Aristocrat Technologies Australia Pty Ltd v IGT - [2007] APO 26

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 754689 in the name of ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LTD.

Title: Slot Machine Game and System with Improved Jackpot Feature.

Action: Opposition under Section 59 of the Patents Act by IGT and an application under Regulation 5.10(4) by IGT to serve further evidence.

Decision: Issued 9 August 2007.
Abstract

The opponent filed some 30 additional prior art documents as further evidence. The opponent also foreshadowed still further evidence to come from key witnesses in the field who could comment on the additional prior art.
Furthermore the opponent indicated there could be further evidence to come from a notice to produce documents that the opponent desired to have served on the patent applicant by the Commissioner of Patents under section 210(c).
It was found that the further evidence was unlikely to add significantly to the opponent’s case in this opposition. Furthermore this opposition was now at a late stage in proceedings and would be significantly further delayed if this further evidence was allowed.
The application to serve further evidence was refused.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent application 754689 by ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LTD, and opposition thereto, under Section 59, by IGT, and an application by IGT under Regulation 5.10(4) to serve further evidence.

BACKGROUND

Aristocrat Technologies Australia Pty Ltd (“Aristocrat”) filed patent application 754689 on 8 July 1998. The application claims priority from two Australian provisional applications filed on 8 July and 9 September 1997. Patent application 754689 was advertised accepted on 21 November 2002.
Acres Gaming Inc (“Acres”) filed a notice of opposition on 21 February 2003 to the grant of a patent on application 754689. A statement of grounds and particulars in support of the opposition followed on 21 May 2003.
Acres gained numerous extensions of time to serve evidence in support. The serving of that evidence was completed on 2 March 2005. Aristocrat obtained several extensions of time to serve evidence in answer. On 4 December 2006 Aristocrat advised the Patent Office that it would not be filing any evidence in answer.
On 9 February 2007, IGT filed a request to amend the notice of opposition to record IGT as the opponent. The reason for the request was that the development of the intellectual property in gaming technologies that Acres was involved in had been assigned to IGT. The opposition is now proceeding in the name of IGT.
On 13 April 2007 IGT filed an application to serve further evidence on Aristocrat. IGT also concurrently served two statutory declarations. Both declarations were by Mr Stephen Krouzecky, patent attorney responsible for the conduct of IGT’s opposition. The first declaration is in support of the application to serve further evidence. The second declaration lists and is accompanied by some 30 documents of alleged prior art. In the first declaration Mr Krouzecky further indicated key individuals were being engaged to provide statutory declarations to provide support and context to the further evidence served on 13 April 2007. From the first declaration, IGT sought three months until 9 July 2007 to enable IGT to serve the evidence from these key individuals on Aristocrat.
Aristocrat objected to IGT’s application to serve further evidence. On 15 May 2007 Aristocrat requested a hearing on this application.
The hearing was held in Canberra on 27 June 2007. Mr Paul Savage and Mr Carl Harrap, patent attorneys of Freehills, represented Aristocrat. Mr Richard McCormack of counsel, instructed by Mr Stephen Krouzecky, patent attorney of Wray & Associates, represented IGT. Both parties appeared by phone. While Mr Savage and Mr McCormack took on the principal responsibility for representing their respective parties, all four personnel appearing at the hearing made submissions at various times.
EVIDENCE
Evidence in support
IGT’s evidence in support consists of some 25 prior patent specifications from Australia, the USA and Europe. A Mr Phillip Charles Dimond has also provided declarations discussing the state of the gaming machine industry, and several of the prior patent specifications tendered in evidence. On the state of the industry Mr Dimond commented on special aspects or variations of play of gaming machines that had developed before the priority date of the present application to attract additional player interest. For example, progressive jackpots were available on gaming machines linked by a common gaming machine network. Various methods for triggering the jackpots based on gaming machine play were also known. On the prior patent specifications Mr Dimond commented that people in the gaming machine industry generally were aware of inventions contained in patent documents and that several of the specifications in evidence related to jackpot or bonus play, and triggering features thereof, on gaming machines.
Further evidence
The further evidence will be categorised as follows. There is the further evidence filed on 13 April 2007. This further evidence comprises about 30 additional pieces of prior art, some being patent literature while others are non-patent literature. I will further separate this category into Mr Krouzecky’s exhibit SGK-23, and the remaining 29 documents are the residue. SGK-23 describes a communication protocol (“QCOM”) published in 1997 as a standard of the Queensland Treasury Office of Gaming Regulation (“QOGR”). The standard described is version 1.2.
There is then the anticipated further evidence still to be filed. This group would be appropriately also separated into two categories. IGT anticipates the serving of further evidence from key individuals in the industry who will comment on the above 30 additional pieces of prior art. IGT also anticipates the serving of further evidence that would arise from a notice that IGT has drafted for the Commissioner of Patents to issue on Aristocrat under section 210(c) for the production of documents. The commissioner will deal with this notice as appropriate on the basis of this hearings decision. From the draft notice for the production of documents, IGT is principally seeking documents from Aristocrat relating to communications between Aristocrat and QOGR about QCOM and about Aristocrat’s gaming system compliance with QCOM.
In addition to the two declarations of 13 April 2007, Mr Krouzecky also filed a third declaration in the evening of 26 June 2007, the day before the hearing. Mr Savage confirmed at the hearing that he had received a copy of the third declaration. In that declaration Mr Krouzecky explained the nature of the anticipated further evidence, commented on some of the prior art filed already as further evidence and explained the further delay in serving the anticipated further evidence. The third declaration also requested extended leave now until 13 October 2007 to file the anticipated further evidence.
RELEVANT LAW
Regulation 5.10 of the Patents Regulations is the pertinent regulation. Sub-regulation 5.10(4) provides the statutory basis to allow further evidence to be served. The sub-regulation states:
(4)       The Commissioner may:
(a)    on the application of a party; and
(b)   on such reasonable terms (if any) as the Commissioner specifies;
permit the party to serve further evidence on the other party.
This provision must be read in conjunction with sub-regulation 5.10(5):
(5)The Commissioner must not give a direction under subregulation (1) or grant an application under subregulation (2) or (4) unless the Commissioner:
(a) …
(b) …
(c) in either case:
(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 criteria for allowing an application to serve further evidence under Regulation 5.10 are well-established. In Emory University v Biochem Pharma Inc., [1999] APO 50, in assessing an application to serve further evidence amongst other things, the delegate adopted the principles from Ferocem Pty Limited v Commissioner of Patents, (1994) 28 IPR 243, and A Goninan and Co Ltd v Commissioner of Patents and Another, (1997) 38 IPR 213, with respect to extensions of time. Relevant considerations are the discretionary nature of regulation 5.10, the explanation of the delay in serving the further evidence although a satisfactory explanation is not mandatory, the interests of the parties taking part in the opposition, and the public interest. In assessing the latter, the delegate indicated with reference to the Goninan case, that a view needs to be formed as to the nature of the evidence sought to be adduced and the significance of that evidence for the opposition. With reference to significance, the delegate formed the view that the further evidence needs to be not just merely relevant. If it did not add substantially to the case compared with previous evidence already served then the further evidence could be refused.
DISCUSSION
PUBLIC INTEREST
The public interest calls for a balance between the requirements that oppositions be dealt with expeditiously and economically, and that a serious opposition be dealt with on its merits (Ferocem (supra) and Goninan (supra)).
The main case against the patent application should already be in the evidence in support. Aristocrat has not served any evidence in answer. In principle, there consequently seems to be no case for IGT to serve more evidence without good reason. This opposition also began well over four years ago. It would seem IGT’s present application to serve further evidence, with the consequential further delay, could only be justified in this case if the further evidence was significantly different from the initial evidence served in support and crucial to advancing the proper determination of the opposition on its merits.
SGK-23 - The QCOM document
At the hearing the discussion principally centred on just one of Mr Krouzecky’s exhibits. That exhibit was SGK-23, the QCOM document. Mr Krouzecky stated the QCOM document was distributed to various gaming machine manufacturers on or shortly after 7 March 1997. This was about four months before the earliest priority date of the present application. He indicated Aristocrat developed a “Hyperlink” system compliant with QCOM before the earliest priority date of Aristocrat’s present application and that this system is the subject of that application.
Mr McCormack submitted the QCOM document was materially relevant. He made some reference to section 17 of the document. While a complete analysis is more appropriate for the substantive hearing, the onus nonetheless lies with IGT to make a case that the QCOM document is likely to add significantly to its case. There was scant discussion at the present hearing from IGT on how QCOM might affect the claims of the present application. More importantly for the present hearing, there was little discussion from IGT on how QCOM might be significantly better in this regard compared with material served by IGT as evidence in support.
The QCOM document, on the face of it, discloses several operational requirements of electronic gaming machines. Section 17 of the document discusses Down-Loaded System Awards (“DLSA”). Mr Krouzecky indicated in his evidence that DLSA was known in the industry. With DLSA, the electronic gaming machine in a network triggers the prize or event but the system determines what the prize will be upon a win occurring. On my cursory reading of the evidence in support, DLSA does not readily stand out in the evidence in support. Aristocrat did not point to such feature in that evidence either. On the face of it, the broadest claims of the present application may define the machine trigger and system determination features of DLSA. However those claims also seemingly go further to define dependencies of triggers on event probabilities related to desired gaming machine turnover between specific points. On the face of it, there seems little in section 17 that reads completely on to the claims of the present application. I regard this section of the QCOM document, on the face of it, as being only of interest rather than significant in the present opposition over and above the evidence in support.
Mr Harrap described the QCOM document as one where very little of it related to the claimed invention. He suggested the closest passage might be section 10 which describes linked progressive jackpot features. Mr Harrap noted such disclosures are already in the evidence in support notably in US Patent 5249800 and in paragraphs 5-8 of Mr Dimond’s first declaration. Mr Harrap indicated SGK-23 has nothing of significance over the evidence in support already served and further there is nothing in the exhibit to anticipate the claimed invention.
IGT made no significant comment on Mr Harrap’s assertions of the lack of relevance of the QCOM document. In my broad analysis of section 10 and the evidence in support in this respect, I agree with Mr Harrap.
Mr McCormack argued the following point of the relevance of the QCOM document. On several occasions at the hearing, he noted that Aristocrat’s Mr Harrap was first at the hearing, quite unsolicited, to take me to the document. Mr McCormack submitted this indicated that Aristocrat thought the document was of concern and relevant.
Mr Savage iterated that Mr Harrap’s referral to the document was because Mr Krouzecky made much of QCOM in his third statutory declaration. Mr Savage also stated Mr Harrap’s referral to the document was to highlight how the document was not relevant.
I am somewhat concerned that IGT’s case of relevance of QCOM seemed to rely so heavily on Mr Harrap’s actions at the hearing to be first to take me to the QCOM document. IGT’s focus on these actions seemed to take away the focus on the more important issue of the admissibility of the document based on how significant the document was likely to be to the outcome.
I am unconvinced that the QCOM document is likely to add significantly to IGT’s case in the present opposition.
The residual documents
At the hearing I prompted IGT to discuss the relevance of the remaining documents filed as further evidence on 13 April 2007. Mr Krouzecky replied that the remainder serve to clarify the understanding of terms in the claims and assist in interpretation of claims in this art. Mr Krouzecky further stated some of these documents challenge the novelty or inventive step of the claims depending on the interpretation of the claims.
It is not clear why these documents are necessary for the purpose outlined by Mr Krouzecky. The evidence in support consists of expert evidence and documents that seem to address these points already. On the face of it, Mr Dimond’s evidence in support contains substantial commentary on the state of the art, the terminology used and its meaning, and the relevance of prior art. The further evidence would seem to not significantly enhance this position. Furthermore Mr Krouzecky did not point to any particular documents that might be crucial over and above those already in the evidence in support. Moreover I detected Mr Krouzecky’s comments lacked any real conviction that the remaining documents were crucial in this opposition. Mr Krouzecky indicated at best that only some of the documents might challenge the novelty and inventive step of the claims of the application depending on how the claims are interpreted.
I am unconvinced that these documents are likely to add significantly to IGT’s case.
Anticipated further evidence
Anticipated evidence from key witnesses
IGT indicated that it was engaging key witnesses to provide evidence in respect to the 30 additional prior art documents filed on 13 April 2007. Furthermore Mr Krouzecky in his third declaration requested extended leave now until 13 October 2007 for IGT to file the anticipated further evidence from these witnesses. As noted above, I am unconvinced that any of the additional prior art documents are likely to add significantly to the case. Consequently I see little point in evidence about these documents being served from key witnesses.
Anticipated evidence arising from a desired notice to Aristocrat to produce documents
As mentioned earlier, IGT anticipates the serving of further evidence that will arise from a notice that IGT has drafted for the Commissioner of Patents to issue on Aristocrat under section 210(c) for the production of documents. From the draft notice, IGT is principally seeking documents from Aristocrat relating to communications between Aristocrat and QOGR about QCOM and about Aristocrat’s gaming system compliance with QCOM. Mr Krouzecky indicated that Aristocrat’s “Hyperlink” system complied with QCOM. As I have found the QCOM document, SGK-23, is unlikely to add significantly to IGT’s case, I am unconvinced that extra material arising from the draft notice to produce documents would add anything further to the case.
Conclusion on public interest
As mentioned earlier, this opposition began well over four years ago. The opposition is at the stage where I would expect demonstrable significance of any further evidence over the evidence in support before I would allow the further evidence. If new evidence came to light that was vital and would of its own significantly affect the outcome then well and good. Aristocrat’s Mr Harrap indicated he would be accepting of such evidence. In such circumstances it would appear appropriate to allow the serving of the evidence. IGT has been notably subdued in this respect. IGT has not adequately demonstrated that its further evidence was likely to be vital or significant on its own. Furthermore IGT’s approach suggests the further evidence, if allowed, would still take quite some time to complete. Especially in respect to the notice to produce documents, I would think completion of the further evidence by October was exceedingly optimistic.
I conclude the public interest weighs heavily against allowing the application to serve further evidence.
INTERESTS OF THE PARTIES INVOLVED IN THE OPPOSITION
Mr Savage noted that almost half of any available patent term, if granted, had already expired. Aristocrat has played some part of its own in the delay with several extensions of time to serve evidence in answer. As no evidence in answer has been served though, the opposition proceedings so far seem to have been inordinately long. IGT’s application for further evidence would appear to be significantly detrimental to Aristocrat.
IGT’s interest lies in putting forth all material it considers potentially relevant in its opposition to the patent application. This seems laudable in having the opposition fully determined on its merits.
Given my findings on the lack of significance though of the further evidence over the evidence in support, I conclude Aristocrat’s interest in progressing the matter carries more weight than IGT’s interest in seeking to serve its further evidence.
EXPLANATION OF THE DELAY IN SERVING FURTHER EVIDENCE
Mr Krouzecky principally stated the further evidence has been drawn to his firm’s attention by USA counsel acting for IGT in litigation in the USA on a corresponding US patent. Additionally Mr Krouzecky stated that the further evidence related to major changes that occurred in the gaming industry around 1997.
Mr Savage submitted this was an inadequate explanation. He suggested some relevance of the US proceedings to the Australian case needed to be established noting there were differences in patent law between the two countries. Mr Savage also noted that IGT has provided no explanation of why it has apparently overlooked these major changes until now, and submitted this signified a serious lack of care and diligence by IGT.

IGT has been a major operator in the gaming field in Australia since well before the priority date of the present application. IGT has also been a major user of the patent system in Australia in that time, both as patentee and as opponent in numerous cases. I am somewhat concerned that the material IGT wishes to now rely on has supposedly only turned up now in the US proceedings and that IGT was previously unaware of the material or its possible relevance to the present case. Furthermore IGT did not indicate the stage of proceedings in the USA nor the degree to which this material has been deemed relevant in the US proceedings.
At the hearing it transpired that the major changes in the industry cited by IGT related to QCOM. According to Mr Krouzecky, all gaming machines sold or operated in Queensland after 7 March 1997 had to comply with and implement DLSA. If this was a major change in the industry then I expect companies active in this field in Australia would have been well aware of the protocol and have had due regard to it. As mentioned above, IGT has been a major operator in this field in Australia since well before 1997 and has been a major user of the patent system in that time. It is perplexing that IGT has supposedly only now realised this change in the industry might be significant to the present application.
It may be argued that both of the above circumstances suggest some lack of diligence by IGT. On the other hand I have no strong indications before me that IGT has deliberately delayed these opposition proceedings.
Mr McCormack noted the difficulties in the gaming technology field of engaging and retaining witnesses to give evidence in opposition proceedings and the pressures of time on witnesses. He said there were only a few significant companies involved in this industry in Australia and it was difficult to find experts who were independent of the parties involved in this opposition.
IGT did not clearly explain at the hearing why only independent experts were important in this case. While it may be that the evidence of independent experts might carry more weight, at this late stage, I would expect IGT to have served evidence from any expert declarants that could be engaged, independent or otherwise.
I am prepared to accept IGT’s explanations regarding the difficulties in engaging experts in respect to the further evidence. Overall I conclude IGT has not deliberately delayed these proceedings.
APPROPRIATENESS IN ALL THE CIRCUMSTANCES
Mr McCormack submitted the considerations for allowing further evidence are disjunctive and not conjunctive. He said that satisfying any one requirement alone suffices to allow the application to serve further evidence.
I accept the requirements ought to be considered flexibly. As noted above, regulation 5.10 is a discretionary provision. On the other hand, I would not put the position as favourably as Mr McCormack has done. The words, “appropriate in all the circumstances”, in sub-regulation 5.10(5), suggest an appropriate balance be applied against all the criteria. While I have concluded there has been no deliberate delay by IGT in the present case, the public interest and the parties’ interests in this case weigh heavily against allowing the further evidence.
This opposition has been underway for more than four years. I think that is long enough in this case. IGT may feel somewhat shut out if I refuse the application to serve further evidence. Even if I am wrong though in my analysis of the significance of the further evidence, IGT has other avenues. As noted in Cryovac Inc v Pechiney Plastic Packaging Inc, [2006] APO 15, and Aristocrat Technologies Australia Pty Ltd v IGT, [2007] APO 23, an opposition is not the only forum where a patent can be challenged. Re-examination (section 97) and revocation (section 138) are available options to IGT if IGT remains concerned about the validity of any resulting patent in this case. I think it is inappropriate to delay the present opposition any longer without substantially good reason. The reasons offered in the present case were insufficient.
DECISION
I have found the further evidence is unlikely to add significantly to IGT’s case. Furthermore the opposition is at a late stage in proceedings and would be significantly further delayed by allowing this further evidence.
I refuse IGT’s application to serve further evidence.
COSTS
In matters before the commissioner, costs are generally awarded to the successful party. I see no reason to depart from this practice in this case.
Aristocrat has been successful in this case. I award costs in accordance with Schedule 8 against IGT.
M. G. Kraefft
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Freehills, Sydney
Patent attorneys for the opponent : Wray & Associates, Perth