BGC (Australia) Pty Ltd & CSR Building Products Limited v James Hardie Technology Limited

[2012] APO 13

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

BGC (Australia) Pty Ltd & CSR Building Products Limited v James Hardie Technology Limited [2012] APO 13

Patent Application:                   2006241323

Title:Fiber cement building materials with low density additives

Patent Applicant:  James Hardie Technology Limited

Opponent:BGC (Australia) Pty Ltd & CSR Building Products Limited

Delegate:  Dr B. Akhurst

Decision Date:  27 January 2012

Hearing Date:  By written submissions filed on 9, 13 and 20 January 2012

Catchwords:  PATENTS - subregulation 5.10(2) - request for an extension of time to serve evidence in support - the balance of considerations support the extension - application granted

Representation:  Patent applicant:  Shelston IP, Sydney

Opponent:Griffith Hack, Perth

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

Patent Application:                   2006241323

Title:Fiber cement building materials with low density additives

Patent Applicant:  James Hardie Technology Limited

Date of Decision:  27 January 2012

DECISION

I grant BGC (Australia) Pty Ltd & CSR Building Products Limited an extension of time until 28 February 2012 to serve evidence in support.  Costs are awarded against James Hardie Technology Limited.

REASONS FOR DECISION

Background

1.   Patent application 2006241323 in the name of James Hardie International Finance B.V. (‘the applicant’) was advertised as accepted on 26 August 2010.  On 26 November 2010, BGC (Australia) Pty Ltd & CSR Building Products Limited (‘the opponents’) served a notice of opposition to grant of a patent, followed by a statement of grounds and particulars on 28 February 2011. 

2.   The date for serving evidence in support was originally 28 May 2011, which was extended until 28 November 2011 by way of two extensions of time.  On 25 November 2011, the opponents filed a third application under regulation 5.10(2) for a further three months to serve evidence in support.  On 7 December 2011, James Hardie objected and requested a hearing. 

3.   The Commissioner advised the parties on 13 December 2011 that in the circumstances an oral hearing was not required and the hearing would be based on written submissions.  The parties were invited to file written submissions, followed by responding submissions, on whether the extension of time should be allowed. 

4.   Both parties have provided submissions.  The opponents’ included a statutory declaration by attorney Anthony Paul Mizzi dated 9 January 2012.

The law on extensions of time

5.   The time for serving evidence can be extended under subregulation 5.10(2) of the Patents Regulation 1991 which provides that:

(2) The Commissioner may extend the time within which the party may take a step prescribed in this Chapter (not being a step that is taken under regulation 5.3 or 5.3AA, paragraph 5.4(a), subparagraph 5.8(1)(a)(i) or regulation 5.9A):

(a) on the application of a party in the approved form; and

(b) on such reasonable terms (if any) as the Commissioner specifies; and

(c) after the party has served a copy of the application on the other party.

6.   The above provision must be read in conjunction with subregulation 5.10(5) which relevantly provides that:

(5) The Commissioner must not … grant an application under subregulation (2) … 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

(c) … :

(i) gives the parties a reasonable opportunity to make representations concerning the application or proposed action; and

(ii) is reasonably satisfied that … an extension of time … is appropriate in all the circumstances.

7.   In this case the applicant has been notified of the extension request, and both parties have had an opportunity to make representations. 

8.   The extension can only be granted if the Commissioner is reasonably satisfied that it is appropriate in all the circumstances.  In exercising this discretion, I am guided by the decisions of Burchett J in Ferocem Pty Ltd v Commissioner of Patents [1994] FCA 981; 28 IPR 243, Sackville J in A Goninan & Co Ltd v Commissioner of Patents [1997] FCA 424; 38 IPR 213 and Goldberg J in National Starch & Chemical Co v Commissioner of Patents [2001] FCA 33; 50 IPR 398. The general principles that flow from these decisions are that:

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 FCA at [11]; IPR at 247-8, Goninan IPR at 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 FCA at [10]; IPR at 247).

c)The public interest: The public interest in determining a serious opposition on its merits is a relevant consideration (Goninan IPR at 222). It is necessary for the Commissioner to form a view as to the nature of the evidence that is sought to be adduced, and the significance of that evidence for the opposition proceedings (Goninan IPR at 225-6). The significance of the evidence is assessed having regard to any relevant material available, not just the evidence itself (National Starch FCA at [33]; IPR at [33]). The public interest is not protected merely because some evidence has already been served (Goninan IPR at 225).

d)The interests of the parties: The interests of the party seeking the exercise of discretion are a relevant consideration (Ferocem FCA at [11]; IPR at 247). It is also 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 Patent Office. (Ferocem FCA at [11]; IPR at 247, Goninan IPR at 222).

The application for an extension of time

9.   The opponents’ application of 25 November 2011, requested an extension of time of 3 months from 28 November 2011 to 28 February 2012 in which to serve evidence in support of the substantive opposition.  The application continues:

“The circumstances in which and the grounds upon which this application is made are as follows:

Reasons for the delay

The Applicants’ evidence in support is in progress, but is not yet complete.  At 23 August 2011, we had only just located one suitably qualified expert and had preliminary discussions with him in relation to the issues of novelty and inventive step.  The Applicants have now engaged three independent expert witnesses and had extensive discussions with all three experts.  Advanced drafts of their initial evidence have been prepared, and we are in the process of finalising their evidence in this regard in declaratory form.

The delay is due to the complexity of the issues and the subject matter, as well as the fact that two of the witnesses are overseas in Europe.  All of the witnesses which have been engaged are often unavailable, making it difficult to consult with the witnesses.  It is therefore taking longer than expected to prepare the evidence.

The experts have been asked to give evidence in relation to literature searches which have been conducted over the past few weeks.  Conducting the searches and considering the results has taken longer than expected, primarily because a large number of documents have been located.  In addition, each of the independent witnesses have had other commitments of a personal and business nature, including travel commitments, for several weeks over the last three months during which they were unavailable.  This has made it considerably more difficult to complete the evidence during this period.

We expect to be in a position to provide the expert witnesses with a copy of the patent application and ask them to analyse the validity of the application very shortly.  We note, however, that the Christmas holidays are coming up and most of the witnesses will be taking time off and will not be available to assist during this period.  As a result, we anticipate that a further three month period is needed to complete the preparation of the evidence.

Public Interest

All of the evidence which is being prepared is highly relevant to a correct determination of the opposition.  It is not in the public interest for the Commissioner not to be in possession of the Applicants’ complete evidence in support when determining the outcome of the opposition.  We therefore submit that the public interest lies in granting the requested extension of time. 

Interests of the parties

The Applicants’ interests are in obtaining the extension of time, so that they have an opportunity to serve their evidence in support in the opposition is a relevant consideration.  This request is not a delaying tactic.  The evidence is being prepared diligently and is clearly relevant to the outcome of the opposition.  The extension sought is for a relatively short period of time, which includes the Christmas holiday period, to allow for the completion of the evidence.

The Applicants will be significantly disadvantaged if they are shut out of filing substantive evidence in support by reason of being precluded from filing their evidence.  Whilst it is in James Hardie Technology Limited’s interests to have the opposition dealt with expeditiously. it is submitted that in the present circumstances the interests of the James Hardie Technology Limited will not be unduly prejudiced by the grant of an extension of time, whereas the Applicants will be seriously prejudiced if they are not provided with additional time in which to complete and serve their evidence in support of the opposition.  It is noted that the application under opposition has a priority date of 14 March 2000, but was not finally prosecuted to acceptance until 26 August 2010.

Discretion

Taking into account all relevant considerations, it is submitted that the extension of time is justified as the Applicants have provided a satisfactory reason for the delay, the public interest favours the grant and it is in the interests of the Applicants for the extension to be granted.  Accordingly, we respectfully request that the broad discretion to grant an extension of time be exercised in the Applicants’ favour.”

Explanation of the delay

10.  To summarise the application, the delay in filing evidence in support is due to (i) the complexity of the issues and subject matter, and (ii) the difficulty in consulting the witnesses due to their lack of availability and because two are based overseas .

11.  In his declaration, Mr Mizzi provides further explanation of the delay, as follows:

“6.   As outlined in the circumstances in which and grounds upon which the first application was made, the Opponents had been unable to locate a suitable independent expert as at the date of this application.  This was despite numerous enquiries by Griffith Hack, by both telephone and email, with potential experts in both academia and industry in Australia and overseas in the area of formulation of fibre reinforced cement building materials (the area to which the Patent Application relates).

7. It proved very difficult to locate an expert who was not connected with the parties to the opposition in any way and/or had relevant experience in fibre cement materials as at the priority date.

8. On 23 August 2011 Griffith Hack filed a further application for a three month extension of time in which to serve the evidence in support to 28 November 2011 (second application).

9.As outlined in the circumstances in which and grounds upon which the second application was made, the Opponents had by this time retained an overseas expert experienced in the relevant area and had engaged in preliminary discussions with him in relation to the issues of novelty and inventive step.  However, there had not been sufficient time to finalise his evidence.

10. On 25 November 2011 Griffith Hack filed the present application for a three month extension of time in which to serve the evidence in support to 28 February 2012 (third application). 

11. Whilst instructions were being taken from the first expert witness, enquiries continued to be made for potential additional expert witnesses during the intervening period.  In particular, we wanted to try and locate a witness in Australia.  The purpose of this was to counter any possible suggestion the Applicant may seek to make that the evidence of the first expert was not evidence from a person skilled in the art in the “patent area”.

12. As outlined in the third application, the Opponents engaged two further expert witnesses during this period, taking the total number of expert witnesses to three.  One of these witnesses is located in Australia.  The other is an overseas witness with extensive practical experience in the area as at the priority date. Their evidence will address the validity of the Patent Application, primarily on the grounds of lack of novelty and inventive step.

13. Griffith Hack had extensive discussions with all three experts and prepared advanced drafts of their initial evidence prior to 25 November 2011.  However, it was not possible to finalise their evidence by 28 November 2011, which is why the third application was made.

14. Set out below are details regarding the steps taken in the preparation to date of evidence from each of the proposed expert witnesses, so as to inform the Patent Office of the progress made so far.

Reasons for the delay

Expert 1

15. Following some preliminary discussions with this expert, who is located overseas, we obtained our clients’ instructions to engage Expert 1 and received a signed engagement letter from him on 3 August 2011.

16. We had initial discussions with Expert 1 between this date and 23 August 2011. He was asked in these discussions for background information in relation to his experience and about the common general knowledge in the relevant area as at the priority date.

17. We had further extensive telephone discussions with this witness in the period between 23 August 2011 and 25 November 2011. After finalising the background and common general knowledge part of his evidence, Expert 1 was asked on 20 September 2011 to consider the steps he would have taken as at the priority date to solve the problem identified in the Patent Application. 

18. A principal difficulty in the finalisation of his evidence has been the fact that this expert is a consultant who runs his own business and has a number of other ongoing matters which he has to attend to.  These matters often require overseas travel and it is difficult to contact Expert 1 when he is away on business dealing with these matters.  In particular, he was overseas on business for over 50 days between August and November 2011.

19. Since November 2011, instructions have been taken from this witness for the purpose of further preparing his evidence, but that process is not yet complete.

Expert 2

20. This expert is also based overseas.  He was not identified as a suitable witness until early September 2011, and was retained to give evidence in this proceeding on 22 September 2011.

21. As with Expert 1, Griffith Hack has had extensive discussions with this expert between 22 September 2011 and 25 November 2011.  These were in relation to his background experience and common general knowledge as at the priority date, as well as the steps he would have taken as at the priority date to solve the problem identified in the Patent Application.

22. Expert 2 was on holiday for approximately two weeks in late October/early November 2011.  He was unavailable to assist during this period.  Since November 2011, instructions have been taken from this witness for the purpose of further preparing his evidence, but that process is not yet complete.

Expert 3

23. Expert 3 is a professor at an Australian University.  He was engaged by Griffith Hack through a university expert service provider.  We initially contacted the service provider on 15 July 2011 to assist in locating suitable candidates as expert witnesses (further to the first expert who by about that time had been located but not retained). They provided us with the name of a potential expert.  However, upon investigation we formed the view that this expert did not have relevant experience to give expert evidence in this proceeding.  We subsequently asked the service provider to make further enquiries to see if they could locate a suitable person. 

24. The service provider suggested Expert 3 on 19 September 2011 and we spoke with him for the first time on 20 September 2011.  After obtaining our clients instructions to engage this expert, there was some delay on the part of the service provider in providing us with suitable terms of engagement.  We executed terms of engagement with Expert 3 on 12 October 2011, only 6 weeks prior to 25 November 2011.

25. Griffith Hack had a number of discussions with this expert between 12 October 2011 and 25 November 2011.  These were in relation to his background experience and common general knowledge as at the priority date, as well as the steps he would have taken as at the priority date to solve the problem identified in the Patent Application.

26. Expert 3 is a very busy academic.  He travels often with work and it can also be difficult to arrange a suitable time to speak with him even when he is at the university because of his daily academic commitments.  There was approximately two weeks between 12 October 2011 and 25 November 2011 when he was unavailable.  He will also be overseas from 25 November 2011 to 21 January 2012, and has indicated that it may be difficult to contact him during this period.  It is expected that his evidence will be finalised by the end of the 3 month extension of time period, if the extension is granted.

Summary

27. In summary, it initially proved difficult to engage experts with suitable experience in the relevant area.  Despite extensive efforts to find a suitable witness, Expert 1 was not retained until 3 August 2011, close to the end of the second period of extension.  Experts 2 and 3 were not retained until 22 September 2011 and 12 October 2011, part way through the third period. 

28. Since their engagement, the delay in finalising the evidence has been due to the complexity of the issues and the subject matter, as well as the fact that all of the witnesses which have been engaged have become unavailable from time to time for consultation.”

12.  The opponents submitted that the delays experienced in preparing and finalising the evidence were reasonable and not uncommon.  They further submitted that the steps they had taken to date in the preparation of their evidence had been reasonable, and that satisfactory progress has been made in an efficient manner.

13.  The applicant has provided lengthy submissions challenging the veracity of the opponents’ account and argued that more information and corroborating evidence should have been provided to support Mr Mizzi’s statements.  The applicant contended that the fact that two of the opponents’ experts are overseas cannot justify the delay and the opponents should have anticipated the availability issues for overseas experts and acted expeditiously in securing those experts and preparing their evidence.  

14.  However I believe the opponent has provided sufficient information to explain the circumstances that led to the delay in the preparation of evidence.  I see no reason not to accept the opponents’ account, a major part of which is in declaratory form, regarding their difficulty in identifying suitable experts.  I also accept Mr Mizzi’s evidence that the availability of the three experts now engaged has been limited, which together with the Christmas holiday period has further hampered the preparation of evidence. 

15.  Throughout their submissions the applicant has repeatedly argued that the opponents have adopted a deliberate strategy to prolong the proceedings.  However, the information provided in the opponents’ three extension requests demonstrates progression in the preparation of evidence.  In his declaration, Mr Mizzi describes further progress and at [3] and [33], he anticipates that the evidence in support will be completed by the 28 February 2012 and that no further application for an extension of time will be made.  This weighs against a view that the opponents are deliberately delaying the evidence process.

16.  I am satisfied that the opponents have provided a satisfactory explanation of the delay.

The public interest

17.  In determining the public interest, the expeditious disposal of the opposition by the Patent Office must be balanced with the need to determine a serious opposition on its merits.  The latter consideration is assessed by considering the nature and significance of the evidence that will be served (Goninan IPR at 225-6).

18.  The opponents’ application describes the evidence in preparation as highly relevant to a correct determination of the opposition.  The opponents submitted that the evidence they wish to serve is expert evidence relevant to the question of validity, including lack of novelty and inventive step, and is critical and essential to their opposition.  I note that that the statement of grounds and particulars lists 23 prior art documents under these grounds supporting the view that a serious opposition is in train.  Prima facie, given its nature and the fact that no evidence in support has yet been served, the evidence sought to be adduced will be important to the opponents’ case. 

19.  Regarding the public interest in the expeditious disposal of matters, the opponents’ application describes the extension as a “relatively short period of time”, which they submit is “not unreasonable”.  In contrast, the applicant claimed that the precedent case law in which the public interest was considered do not support granting an extension where the total time for preparation of evidence in support would amount to 12 months.  However, I do not believe the case law provides a precedent for there being a time period above which the period of the extension must outweigh the need to determine the opposition on its merits.  Certainly, the applicant did not identify any.  Extensions of time under regulation 5.10 are granted when deemed appropriate in all of the circumstances.  The length of time is one consideration, but it cannot be an overriding consideration because the discretion whether to grant an extension cannot be reduced to imperative compliance with particular requirements. 

20.  Clearly, granting the extension will delay the opposition proceedings.  However, given Mr Mizzi’s statement at [33] that the evidence will be able to be completed by 28 February 2012, the delay should be relatively short. 

21.  Given the nature and significance of the evidence and the short additional delay, I am satisfied that the public interest supports the extension of time in this case.

The interests of the parties

22.  The opponents’ extension request relevantly states that their interests lie in obtaining the extension of time, so that they have an opportunity to serve their evidence in support in the opposition.  They submit that their substantial investment in the opposition would be wasted if it were to be shut down by refusal of the extension.  Clearly the opponents have a strong interest in the application being allowed. 

23.  The patent applicant claims that it has been disadvantaged by having to obtain and bear the cost of legal advice in relation to multiple requests for extension of time.  In addition, it considers the delay will erode their competitive advantage, in providing potential competitors time in which to develop potentially infringing products.  Consequently, the interests of the applicant lie in having the opposition dealt with expeditiously and are against allowing the extension. 

24.  The interests of the applicant and opponent lie in opposing directions and are largely offsetting.  The Patent Office has an interest in the orderly processing of oppositions. 

The balance of considerations

25.  The power to grant an extension of time under regulation 5.10(2) is discretionary.  In exercising this discretion, I am guided by regulation 5.10(5)(c)(ii) which states that the Commissioner must not grant an extension of time unless reasonably satisfied that the extension is appropriate in all circumstances.

26.  In this case, the opponents have provided a reasonable explanation for the delay.  The public interest supports allowing the extension of time in this case.  The interests of the parties are largely offsetting.  On balance, I consider it appropriate in the circumstances to grant the application for an extension of time.

Conclusion

27.  I am satisfied that the extension of time is appropriate in all the circumstances.  I grant the opponents an extension of time until 28 February 2012 to serve evidence in support.

Costs

28.  Neither party made submissions on costs.  In proceeding such as these it is normal practice for costs to follow the event.  In the present case, I can see no reason to depart from this practice.  I award costs according to Schedule 8 against James Hardie Technology Limited.

Dr B. Akhurst
Delegate of the Commissioner of Patents