Daniel Charles Underwood v Toby Construction Products Pty Ltd

[1988] APO 41

In the Matter of the Patents Act 1952 - and - In the Matter of Application for a Patent No. 567093 by DANIEL CHARLES UNDERWOOD - and In the Matter of Opposition thereto under Section 59 by TOBY CONSTRUCTION PRODUCTS PTY. LTD.

DECISION OF A SUPERVISING EXAKINER OF PATENTS:

Background

Daniel Charles Underwood (Underwood) lodged application No. 567093 on 4 May, 1982. The Office examined the application and notified acceptance thereof in the Official Journal of Patents of 12 November, 1987. On 12 February, 1988, Toby Construction Products Pty. Ltd. (Toby) lodged Notice of opposition under section 59. Pursuant to regulation 55, evidence-in-support became due for service by 12 May, 1988.

On 12 May, 1988 Toby lodged an application for extension of the time in which to serve evidence-in-support to 12 August, 1988; the delegate of the Commissioner allowed the extension but Toby served only part of its evidence-in-support within the time so extended. On 12 August, 1988 Toby requested a further extension to 12 October, 1988. Underwood's attorneys objected to this request and the matter was set down for hearing in Sydney on 13 October, 1988, as the attorney for Toby had not been available any earlier. At the hearing Mr. F. Schilling, patent attorney, of F.B. Rice & Co. represented Toby. Underwood's attorneys did not appear, but instead relied on written submissions lodged some time before the hearing.

Application

In its application for extension, Toby made the following statement:

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

Pursuit of declaratory evidence was being undertaken by Donald Thomas, a technical assistant of F.B. Rice & Co., and he had conducted an interview with Peter Allen, a structural and civil engineer of consulting engineers Mateffy Perl Nagy Pty. Limited. Prior to preparation of a statutory declaration by Mr. Allen, Donald Thomas took leave from F.B. Rice & Co., on 4 July 1988 after briefing Fred Schilling of F.B. Rice & Co., as to the progress of his investigations. Donald Thomas is still on leave. Due to the transference of responsibility for the preparation of the concluding part of the Evidence- in-Support further time is required to prepare and serve that evidence."

Submissions

In written submissions prepared by his attorneys, Underwood has made the following points:

• the reasons given to justify the extension in accordance with the principles set out in Vangedal-Nielsen v. Smith and Gelphen Nominees (1980) 33 ALR 144 do not do so, and merely reflect problems the attorneys for Toby might have in organising the leave of their staff;

• the opposition is not a serious one : Toby was aware of the application as early as 1 July, 1987 as evidenced by the fact that it lodged a section 57 application drawing the examiner's attention to one of its own brochures, and further, Toby cannot rely on the adage that they could not commence gathering evidence until they were aware of the form of accepted claims - this is because Toby had already decided by at least December 1987 to make a direct copy of one of the preferred embodiments knowing full well that once a patent was granted it would be infringing the omnibus claims independent of any amendment of the substantive claims;

• if Toby is granted an extension of time substantial hardship will result to Underwood in that it will delay the latter in seeking relief in respect of the infringement by the opponent (and others3; this will allow the opponent to continue distributing its product thereby damaging the applicant's business interests; also delay in granting of the patent will hamper licencing agreements contemplated by the applicant; in support, Underwood lodged a statutory declaration exhibiting a product currently being made and sold by Toby - that product is substantially identical to one of Underwood's preferred embodiments;

• the public interest would not be served by granting the extension because of the demonstrated abuse of the patent system by Toby, i.e. "... rather than attempt to avoid the patent the opponent elected to take a preferred embodiment of the invention" : it could not be in the public interest to condone such behaviour by assisting the opponent; further, refusal of the extension would settle the matter and this would be in the public interest;

• finally, rights would still be available to Toby as it would have the opportunity to sue for revocation in any ensuing infringement action.

At the hearing, Mr. Schilling responded to the above submissions by stating that there was a serious opposition, and to show that this was so he had served the remainder of the evidence-in-support on Underwood's attorneys by facsimile transmission on the preceding day, i.e. 12 October, which was the final day of the extension period currently being sought. Consequently, no further time would be required, and if I disallowed this extension, it would still be necessary for the Commissioner to consider the evidence-in-support before deciding whether to seal a patent or not. Mr. Schilling referred to the judgement of the High Court in Kaiser Aluminium & Chemical Corporation v. Reynolds Metals Co. (1969) 120 CLR 136 at page 143 -

"it is in the public interest that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on its merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though the failure may be."

He said that in the present case, there was no failure in procedure lamentable or otherwise, and as far as the Vangedal-Nielsen judgement (supra) was concerned, the Court also made the point that it was in the public interest that worthless patents should not be granted, this point being especially apposite in relation to the Underwood application. Thus, overall, the evidence-in-support has been served within 8 months of lodgement of the notice of opposition, a relatively short time in this class of action.

Mr Schilling did, however, concede that there had been delays caused largely by difficulty in dealing with the appropriate personnel in Toby, which company had, in the last 12 months, undergone extensive restructuring.

Decision

The law regarding this class of extension has been comprehensively reviewed by the Federal Court in Vangedal-Nielsen V. Smith and Gelphen Nominees (1980) 33 ALR 144 and in Lyons v. Registrar of Trade Marks 1 IPR 416; in addition there are many Office decisions dealing with such extensions, quite a few of which are published in the Butterworth Industrial Property Reports (IPR) and in the CCH publication, Australian Industrial & Intellectual Property (AIPC). This law can be stated simply as follows:

(i) The Commissioner, before allowing the extension, must be satisfied that the person seeking the extension has made out a proper case justifying the extension;

(ii) The Commissioner must consider not only the private interests of applicants for patents, and opponents, but also the public interest, by ensuring that invalid patents are not granted, and that proceedings are not unreasonably protracted.

The specific matters in this action to be considered within the framework of that law are:

• whether Toby is mounting a serious opposition;

• whether Underwood's rights will be prejudiced with respect to his contemplated licensing agreements, and his desire to seek relief in relation to the "infringement", if the extension is granted;

• whether Toby's rights will be prejudiced in relation to the "infringement" if the extension is not granted;

• would the public interest be better served by the grant or refusal of the invention.

On the question of serious opposition, Toby has gathered and served evidence which is prima facie relevant to the Underwood invention. Further, as the evidence of Underwood in this extension action clearly shows, Toby is manufacturing a device which corresponds to one of Underwood's preferred embodiments. Taking these two points together, Toby has good grounds to mount opposition; in addition, it first produced supporting evidence in May 1988, and has now completed the service of all its supporting evidence, I am satisfied, therefore, that the opposition is serious, in terms of the law.

The next two matters to consider concern the private interest, i.e. the rights of each of the parties to the action. There can, of course, be no infringement unless there is a valid patent. As Toby is currently performing actions which would constitute infringement if the Underwood application proceeds to valid grant, it has at least the same interest in this aspect of the action as has Underwood, i.e. Underwood's argument that his rights would be prejudiced in relation to the "infringement" if the extension-is granted can be equally countered by the argument of Toby that its rights to manufacture the device will be prejudiced if a patent is sealed on the application in suit without it first being tested by the Office in the light of the evidence-in-support. As to the question of the licensing arrangements contemplated by Underwood, I have been told no more than that this is so. What such arrangements might be or how Underwood's rights might be affected has not been explained. Consequently, I attach little weight to this question. In any case, coming to the final point, it is my view that the public interest would be better served - at least now that the evidence-in-support is to hand - if the parties were allowed to argue the merits of the application before the office in the light of that evidence. As Mr. Schilling rightly pointed out, the Commissioner would have to consider that evidence anyway (see Tate v. Haskins 53 CLR 594), as a matter of public interest, and that interest would be better served if the opponent were to be present to argue accordingly.

Taking account of all the above factors, it is my view that the application for extension is justified, and I allow the extension, In order to avoid further delay I notified both parties of this decision on Monday, 17 October - accordingly, the evidence-in-answer will be due for service by three months from that date. On the matter of costs, I find that Toby's action was somewhat unsatisfactory in that its application for extension made no reference to the restructuring of the Company and how this had contributed to the delay. However Underwood's representatives did not attend the hearing, and I am unable to award any costs on behalf of Underwood as the Official scale of costs has no provisions for such award in this class of action except in respect of attendance at the hearing.

(J L Roveta)
Supervising Examiner of Patents
3 NOV 1988
Attorneys for the Applicant: G.R. Cullen & Co. Attorneys for the Opponent : F.B. Rice & Co.