Cryovac, Inc. v American National Can Company
[2006] APO 34
•6 October 2006
ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 739685 in the name of American National Can Company
Title: Functional Barrier in Oxygen Scavenging Film
Action: Opposition under section 59 by Cryovac, Inc. and a request for an extension of time under regulation 5.10(2) to serve evidence in answer
Decision: Issued 06 October 2006.
Abstract
The applicant has failed to provide a satisfactory explanation of the delays in the preparation of evidence in answer. They have had more than sufficient time to prepare evidence in answer and their failure to make any progress with it is not consistent with a serious defence of the opposition. While the interests of the parties are substantially equivalent, the public interest is not served by any further delays in this matter.
The present hearing was deferred several times on the basis of recent settlement negotiations. However, under the circumstances the applicant’s decision to place further preparation of evidence in answer on hold until such time as the settlement negotiations are completed may be premature. Mere speculation of a settlement is not sufficient reasoning for the grant of an extension and it is incumbent on the applicant to continue preparing their evidence unless there is an in-principle agreement or understanding that negotiations towards settlement are taking place.
A short extension of 7 days from the date of this decision granted so that the applicant may file any evidence in answer they have at hand.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 739685 by American National Can Company, an opposition under section 59 by Cryovac, Inc. and a request for an extension of time under regulation 5.10(2) to serve evidence in answer.
BACKGROUND
Patent application 739685 was filed by American National Can Company (“the applicant”) on 17 June 1996 under the provisions of the PCT. The Australian application was advertised accepted on 18 October 2001 and a notice of opposition was filed on 21 December 2001 by Cryovac, Inc. (“the opponent”). The opponent served their Statement of Grounds and Particulars on 21 March 2002 followed by evidence in support on 15 January 2004.
Evidence in answer was initially due on 15 April 2004 [regulation 5.8(2)(a)]. The applicant requested and was granted 8 extensions of time (each for three months) without objection from the opponent. The current extension requests are each for three months (from 15 April 2006 until 15 July 2006, hereinafter “the first extension” and from 15 July 2006 until 15 October 2006, hereinafter “the second extension”). The opponent did not formally object or provide written comments in relation to either of the present extension requests.
A chronology of events following the first extension request is as follows:
·9 May 2006: the delegate wrote to the applicant advising that the Commissioner was not satisfied that the extension was appropriate in all the circumstances and invited them to provide further information to justify their extension. No response was received to that letter and the parties were advised that the matter was set for hearing on 15 June 2006 with a view to refuse the extension.
·5 June 2006: the applicant’s attorneys advised that instructions had been received from the applicant to amend the application with a view to seek a settlement of the matter. The hearing was cancelled.
·30 June 2006 the delegate noted that the public interest was not served by further delays of the matter, and that the matter was set for hearing on 1 August 2006. The applicant was advised that:
“any further delays in the hearing will only be considered if there is evidence of significant progress towards the preparation of evidence in answer of [sic] settlement (such as the filing of amendments as indicated in the letter of 15 June 2006). Any submissions in relation to settlement will need to be corroborated by the opponent.”
·3 July 2006: the applicant advised that an offer of settlement based on amendment of the claims had been made, and requested a deferment of the hearing until after a response had been received from the opponent.
·10 July 2006: the delegate noted the settlement offer and reiterated that it was not in the public interest to further delay matters. The hearing was deferred until 15 August 2006, but the delegate advised that any further deferment would only occur if both parties advised that the settlement offer had been accepted.
·11 July 2006: the opponent advised that the settlement offer had been rejected.
·17 July 2006: the second extension request was received. The parties were advised that this request would be determined together with the first extension at the hearing of 15 August 2006.
·10 August 2006: the applicant requested deferral of the hearing on the basis that a further settlement offer had been made and there were “realistic prospects that the matter could settle based on this offer”. The delegate advised that the hearing would be deferred until 25 August 2006 on the understanding that settlement could be finalised within such time.
·21 August 2006: the opponent advised that the further settlement offer had been rejected.
·24 August 2006: the applicant sought a further deferment of the hearing on the basis that another settlement offer was being considered by the U.S. Counsel for the applicant. This was initially rejected by the delegate but after further discussions the hearing was deferred on the basis that the proposed settlement offer was close to being the final made by the applicant. The hearing was set for 7 September 2006.
·30 August 2006: the opponent advised that the latest settlement offer had been rejected.
Neither party appeared at hearing, but the applicant provided written submissions. This decision is therefore based on those written submissions and the material already on file.
THE RELEVANT LAW
The requirements for granting an extension of time to serve evidence in answer are set out in regulation 5.10(2) which states:
(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) or subparagraph 5.8(1)(a)(i)):
(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.
This provision must be read in conjunction with regulation 5.10(5):
(5)The Commissioner must not give a direction under sub-regulation (1) or grant an application under sub-regulation (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 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.
The law on extension of time provisions, and more specifically the law on regulation 5.10 has been considered by the Federal Court 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. It is clear from these judgments that regulation 5.10 confers a broad discretion, which cannot be reduced to an imperative compliance with particular requirements. On the contrary, it is necessary to give proper, genuine and realistic consideration to all relevant aspects of the case.
Relevant aspects broadly include the reasons for the delay, the public interest and the interests of the parties, and I will address each of these factors in my decision.
DECISION
Satisfactory Explanation for delay
The onus lies with the party seeking an extension of time to justify the need for the extension with sufficient details of the circumstances and reasons for needing the extensions. I note that the reason why evidence was not filed earlier is a relevant consideration, but a satisfactory explanation is not a mandatory requirement (Ferocem at IPR 247). The submissions made in support of the first extension included that:
“The applicant is still considering the Evidence-in Support which was filed by the Opponent. Comments have been obtained from a local expert, namely Professor David Solomon in relation to the Evidence-in Support, and as a result of that meeting, the Australian Attorney is seeking further instructions from U.S. Counsel for the Applicant.
U.S. Counsel for the Applicant has indicated that further time is required to allow the Applicant company to consider the initial comments of Professor Solomon. Further comment is also required in relation to issues which have been raised by the Australian Attorney. The comments relate to particular issues raised in the Evidence-in-Support.
The delay in receiving comments from U.S. Counsel relates to the fact that there has been considerable change in the technical and professional personnel at the applicant company since the patent application was filed due to a merger and restructuring of the Applicant company. This has resulted in the delay in considering the issues. Nevertheless, the Applicant is in a position to continue to prepare a Declaration in the name of Professor Solomon once the further instructions have been received from U.S. Counsel.
The further time required is to enable U.S. Counsel and the Applicant company to consider the comments of Professor Solomon, provide further comment and instructions relating to that comment and to place the comments already obtained from Professor Solomon in the form of a Declaration suitable for service as Evidence-in-Answer.”
These reasons are essentially the same as those provided in several preceding requests. In particular, changes in the applicant company and the associated changes in professional and technical staff have delayed the timely provision of instructions. This has apparently been an on-going problem since at least May 2004 when Professor Solomon’s comments were first sent to the U.S. Counsel for consideration. However, I note that the first of the company mergers occurred prior to the commencement of the present opposition, and the second merger occurred in April 2005. Accordingly, problems associated with any changes resulting from these mergers should have been resolved by now. There is no apparent reason why such changes continue to delay matters, and the applicant’s lack of progress in this regard is not consistent with a serious defence of the opposition.
The second extension request also described recent attempts by the applicant to resolve the present matter by amendment of the claims, and the hearing was deferred several times on that basis. Each of the applicant’s offers was rejected by the opponent, but the written submissions provided at hearing suggest that they are still seeking a negotiated settlement of the matter. The request also indicated that preparation of evidence in answer would be held in abeyance while negotiations proceeded:
“On 3 July 2006, a settlement offer was made by the Applicant to the Opponent. That offer related essentially to claim amendment.
On 6 July 2006, the Australian Attorney for the Applicant received word from the Australian Attorneys for the Opponent, that the settlement offer based on the amendment outlined in the offer of 2 July 2006 had been rejected.Following that rejection, the Australian Attorney for the Applicant prepared an alternative clam structure with the view that claim structure could form the basis of a further settlement offer and on 12 July 2006, that alternative claim structure was forwarded to U.S. Counsel for consideration.
… the Applicant would prefer to settle this matter by way of claim amendment if that proves possible. Further time is required to allow U.S. Counsel both at the U.S. legal firm and any new primary Counsel for the Applicant company to consider the further suggested claim structure and to refer any further settlement offer that may arise to the Opponent.
Whereas comments have been received from Professor Solomon relating to preparation of Evidence-in-Answer, preparation of the declaration based on those comments has been placed on hold until such time that the settlement negotiations have been completed.”
Settlement negotiations have been recognised in previous decisions as a proper explanation of delay (see for example Race Lotto Pty Ltd v AWA Ltd [1998] APO 72; Eli Lilly & Co v Amgen Inc (2000) 48 IPR 363; DYWIDAG-Systems International Pty Ltd v Jennmar Australia Pty Ltd [2003] APO 36; Boral Resources (NSW) Pty Ltd v BST Holdings Pty Ltd [2003] APO 46). These cases broadly involved opposition matters in which settlement negotiations had commenced relatively early in the evidentiary process, but delays in the preparation of evidence had resulted from one party labouring under the misapprehension that negotiations were underway when the other party did not consider any settlement to be in train. The present situation is similar to that in Race Lotto Pty Ltd v AWA Ltd [supra], but in contrast here settlement negotiations have only recently commenced and could not have resulted in the previous extensive delays in the preparation of evidence.
Whilst I accept that the applicant is seriously attempting to negotiate a settlement of the present matter, there is nothing on file to suggest that the parties have agreed in principle to settle this case. The parties have been involved in a number of related matters before the Commissioner (see Cryovac Inc. v Pechiney Plastic Packaging, Inc. [2003] APO 18), and a recent review indicated that many of the oppositions between the parties had been settled (see Kureha Kagaku Kogyo Kabushiki Kaishav Cryovac Inc [2005] APO 45). Given the number of cases now settled, the parties should have an overarching view of the issues in dispute and be in a position to quickly resolve the outstanding matters. However, the parties appear to be approaching the present negotiations in a relatively ad hoc manner, with the applicant apparently proposing amendments without any understanding of the opponent’s position and without any counter offer from the opponent.
Under the circumstances the applicant’s decision to place further preparation of evidence in answer on hold until such time as the settlement negotiations are completed may be premature. There has been no clear indication from the opponent that they are party to serious settlement negotiations in this particular case, and mere speculation of a settlement is not sufficient reasoning for the grant of an extension (Cryovac Inc. v Pechiney Plastic Packaging, Inc. [supra]). In such circumstances I consider that it is incumbent on a party to continue preparing their evidence until there is an in-principle agreement or mutual understanding that negotiations towards settlement are taking place.
Furthermore, the written submissions indicate that the applicant’s in-house Counsel, who had been dealing with the matter for at least three years, recently left the company. The extension until 15 October 2006 was sought so that the new Counsel could be fully apprised of the issues involved in the present case. This development does not help explain the delays to date, and it is a significant concern that further delays are expected. Moreover it indicates a lack of diligence on the part of the applicant that they have not better managed their resources to ensure that the evidentiary timeframes in the present opposition were met.
My view is therefore that the opponent has failed to provide a satisfactory explanation for either of their extension requests.
Interests of the Parties
Clearly the interest of the applicant is in obtaining the extensions in order that it has the opportunity to serve evidence in answer in the opposition. This represents the only opportunity for the applicant to defend their application, and there is an argument that the applicant will be shut out of the opposition because they are precluded from filing evidence in answer. However, this has to be balanced against all the other competing factors. The applicant has failed to provide any further material to establish that they have been diligent in preparing their evidence. To the contrary, the material before me suggests that despite a number of previous extensions of time no progress has been made since early in the period for serving evidence in answer. Such actions are not consistent with a serious intention to defend their right.
The interests of the opponent lie in having the opposition dealt with expeditiously, and as a consequence lie against allowing the extension. However, the opponents have not objected to, nor provided written submissions in relation to, these or any other of the extensions of time requested by the applicant. Furthermore, I consider that parties have a shared responsibility to ensure that all stages of an opposition progress in a timely manner and the actions of either party should not unduly delay matters. I note in this regard that “negotiations” to date have only been actively pursued by the applicant. There has been no apparent attempt by the opponent to facilitate the resolution of this matter, and any progress towards settlement has only been the result of the applicant’s efforts. Accordingly I consider the interests of the opponent are relatively minor.
On balance my view is that the interests of the parties are substantially equivalent.
Public Interest
The public interest calls for a balance between the requirements that the Commissioner deal with opposition matters expeditiously and economically and that a serious opposition is dealt with on its merits [see Ferocem Pty Limited v. Commissioner of Patents (supra) and A Goninan and Co Ltd v Commissioner of Patents and Another (supra)].
The recent attempts by the applicant to negotiate a mutually acceptable settlement are consistent with these principles, and the hearing was deferred several times on that basis. However, there has been more than enough time for the applicant to prepare their evidence in answer. Their failure to do so without a satisfactory explanation does not suggest a suitable level of diligence on their part.
A further concern is the potential for the applicant to file a substantially identical divisional application and withdraw the opposed application. Such an outcome is predicated by the applicant’s written submissions that:
“[t]he applicant would rather reach resolution in the context of the present opposition proceedings rather than in any subsequent proceedings should the applicant file a divisional application from the present application.”
The delays caused as a result of such a course of action are far more detrimental to the interests of all parties than those resulting from the grant of a relatively short extension under regulation 5.10(1) (see for example, Kureha Kagaku Kogyo Kabushiki Kaishav Cryovac Inc supra, Acres Gaming v Aristocrat [2005] APO 16, and ExxonMobil Chemical Patents Inc, v The Associated Octel Company Limited [2002] APO 34). I note that in such a situation the Commissioner may conclude that the applicant has “effectively surrendered” to the opponent, and this could be a consideration in the award of costs (Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27). Nevertheless, the material provided in support of the present opposition would be considered during the examination of any divisional application, and many of the issues under dispute could be resolved during the examination process, thereby alleviating the need for any further opposition.
In any case, it is incumbent on the applicant to prepare their case in a timely and expeditious manner, and it would unduly shift the balance if concessions were made on the basis that the applicant may withdraw their application and file a divisional. The delays experienced in the present matter are inconsistent with an expeditious handling of the opposition in the Patent Office, and the public interest is not served by any further delays in this matter. Therefore I believe the public interest is therefore best served by refusing the current extension.
CONCLUSION
The applicant has requested that the extension to 15 October 2006 be granted in order to permit the new in-house Counsel to get up to speed and provide appropriate instructions.
Balancing the public and private interests, my view is that the extensions should be refused. The applicant has had more than sufficient time to prepare evidence in answer and their failure to make any progress with it suggests a lack of diligence which is inconsistent with a serious opposition. While the interests of the parties are substantially equivalent, the public interest is not served by any further delays in this matter.
I acknowledge that the applicant is seriously attempting to negotiate a settlement of the present matter, but there is nothing on file to suggest that the parties have agreed in-principle to settle this case. Furthermore, the applicant has placed further preparation of evidence in answer on hold pending settlement negotiations. In my opinion this approach is premature and it is incumbent on the applicant to continue preparing their evidence until there is an in-principle agreement or mutual understanding that negotiations towards settlement are taking place. Mere speculation of a settlement is not sufficient reasoning for the grant of an extension.
I note that the applicant has effectively received the requested extensions through the hearing being deferred pursuant to settlement negotiations. However, I am loathe to completely shut the applicant out of the opposition, and in most cases of this type a short “Ferocem” type extension will be granted to allow the applicant to file any evidence in answer they have at hand.
In keeping with this long-held practice I therefore grant the applicant 7 days to file their evidence in answer.
COSTS
The power to award costs is based on section 210 and regulation 22.8. As this refusal was initiated by the Commissioner and neither party appeared at the hearing or provided any written submissions, an award of costs is not appropriate.
L. F. McCaffery
Delegate of the Commissioner of Patents06 October 2006
Patent attorneys for the applicant : Phillips Ormonde & Fitzpatrick, Melbourne
Patent attorneys for the opponent : Davies Collison Cave, Melbourne
11
0