Aristocrat Technology Australia Pty Ltd v IGT - [2008] APO 9

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No.769093 in the name of IGT

Title: Bonusing Apparatus and Method for Gaming System Providing Flexibility and Interest

Action: Opposition by Aristocrat Technologies Australia Pty Ltd and costs in proceedings where an application is withdrawn following allowance of S104 amendments

Decision: Issued 4 April 2008.
Abstract

Award of costs where the opposition was withdrawn after the amendments were allowed.
Decided from the submissions of Aristocrat that withdrawal of the opposition was predicated on the allowance of the amendments. It is also apparent that some of the amendments were substantial in nature as they further defined the invention.
While a broad view of the situation could be taken in which it is reasonable to associate the amendments with the opposition, this proposition can be rebutted. In this case, the rebuttal took the form of a lack of nexus of the statement of grounds and particulars and the evidence with the amendments. Unless it is manifestly obvious otherwise, analysis of the facts of the case would be required.
Decided that it is not possible to determine the merits of the case without review. Consequently, no award of costs was made: Sensis Pty Ltd v Super Internet Site System Pty Ltd [2006] APO 27 followed.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 769093 by IGT, opposition by Aristocrat Technologies Pty Ltd and costs in proceedings where the application is withdrawn following allowance of S104 amendments.

BACKGROUND

Patent application 74817/00 was filed by IGT and is the national phase application of WO 01/19475. The application was advertised as accepted on 15 January 2004. Opposition by Aristocrat Technologies Pty Ltd (hereinafter called Aristocrat) was filed 15 April 2004. Evidence-in-support was completed on 29 March 2006 after 8 extensions of time were granted and evidence-in-answer was completed on 28 February 2007. On 28 March 2007, Aristocrat filed a notice of intent to serve evidence-in-reply. Further extensions of time were granted to 28 August 2007 for the filing of this evidence.
On 25 October 2006, IGT filed a request under S104 to amend the specification. Allowance of the request was advertised on 28 June 2007. On the 31 August 2007, Aristocrat filed a notice of withdrawal of the opposition.
On 15 October 2007, IGT filed its claim for costs in the matter. On 9 November 2007, a delegate of the Commissioner indicated that he intended to award costs against the opponent as he considered that the opponent had “effectively surrendered” to the applicant. On 27 November 2007, Aristocrat filed its submission on costs and submitted that cost should be awarded against IGT. A delegate of the Commissioner agreed with this submission and indicated in a letter dated 4 January 2008 that in the absence of any submissions from the applicant, the Commissioner would award costs in this opposition in accordance with the practice as laid out in paragraph 3.13.6.5 of the Manual of Practice and Procedure. IGT responded on 25 January 2008 with further submissions. The delegate considered these arguments and concluded in a letter dated 4 February 2008 that the IGT’s arguments were not persuasive.
The matter was subsequently set down for a hearing which occurred on 7 March 2008 in Canberra. Both parties attended by telephone. David Clark, patent attorney, of Blake Dawson Waldron appeared on behalf of IGT while Andrew Fox, counsel and Kieran Power appeared on behalf of Freehills Patent & Trade Mark Attorneys.
DECISION
The Commissioner’s powers to award costs arises from Section 210 of the Patents Act 1990 which provides:
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.”
Furthermore, Patents Regulation 22.8 states that:
"(1)The Commissioner must not award costs in proceedings to which this Division applies, other than costs specified in Schedule 8 unless each party to the proceedings has had the reasonable opportunity to make a submission on the matter of the award of those costs.
(2)The Commissioner may award an amount:
(a)for costs in respect of a matter specified in column 2 of an item of Part 1 in Schedule 8; or
(b)in respect of the expenses or allowances of a person in relation to proceedings to which this Division applies."
Both parties have submitted costs as specified in Schedule 8.
Principles in Awarding Costs
The general rule in awarding costs is discussed in the Patent Office Manual of Practice and Procedure at paragraph 3.13.2.
“The Federal Court in Patent Gesellschaft AG v Saudi Livestock Transport and Trading 33 IPR 461 set out a number of principles relevant to the award of costs:
As a general proposition, in the absence of special circumstances, costs follow the event but the costs should reflect the degree of success obtained and the successful party may be ordered to pay some costs in respect of unsuccessful aspects of the case. - Hughes v Western Australian Cricket Association Inc (1986) 66 ALR 660; ATPR 40-748.
The community's interest in economy and efficiency in litigation may be reflected in qualification of the presumption that a successful party is entitled to its costs. - Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261.
The costs order in a patent case should, where appropriate, reflect the extent to which significant sums of costs have been thrown away by reason of one party, albeit successful overall, raising and pursuing unsuccessful points. - C Van Der Lely NV v Ruston's Engineering Co [1993] RPC 45.
Where a successful party raises issues or allegations improperly or unreasonably, the court may not only deprive him of costs but might order him to pay the whole or part of the unsuccessful party's costs. - Rediffusion Simulation Ltd v Link-Miles Ltd [1993] FSR 369.
However, a successful party who neither improperly nor unreasonably raised issues or made allegations on which he failed ought not to be ordered to pay any part of the unsuccessful party's costs. - Rediffusion Simulation Ltd v Link-Miles Ltd (supra)
In relation to proceedings discontinued before hearing or determination:
“It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceedings should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial” Aussie Red Equipment Pty Ltd v Antsent Pty Ltd [2001] FCA 1641
However in this regard the courts have recognised a distinction between cases where it can be said that one party has effectively surrendered to the other and cases where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs. The first type generally will attract the usual award of costs, for example where an opposition or an opposed application is withdrawn. The second type generally will not attract an award of costs unless it is apparent that one party was almost certain to have succeeded or the conduct of a party otherwise makes an award of costs appropriate. (Kiama Council v Grant [2006] NSWLEC 96, Sensis Pty Ltd v Super Internet Site System Pty Ltd [2006] APO 27).”
The Patent Office Manual of Practice and Procedure sets out the following as to the practice of the Commissioner in the circumstances of the opposition or an opposed application being withdrawn or lapsed:
Costs for withdrawn oppositions
“3.13.6.1 Opposition/Application Withdrawn or Lapsed; Opposition Dismissed
Where proceedings are discontinued through the withdrawal of the opposition or patent application, it will often be appropriate for the Commissioner to conclude that the party withdrawing has “effectively surrendered” to the other and an award of costs can be made, save any consideration related to the conduct of the parties.
However, while withdrawal from proceedings may suggest prima facie that one party has succeeded over the other, an award of costs in that situation is not automatic and reference must be made to the particular circumstances of each case.
See Sensis Pty Ltd v Super Internet Site System Pty Ltd [2006] APO 27
Accordingly the practice of the Commissioner is not to automatically award cost in these circumstances. However, if a request for an award of costs is filed, the Opposition Clerk will write to the parties indicating that the Commissioner intends to award costs and that comments or objections can be filed within 21 days. The Commissioner will then, as appropriate, make the award of costs, seek further submissions or set the matter for hearing.
Similar considerations apply when an opposition is dismissed either because it is unsupported or for other reasons.
Special considerations may apply where:
withdrawal of an application follows the filing of a divisional application - See 3.12.3.2 Variation of the Scale
withdrawal of the opposition occurs following an amendment of the application see - 3.13.6.5
In circumstances where an opposed application lapses it may also be appropriate for the Commissioner to act on the assumption that proceedings have been discontinued and that applicant has “effectively surrendered” to the opponent. Generally this will be where the applicant is aware of the application lapsing and has made no attempt to seek restoration of that application within a reasonable period. In such cases the Commissioner will proceed on the same basis as if the application has been withdrawn.
In William King and v KMJ Corporation Pty Ltd [2005] APO 37 however the delegate decided to issue a decision in the matter and awarded costs on the basis that the applicant had demonstrated continuing interest in the application.”
In circumstances where the specification is amended, the Patent Office Manual (supra) at Section 3.13.6.5 states the following;
“3.13.6.5 Specification Amended
As a general rule, where there is no action of substance following amendment of the specification, including when the opposition is withdrawn (whether or not a hearing has been held), and the amendment can reasonably be seen to have been made as a result of the opposition “without the close examination of a case” (We Two Pty Ltd v Shorrock [2002] FCA 875) then costs are generally awarded against the applicant. See e.g. Faulding v. Bickford (1952) 22 AOJP 2045
However where an opposition is withdrawn and it is not clear that the amendment was the result of matters raised in the opposition and would, in effect, require a determination of the merits of the case it will generally be appropriate to make no award of costs. Sensis Pty Ltd v Super Internet Site System Pty Ltd [2006] APO 27.
If after the amendment of the specification there is further substantive action (i.e. the matter proceeds to a main hearing, or a further or "final" hearing), the Commissioner general practice has been that costs are awarded against the applicant up to, and including, the date of advertisement of allowance of the amendment (which amendment has the effect of removing the ground of objection) and costs are awarded against the opponent thereafter; however, variations to the transition date have occurred.”
While there is general agreement with these principles, Aristocrat submitted that the principle that the “amendment can reasonably be seen to have been made as a result of the opposition” is not based upon the decision in Faulding (supra). In Aristocrat’s view it is “sufficient the amendments made avoid the prior art raised by an opponent”. In other words, Aristocrat was suggesting an objective standard be applied rather than an subjective standard and that a comparison with the statement of grounds and particulars and the evidence filed in the opposition and the amendments is not warranted. IGT made the opposite submission that the amendments must be seen as answering the statement of grounds and particulars and the evidence. Aristocrat submitted in the alternative that if reasonableness is an element of the test then this would be satisfied by the chronology of the events and the fact that once the amendments were made the opposition was effectively rendered pointless. IGT further responded that the amendments simply signified an intention by the applicant to better define the invention and that the amendments themselves were not driven by the opposition.
In relation to this last point, IGT suggested that Aristocrat were tardy in its withdrawal of the opposition. Yet this delay was approximately 2 months and coincided with the expiry of an extension of time in which to file evidence-in-reply. I fail to see any unreasonable behaviour on Aristocrat’s behalf in this particular matter.
Both views are difficult to reconcile. It is manifestly clear that a trivial amendment to the specification would not trigger costs going to the opponent, who would be seen in such a case, to surrender the opposition. On the other hand, a detailed analysis of the facts of the case is also manifestly unwarranted as this would be seen as a trial of the facts.
In my view, the amendments made to the specification are clearly substantial and I do not believe that there is any debate amongst the parties on this matter. The debate is about the nexus between the opposition and the amendments. The opponent is submitting that the amendments can reasonably be seen as a result of the opposition while the applicant submitted that that this is not the case. Both parties provided some analysis of the statement of grounds and particulars and of the evidence but drew differing conclusions.
Both parties also made alternate submissions which effectively follow Sensis (supra) that if the Commissioner is unable to form a view of the merits of the dispute without a close examination of the case, then it would be appropriate to make no award of costs.
CONCLUSION
It was clear from the submissions of Aristocrat that withdrawal of the opposition was predicated on the allowance of the amendments. It is also apparent from the submissions of the parties that some of the amendments were substantial in nature as they further defined the invention. Taking a broad view of the situation, it is reasonable to associate the amendments with the opposition as the chronology of the events would support this conclusion. However, this is not a fixed proposition: it can be rebutted. In this case, the rebuttal took the form of a lack of nexus of the statement of grounds and particulars and the evidence with the amendments. In such a situation, unless it is manifestly obvious otherwise, analysis of the facts of the case is required. This is the situation with the current case in which it is not possible to determine the merits of the case without review of the evidence. Consequently, no award of costs is to be made following Sensis (supra).
COSTS
Given the nature of the dispute, I do not believe that an award of costs in this is appropriate. Hence, each party should bear its own costs.
G.M.Cox
Delegate of the Commissioner of Patents
4 April 2008
Patent attorneys for the applicant : Blake Dawson Waldron, Sydney
Patent attorneys for the opponent : Freehills Patent & Trade Mark Attorneys, Sydney