Bac Tech (Australia) Pty Ltd v Technological Resources Pty Ltd

[1997] APO 8

official notice

decision of a delegate of the commissioner of patents

Application  :          No. 652231 in the name of BAC TECH (AUSTRALIA) PTY. LTD.

Title:          OXIDATION OF METAL SULFIDES USING THERMOTOLERANT BACTERIA.

Action:          Proposed direction to admit material served by the opponent, TECHNOLOGICAL RESOURCES PTY LTD, as further evidence; and objection to the proposal by BAC TECH (AUSTRALIA) PTY LTD.

Decision:          Issued  .

Abstract:          The opponent advised that evidence served on the applicant in March 1996 “forms the opponent’s evidence-in-reply”.  The office interpreted this statement to mean the completion of serving evidence-in-reply and advised both parties accordingly.  The opponent has never challenged this advice.

The opponent served further material in June 1996 within an allowed extended period of time in which to serve evidence-in-reply.  This decision holds this material to be served out of time since the opponent completed the serving of evidence-in-reply in March 1996.  The grant of the extension of time does not enable the opponent to serve further material if evidence-in-reply is already completed.  The material can then only be considered for the substantive hearing if admissible under regulation 5.10(4) as “further evidence”.

On balancing considerations of diligence, influence on the result of the opposition, credibility, protraction, and injustice to the other party, the evidence of June 1996 is not admissible.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Patent Application No. 652231 by BAC TECH (AUSTRALIA) PTY LTD, and opposition thereto by TECHNOLOGICAL RESOURCES PTY LTD; objection by BAC TECH (AUSTRALIA) PTY LTD to a proposed direction to admit material, served by TECHNOLOGICAL RESOURCES PTY LTD, as further evidence.

background

Patent application 652231 was advertised accepted on 18th August 1994.  Technological Resources Pty Ltd (Technological Resources) filed a notice of opposition on 18th November 1994.  Following the evidence-in-support and evidence-in-answer stages, Technological Resources was due to serve evidence-in-reply by 7th March 1996.  On that date, Technological Resources applied for a three month extension of time to serve evidence-in-reply.  Bac Tech (Australia) Pty Ltd (Bac Tech) objected to this extension.  Before a hearing could be set to hear the objection, Technological Resources served evidence-in-reply on 25th March advising this “forms the opponent’s evidence-in-reply”.  The Australian Industrial Property Organisation (the office) interpreted Technological Resources’ statement to mean the completion of evidence-in-reply and advised both parties accordingly on 29th March.  Following this advice Bac Tech withdrew its objection to the extension of time.  The office subsequently granted the three month extension of time on 3rd April.

Technological Resources served further material on 5th June, within the extension period, and advised this material completed the evidence-in-reply.  Bac Tech objected to the inclusion of this evidence saying that, on their understanding, Technological Resources had completed evidence-in-reply on 25th March.  Bac Tech also requested a hearing to determine the matter.

Over the ensuing months there were significant amounts of correspondence between the parties and the office disputing the status of the evidence of 5th June.  In an attempt to resolve the dispute the office advised, on 5th September, that the material of 5th June was considered to be served out of time and proposed the following direction:-

The Commissioner will admit the material served on 5 June 1996 as further evidence in the opposition, if the opponent files an application under regulation 5.10(4) within one week from the date this direction is given, and

the Commissioner allows the applicant one month from the date of this direction to file evidence in response to the further evidence.

Technological Resources accepted the proposed direction although the company emphasised that it did not concede its evidence was out of time.  Bac Tech opposed the proposed direction.  The hearing on the proposed direction took place on 7th February 1997.  Mr B. Bennett, patent attorney of Pizzeys, Canberra, appeared on behalf of Lord & Company, Perth, and represented Bac Tech.  Mr C. Bentley, patent attorney of Griffith Hack, Melbourne, represented Technological Resources.

APPLICABLE LAW

The point of contention in this case is the date that Technological Resources completed the serving of evidence-in-reply.  The resolution of this point determines whether there is a need to consider if the material served by Technological Resources in June 1996 should be admitted as further evidence.  Both parties made extensive submissions on these points and on the granting of the extension of time.

Regulation 5.10(4) provides for the Commissioner to permit a party to serve further evidence on another party, on application being made by the first party and on such reasonable terms as the Commissioner specifies.  The Imperial Chemical Industries PLC (ICI) v Mitsubishi Gas Chemical Co. decision ((1994) 29 IPR 285) mentions five criteria to consider in deciding whether to grant an application to serve further evidence. These criteria derive from the Micronair (Aerial) Limited v Waikerie Cooperative Producers Limited ((1986) 7 IPR 107) and Sandoz Ltd v Fujisawa Pharmaceutical Co Ltd ((1993) 27 IPR 421) decisions. The criteria are whether the evidence:-

• could have been obtained with reasonable diligence at an earlier stage;

• would be likely to have an important influence on the result of the case;

• is presumably to be believed, that is, apparently credible though not necessarily incontrovertible;

• would cause unnecessary protraction of the opposition; and

• would result in any injustice done to the other party.

With these five criteria I will determine the admissibility of the material at the appropriate point in this decision.

Regulation 5.10(2) enables the Commissioner to extend the time in which a party may serve evidence on another party, on application being made by the first party and on such reasonable terms as the Commissioner specifies.  The Vangedal-Nielsen v Smith ((1980) 33 ALR 144) and Ferocem Pty Ltd v Commissioner of Patents ((1994) 28 IPR 243) decisions provide guidance in this respect. These decisions suggest that, before allowing an extension, the Commissioner must be satisfied that the person seeking the extension has made out a proper case justifying the extension. The Commissioner must also consider, not only the private interests of patent applicants and opponents, but also the public interest by ensuring that invalid patents are not granted and that proceedings are not unreasonably protracted.

DECISION

The primary issues are the time of completing the serving of evidence-in-reply and the admissibility of material as further evidence.  The question of the status of the grant for extension of time is a secondary issue for reasons which will become apparent during the course of this decision. 

The Micronair (supra) decision supports the primacy of serving evidence and the admissibility of further evidence.  In that case the opponent obtained an extension of time to lodge evidence-in-support.  Shortly prior to the grant of the extension the opponent lodged evidence and advised that this material completed the evidence-in-support.  Upon learning of the grant, the opponent sought to adduce further evidence within the extended period.  The opponent’s request was refused whereupon the opponent sought special leave to adduce the evidence. 

I will deal with the secondary issue first.  This is because there was uncertainty between the parties at the hearing regarding the status of the extension of time.

Extension of time

When a party applies for an extension of time, the office informs any other interested party of the receipt of the application and allows some time for any objection to be filed thereto.  The office may grant an application for extension of time unless one of the parties raises an objection, or unless delays by both parties impact on the public interest.

On 3rd April 1996 the office granted an extension of time for Technological Resources to serve evidence-in-reply.  This extension allowed Technological Resources until 7th June 1996 to serve that evidence.  This position may only be reviewed or varied if the grant of the extension was contrary to the Patents Act or Regulations.  In referring to regulation 5.10(5), prima facie, this is not the case in the present circumstances.  The office advised Bac Tech of Technological Resources’ application for an extension of time on 12th March.  This was five days after Technological Resources made the application.  The advice also stated that Bac Tech had fourteen days from the date of the advice to raise an objection, and be heard, if they wished.  While Bac Tech initially objected to the extension, they subsequently withdrew that objection following the serving of evidence-in-reply by Technological Resources.

There are no circumstances to show that the decision to grant the extension of time was, prima facie, clearly invalid.  Consequently I cannot review that decision.

From the Vangedal-Nielsen (supra) and Ferocem (supra) decisions Mr Bennett pointed out the onus was on Technological Resources to provide adequate reasons to support the need for an extension of time before the Commissioner could be satisfied the extension was justified.  Mr Bennett contended that Technological Resources has not given any valid reasons to justify a three month extension.  Consequently he suggested the extension of time should not have been granted.  If Bac Tech wished to pursue this point the appropriate avenue was through external appeal rather than questioning, before this office, the correctness of the decision to grant the extension of time.

Completion of serving of evidence-in-reply

The end of an evidence stage is determined on the basis of advice from the server.  It is established practice (from Parts 2.2.2 and 2.2.3 of Volume 3 of the Manual of Practice and Procedure) that, unless a party clearly advises that any filed evidence is ‘part evidence’, the office will advise the parties that the next stage of serving evidence will apply.  The time limit to complete the next stage is set irrespective of whether time is still left in the preceding evidentiary stage.  The same applies where the serving of evidence-in-reply is the last stage and the setting of a hearing is the next action.  The reason for this practice is to avoid unnecessary protraction where parties complete the serving of evidence early.

The official letter outlining the proposed direction states that the Commissioner considers the material served on 5th June was served out of time.  At the hearing Mr Bentley disputed this.  He mentioned that Technological Resources applied for and were granted an extension of time until 7th June 1996 to complete the serving of evidence-in-reply. 

While Technological Resources subsequently gained time until 7th June to serve evidence-in-reply, the company had filed evidence-in-reply with the office on 26th March advising that this evidence “forms the opponent’s evidence-in-reply”.  The office interpreted this statement to mean the completion of serving evidence-in-reply and advised both parties accordingly on 29th March.  This advice also stated that regulation 5.12 would now apply, meaning that the hearing of the opposition would be set, given that the evidentiary stages had concluded. 

I think it would be reasonable to allow and to expect a party to challenge the office’s determination of when the serving of evidence had been completed if that determination is incorrect.  A period of one week would be adequate to allow a challenge to such a determination.

If the office’s interpretation of Technological Resources’ statement is incorrect it raises the question of why Technological Resources did not dispute the official letter of 29th March at the time, nor at any time since then.  I put this to Mr Bentley at the hearing.  Unfortunately Mr Bentley was unable to shed any light on this question. 

Mr Bentley referred to previous experience in dealing with the office.  He mentioned occurrences where the office has granted shorter extensions, than the periods for which parties have applied, where it was clear that full extensions of time were not needed or were not justified.  This occasionally occurs to validate completed evidence that has already been served.  For this case Mr Bentley pointed out that, subsequent to 25th March, the office granted a full three month extension until June.  Mr Bentley suggested this meant the office understood that evidence-in-reply served in March 1996 was not the complete evidence. 

If the office grants extension periods to validate evidence that parties have already served, I do not think it automatically follows that the office anticipates the serving of further evidence near the end of extension periods if it grants full-term extensions.  The grant of an extension of time simply enables a party to serve evidence (in part or in complete form) at any time within the extension period.  A party may also decide not to use extensions of time that are available to it.  The latter point appears to be the case in the present opposition.  While Technological Resources subsequently gained an extension of time to serve evidence, the company’s correspondence of March 1996 suggests an intention, at the time, that the evidence served with that correspondence was the complete evidence.

The primary point is that Technological Resources has not, at any time, challenged the official position outlined in the letter of 29th March.  On balance I can only form the view that, at the time, Technological Resources acknowledged and accepted the position outlined in that letter and thereby forfeited any time left for serving evidence-in-reply under their subsequently allowed extension of time.  Furthermore the requirement to clearly advise if any filed evidence is ‘part evidence’ suggests that I must support the original determination that the words, “forms the opponent’s evidence-in-reply” means the evidence-in-reply is complete.

Technological Resources completed the serving of evidence-in-reply on 25th March 1996.  Consequently the material served on Bac Tech on 5th June is out of time.  I now have to consider whether the direction proposed by the Commissioner on 5th September 1996 meets the requirements of regulations 5.10(1)(a) and 5.10(5)(c)(ii).  Specifically the parties argued, at the hearing, whether the material served on 5th June should be admitted as further evidence.

Admission of material as “further evidence”

The material served by Technological Resources on 5th June comprises two declarations which provide further elaboration of the evidence-in-reply served on 25th March.  The first declaration, by a Mr C.N. Davis, refers to an abstract of an oral presentation made at a conference in Portugal in September 1991.  This abstract was included with the evidence-in-reply served on 25th March.  The declaration makes statements concerning the dissemination of information from the oral presentation to the scientific and industrial community.  The declaration further refers to a 1993 published version of the oral presentation, which was also included with the evidence-in-reply served in March.

The declaration also elaborates Mr Davis’ understanding of the scope of the terms, “saline” and “increased salt concentrations” in response to points, about the inventive concept, raised in Bac Tech’s evidence-in-answer. 

The second declaration, by a Mr W. Hoffmann, describes the dissemination of a report, of the above conference’s proceedings, through Technological Resources.  Mr Hoffmann wrote the report which is dated 30th January 1992.

In assessing the admissibility of further evidence, the first criterion is to establish the diligence of the party seeking to include the evidence.  Mr Bennett stated that Technological Resources could have served the material with reasonable diligence at an earlier stage.  He mentioned the further declarations were made by the same two declarants who swore earlier declarations constituting evidence-in-support and evidence-in-reply.  Mr Bennett also mentioned that the further evidence consists of facts which Mr Davis and Mr Hoffmann would already have known when evidence-in-reply was served. 

Mr Bentley stated that the criterion of diligence is not entirely appropriate in this case because the evidence is not new but relates to an issue which was considered by the applicant before serving evidence-in-answer.  Similarly the Micronair (supra) decision states that diligence is not an issue if evidence is lodged well before the main hearing.  That decision also mentioned that the issue of diligence would be more relevant if a party sought to adduce further evidence after the close of evidence-in-reply or after the hearing. 

In this case I think it is important to consider the issue of diligence since Technological Resources served the further material after the close of evidence-in-reply.  Furthermore the serving of this material has resulted in delay in setting the main hearing.  Mr Bentley stated that Technological Resources has been diligent since the company served its evidence within the allowed extended time. 

On the other hand Technological Resources should have been aware the material of 5th June was not evidence-in-reply.  The official letter of 29th March clearly stated that the serving of evidence-in-reply was complete.  While a subsequent official letter granted an extension of time to serve evidence-in-reply, the absence of a query from Technological Resources, about any perceived inconsistency in these two letters, suggests that Technological Resources accepted there was no opportunity to serve further evidence-in-reply.

The Viskase Corporation v W.R. Grace & Co.-Conn. decision (on application 611601, issued 5th December 1995) suggests that if a party is aware of relevant material or has relevant knowledge that could have been served at an earlier stage then the party has not been reasonably diligent in serving that evidence.  I think this point applies to the present case.  In this case the two declarations elaborate disseminating activities or terminology in respect to material served with the evidence-in-reply in March 1996.  Furthermore the activities took place in late 1991 and early 1992. 

Mr Bentley also argued that Bac Tech’s evidence-in-answer shifted the emphasis of the novelty of the invention to different features than those originally anticipated.  He cited the ICI (supra) case to say that admission of new evidence is allowable where that evidence is consequent to an action initiated by the other party.  In the ICI (supra) decision the applicant sought to serve further material in response to new material raised for the first time by the opponent in its evidence-in-reply.  This material related to alleged prior use.  In the present case the opponent, Technological Resources, seeks to elaborate its case because it did not anticipate a certain emphasis in Bac Tech’s evidence-in-answer.  I do not think this situation is as critical as that of alleged prior use in the ICI (supra) case.  Additionally normal time limits for serving evidence-in-reply allow for the circumstances raised by Mr Bentley.  It is not sufficient for Technological Resources to seek the admission of further evidence merely because Bac Tech filed evidence-in-answer in a form that Technological Resources did not anticipate.  There must be some special difficulty arising from the alleged shift in emphasis, mentioned by Mr Bentley, to justify the admission of further evidence.  At the hearing I was not directed to any special difficulty arising from this shift in emphasis.  Furthermore if the alleged shift in emphasis is the case then Technological Resources would have known this soon after Bac Tech completed serving evidence-in-answer on 7th December 1995 and certainly well before Technological Resources served its evidence-in-reply on 25th March 1996.  In fact the declaration by Mr Davis of that date makes statements, in that evidence-in-reply, on the alleged shift in emphasis. 

Given the activities, described in the material of 5th June 1996, occurred in late 1991 and early 1992 and that Technological Resources would have been aware of the alleged shift in emphasis around the end of 1995, I see no reason why that material could not have been included with the evidence-in-reply of 25th March 1996. 

The second criterion is whether the material is likely to have an important influence on the result of the opposition.  Mr Bentley mentioned the relevance of the material to the issues of novelty, inventive step and patentability of the invention.  He relied on the Micronair (supra) decision to support the position that Technological Resources’ material ought to be admitted since the material is of particular relevance to the issue of anticipation.  In the present case the material sought to be included as further evidence elaborates the means of disseminating information and reports from the above conference.  The information and reports were contained in the material served on 25th March. 

Mr Bentley also cited the Kaiser Aluminium & Chemical Corp. v The Reynolds Metal Company decision ((1969) 120 CLR 136) to submit that evidence should be dealt with on its merits, rather than be shut out because of a failure in procedure. Mr Bennett pointed out that this principle only applied to allow short extensions of time. I accept the position of giving weight to the merits of evidence over adherence to procedure.

Mr Bentley further mentioned the Pioneer Hi-Bred Corn Co. v Hy-Line Chicks Pty. Ltd. decision (1979 RPC 410) where supplementary evidence was admitted for the reason that it related to the purpose of amplifying or explaining material put forward earlier. In that case the evidence related to a claim that the use of a trade mark in New Zealand was likely to deceive or cause confusion and therefore bear on the public interest. The evidence was pertinent to the case and was allowed. Mr Bentley stated that Technological Resource’s material amplifies or reinforces the opponent’s position put forward in March 1996. He notes this is to ensure the facts are fully set out.

I question the degree of relevance of Technological Resources’ new material.  Some commentary is in respect to summary points and an abstract of oral disclosures made at a conference after the priority date of the present application.  Other commentary is in respect to publications made even after the filing date of the application.  This material is only of relevance if the priority date or filing date is in dispute.  On a prima facie assessment of the opposed patent application I am not aware of any matter which may challenge the priority date of the application.  Similarly I cannot see that Technological Resources’ material, prima facie, challenges the priority date.  Mr Davis’ declaration of 4th June mentions the probability, shortly after the 1991 conference, of the dissemination of information from the conference to the scientific and industrial community.  Mr Hoffmann likewise elaborates on the dissemination of a report of the conference proceedings some time after the holding of the same conference. 

The latter dissemination also only took place within Technological Resources and another company, CRA Limited (CRA), through a central filing system at Technological Resources.  This is similar to a situation arising in the Wood and others v Westaflex (Aust.) Pty Ltd case (20 IPR 387). That decision held that, where an employee of an Australian company returns to Australia with an article and then in turn shows it to other employees or officers of the company, this does not amount to public disclosure because the disclosure is equivalent to an individual showing the article to himself or herself. In the present circumstances the report by Mr Hoffmann, an employee of CRA, was placed in the central filing system of Technological Resources for perusal by the staff of Technological Resources and CRA. This also shows that a special relationship existed between the two companies. The dissemination of the report through two related companies in this way is not significantly different to dissemination through a single company. In following the Wood (supra) decision Mr Hoffmann’s report, prima facie, is not publicly disclosed.  Mr Hoffmann’s declaration, prima facie, has no influence on the result of the opposition.

Mr Davis’ declaration, served on 5th June, may be pertinent to the opposition because of its elaboration of means of disseminating information.  I note this information is contained in the evidence-in-reply of 25th March.  On the other hand the means of disseminating this documentation does not bear on the public interest to the same extent as the content of the documentation itself.  Furthermore, prima facie, this documentation became publicly available after the priority date (and even after the filing date in one case) of the present application.  I am not convinced, at this stage, that the material would be likely to have an important influence on the result of the opposition.

The third criterion is the credibility of the evidence.  Mr Davis and Mr Hoffmann are senior chemist and senior chemical engineer, respectively, in the fields of biochemical and biological processes of mining minerals in Australia.  I have no reason to question the credibility of their evidence.

The fourth criterion is whether the material would cause unnecessary protraction of the opposition.  Mr Bennett mentioned a delay of eleven months to date and further delay in having the matter decided, and in giving Bac Tech time to respond if the further evidence were admitted. 
Mr Bentley stressed there would be minimal delay.  He noted the proposed direction would allow the opponent one week to file an application to serve further evidence and allow the applicant one month to serve evidence-in-response.  Mr Bentley submitted this is not detrimental to either party.  He also mentioned that the material served in June 1996 is not new evidence but merely reinforces earlier evidence.  Furthermore Mr Bentley stressed the material has already been served and the applicant has had a chance to review the statements therein.  Mr Bentley said this situation is similar to the ICI (supra) case where the evidence had already been served and it was held that the further delay in allowing the other party to respond was not significant.

The dispute between the parties concerning the time of completing the serving of evidence-in-reply has caused lengthy delay.  There have been significant amounts of correspondence between the parties and the office with proposed directions and counter-proposed directions in an attempt to resolve the dispute.  Mr Bennett correctly pointed out that this dispute has resulted in an eleven month delay in setting a hearing.  I observe that further delay may arise in allowing time for Bac Tech to serve evidence-in-response if I admit Technological Resources’ further material.  This delay would not be significant in the overall progress of the opposition.  On the other hand I am concerned that a simple question of interpretation of a letter, advising the status of evidence-in-reply served by Technological Resources on 25th March, has resulted in a delay of about one year in progressing the opposition.  The fact that Technological Resources did not challenge the office’s interpretation of that letter when the office advised both parties of the completion of evidence-in-reply, if that interpretation was in fact incorrect, has significantly contributed to the delay.  I think there has been unnecessary protraction of the opposition.

The fifth criterion is whether the further material would result in injustice done to the other party.  This opposition is quite different from the Dextec Metallurgical Pty Ltd v Societe Miniere Et Metallurgique De Pennaroya case (on application 502388, issued 20th December 1982).  In that case the admission of further evidence was refused because it would expose the applicant to a completely new attack on the specification at a late stage in proceedings.  In the present case the material sought to be admitted is not new evidence but rather in the nature of supplementary evidence.  The material is not voluminous, nor is Bac Tech being taken by surprise with a new case to answer.  If I were to accept the material as further evidence, Bac Tech would also be given an opportunity to respond, as indicated in the proposed direction of 5th September.  I conclude there would be no injustice to Bac Tech if I accept the material.

On balance the further material does not satisfy most of the criteria.  In any case I think the criteria of likely influence on the result of the opposition and protraction of proceedings are especially important and carry more weight than the other criteria.  These two criteria protect the public interest in aiming to ensure that invalid patents are not granted and that opposition proceedings are not unnecessarily protracted.  The material served by Technological Resources on 5th June does not satisfy these two criteria.  Given the case put forward to me by both parties, at this stage, I think the material should not be admitted as further evidence.

CONCLUSION

On the basis of statements from Technological Resources, the office advised both parties that the evidence served on Bac Tech on 25th March completed the service of evidence-in-reply.  Technological Resources has not questioned this advice at any time.  The material served by Technological Resources on 5th June was served out of time despite Technological Resources gaining a three month extension of time on 3rd April in which to serve evidence-in-reply.  Theoretically this extension allowed the company until 7th June to serve evidence and validated the evidence-in-reply served on 25th March.

Since Technological Resources’ material of 5th June is out of time it became necessary to determine whether the proposed direction of 5th September complied with regulations 5.10(1)(a) and 5.10(5)(c)(ii).  In this case this required a determination of whether the material of 5th June should be admitted as further evidence under regulation 5.10(4).  Considering the factors of diligence, influence on the opposition, credibility, protraction and potential injustice to the other party, on balance, I have concluded that the material should not be admitted.  The proposed direction of 5th September 1996 is not to issue.  The opposition can now be set for substantive hearing, subject of course to any appeal against this decision.

COSTS

Both parties submitted that costs should follow the event.  Technological Resources has been unsuccessful on the core issue of the time of completing evidence-in-reply.  On the second point of compliance of the proposed direction with regulation 5.10, and specifically on the admissibility of the further material, the company has also been unsuccessful.  I award costs against Technological Resources.

M.G. Kraefft
Delegate of the Commissioner of Patents

Patent attorneys for the applicant   :  Lord & Company, Perth

Patent attorneys for the opponent   :  Griffith Hack, Melbourne