Boral Resources (NSW) Pty Limited v BST Holdings Pty Limited

[2003] APO 46

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No. 747361 in the name of Boral Resources (NSW) Pty Limited

Title:          Building Panel and Method and Apparatus of Forming Same

Action:          Application by BST Holdings Pty Limited for an extension of time under Regulation 5.10(2) to serve evidence-in-support, and objection thereto by of Boral Resources (NSW) Pty Limited

Decision:          Issued 30 October 2003.

Abstract

BST, who has made an allegation of "obtaining", has been in negotiations for some time with Boral regarding a Notice to Produce issued by the Commissioner under 210(c) of the Act.  BST gave, as reasons for the delay in serving evidence, that negotiations were still in progress, and that they were currently awaiting a response from Boral.

It was found that the opponent had made out a proper case justifying the extension.  BST’s belief that serious negotiations were taking place goes some way to explaining why evidence was not served in time.  Even though the opponent appears to have been influenced more by issues of administrative convenience than by the actual progress of the evidentiary stages, arguments surrounding the explanation for the delay fall very slightly in BST’s favour.

It was also considered that the evidence to be served is likely to have an important influence on the outcome of the case.  The interests of the opponent and the public both weigh heavily towards the grant of the extension, and the extension is appropriate in all the circumstances.

The extension of time to serve evidence in support was granted.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 747361 in the name of Boral Resources (NSW) Pty Limited and an application under Regulation 5.10(2) for an extension of time to serve evidence-in-support of an opposition, by BST Holdings Pty Limited. 

BACKGROUND

1. Patent application 747361 in the name of Boral Resources (NSW) Pty Limited (Boral) was filed on 28 August 1998 and advertised accepted on 16 May 2002.  A notice of opposition to the grant of the patent was filed by BST Holdings Pty Limited (BST) on 16 August 2002.  A statement of ground and particulars was served on 15 November 2002.

2. BST applied for two extensions of time in which to serve evidence-in-support, and these were granted without objection.

3. During this period, BST requested that the Commissioner issue to Boral a Notice to Produce under section 210(c) of the Act. Boral replied that it had lawful grounds on which it objected to the production of documents sought by the notice. On 24 April 2003 the Commissioner sought advice from both parties on how they wished to progress the matter. No response was received, and both parties were informed on 30 May 2003 that the Commissioner would proceed on the basis that no documents were required to be produced.

4. On 15 August 2003, BST filed a further application for an extension of time of three months to 16 November 2003 in which to serve evidence-in-support.  This was opposed by Boral, resulting in this hearing.

5. The matter was heard in Canberra on 23 September 2003.  Mr Sean Gleeson, solicitor of Baldwin Shelston Waters Law, Sydney, represented the opponent.  Mr Greg Turner, patent attorney of Spruson & Ferguson, Sydney, represented the applicant.  Both parties appeared by telephone.

   THE APPLICATION FOR AN EXTENSION OF TIME

6. The circumstances in which, and the grounds upon which the application for extension of time was made are given as follows:

   “1.A request for a Notice to Produce (the "Notice") was issued by the Commissioner of Patents and served on the Patent Applicant, Boral Resources (NSW) Pty Limited (the "Applicant") on 24 March 2003, seeking production of various documents relating to the development of the alleged invention and the sale or commercial dealing in products made in accordance with the subject matter of the opposed application.

   2.The Applicant has claimed that it has lawful excuse not to provide any documents in response to the Notice.  The Opponent maintains that the documents sought under the Notice are relevant to various allegations raised in the Statement of Grounds and Particulars.

   3.The Opponent was granted an extension of time to 18 August 2003 in which to serve Evidence-in-Support.

   4.The Opponent's Attorneys wrote to the Applicant's Attorneys on 2 June 2003 offering to substantially narrow the scope of the documents in respect of which it requires production.

   5.The Opponent's Attorneys wrote to the Applicant's Attorneys on 25 June 2003 and again on 18 July 2003 requesting a response to the offer.  On 23 July 2003 the Applicant's Attorneys advised that they had not received instructions from the Applicant and had forwarded a reminder.  The Opponent has not yet received a response from the Applicant in relation to the offer made on 2 June 2003.

   In the absence of production of any documents in response to the Notice or the narrowed scope of documents, the Opponent requires a further three months to obtain at least some of the documents sought under the Notice and to finalise and serve its Evidence-in-Support.”

   SUBMISSIONS

7. Both parties provided written submissions prior to the hearing, and I will refer to these where appropriate in the body of my decision.

8. The opponent also filed a declaration by Mr Gleeson, dated 22 September 2003. Appended to the declaration are exhibits SPG1 to SPG4, which are copies of correspondence between Baldwin Shelston Waters Law and Spruson & Ferguson regarding the Notice to Produce issued to Boral under s 210(c) of the Patents Act.

   DECISION

   The law on extensions of time

9. The requirements for granting an extension of time to serve evidence-in-support are set out in regulation 5.10(2) which states:

   (2)       The Commissioner may:
   (a)       on the application of a party in the approved form; and
   (b)       on such reasonable terms (if any) as the Commissioner specifies;

   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 paragraph 5.4(1)(a).

10. This provision must be read in conjunction with regulation 5.10(5):

    (5)       The Commissioner must not … grant an application under subregulation (2) ... unless the Commissioner:
               ...
    (c)       ...

    (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.

11. The Federal Court has considered the requirements of regulation 5.10 in Ferocem Pty Limited v. Commissioner of Patents (1994) 28 IPR 243, A Goninan and Co Ltd v Commissioner of Patents and Another (1997) 38 IPR 213, and National Starch & Chemical Company v Commissioner of Patents (2001) 50 IPR 398. The principles arising from these decisions have been set out and followed in numerous patent office decisions relating to regulation 5.10, and may be summarised as follows:

    (a)The broad discretion afforded by Regulation 5.10 cannot be reduced to insistence on imperative compliance with particular requirements;

    (b)The exercise of this discretionary power requires proper, genuine and realistic consideration of all the relevant aspects that pertain to the application;

    (c)The provision of a satisfactory explanation of the delay is a relevant consideration, but is not mandatory;

    (d)The public interest in determining a serious opposition on its merits is a relevant consideration and must be balanced with the requirement that matters before the patent office should be dealt with in an efficient, orderly manner and not be unduly prolonged;

    (e)The interests of the opponent, the applicant and any other parties are a relevant consideration.

12. In summary, it is clear from these decisions that the Commissioner, having given both parties the opportunity to make representations, may grant an extension only if reasonably satisfied that it is appropriate in all of the circumstances.

    Justification for the extension

13. This case is unusual in that the major ground of opposition involves an allegation of “obtaining”.  The opponent’s reason for requesting the extension of time primarily relates to their difficulty in gathering evidence related to this ground.  Mr Gleeson submitted that much of this evidence would only be in the possession of the applicant, and argued that the extension was justified because “…the opponent has worked upon the presumption that negotiations with Boral regarding the Notice to Produce were still ongoing.”.

14. In support of this contention, Mr Gleeson directed my attention to the documents exhibited to his declaration.  Exhibits SPG1 to SPG-3 confirm that BST was in contact by facsimile with Boral in June and July of 2003 regarding the production of documents.  Of particular interest is SPG1, which includes an offer by BST to limit the scope of documents sought.  Exhibit SPG4, a letter dated 23 July 2003 from Spruson & Ferguson to BSW Law, refers to the receipt of these facsimiles, and states that “We have forwarded your request to our client together with advice in respect thereof.  I have today forwarded them a reminder.”. 

15. The opponent claims that this correspondence supports their view that “…there is still some prospect of a negotiated agreement being reached between BST and Boral on what documents could be produced.”.

16. In response, Mr Turner submitted that although correspondence had been exchanged between the parties, that “…at no time have we given a positive reply indicating that we have entered negotiations…”.  Mr Gleeson rebutted this argument by noting that the evidence also supports the contrary view; that is, at no time was the opponent given a positive indication that negotiations had ceased.  From the comments made at the hearing it is clear that both parties have widely disparate views on the seriousness and likely success of past negotiations.

17. At this point, I must note my concern at BST’s failure to reply to the Commissioner’s letter of 24 April 2003 regarding the pursuit of the Notice to Produce.  Mr Turner argued that no justification for an extension existed when the Notice to Produce had clearly been abandoned.  Furthermore, the applicant had proceeded on the basis of the letter of 30 May 2003 that no documents were required to be produced.  It was submitted that BST should have done the same.

18. Mr Gleeson asserted that the Notice had not been abandoned, and that BST had merely chosen to act in the most efficient manner “…without troubling the Commissioner.”.  While the reason for rejecting the Commissioner’s offer of assistance is unclear, it is apparent that BST continued discussions with Boral concerning the narrowed scope of documents proposed in SPG1.  I note that a similar situation was addressed in Race Lotto v AWA Limited [1998] APO 78. In that decision, the delegate found that the opponent’s understanding of the state of negotiations at the time provided a credible explanation for the delay in serving evidence-in-support.

19. I consider the situation in this instance to be similar, and conclude that the opponent’s belief that negotiations were in progress provides some explanation for their conduct so far in this matter.

20. However, I do not wish to suggest that BST have acted in the most diligent manner possible.  On this point, Mr Turner argued that BST had not shown due diligence in progressing the opposition, as twelve months had passed since the filing of the notice of opposition and no evidence had yet been served.  In reply, Mr Gleeson submitted that the opponent was actively pursuing evidence in relation to the first ground of “obtaining”, and stated:

    “If this can be dealt with expeditiously, there may be no need to go into the other grounds, and … there would be considerable expense in engaging experts to establish what the prior art was and what the general knowledge was at the time of the application.  The opponent is looking to do this in the most efficient manner and that [will be] with the documents that are in the possession of the applicant being produced.”

21. It would seem that the opponent’s decision to gather evidence in an administratively convenient manner has prevailed over any concern regarding the actual progress of the evidentiary stages.  As Mr Turner observed, one should be pursuing all grounds at all particular times, and not be proceeding on the basis that if one ground falls aside, then preparation on the next ground will begin.  As far as I am aware, there was no practical reason why evidence on the grounds separate to the issue of obtaining could not be prepared and served.  I share the applicant’s concern regarding the approach adopted by BST to the gathering of evidence.

22. Notwithstanding this concern, I am prepared to accept the opponent’s argument that it held a genuine belief that negotiations were being undertaken.  The desire to conduct these negotiations as efficiently as possible explains why BST has not endeavoured to compile evidence on the grounds separate to obtaining. 

23. Overall, I consider the arguments on whether the delay is justified to be very slightly in the opponent’s favour.  However, I will take this opportunity to note that the Commissioner is unlikely to allow any further extensions based on negotiations being in progress.  Given these circumstances, it would be wise for BST to proceed diligently in the preparation of evidence-in-support.

    The public interest

24. The public interest has two components.  The first requires that a serious opposition should be dealt with on its merits rather than shut out because of a failure in procedure.  The second factor requires that proceedings before the Commissioner should be conducted in an efficient and expeditious manner.

25. Opponents, and particularly their statements of grounds and particulars and evidence-in-support, are an important source for reducing the risk of granting invalid patents. In the present case, BST has served a statement of grounds and particulars outlining five grounds for the opposition. These include that the nominated person is not entitled to the grant of a patent and that the invention is not patentable, not novel, does not involve an inventive step and does not comply with section 40 of the Patents Act. The particulars are both numerous and detailed.

26. In my opinion the statement of grounds and particulars suggests that a serious opposition is in train.  It is also apparent that expert evidence would be required to establish the state of the art and the relevant common general knowledge for the grounds of novelty and inventive step.  Consequently, I consider that the filing of evidence-in-support would clearly be of significance for a proper determination of the opposition.

    My conclusion on this point is supported by the decisions in Acres Gaming, Inc and IGT (Australia) Pty Limited v Aristocrat Technologies Australia Pty Ltd [2003] APO 19 and Race Lotto Pty Limited v AWA Limited (supra).  For these reasons refusal of the extension would not be in the public interest.

27. The orderly progress of opposition proceedings is also an important factor relevant to the public interest.  The opponent has previously had two extensions of time, and I am mindful that, if granted, a third extension would cause a further delay of three months before the substantive hearing.  However, at this stage of the proceedings I do not believe this represents a serious delay in the overall process. 

28. In relation to this point, I note that Boral's reluctance to provide any information following the Notice to Produce has not helped to expedite matters.  Though a lawful excuse not to produce documents may exist, this does not preclude Boral from identifying to BST the relevant companies in the Boral group which are most likely to have this information.  Furthermore, the Commissioner holds the reasonable expectation that the parties to an opposition will act in good faith, and be willing to present all relevant evidence in order to assist the Commissioner in making a fair and just determination.  Given that the major ground of opposition is one of "obtaining", the Commissioner would expect both parties to provide evidence showing their entitlement to the invention.

29. Overall, I consider the public interest in providing BST with an opportunity to obtain relevant evidence that would allow a more just determination of the opposition outweighs any delay in the opposition proceedings. 

    Interests of the Parties

30. The interests of the opponent clearly lie in obtaining the extension.  Given that to date no evidence at all has been served, I believe it would be exceedingly difficult for BST to effectively argue its case without any evidence to support their grounds of opposition.

31. At the hearing, Mr Turner argued that there was no guarantee that the opponent, even with this extension, could complete the service of evidence-in-support.  They had not displayed due diligence so far, and any extension, if granted, would unnecessarily protract the proceedings.  I accept that Boral could be disadvantaged by a further protraction of proceedings if I were to grant the extension now sought.  Nevertheless, there is nothing before me to suggest that such a protraction would have the same undue effect on Boral as the effect on BST if they were denied the opportunity to fully state their case.

32. On balance, I think the interests of the opponent in having the opportunity to present relevant evidence that would allow the opposition to be decided on its merits outweighs the interests of the applicant in these circumstances.

    CONCLUSION

33. I believe that the opponent has made out a proper case justifying the extension.  I have found that even though the issues surrounding the explanation for the delay are finely balanced, they fall slightly in BST’s favour.  The interests of the opponent and the public both weigh heavily towards the grant of the extension, and I also consider that the evidence to be served is likely to have an important influence on the outcome of the case.

    Accordingly, I grant the applicant BST an extension of time from 16 August 2003 to 16 November 2003.

34. Nevertheless, I am mindful that the documents sought by BST under the Notice to Produce have not yet been served, and that this is one impediment to the completion of evidence-in-support.  It is well established that in opposition proceedings, the Commissioner functions as an administrative tribunal which would benefit from having all relevant evidence placed before it.  Ideally, both parties should work together to resolve this issue to their mutual satisfaction, and I consider that a period of 1 month from the date of this decision would be an appropriate length of time.  However, if the issue is not resolved within this period, the opponent should advise the Commissioner if they wish to be heard regarding the Notice to Produce.

35. I also consider that any documents produced in response to the Notice are highly likely to be relevant to the opposition.  Consequently, I believe it is appropriate to propose a direction under regulation 5.10(1)(a) deferring evidence-in-support until the Notice to Produce is complied with or the Commissioner advises the parties that Boral has a lawful excuse not to comply.

36. However, under sub-regulation 5.10(5)(c)(i), the Commissioner must give both parties a reasonable opportunity to make representations concerning the proposed action.  Consequently I allow ten days from the date of this decision for both parties to make such representations.  If no such representations are made, I will proceed to issue the above direction.

    COSTS

37. Both parties, irrespective of whether the extension was granted or denied, argued that costs should be awarded in their favour.  The power of the Commissioner to award costs is based on section 210 and regulation 22.8.  The power to award costs is discretionary, so I must take into account all relevant considerations.

    In matters before the Commissioner, costs usually follow the event, and I see no reason to depart from this practice in the present case.  Therefore I award costs against Boral.

    R. W. J. Finzi

    Delegate of the Commissioner of Patents

    Patent attorneys for the applicant:  Spruson & Ferguson, Sydney

    Patent attorneys for the opponent:  Baldwin Shelston Waters, Sydney