Aristocrat Technologies Australia Pty Ltd v IGT
[2008] APO 3
•24 January 2008
ABSTRACTS OF DECISIONS
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Application : No. 785277 in the name of Aristocrat Technologies Australia Pty Ltd
Title: Gaming machine with transparent symbol carrier
Action: Application under s223(2) for an extension of time to file a notice of opposition by IGT and the matter of a notice requiring production of certain documents served on IGT.
Decision: Issued 24 January 2008.
Abstract
Lawful excuse for not complying with a Notice requiring production of certain documents including drafts of declarations claimed. Lawful excuse found in relation to some but not all of the documents covered by the notice – claim of privilege, including in relation to US patent attorneys, and implied waver considered.
PATENTS ACT 1990
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Re:Patent Application No. 785277 in the name of Aristocrat Technologies Australia Pty Ltd, application under s223(2) for an extension of time to file a notice of opposition by IGT and the matter of a notice requiring production of certain documents served on IGT.
BACKGROUND
This matter arises in the context of an application by IGT for an extension of time to oppose Aristocrat's patent application 785277. The deadline for filing the notice of opposition was 14 March 2007 but IGT filed its notice and application for an extension six days later on 20 March. This was followed on 2 May 2007 by a statutory declaration supporting the extension made by Mr Keith Moore who is an in-house patent attorney employed by IGT in the United States.
Aristocrat advised that it objected to the granting of an extension however in a letter dated 28 May 2007 a delegate of the Commissioner wrote to IGT and Aristocrat advising that he:
“was reasonably satisfied that the information provided by the opponent establishes an error or omission on the part of the opponent or their agent and that this error or omission led to the failure to file the Notice of Opposition within the prescribed time”
Nevertheless, as is the practice of the Commissioner in these circumstances, the delegate invited Aristocrat to indicate if it wished to be heard on the matter.
Aristocrat confirmed that it wished to be heard and on 16 July 2007 requested that the Commissioner issue a notice to IGT requiring production of certain documents. Aristocrat indicated that it wished to “establish whether IGT’s patent attorney Keith Moore was properly instructed in the matter of the preparation of his evidence filed in support of the application”. IGT responded to this claiming privilege in the documents sought to be produced and asserting that they lacked relevance, in particular in that the notice encompassed documents generated after the filing of the notice of opposition. IGT also filed on 23 August a statutory declaration by IGT's Australian patent attorney Stephen Krouzecky, said by IGT to corroborate the statements made by Mr Moore in support of the extension of time.
In the event, a notice requiring production was issued by an acting Deputy Commissioner of Patents on 14 September 2007 and required IGT to produce:
“1.All documents including all mail, emails and facsimiles, sent by IGT's Australian attorneys Wray & Associates to IGT and including such documents sent to IGT from any other of IGT's attorneys or representatives, regarding the preparation of the statutory declaration of Keith Moore dated 26 April 2007, including any instructions given to Mr Moore as to his role in providing such evidence.
2.All of IGT's written responses to 1 above, whether provided by IGT or by a representative of IGT, including drafts of declarations.
3.,All file notes, correspondence and memoranda prepared by IGT and such documents made by IGT's agents or representatives relating to the declaration of Keith Moore dated 26 April 2007, including such documents made by IGT's Australian attorneys, such documents made by Keith Moore and such documents prepared by IGT's US patent attorneys or other advisors.”
IGT maintained its objection with the result that the matter was set down for hearing in Canberra on 18 December 2007. IGT was represented by Mr R McCormack of counsel and Mr S Krouzecky patent attorney of Wray & Associates, Perth. Aristocrat was represented by Mr S Burley SC, Mr A Fox of counsel and Mr J Dower, patent attorney, Freehills Sydney.
APPLICABLE LAW
The power for the Commissioner to require production is provided under section 210 of the Act:
The Commissioner may, for the purposes of this Act:
(a) summon witnesses; and
(b) receive written or oral evidence on oath or affirmation; and
(c) require the production of documents or articles; and
(d) award costs against a party to proceedings before the Commissioner.
The practice of the Commissioner in dealing with a request to issue a Notice requiring production is as recited in Eli Lilly & Company v Novo Nordisk A/S [1999] APO 45 (2 August 1999); that is the Commissioner:
"... will consider ex parte whether a requested notice has adjectival relevance. Unless adjectival relevance is clearly lacking, the Notice will be issued - with the expectation that any issues of lack of relevance will be dealt with as a matter of lawful excuse for non-compliance with the Notice."
Thus the person to whom the notice is given must either produce the documents identified or provide to the Commissioner a lawful excuse. Where there is a dispute as to compliance with the notice it is appropriate that both the party on whom the notice has been served and the party seeking production should be heard.
Sub-sections 200(2) and (4) of the Act are also relevant for current purposes. They provide that:
"(2) A communication between a registered patent attorney and the attorney’s client in intellectual property matters, and any record or document made for the purposes of such a communication, are privileged to the same extent as a communication between a solicitor and his or her client."
(4) In this section:
intellectual property matters means:
(a) matters relating to patents; or
(b) matters relating to trade marks; or
(c) matters relating to designs; or
(d) any related matters.
Finally the power to grant an extension of time relevant in the present case is provided by s223(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. "
This section has been considered beneficial in nature and should be applied beneficially (re Sanyo Electric Co Ltd and the Commissioner of Patents (1996) 36 IPR 470 at 480). Relevant factors to be taken into account by the Commissioner include whether an applicant for an extension has given a full and frank disclosure of all the surrounding circumstances that led to the error or omission, including a disclosure of the chain of causation (Kimberly-Clark Ltd v Commissioner of Patents (No 3) 13 IPR 569). At page 583 Jenkinson J found that, in order to make out a proper case justifying an extension:
"an applicant would in my opinion have to go beyond a disclosure of the processes by which an agent's errors came to be committed, and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes (or, in the case of corporation aggregate, of the relevant officers and other agents) relevant to an understanding of the way the failure to do the act or take the step occurred, or relevant to an evaluation of the reasonableness of that conduct."
DECISION
The current dispute is somewhat unusual in that it does not arise in the context of a formal opposition to IGT's extension of time under s 223(6) and could not do so because the extension sought is not of the extent that it would be advertised for opposition purposes under s223(4). Rather Aristocrat’s right to be heard in the matter of the extension arises under the general provision of r22.22(1) which permits a person to be heard before the Commissioner exercises a discretionary power under the Act or Regulations adversely to them. The granting of an extension of time under s223 is a discretionary power and consequently it is the practice, where an extension is sought to file a notice of opposition, for the patent applicant to be invited to provide submissions or to indicate whether it wishes to be heard.
IGT claims lawful excuse in not producing documents covered by the notice on the basis of privilege and relevance. Since IGT has not provided me with copies of any documents (other than those annexed to the two statutory declarations already filed), nor provided a summary list, I am not in a position to make findings on particular documents. I will however seek to address IGT’s objections to the various classes of documents to the extent possible and issue directions accordingly.
It will be evident that by virtue of s200(2) of the Act that communications (and any record or document made for the purposes of such a communication) between IGT and its patent attorneys Wray & Associates or particularly Mr Krouzecky covered by the notice in relation to the current matter “are privileged to the same extent as a communication between a solicitor and his or her client”. They clearly would concern matters relating to patents. It may be noted that the statutory privilege for patent attorneys has undergone a number of changes since its introduction, particularly with the 1990 Act, at commencement, including “any record or document made for the purposes of such a communication” and 1998 amendments that clarified that the scope of the privilege extended to “intellectual property matters”. The position pre-1998 is conveniently summarised by French J in Wundowie Foundry Pty Ltd and Clarewood Pty Ltd v Milson Foundry Ltd and David Wallace [1993] FCA 422 which also refers to earlier decisions relating to the narrower provisions of s134(1A) of the 1952 Act. See also Trade Practices Commission v International Technology Holdings Pty Ltd [1995] FCA 1367.
In the more recent case of Eli Lilly & Company v Pfizer Ireland Pharmaceuticals (No 2) [2004] FCA 850, Heerey J found that the privilege provided by s200 did not extend to foreign patent attorneys and particularly patent attorneys in the UK. However in Arrow Pharmaceuticals Limited v Merck & Co., Inc. [2004] FCA 1131 Gyles J found privilege to exist in internal communications with an in-house attorney in the United States who was qualified to practice before both State and Federal courts in the US and the United States Patent and Trade Mark Office (USPTO). Indeed it is the case that US patent attorneys, as opposed to US patent agents or Australian patent attorneys, must be attorneys-at-law and “be a member in good standing of the bar of any United States court or the highest court of any State”. This is clear when one considers the US patent rules relating to those who may practice before the USPTO (see in particular 37 CFR 10.14 and the definition of “attorney” in 37 CFR 10.1(c)). Furthermore, as one would expect, the use of the title “patent attorney” is (other than for persons registered before 1938) reserved for lawyers (37 CFR 10.38) and subject to sanctions for misrepresentation. On this basis while it is clear that the statutory privilege provided in s200(2) does not apply to communications between IGT and its US attorneys (assuming they are not registered patent attorneys in Australia) it is nevertheless apparent that legal professional privilege may otherwise apply. I note in this regard also the decisions in Kennedy v Wallace [2004] FCA 332 and [2004] FCAFC 337. There appears in this case no particular reason on public interest or other grounds to conclude that such privilege should not apply and consequently I believe it is appropriate to proceed on the basis that privilege applies as between IGT and the US patent attorneys mentioned in the Moore and Krouzecky declarations.
Privilege may be waived expressly or by implication. Aristocrat in the event appeared to argue primarily that privilege is waived by reliance on or reference to otherwise privileged materials in the Moore and Krouzecky declarations. The relevant principles were considered by the High Court in Mann v Carnell [1999] HCA 66 where Gleeson CJ, Gaudron, Gummow and Callinan JJ said at [29]:
“Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is ‘imputed by operation of law’. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. ... What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.”
Also at [34]:
“... Disclosure by a client of confidential legal advice received by the client, which may be for the purpose of explaining or justifying the client’s actions, or for some other purpose, will waive privilege if such disclosure is inconsistent with the confidentiality which the privilege serves to protect. ... considerations of fairness may be relevant to a determination of whether there is such inconsistency.”
Gyles J in considering the matter in Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 indicated at [68] that:
“A decision as to whether privilege in a particular document is waived will normally be a question of fact. … The test looks to inconsistency between the disclosure that has been made by the client on the one hand and the purpose of confidentiality that underpins legal professional privilege on the other. It is not a matter simply of applying general notions of fairness as assessed by the individual judge. The authorities to which I have referred show that it is well established that for a client to deploy the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege.”
In the same case Tamberlin J said of the matter in question at [5] and [6]:
"It is apparent that the substance and effect of the advice was being communicated in order to emphasise and promote the strength and substance of the case to be made against Mr Bennett."
and:
"In my view, it would be inconsistent and unfair, having disclosed and used the substance of the advice in this way, to now seek to maintain privilege in respect of the relevant parts of that advice which pertain to the expressed conclusion."
Similarly in Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86 the Full Court in holding that that privilege had been waived said at [52]:
“the authorities show that where issue or implied waiver is made out, the privilege holder has expressly or impliedly made an assertion about the contents of an otherwise privileged communication for the purpose of mounting a case or substantiating a defence. Where the privilege holder has put the contents of the otherwise privileged communication in issue, such an act can be regarded as inconsistent with the confidentiality that would otherwise pertain to the communication.”
Their Honours said also at [61]:
“Both before and after Mann, the governing principle required a fact-based inquiry as to whether, in effect, the privilege holder had directly or indirectly put the contents of an otherwise privileged communication in issue in litigation, either in making a claim or by way of defence. In DSE at 519 [58], Allsop J put the matter somewhat more descriptively, saying waiver arises when "the party entitled to the privilege makes an assertion (express or implied), or brings a case, which is either about the contents of the confidential communication or which necessarily lays open the confidential communication to scrutiny and, by such conduct, an inconsistency arises between the act and the maintenance of the confidence, informed partly by the forensic unfairness of allowing the claim to proceed without disclosure of the communication”
In addition if a party puts in issue its state of mind then privilege in legal advice that likely contributed to that that state of mind may also be waived. So in DSE (Holdings) Pty Limited v Intertan Inc [2003] FCA 384) it was said at [127] that:
“The inconsistency or unfairness arises from the putting in issue of a state of mind and maintaining confidence in communications which were relevant to the formation of that state of mind. (Or, putting the matter as I would prefer to put it – the inconsistency or unfairness arises from laying open to scrutiny the communication and maintaining confidence in the communication.)”
From these authorities it is clear that there is no general rule that disclosure of the existence of legal advice or its conclusion amounts to waiver but each case must be considered on its merits in light of the overriding principle in Mann v Carnell that waiver occurs where the party entitled to the privilege acts in a way which is inconsistent with the maintenance of the confidentiality. In the case of evidence supporting an application for an extension of time to file a notice of opposition, the person seeking the exercise of the Commissioner’s discretion is expected to give a frank disclosure of the circumstances surrounding an error or omission that it claims led to the failure to act in time. Often that will involve revealing circumstances or communications between a patent attorney and their client that go directly to the alleged error or omission and also to matters that are peripheral to it which are provided to explain a sequence of events or provide context for the actions of a particular person. In this it seems to me that I should be cautious in assuming that reference to advice in a contextual way or as part of a narrative means that the advice has been put at issue or has been relied on. It may be said that any and all the circumstances referred in support of an application have been put at issue and should be fully open to scrutiny but to the extent that privilege is involved I think it ignores the balancing of interests apparent in the authorities above and the importance of the principle of privilege in our legal system. I am also mindful that an approach that unnecessarily hazards privileged information will likely discourage full disclosure to the Commissioner of the circumstances behind an application for an extension of time and may in fact make proper scrutiny of a case more rather than less difficult. In this light I will now consider the documents required to be produced under the notice.
Paragraphs 1 and 2 of the notice apply only to communications or responses to communications “regarding the preparation of the statutory declaration of Keith Moore”. These to my mind are clearly privileged and that privilege can not be said to have been waived by IGT on any of the principles mentioned above. Neither is my decision in Warner-Lambert Company v Cardinal Health, Inc [2006] APO 14 applicable since the issue of expert evidence is clearly distinguishable from the present circumstances. There is furthermore nothing before me to suggest that Mr Moore was not properly instructed in the preparation of his evidence and maintenance of privilege appears to be entirely appropriate. Consequently I find that IGT has a lawful excuse in relation to all of the documents covered by paragraphs 1 and 2 of the notice and to any documents falling within paragraph three that relate to the preparation of Mr Moore’s declaration rather than to the discussions, advice or other matters referenced in it.
Paragraph 3 in requiring “All file notes, correspondence and memoranda prepared by IGT and such documents made by IGT's agents or representatives relating to the declaration of Keith Moore …” is broader than paragraphs 1 and 2 and is perhaps somewhat unclear. I take it to mean documents relating to the matters mentioned in Mr Moore’s declaration rather than merely those relating to the preparation of the Moore declaration. To the extent that it covers material that is privileged, and considering the detailed submissions made by Aristocrat, I find that privilege has been clearly waived in the matters mentioned at:
a)paragraph 10 (also paragraph 17 of Mr Krouzecky’s declaration) as far as it concerns the conversation between Mr Moore and Mr Krouzecky about the current application and that it did not have to be opposed immediately;
b)paragraph 12(b) concerning the receipt by Mr Moore of a copy of the specification;
c)paragraphs 13 and 14 (also paragraph 19 of Mr Krouzecky’s declaration) relating to the teleconference of 12 February 2007, as far as they concerned the current application; and
d)paragraph 16 (also paragraph 22 of Mr Krouzecky’s declaration) relating to the notification from Wray’s and the advice to oppose after the due date.
These paragraphs particularly put at issue IGT’s interest in the application, its intention to oppose or delay opposing and the state of mind of Mr Moore concerning the possibility of opposition and therefore in reliance on those matters I consider IGT to have waived privilege.
As to the other specific classes of documents referred to by Aristocrat I do not find that there is a waiver in the reference to:
a)the discussions or advice concerning the unrelated Federal court matter (eg Moore 12 and 13 (a) and (b), Krouzecky 19 (a) to (b));
b)the discussions or advice concerning the unrelated “hyperlink opposition matters” (eg Moore 5, 6,10,13 (c), Krouzecky 19 (a) to (b));
c)the advice sought from Wrays as to the possibility of obtaining an extension of time (Moore 16 and 18, Krouzecky 22 (a)); or
d)the confirmatory advice sought and received by Mr Moore from the second US attorney after the time for filing the notice of opposition as to whether to oppose the application (Moore 17).
In all these matters I do not believe IGT has acted to “deploy the substance or effect of legal advice for forensic or commercial purposes”. Rather it has provided a narrative that refers to the obtaining of legal advice as context for the events which it has put in evidence to support its application for an extension of time. Ultimately I do not consider the reference to these matters in this way to be inconsistent with the maintenance of privilege and consequently I find that lawful excuse exists in relation to them on this basis.
Given my finding above it appears that the submissions made by IGT on relevance are moot. However since there is the possibility that there are some documents that are not subject to privilege to which relevance or other lawful excuse may apply I do not intend to exclude that possibility at this stage.
CONCLUSION
I have found that a lawful excuse exists in relation to some but not all documents covered by the notice. Consequently I allow IGT a further period of one month from the date of this decision to produce copies of all documents within its possession, power or control covered by paragraph 3 of the notice other than those relating exclusively to matters for which I have indicated lawful excuse exists. If IGT wish to claim lawful excuse in relation to all or part of these documents it shall, in addition to providing a copy of the documents, file a summary list of the documents and indicate in writing the specific basis of its excuse including reference to my decision if appropriate. Where necessary IGT may redact parts of documents for which it submits a lawful excuse applies consistent with my findings above. I adopt this position noting the approach taken by the Deputy Commissioner in Eli Lilly, supra and in consideration of the fact that the formal rules of evidence do not apply to the Commissioner as an administrative decision maker. I reserve however the option of directing that un-redacted documents be supplied if I consider it appropriate. Subsequently I will allow Aristocrat the opportunity to make written submissions on the list and excuses and thereafter determine whether lawful excuse applies to each of the documents. Documents for which a lawful excuse is found will be returned to IGT.
COSTS
The power to award costs in proceedings is provided by s210(d). While arising in somewhat unusual circumstances, what is involved here is an interlocutory step in a broader matter “comprising a determination by the Commissioner with respect to the exercise or non-exercise of a power conferred on him by the Patents Act which he is permitted to make only after hearing the persons with opposing interests in the exercise of the power.” (Stack v Commissioner of Patents [1999] FCA 148). Therefore these are proceedings to which s210(d) may apply (Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27).
Given the outcome that lawful excuse has been found in relation to some but not all of the documents covered by the notice, it might be said that both parties have been partially successful. Aristocrat has however been unsuccessful in relation to much of the scope of the notice and particularly with regard to the reasons for which the notice to produce was initially sought, that is, to “establish whether IGT’s patent attorney Keith Moore was properly instructed in the matter of the preparation of his evidence filed in support of the application”. Consequently I award costs against Aristocrat in this matter according to Schedule 8 of the Regulations.
Philip Spann
Deputy Commissioner of Patents
24 January 2008
Patent attorneys for the patent applicant : Freehills, Sydney
Patent attorneys for the s223 applicant : Wray & Associates, Perth
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