Bernard Charles Sherman v Merck & Co., Inc - [2006] APO 30

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 697696 in the name of Bernard Charles Sherman

Title: Stable solid formulation of enalapril salt and process for preparation thereof

Action: Objection to an application to serve further evidence

Decision: Issued 5 September 2006 .
Abstract

Application to serve further evidence granted.
The further evidence relates to the ground of entitlement. Evidence in relation to entitlement is already on file, but the new evidence covers different territory, and provides eye witness evidence from someone present at the time it is alleged that Dr Sherman acquired the invention from Merck. This gives the evidence prima facie significance.
The significance of evidence also depends on how it will fit into the case that will be argued. If it is not possible for a party to succeed on a ground (for instance, if there is no evidence in relation to some of the material facts - even after admitting the further evidence), then that further evidence cannot be of significance to the outcome of the hearing. The present case is not of that type. It is a ground of opposition that Dr Sherman is not entitled to the grant of a patent. It is a possible inference from the evidence that Dr Sherman did not invent the subject matter of the present application, and obtained from Merck knowledge of the subject matter. This is sufficient to raise an arguable case of lack of entitlement, and make the evidence significant.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 697696 by Bernard Charles Sherman, and an objection to an application to serve further evidence in relation to an opposition to the grant of a patent by Merck & Co., Inc.

BACKGROUND

Patent application 697696 in the name of Bernard Charles Sherman (‘Dr Sherman’) has been opposed by Merck & Co., Inc. (‘Merck’). The evidence stages up to evidence in reply have been completed, and several rounds of further evidence have been served.
The present action arises as a consequence of a declaration by Edward W. Murray, dated 21 July 2006. This document was filed by Merck after the substantive opposition had been set for hearing. The covering letter indicates that the declaration relates to matters already in evidence. However, the Commissioner came to the view that the declaration was further evidence, and Dr Sherman objected to this new evidence.
The application for further evidence was heard in Canberra on 22 August 2006. Dr Sherman was represented by Bruce Caine of counsel, assisted by Paul Jones, Shaun McVicar and Kirstie Murdoch of Freehills Patent & Trademark Attorneys. Merck was represented by Katrina Howard of counsel, assisted by Shahnaz Irani and Linda Govenlock of Spruson & Ferguson.
DECISION
Further evidence is governed by regulation 5.10. The relevant subregulations state:
(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.
(5) The Commissioner must not give a direction under subregulation (1) or grant an application under subregulation (2) or (4) unless the Commissioner:
(a)if he or she proposes to grant an application by a party - is reasonably satisfied that the other party has been notified of the application; and
(b)if he or she proposes to act on his or her own motion - ensures that the parties are notified of the proposed action; and
(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.
In the circumstances, I am satisfied that Sherman has been notified, and the parties have had an opportunity to make representations. The question that must now be considered is whether I am satisfied that it is appropriate to grant the application to serve further evidence. In exercising this discretion I am guided by the decisions of Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) AIPC 91-057; 28 IPR 243, Sackville J in A Goninan & Co Ltd v Commissioner of Patents (1997) AIPC 91-330; 38 IPR 213 and Goldberg J in National Starch & Chemical Co v Commissioner of Patents [2001] FCA 33 on the operation of regulation 5.10(5) in relation to extensions of time. The general principles that flow from these decisions are:
a)The power is discretionary:    Regulation 5.10 confers a broad discretion, which cannot be reduced to imperative compliance with particular requirements. It is necessary to give genuine and proper consideration to all relevant considerations. (Ferocem at AIPC 38,208; IPR 247-8, Goninan at AIPC 39,434; IPR 220)
b)Explanation of delay:            The reasons why the evidence was not served earlier are a relevant consideration, but a satisfactory explanation is not a mandatory requirement. (Ferocem at AIPC 38,207-8; IPR 247)
c)The public interest:                The public interest in determining a serious opposition on its merits is a relevant consideration. (Goninan at AIPC 39,435-6; IPR 222)
*         In order to do this, it is necessary for the Commissioner to form a view as to the nature of the evidence that it is sought to adduce, and the significance of that evidence for the opposition proceedings. (Goninan at AIPC 39,438; IPR 225-6)
*         The significance of the evidence is assessed having regard to any relevant material available, not just the evidence itself. (National Starch at [33])
*         The public interest is not protected merely because some evidence has already been served. (Goninan at AIPC 39,438; IPR 225)
d)The interests of the party seeking the exercise of discretion:            The interests of the party seeking the exercise of discretion are a relevant consideration. (Ferocem at AIPC 38,208; IPR 247)
e)The interests of other parties:            It is relevant to consider the disadvantage to the other party of delays in determining the opposition, and the effect of delays on the efficient and orderly administration of the Patents Office. (Ferocem at AIPC 38,208; IPR 247, Goninan at AIPC 39,436; IPR 222)
These considerations seem equally relevant to the determination of the present application to serve further evidence. Previous decisions of the Commissioner on further evidence illustrate different aspects of these considerations, but do not represent binding rules. It also follows from the words of regulation 5.10(5) that, before granting an application, I must be satisfied that it is appropriate in all the circumstances.
1. The facts
The facts in relation to the further evidence are quite brief. The prosecution of the opposition on behalf of Merck was originally handled by Mr Power at Spruson & Ferguson. Mr Power retired on 30 January 2006, and Ms Irani took over the opposition. It seems that Ms Irani became aware of shortcomings in the evidence, which led to the preparation and serving of the further evidence. These facts are attested in a declaration by Ms Irani, tendered at the hearing. It is not apparent why the deficiencies in the evidence were not noticed earlier in the opposition.
The shortcomings in the evidence are addressed by the Murray declaration. I note that the Murray declaration incorporates three types of evidence: evidence that was already on file, evidence of what Mr Murray saw and heard, and evidence that could be given as submissions at the final hearing. Clearly the first and third categories do not need to be the subject of further evidence, so cannot ground a successful application to serve further evidence. They have been included for convenience, so that the Murray declaration will become the whole of the case on entitlement. The second category of evidence - matters that Mr Murray saw and heard - is the new evidence that is relevant to whether or not to grant the application to serve further evidence. The most significant portion of the new evidence is para 20:
After being permitted to remain in the courtroom during testimony involving discussion of the composition of Merck’s VASOTEC product, which I believe to be on the third or fourth day of the trial (i.e. after Mr McLeod had given his testimony as to the process used by Merck), during a brief recess when most of the courtroom was empty, I specifically recall Dr Sherman approached his counsel, Malcolm Johnston, and, in a clear voice easily heard by me and by others, stated “Now I know how they do it. They use a wet granulation.” Mr Johnston responded, “Barry [i.e. Dr Sherman], keep it down.” Dr Sherman replied, again in an easily heard voice, “It must react with the water.”
In addition, the grounds of the opposition have been contracted. The opposition is now only proceeding on the grounds of lack of entitlement, and lack of novelty and lack of inventive step (both in the light of the single document WO 94/01093).
2. Application of the facts to the law
(i) Explanation of delay
A proper explanation of the delay has not been provided. It has not been explained why the evidence was not served as part of the evidence in support of the opposition, or why the need for the evidence was not noticed earlier. The Irani declaration merely provides an explanation of recent events, and makes it clear that she acted promptly once the deficiency in the evidence was noticed. A large amount of evidence had already been prepared and served, but the opposition will rely on only a single citation (in addition to the ground of entitlement). Clearly a large amount of effort has gone into preparing evidence that will not be used, and insufficient effort has gone into preparing the evidence that will be relied upon. This is even more surprising given that the evidence in the Murray declaration must have been well known to Merck since 1994. However, there is no suggestion of deliberately withholding the evidence.
I consider that an explanation has been provided for only a small portion of the delay.
(ii) The public interest
The public interest requires a consideration of the nature and significance of the evidence. The Murray declaration relates solely to the issue of entitlement of Dr Sherman. The declaration provides evidence of matters that Mr Murray was witness to, copies of documents (some of which were previously in evidence and some that were not in evidence), and explanation of the context of those documents.
At the hearing it was confirmed that the grounds of opposition had been reduced to only three matters: entitlement, and lack of novelty and inventive step in the light of a single citation. The issue of entitlement is clearly an important part of the opposition. Some evidence in relation to entitlement is already on file, but the Murray declaration covers different territory, and provides eye witness evidence from someone present at the time it is alleged that Dr Sherman acquired the invention from Merck. This gives the evidence prima facie significance.
The significance of evidence also depends on how it will fit into the case that will be argued. Mr Caine asserted that it was not apparent how the facts in the Murray declaration, even if accepted, could constitute a case of lack of entitlement. If it is not possible for a party to succeed on a ground (for instance, if there is no evidence in relation to some of the material facts - even after admitting the further evidence), then that further evidence cannot be of significance to the outcome of the hearing. I do not believe that the present case is of that type.
It is a ground of opposition that Dr Sherman is not entitled to the grant of a patent. It is easy to see how an argument of lack of entitlement could be constructed in this case. Entitlement derives from inventorship, either directly or by legal transfer. If Dr Sherman did not invent the subject matter of the application, then direct entitlement would not exist. It is a possible inference from the evidence that Dr Sherman did not invent the subject matter of the present application, and merely obtained from Merck knowledge of the subject matter.
I consider this sufficient to raise an arguable case of lack of entitlement. Whether that case is successful will be determined following the substantive hearing. I am satisfied that the public interest strongly favours granting the application, so that this important ground of opposition can be fully considered.
(iii) The interests of Merck
The significance of the evidence suggests that Merck’s case would be disadvantaged if the further evidence was not included.
(iv) The interests of Dr Sherman
While further evidence always represents a detriment to the other party, the extreme delay in the present case creates a greater detriment than normal. Dr Sherman is clearly disadvantaged by the delay, and the need to consider whether to prepare additional evidence at this very late stage in the opposition.
Ms Howard noted that any delay arising as a consequence of the further evidence was only small when seen against the total opposition period. The opposition in this case commenced in 1999, and the evidence processes have already spread over seven years. The further evidence relates to actions in which Dr Sherman was personally involved. Consequently, it should be possible for Dr Sherman to respond to them within a short time period, i.e. two months. A further two months would not represent a large percentage of the time that the opposition has already run. So long as the further delay can be kept to two months, then the detriment to Dr Sherman may not be excessive.
(v) Interests of the Patent Office
The interests of the Patent Office in the orderly processing of matters before the Commissioner are a minor consideration in this matter, and rank behind the interests of the parties. I note that the fact that this evidence was not originally identified as further evidence has complicated the task of the Commissioner.
(vi) Other matters
Ms Howard stressed that the new material included in the further evidence would already have been within the knowledge of Dr Sherman as a consequence of similar actions between the parties in the United States and in Europe. While this is probably true, the critical point is that the new evidence was not part of the opposition in Australia, and could not have been relied upon in the substantive hearing of the matter. By introducing the material as further evidence, it is brought into the action in Australia. Consequently it changes the case that Dr Sherman has to answer. This constitutes disadvantage to Dr Sherman. However, if the application to serve further evidence is granted, then it should be possible for Dr Sherman to respond to it quickly because of the prior knowledge of the material.
3. The balance of considerations
It is always regrettable that evidence is not prepared in a timely manner. In the present case, the public interest is strongly in favour of granting the application to serve further evidence. The interests of Merck and Dr Sherman are largely offsetting. On balance, it is appropriate to grant the application.
4. Other matters
Mr Caine was concerned to know the nature of the case that Merck would present at the substantive hearing. Specifically, he wanted to know how the allegation of lack of entitlement would be argued, and what elements of common general knowledge would be relied upon in arguing lack of inventive step. These are matters that arise quite separate to the application to serve further evidence. However, the Commissioner has a general power to give directions, and both parties were heard in relation to these matters.
The parties agreed to provide statements of the parts of the evidence that will be relied upon at the substantive hearing. Given that the parties have undertaken to do so, it is not necessary to give a formal direction. This should address the concerns in relation to the ground of inventive step. On the ground of entitlement, there was a protracted discussion of that issue at the hearing. My concern is that Dr Sherman is essentially seeking further and better particulars of this ground, but has waited until the eleventh hour to do so. I would be reluctant to order further and better particulars at such a late time. However, the submissions at the hearing provided most, if not all, of the information that Dr Sherman was seeking. In the light of this, I will not order Merck to provide either further particulars or a more detailed explanation of the case. However, it is incumbent on Merck’s counsel to ensure that they do not present a different case at the substantive hearing.
I grant the application to serve further evidence and give the following directions.
1. Merck has 2 weeks from the date of this decision to identify the evidence on which they will rely.
2. Dr Sherman has 8 weeks from the date of this decision in which to serve evidence in response to the further evidence, and to identify the evidence on which he will rely.
Consequently, 8 weeks from the date of this decision the Commissioner will be in a position to set a date for the hearing of the opposition to the grant of the patent.
5. Costs
Merck have been successful in their application to serve further evidence. However, the explanation of delay was not provided until the day of the hearing. The nature of the opposition case that will be argued was clarified at the hearing, making the significance of the evidence more apparent. Consequently, the normal rule that costs follow the event should be reversed. Mr Caine suggested the award of costs should be deferred until the substantive hearing of the case. I believe that the present action stands on its own, and costs can be determined now.
I award costs in accordance with Schedule 8 against Merck.
Dr S.D.Barker
Delegate of the Commissioner of Patents
Patent attorneys for the patent applicant: Freehills Patent & Trade Mark Attorneys
Patent attorneys for the opponent: Spruson & Ferguson