Aqua HD Separation & Filtration Systems Ltd
[2025] APO 2
•10 February 2025
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Aqua HD Separation & Filtration Systems Ltd [2025] APO 2
Patent Application: 2016314375
Title:A duct for use in a system for separating particles suspended in a fluid, and a method of designing such duct
Patent Applicant: Aqua HD Separation & Filtration Systems Ltd
Delegate:M. Umehara
Decision Date: 10 February 2025
Hearing Date: Written submissions filed on 23 January 2025
Catchwords: PATENTS – extension of time – request for extension of time under section 223(2)(b) to pay continuation fees and gain acceptance – lack of funds – circumstances relevant to a trustee – request refused
Representation: Patent attorney for the applicant: FPA Patent Attorneys Pty Ltd
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2016314375
Title:A duct for use in a system for separating particles suspended in a fluid, and a method of designing such duct
Patent Applicant: Aqua HD Separation & Filtration Systems Ltd
Date of Decision: 10 February 2025
DECISION
I refuse the request for an extension of time under section 223(2)(b) to pay continuation fees and gain acceptance.
REASONS FOR DECISION
Patent application 2016314375 (the application) in the name of Aqua HD Separation & Filtration Systems Ltd (Aqua HD, the applicant) was filed on 1 September 2016. Examination on the application was requested 14 July 2020 and the first examination report was issued on 17 May 2021. The 5th year continuation fee was not paid by the due date of 1 September 2021, nor within the 6-month grace period, and the application lapsed.
An enquiry was made by the attorney for the applicant on 20 March 2023 regarding the process for paying the required fees and getting an extension of time to do so. On 21 June 2023, an application for an extension of time of 22 months to pay the 5th and 6th year continuation fees for the application and gain acceptance was filed by Filter Art Ltd. (Filter Art). The ground relied upon was, pursuant to s223(2)(a), that there was an error or omission by the person concerned or by their agent. Apparently, this request was made in error and was withdrawn on 23 June 2023, which was followed by a new request for an extension of time, pursuant to s223(2)(b), on the same day.
A first declaration setting out the grounds on which the request is made was filed on 29 August 2023. Over the course of many months, a series of requests for information were issued and responded to. The extension application was further amended on 4 March 2024 to increase the requested extension to a period of 30 months from 1 March 2022 to 1 September 2024, and for the request to be made in the name of Advocate Bnayahu Lebel as trustee of Aqua HD (the trustee).
Despite the series of requests for further information, the delegate was not satisfied that the extension was justified by the material provided in support. On 5 August 2024, the delegate informed the applicant that they intended to refuse the request. The applicant requested a hearing on 2 September 2024. The matter was heard by way of written submissions filed on 23 January 2025.
The law
The present matter is governed by s223, which states:
(2) Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney; or
(b) circumstances beyond the control of the person concerned;
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.
S223(2)(b) is a force majeure provision where, despite having an intention to perform the relevant act, the person concerned fails to do so due to something outside the control of that person and something that could not have been avoided by that person's exercise of due care:
“In the context in which it is found, the expression ‘circumstances beyond the control of the person concerned’ does in my opinion designate - and designates only - occurrences which neither the person concerned nor any person acting on his behalf to do the act or take the step could prevent. The operations of nature and the activities of strangers may result in such occurrences. So, too, may the acts and omissions of certain independent contractors engaged by the person concerned or by his agent, as for example the carrier of mail or the office cleaner, either of whom causes the loss or destruction of a document to be filed. But the acts or omissions of the agent who on behalf of the person concerned is to do the act or take the step are not occurrences of the description specified in paragraph 131(1)(a), in my opinion. Nor, in my opinion, are the acts or omissions of that agent’s servants. The section is, I think, correctly described as a force majeure provision.”[1]
[1] Re Atomic Skifabrik Alois Rohrmoser v Registrar of Trade Marks [1987] FCA 22 at [18].
This approach was cited with approval by the Administrative Appeals Tribunal in Jiejing Pty Ltd v Commissioner of Patents and Ron Thomas and Allan Garnham.[2] Furthermore, bankruptcy[3] and general lack of funds[4] at a time when fees are due are not circumstances beyond control of the person concerned, where it is the lack of funds that prevent the desirous action being taken.
[2] Jiejing Pty Ltd v Commissioner of Patents and Ron Thomas and Allan Garnham [1995] AATA 100 at [104].
[3] Hugh Macdonald Reilly v Commissioner of Patents [1996] AATA 130 (Re Reilly)
[4] Victor Vrubel and Dan Vrubel v John D Upham [1996] APO 37 (Vrubel)
The definition for a “relevant act” for the purposes of s223 is defined in s223(11) and means:
relevant act means an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications.
Reg 22.11(4) sets out that, for the definition of relevant acts in s223(11), the following are prescribed:
(a) an action mentioned in Chapter 5, other than an action or step taken under regulation 5.4, 5.5, 5.10 or 5.11;
(b) filing, during the term of a standard patent under subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent;
(c) an action mentioned in Chapter 20.
It should be noted that s223(2) stipulates that the Commissioner may extend the time, which indicates that this is a discretionary power.[5]
[5] Acts Interpretation Act 1901 (Cth), s33.
The evidence
Since making the initial request for an extension of time, a number of declarations have been filed in response to requests for further information by the delegate. Although they were filed prior to the making of a request to be heard, the contents of these declarations are useful in attaining a more fulsome picture of the surrounding circumstances. The following declarations have been filed:
Declarant Date Reference Relationship Daniel Ityel 27 August 2023 Ityel CEO of Aqua HD Moran Rosenberg 30 October 2023 Rosenberg #1 Attorney for Advocate Bnayahu Lebel, the court-appointed trustee Ami Kotler 2 November 2023 Kotler CEO of Filter Art Asi Moravchick 29 February 2024 Moravchick #1 Attorney for Filter Art Asi Moravchick 4 July 2024 Moravchick #2 (as above) Moran Rosenberg 5 July 2024 Rosenberg #2 (as above)
On 6 February 2022, Aqua HD was ordered to be wound down by the courts and Advocate Bnayahu Lebel was appointed as a trustee.[6] The trustee was conferred, by the court, with “all the authorities that were conferred on the organs and office holders of Aqua HD”.[7] The patent application being an asset of Aqua HD, the court orders meant that “the Trustee was required to act for the purposes of realizing it in a manner that would maximize its value”.[8]
[6] Ityel at [1] and [3].
[7] Ityel at [2].
[8] Rosenberg #1 at [4].
Under Israeli law, where Aqua HD was undergoing the insolvency proceedings, a trustee is “legally prohibited from creating new deficit during the liquidation proceedings.”[9] Where new debts or expenses must be incurred to maintain an asset, “a trustee may apply to the court and request directions in anything related to the performance of the trustee’s function and any approval of a trustee’s request is at the court’s discretion.”[10] However, despite this legal option:
“At the time of the Trustee’s appointment, Aqua HD was insolvent and there were no funds available to the Trustee to pay the Application’s renewal fee. Accordingly, there was no reason for the Trustee to apply to the Court to permit the payment of the Application’s renewal fees since there were no funds available to pay the fee even if the Court authorized its payment.”[11]
[9] Moravchick #1 at [5].
[10] Moravchick #2at [4].
[11] Rosenberg #2 at [6].
The application lapsed for the non-payment of renewal fees on 1 September 2022. Irrespective of the appointment of the trustee, the grace period for late payment of continuation fees, provided by regulation 13.3(1A)(a), ended on 1 March 2022. A notice of lapsing was sent to the applicant on 16 March 2022. The application was already in a state of lapse but I will also note that the final date for acceptance was 17 May 2022. No attempt was made to file any response to the examination report.
Filter Art acquired Aqua HD and its assets on 14 December 2022 and soon commenced investigations into “the possibility of reinstating Australian patent applications 2016314375 and 2018231834.”[12] Following various correspondences and advice, on 19 March 2023, Filter Art instructed their attorney to “proceed with the request to reinstate Australian patent application 2016314375.”[13] As noted above, an initial application for extension of time was filed on 21 June 2023 and a correction made on 23 June 2023.
[12] Kotler at [3].
[13] Kotler at [4]-[6].
For convenience, I have gathered the following dates from the provided declarations:
Office action/Relevant event Date Applicant action 1 September 2016 International filing date 29 March 2018 Entered AU national phase Direction to request examination 10 June 2020 14 July 2020 Examination requested First Report issued 17 May 2021 Application lapsed (continuation fee) 1 September 2021 6 February 2022 Trustee appointed End of grace period 1 March 2022 Notice of lapsing sent 16 March 2022 Final date for acceptance 17 May 2022 10 November 2022 Assets Purchase Agreement prepared 14 December 2022 Purchase Agreement approved 8 January 2023 IP manager engaged 21-23 June 2023 Application for extension of time filed Consideration
The relevant request for consideration is to extend the time to pay the 5th and 6th year continuation fees and gain acceptance under s223(2)(b), which was filed on 23 June 2023 and amended on 24 March 2024. The payment of continuation fees and gaining acceptance are both relevant acts within the meaning of s223 and reg 22.11(4).
The requested duration of extension is 30 months from 1 March 2022, at the end of the grace period, to 1 September 2024. The late fees for payment of the continuation fee during the grace period as well as the 5th and 6th year continuation fees were paid on 23 June 2023 with the extension request. The additional 6 months was required to allow time for gaining acceptance after reviving the application. The 7th and 8th year continuation fees have been paid on 30 August 2023 and 30 August 2024, respectively.
From the timeline above, it is clear that Aqua HD had sufficient funds to request examination on 14 July 2020. Despite an examination report issuing on 17 May 2021, the application lapsed only a few months later for the non-payment of continuation fees on 1 September 2021. As the trustee was not appointed until 6 February 2022, Mr Ityel, or someone else at Aqua HD, would have been the relevant person concerned for taking steps to ensure that the continuation fee was paid on time or in the grace period up to 5 February 2022 so as to ensure that the application remained in force.
None of the declarations provide any insight into the state of affairs during this time. Although Mr Ityel provided declarations, nothing is mentioned of his intentions to take any actions in relation to the application between requesting examination and the trustee being appointed. Consequently, I have no evidence that Aqua HD ever intended to pay the fees concerned. Therefore, to the extent there were any circumstances beyond control, it is not apparent these were causative in the failure to pay the relevant fees in the period up to 5 February 2022.
The submissions stressed that the person concerned is the trustee and that he is a separate legal person to Aqua HD.[14] It is then submitted that the lack of funds were the relevant circumstances beyond the control of the trustee.[15] The submissions go on as follows:
“In the words of, and in contrast to, Re Reilly, the sequence of events leading up to the appointment of the Trustee was clearly something outside the control of the Trustee and something that could not have been avoided by the Trustee’s exercise of due care. Similarly, in the words of, and in contrast to, Vrubel, the financial circumstances inherited by the Trustee were not something within the Trustee’s control.”[16]
[14] Submissions at page 2 paragraph 4-6.
[15] Submissions at page 2 paragraphs 7-8.
[16] Submissions at page 2 paragraph 9.
I agree that the relevant person concerned immediately prior to the end of the grace period was the trustee. If the continuation fee had been paid within the grace period, before 1 March 2022, the application would not have lapsed for the lack of payment. However, I must emphasize that the lack of funds pre-dated the appointment of the trustee.
Despite being the relevant person concerned during the period between their appointment on 6 February 2022 and the grace period ending on 1 March 2022, there is a notable absence of any declaration filed by the trustee. I therefore have no evidence on whether the trustee was aware of the application, its status, what actions may have been required before 1 March 2022 or what his intentions were during this time. Mr Rosenberg made declarations, on behalf of the trustee, in relation to the obligations of a court-appointed trustee under Israeli law. Mr Rosenberg explained that the trustee was obliged to “realise the assets of Aqua HD in a manner that would maximise their value… as the Intellectual Property was the main asset, absent the legal and financial restrictions on the Trustee the Trustee would have renewed the Application until the asset realisation activities were complete.”[17]
[17] Rosenberg #2 at [5].
At the time of the trustee being appointed, the application had already lapsed. The trustee simply maintained this pre-existing state and performed their ordinary, necessary and expected functions to wind down an insolvent company. The trustee was appointed to divest assets in the company in a manner that would maximize its value. The trustee dutifully carried out this role and secured a purchaser for Aqua HD and its assets, including the present application despite its state of lapse. In the absence of any evidence as to the trustee’s intentions prior to the end of the grace period, to the extent there were any circumstances beyond their control, it is not apparent that these were causative in the failure to pay the relevant fees in the period between 6 February 2022 and 1 March 2022.
Mr Rosenberg went on to explain that there simply were no funds to be released for the purposes of paying the continuation fee or any other payment and there was therefore “no reason for the Trustee to apply to the court to permit the payment of the Applicant’s renewal fees”.[18] The submissions echo that it was the lack of funds that had prevented the payment of the continuation fee and “the fact that there was a lack of funds was outside the control of the Trustee and something that could not have been avoided by the Trustee’s exercise of due care”.[19]
[18] Rosenberg #2 at [6].
[19] Submissions at page 2 paragraph 8.
As noted in the submissions, the trustee did not become a director of Aqua HD and “the appointment merely resulted in the authorities that were previously conferred on the organs and office holders of Aqua HD being conferred on the Trustee.”[20] Upon having the authorities conferred to him, the trustee became the person concerned and responsible for maintaining the assets of Aqua HD. However, in my view, the trustee was merely taking on the role of the office holders and the pre-existing financial situation they already had.
[20] Submissions at page 2 paragraph 7.
I agree that a trustee cannot access funds which were not there. Nor can a trustee be held responsible for allowing a company to become insolvent when they had no relationship to the company prior to their appointment. However, this does not mean that the pre-existing lack of funds which continued during the trusteeship amounts to a force majeure event as understood for the purposes of s223(2)(b). Unlike operations of nature, activities of strangers or independent contractors, the consequences of insolvency by Aqua HD and the subsequent court orders are what brought the trusteeship into being in the first place.
The timely payment of the due fees was not prevented by a natural disaster or random activity in the peripheries of daily operation of Aqua HD. There simply were no funds to make the required payment due to Aqua HD’s insolvency. This situation did not change until Aqua HD was acquired by Filter Art, 8 months after the end of the grace period. Until Filter Art began investigating the possibility of reinstating lapsed patent applications they had just acquired, there was simply no funds to allow for such payment. A change of circumstances after the relevant time cannot alter the financial situation that prevailed when the continuation fee was due through past the end of the grace period.
I cannot find any force majeure event that prevented the payment of the continuation fee before the end of the grace period.
Conclusion
The provisions of s223(2)(b) cannot be enlivened as there were no circumstances beyond the control of the persons concerned that prevented the payment of the continuation fee on the due date or before the end of the grace period. Consideration of the exercise of discretion is therefore moot. I refuse the request for extension of time.
M. Umehara
Delegate of the Commissioner of Patents
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