DOMTAR Inc v WESTVACO Corporation

[1997] APO 50

official notice

decision of a delegate of the commissioner of patents

Application  :          No. 653587 in the name of DOMTAR INC

Title:          Recycling Waste Cellulosic Material

Action:          Opposition under section 59 (Patents Act 1990) by WESTVACO CORPORATION.  Direction (regulation 5.10(1)(a)); application to serve further evidence (regulation 5.10(4); request to amend statement of grounds and particulars (regulation 5.9).

Decision:          Issued            .

Abstract

Direction to admit inadvertently omitted exhibits into evidence in answer.  Application to lodge further evidence refused as not being appropriate in all the circumstances; the evidence merely reflects technical differences between the parties, and would only serve to further prolong resolution of the opposition.  Request to amend the statement of grounds and particulars is a repeat of a previous request, heard and refused; estoppel considered.  Refused again as the nature and timing of the amendment would inflict undue prejudice on the applicant. Submissions sought on costs.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Patent Application No. 653587 by DOMTAR INC and opposition thereto by WESTVACO CORPORATION.

background

Patent application 653587 (the application) was filed under the provisions of the PCT on 28 February 1992 by DOMTAR INC (the applicant), and was advertised accepted on 6 October 1994.

A notice of opposition was lodged on 6 January 1995 by WESTVACO CORPORATION (the opponent), followed on 6 April 1995 by a statement of grounds and particulars.

Following one extension of time, the evidence in support was completed on 4 August 1995.

A request to amend the statement of grounds and particulars was made on 4 August 1995, and was allowed unopposed on 4 September 1995; hereafter referred to as ‘the statement’.

After extensions of time totalling 6 months, the evidence in answer was completed on 6 May 1996, and after extensions totalling 4 months, the evidence in reply was completed on 22 November 1996.

Another request (‘the first’ hereafter) to amend the statement was lodged on 9 October 1996.  This one was opposed, and following a hearing, a decision (‘the first’) was issued on 8 April 1997, which refused the request.  This has some relevance to the present proceedings, and I will refer to it later.

Also relevant to the present decision are the following events.

An application was made on 4 March 1997 by the applicant to lodge further evidence.  The opponent objected to this application, but made a conditional offer to withdraw the objection, which the applicant rejected on 1 May 1997.

On 11 April 1997 the applicant filed certain exhibits which had been inadvertently omitted from the evidence in answer.  It transpired that these exhibits had also been served on the opponent on the same day.  The parties were advised on 22 April 1997 of a direction the Commissioner proposed to make regarding these exhibits, and on 6 May 1997 the opponent appears to have requested a hearing concerning the terms of the proposed direction.  However there seems to be some doubt about this; it may have been the mentioned further evidence which was being referred to.

Another request to amend the statement was made on 14 May 1997, and submissions in response received from the applicant on 30 May 1997.  These submissions have been taken to represent an objection to the requested amendment.

On 1 July 1997 the parties were sent a letter in which they were advised of the issues which in the Commissioner’s view required a decision, based on the material on file. These were:

(i) the Commissioner’s proposed direction regarding the exhibits omitted from the evidence in answer;

(ii) the applicant’s request to file further evidence, dated 4 March 1997; and

(iii) the request to amend the statement, dated 14 May 1997.

A hearing was set for Canberra on 20 August 1997, with the parties appearing by telephone.  The applicant was represented by Mr D Henshaw, patent attorney, of Davies Collison Cave, and the opponent  by Mr A Ward, patent attorney, of Griffith Hack.

SUBMISSIONS

The submissions made, together with relevant details of the various issues, are given under the appropriate headings of my decision, as follows.

DECISION

Direction

Included in the applicant’s evidence in answer is a declaration by Xuan T Nguyen, who is the inventor of the disputed invention.  For reasons not actually explained, the two exhibits associated with this declaration (XN-1 and XN-2) were not included in the evidence as served or lodged, though of course they were identified and referred to in the declaration.

At the hearing it appeared that there may have been no actual intention to object to the Commissioner’s proposed direction of 22 April, and in any event, the exhibits having been served, the proposed direction is superseded.

It was apparent at the hearing that Mr Ward for the opponent was not greatly concerned about the inclusion of these exhibits, pointing out that one of them was a patent owned by the opponent, and that he had advised the applicant of their omission, and also that in his opinion they were not very relevant.

He did however, I think, attempt to bundle the evidence (ie the formally requested further evidence and these exhibits), and suggest an association between the allowance of the evidence and the success or otherwise of the request to amend the statement.  However I do not think that I can proceed in that manner; it seems to me that there are three issues to be decided, which at this stage must be decided separately and on their merits.

Irrespective of how relevant the exhibits might be, and I have formed no opinion on this, it appears desirable for them to be admitted so as to complete the applicant’s answer to the opposition.  I raised the question at the hearing of allowing the opponent a suitable time to respond, should the exhibits be admitted.  The parties agreed that this was the only real issue, and that one month would be an appropriate time.

Accordingly, I make the following direction under regulation 5.10(1)(a) (“The Commissioner may, on his or her own motion....give a direction that is not inconsistent with the Act or these Regulations for the conduct of proceedings to which this Chapter applies;....”).

The exhibits XN-1 (EP 566284) and XN-2 (“An evaluation of Asian old corrugated containers”, Mayovsky, Vol 78 No 5 Tappi Journal), served and filed 11 April 1997, are to be admitted into the evidence in answer.  The opponent has 1 month from the date of this decision in which to make written submissions or serve evidence in reply to these exhibits.

Further evidence

On 4 March 1997 the applicant applied under regulation 5.10(4) to serve further evidence.  The relevant parts of the regulations are as follows.

“(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....grant an application under subregulation....(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

....

(c)....(i) gives the parties a reasonable opportunity to make representations concerning the application....and
(ii) is reasonably satisfied that....the serving of the further evidence is appropriate in all the circumstances.”

It is clear that the opponent has been notified of the application and that both parties have had the opportunity, which they have taken, to make representations concerning it.  As I have mentioned earlier, one of the opponent’s submissions was that it was prepared to withdraw its objection to the further evidence if its request to amend the statement was granted.  But that was something for the parties to settle between themselves, and they were unable to do so.

Consequently the only issue for me here is subregulation (5)(c)(ii), ie is service of the further evidence “appropriate in all the circumstances”?

The further evidence is a single 7 page declaration, without any exhibits, made by the (or one of the) applicant’s principal declarants, JRG Bryce.  In this declaration Dr Bryce comments on statements made by a principal declarant of the opponent, HG Higgins, in his declaration lodged as part of the evidence in reply.  Dr Bryce’s comments are technical disagreements and clarifications, and complaints that some of Dr Higgins’ reply was not strictly evidence in reply but new evidence.  Dr Higgins in his turn was commenting (inter alia) on statements made by Dr Bryce in the evidence in answer, who in turn again was commenting on statements made by Dr Higgins in the evidence in support.

Consequently although, as Mr Henshaw submitted, the further evidence is not large, it represents sundry and ongoing disagreements between the parties’ technical experts, which seemingly could continue indefinitely if permitted.  Indeed both parties have recognised the near certainty, if this evidence is allowed, of the provision of another significant period for the opponent to respond in its turn.  I also note that more than 3 months elapsed between completion of the evidence in reply and the application to serve this further evidence; even allowing the need to refer the matter overseas, this seems excessive.

In my opinion it is unlikely that there is anything in the applicant’s further evidence which would prove to be critical to its case, but in any event, the issues of technical interpretations and alleged evidence not strictly in reply, which are the subject matter of the further evidence, are all issues which can be considered at the substantive opposition.  I do not consider in these circumstances that allowance of the further evidence will produce a more correct eventual outcome, nor is allowance necessary in order to provide justice to the parties.

On the other hand, allowance of the further evidence will almost certainly result in a significant further protraction of an already protracted opposition.

In conclusion, I am not satisfied that serving of the further evidence is appropriate in all the circumstances, as I have described them, and I refuse the application.

Request to amend the statement

The amendment

The opponent seeks to add to the original grounds (sections 18(1)(b), 40(2) and (3)), the new ground of section 18(1)(a). Namely, that the invention claimed is not a manner of manufacture within the meaning of section 6 of the Statute of Monopolies.

The particulars would be amended by adding the following:

“PARTICULARS - S.18(1)(a)
The invention as defined in claims 1 to 47 of Australian Patent Application No. 653587 is not a patentable invention because it does not comply with Section 18(1)(a) of the Patents Act 1990.

The invention so far as claimed in any claim of Australian Patent Application 653587 is not a manner of new manufacture or not a manner of manufacture within the meaning of Section 6 of the Statute of Monopolies having regard to the disclosure of any one of the references 1 to 21 above when combined with the common general knowledge in Australia at the earliest priority date of each claim.”

The “references of paragraphs 1 to 21” mentioned are actually the particulars already relied upon to support the ground of section 18(1)(b).  The opponent has undertaken not to rely on any added particulars to support the new ground.

Now, this proposed amendment is actually identical to that proposed, opposed, heard, and refused in the decision of the Commissioner issued 8 April 1997.

Though not mentioned by the parties, this seems to me to raise the question of the doctrine of cause of issue estoppel.  That is, does this doctrine, which if applicable would estop the Commissioner from reconsidering something already decided, apply to decisions of the Commissioner, and if it does, does it apply to the circumstances of this case?

In the case Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353, Gibbs J said at 543:

“In many of the authorities that discuss this form of estoppel, it is said that the estoppel is brought about by a judicial decision, pronounced by a judicial tribunal. .....The use of the phrase “judicial tribunal” in this context is convenient as indicating that an estoppel of this kind does not result from a mere administrative decision, but the question of whether such an estoppel is raised is not answered by inquiring to what extent the tribunal exercises judicial functions, or whether its status is judicial or administrative......The doctrine of estoppel extends to the decisions of any tribunal which has jurisdiction to decide finally a question arising between parties, even if it is not called a court, and its jurisdiction is derived from statute or from the submission of the parties, and it only has temporary authority to decide a matter ad hoc....”

This appears, in general terms, to encompass decisions of the Commissioner.

The application of the doctrine to a tribunal was considered in Comcare v Grimes 121 ALR 485. This was an appeal to the Federal Court from a decision of the AAT to consider an application for an extension of time, where a previous application had been refused, but with “liberty to apply” - this latter apparently as the applicant (though represented) was absent from the hearing.

The Court dismissed the appeal, noting that the AAT is master of its own proceedings, and that as the cases show that the closely related doctrine of issue estoppel does not apply to AAT decisions, then it would be “curious” if cause of action estoppel did.  Further, the Court said, even if cause of action estopel did apply to AAT decisions, it could not apply to the facts of that case.  First:

“....a cause of action is constituted by a series of facts recognised in law as conferring on a particular person an entitlement to relief, as a matter of right, not discretion.” (at 492).

Under the AAT Act, an extension of time is at the discretion of the Tribunal.

Second, the Court said, it could not be said that the earlier decision was a final determination.  This follows from the wording of the decision (“liberty to apply”) and the wording of the relevant part of the Act, which imposes no express limitation on the number of applications for extension, or the circumstances under which they are made.

In deciding that I have the power to consider the request to amend, and in considering it, I have taken into account the following matters.

· The present situation is different to that in Ex Parte Mole Engineering Pty Ltd (1981) 35 ALR 119, in which the High Court determined that the Commissioner had no power to withdraw and re-hear a so-called interim decision, issued in the course of substantive opposition proceedings. In this case, among other differences, there is an application to amend which is separate from and independent of the first one, albeit for the same amendment.

· While I am not sure that the Commissioner is empowered by the legislation to be “master of (his or her) own procedures” (Comcare v Grimes), which would tend to exclude the doctrine of cause of action estoppel, it is clear from chapter 5 of the regulations and the relevant parts of regulation 22, that the conduct of proceedings is largely under the control of the Commissioner, subject mainly to natural justice rules.

· However even if cause of action estoppel can apply to decisions of the Commissioner, or to some decisions or in some circumstances, in my opinion it is not clear that it applies to the circumstances here, for the following reasons.

· The relevant regulation places no express restriction on the number of requests to amend which may be made, nor to their content, circumstances , or timing.  Therefore there is no express compulsion on the Commissioner to regard the first decision as ‘final’, even if all the facts are the same.

· In any case the facts are not the same.  As I explain later, there is a factor to be considered, potentially relevant to the decision, which was not recognised at the time of the first decision.

· Similarly to the extension of time application in Comcare v Grimes, a request to amend a statement does not appear to establish a judicial cause of action.  The legislation does not specify what matters must be established by the opponent in order to gain the amendment; it is determined by the exercise of a discretionary power.

· I have also noted the comments by Sackville J in A Goninan & Co v Commissioner of Patents and Another 38 IPR 213 regarding the obligation of the Commissioner to consider applications on their merits.

·Finally, while the applicant has obviously objected to the request to amend, it has not objected to the Commissioner considering the request.

This proceeding is of course not a formal a review of the first decision, nor could it be.  Neither am I bound to follow it, though I have read the decision and I will refer to it on occasion.

Regulation 5.9

The relevant parts of the regulations are as follows.

“5.9(1) Subject to subregulation (2), the Commissioner, on the written request of an opponent and subject to such terms as the Commissioner may specify:
(a) if the Commissioner reasonably believes that an amendment of a statement....corrects an error or omission by an opponent or by his or her agent - may amend the grounds of opposition set out in the statement;

....

(2) The Commissioner must not allow an amendment requested under subregulation (1), if:

....

(e) he or she reasonably believes that a person will be unduly prejudiced by the amendment.”

Therefore the questions are, has there been an error or omission by the opponent, and if there has, would a person be unduly prejudiced by the amendment if allowed?

Error or omission

In the first decision the delegate found that an error or omission of the relevant kind had occurred. The actual error was the decision not to include the ground of section 18(1)(a) in the statement of grounds and particulars as originally filed, and the source of the error was an understanding of the law prior to NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd 26 IPR 513 and Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1996) AIPC 91-226. These judgements were handed down after the statement of grounds and particulars was filed.

This issue does not appear to have been disputed by the applicant, and no new submissions were made during the present proceedings.  I agree with the conclusion of the first delegate, for the reasons given in that decision.

Undue prejudice

This issue has been considered in a number of office decisions, particularly including Diamond Scientific v CSL Ltd (1992) AIPC 90-227, Abundant Lawn Grass Industries v Crangrove (1993) AIPC 90-973, and Porter v Arbortech Investments (1995) 31 IPR 169. Relevant conclusions to be drawn from these decisions include the following:

(i) any amendment that changes the case the applicant has to answer is potentially prejudicial to the applicant;

(ii) an amendment of particulars will potentially prejudice a person if the amendment is detrimental or disadvantageous to the person, and the circumstances surrounding the amendment cause the degree of detriment or disadvantage to be unwarranted, excessive, improper, inappropriate or unjustified;

(iii) where the amendment could be said to prejudice the applicant, and the circumstances are such that there is a reasonable inference that the prejudice is undue, such as by the timing or nature of the amendment, then there is a reasonable basis for the Commissioner to conclude that the prejudice is prima facie undue, and the onus is on the opponent to refute this;

(iv) notwithstanding the above, the public interest may outweigh prejudice to the applicant when it is clear that the amendment sought is critically relevant to the opposition.

The primary new argument made by the opponent regarding why the amendment should be allowed this time, goes to the applicant seeking to lodge further evidence.  That application was made after the date of the first hearing and prior to the issuance of the decision.  It was submitted that the principal reason for the delegate’s refusal of the amendment was the protraction of the case which would be involved, but the applicant by its own action in filing further evidence was already protracting the case.  Had the delegate been aware of this, it was argued, a different decision may have resulted, and in any event it should be considered now.

It seems to me that in all the circumstances of this case, allowing the amendment would cause undue prejudice to the applicant, and for that matter unwarranted disadvantage to the public.  The reasons for my opinion are as follows.

· The amendment sought is a major one; it is not just a change to the particulars as in many of the decided cases, but a whole new ground, supported by 21 particulars.  It was argued by the opponent that since these particulars are the same as those relied on for the section 18(1)(b) ground, then this should not place a great burden on the applicant, as it would just be a matter of arguing it at the substantive opposition.  I find this difficult to accept; a different issue is involved, and further, serious arguments on manner of manufacture are almost always difficult.

· Also, I think that if the amendment was allowed, then the applicant would certainly have to be allowed a time in which to respond, probably at least several months, further delaying resolution of the opposition.  I note that it is now nearly 3 years since the application was accepted.

· Regarding the effect of the applicant’s filing of further evidence, in my opinion it is not an irrelevant consideration in this decision, but it is very far from being conclusive of it.  The opponent’s argument seems to be that, at least as far as protraction of the case is concerned, the applicant cannot complain of detriment when they are protracting the case themselves by applying to file further evidence.  However I think that the likely duration of the protraction could be very different in each case.  The further evidence raises some technical matters, which if allowed, would suggest only a relatively short period of time for the opponent’s experts to respond.  The amendment, in contrast, raises more complex issues suggesting a substantially longer time to traverse.  Also, protraction of the case is only one of the matters causing detriment.

In any event, as in fact I have refused the filing of the further evidence, there can be no protraction  due to that action.

· An important reason for finding undue prejudice in this case is the lateness during the opposition proceedings that the request to amend was made, ie more than 5 months after the evidence in reply was completed.  In my opinion the extreme lateness of the request (after “all the normal evidentiary stages have been completed” - Stevelift Pty Ltd v Formark Pty Ltd (1994) 29 IPR 154) coupled with the nature of the amendment, show prima facie undue prejudice . The onus is then on the opponent to disprove this, and I consider that they have not done so, nor really attempted to do so, apart from promising no extra particulars.

· In the first decision the delegate considered that the particulars were insufficiently particularised, and referred to Mining Technologies, Inc v Broken Hill Proprietary Co Ltd (unreported Office decision on 644257 dated 21 April 1995).  What constitutes adequate particularisation will depend on the circumstances of each case of course, but I think that the failure to supply any explanation of the relevance of any of the 21 particulars to the new ground must at least contribute to causing undue prejudice.

· This amendment has previously been requested, heard, and refused.  Even the first request was made after completion of the evidence in answer, for reasons given in the first decision and generally accepted by the delegate then.  But prejudice to the applicant is another issue, and as has been said before, the general expectation, implied by the legislation, is that the applicant is entitled to know the case it has to answer by the completion of the evidence in support, or at any rate, before the completion of the evidence in answer.  If, as was found, the applicant would have been unduly prejudiced by allowing the amendment in the first instance, then that would be the situation now as well.

· The opponent argued strongly that the Commissioner should not knowingly grant an invalid patent, relying on the well-known comments of Kitto J in Kaiser Aluminium & Chemical Corp v Renolds Metal Co (1969) 120 CLR 136. In the first decision the delegate expressed the view that the opponent had the onus to satisfy the Commissioner that the patent was likely to be invalid on the new ground. This has been disputed by the opponent, who has requested some authority for that view. Be that as it may, it seems to me that it would have at least been prudent for the opponent, the second time round, to have made some response to the first delegate’s concerns, but this was not done.

Nevertheless I have briefly considered the invention claimed, in respect of the proposed new ground; I have not considered the evidence, though of course the opponent’s concern is that the opposition grounds of novelty and obviousness might fail, leaving only manner of manufacture.

The invention is a process and system for recycling waste cellulosic material such as corrugated paperboard.  The process claims in particular are characterised in large part by numerical process parameters, and I accept that such claims may be difficult to oppose successfully, particularly on the ground of novelty.

However it is not apparent to me that the new ground would clearly be determinative of the opposition, and neither could I form such a view without going into the substance of the evidence on file, which it would be inappropriate for me to do in these present proceedings.  This is not a case, as in Porter v Arbortech (supra), where the consideration was whether a proposed new particular clearly anticipated the invention.

Consequently it has not been established that the undue prejudice to the applicant is outweighed by the public interest.

I conclude that the amendment should be refused as causing undue prejudice to the applicant.  Of course excluding this ground from argument at the substantive opposition does not prevent the Commissioner from considering it at that time by his own volition.

CONCLUSION

I have directed that the exhibits XN-1 and XN-2 be admitted into the evidence in answer, and I have allowed the opponent 1 month from the date of this decision in which to respond to them.  I have refused the application by the applicant to lodge further evidence, and I have refused the request by the opponent to amend the statement.

COSTS

In proceedings before the Commissioner costs normally follow the event.  It is clear that the major issue of dispute between the parties is the opponent’s request to amend the statement, which I have refused.  In recognition of this, and the fact that this is the second unsuccessful hearing on the same amendment, I award costs wholly against the opponent.

RG Tolhurst
Delegate of the Commissioner of Patents

Patent attorneys for the applicant  :  Griffith Hack, Melbourne

Patent attorneys for the opponent   :  Davies Collison Cave, Sydney