s141, and was informed as to the validity of the claims of the divisional application by way of an adverse examination report containing substantive objections to all claims.
It is noteworthy that following the Commissioner’s invitation to request a hearing regarding withdrawal, no correspondence was received from the applicant until the opponent filed their written summary of submissions in preparation for the hearing. In setting the hearing the Commissioner received no correspondence from the applicant indicating an intention to appear (or to not appear) at the hearing and as such the hearing was simply set at the convenience of the opponent. As such, the intentions of the applicant become unclear until the point at which they withdrew both applications after the opponent filed their summary of submissions in preparation for the hearing.
To me the applicant’s conduct is far from ideal in the present circumstance. While it may appear sound to wait for submissions of the opponent before withdrawing, it is clear that the applicant had already formed intent to withdraw and had received an adverse report on the divisional application. With this information I would expect a reasonably diligent applicant, properly managing their portfolio, would be in a position to decide whether withdrawal of both applications was appropriate. Other than waiting for the submission of the opponent, the applicant provides no reason why they did not execute their original intention to withdraw the opposed application in addition to withdrawing the division application after receipt of the examination report on the division application. A sophisticated user of the patent system who had already formed intent to withdraw should be able to make informed portfolio management decisions without the need for the opponent’s summary of hearing submissions.
Having been provided a reasonable amount of time to consider the undertakings for withdrawal proposed by the Commissioner (2 April 2015 to 18 June 2015), the applicant chose silence until after the opponent incurred significant costs in preparation for the hearing. To me withdrawal of both applications, if managed with conduct that was appropriate and reasonable in the circumstances, should have occurred by 18 June 2015. In this regard the conduct can be seen to have brought about (intentionally or otherwise) substantial unnecessary costs and accords with the decisions of Sterling and Sensis. The fact that a hearing did not occur is largely irrelevant as the question is to whether costs incurred were unnecessary. Here the appropriate conduct of the applicant would have seen the opponent avoid having to prepare for a hearing.
Therefore I consider it appropriate to apply a variation to the scale of costs for the period from 18 June 2015 to the date of withdrawal of the relevant applications being 23 October 2015.
What is a “fair estimate” for a variation to the scale?
The opponent provides an account of actual costs occurred in the period 18 June 2015 to 23 October 2015 as follows:
Date Invoice Amount $ Narration 09/07/15 153.18 Receiving and considering correspondence from IP Australia and responding thereto 03/08/15 102.12 Receiving and considering your correspondence, Corresponding with you concerning the need for a hearing 04/08/15 102.12 Receiving your instructions to request an extension of time on the hearing date, drafting and sending letter to IP Australia concerning the same 07/08/15 255.31 Requesting further time to submit possible hearing dates, receiving confirmation of extension of time; responding to your query on publically available documents. 10/09/15 510.61 Discussions with you concerning opposition and path forward 10/09/15 510.61 Teleconference with [xxRedactedxx] and [xxRedactedxx] to discuss the opposition proceedings and hearing. 13/10/15 3114.72 Commencing preparation of submissions 14/10/15 2655.17 Preparation of submissions; sufficiency section 15/10/15 204.24 Correspondence to Australian Patent office confirming we will attend hearing 15/10/15 2093.50 Preparation of submissions; introductory section 16/10/15 510.61 Reviewing file and evidence in preparation for hearing 16/10/15 2297.75 Preparation of summary of submissions 16/10/15 3318.97 Preparing submissions for hearing including the specification section, best method and fair basis sections 19/10/15 3829.58 Finalisation of first draft of submissions and forwarding same to you 20/10/15 4084.88 Continued preparation of summary of submissions. 20/10/15 2093.50 Refining submissions. 21/10/15 2553.05 Further preparation of summary of submissions 21/10/15 1633.95 Making further amendments to submissions 22/10/15 2604.11 Further preparation of submissions inclusive of forwarding further draft to you for comment 23/10/15 1021.22 Finalising submissions, filing the submissions and notifying you of same 23/10/15 765.92 Receiving your instructions to proceed, making further amendments to the submissions and filing same
The narration of the actions provided in respect of each individual cost essentially relates to the preparing of submissions for the hearing. Also it is clear that each of the costs listed in this period is unnecessary in view of my earlier discussion. Consistent with the Deputy Commissioner in Sensis, a variation to the scale need not represent the entirety of actual costs incurred. In this sense there are a number of factors in the present case which I must take into account when determining a “rough and ready” amount which is “fair and reasonable”. The factors include:
·The applicant withdrew the applications before the matter was heard and shortly after receiving the opponent’s submissions
·The claims of the opposed application and divisional application were not the same
·The applicant provided no resistance to the award of costs according to Schedule 8
·There is no evidence of any calculated conduct on the applicant’s part to draw out proceedings
·The scale of costs reflected in Schedule 8 is clearly not intended to reflect actual costs and is inadequate in these circumstances
·The costs incurred by the opponent appear reasonable
Having regard to these factors I believe that the justice of the case warrants an award over scale limited to an amount being 50% of the total actual costs incurred by the opponent in the period 18 June 2015 to 23 October 2015. To me it is pertinent that there is no evidence of intentional or “calculated” conduct by the applicant. Instead I am at least satisfied that the applicant has fallen short of demonstrating appropriate and reasonable action in exercising their original intent to withdraw the opposed application. The result of this finding is a “rough and ready” proportion of the indemnity of costs being awarded against the applicant. Such a proportion of indemnity to me represents a fair penalty for taking a course of action which leads to wasted time, effort and expense in opposition proceedings. Efficient conduct of opposition proceedings is clearly of interest to the parties, the Commissioner and the general public.
Conclusion
The applicant has effectively surrendered in the present proceedings. Following Super Internet Site System Pty Ltd v Sensis Pty Ltd, I award costs according to Schedule 8 against the applicant. Further I apply a variation to the scale of costs for actual costs occurred by the opponent in the period 18 June 2015 to the date of withdrawal of the opposed and divisional applications being 23 October 2015, to the value of 50% of the total of those actual costs.
Dr N.R. Madsen
Delegate of the Commissioner of Patents
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