DYWIDAG-Systems International Pty Ltd v Jennmar Australia Pty Ltd - [2003] APO 36

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No 722243 in the name of DYWIDAG-Systems International Pty. Limited.

Title: Cable Bolt

Action: Application under Regulation 5.10(2) by Jennmar Australia Pty Ltd for an extension of time to serve evidence-in-reply, and an objection to the application by DYWIDAG-Systems International Pty. Limited

Decision: Issued 05 September 2003.
Abstract

DYWIDAG and Jennmar had been in negotiations to commercially resolve issues between the parties. Jennmar gave this as a reason for the delay in not serving evidence-in-reply after four previous extensions to serve evidence-in-reply. The reason for the delay provided in the application was not found to justify an extension of time, particularly as Jennmar provided other primary reasons for wanting an extension of time in its written submissions.
Given the length of the delay to date, public interest, and the interests of both parties were shown to be best served by expeditious disposal of the matters at hand.
Given the existence of a closely related petty patent, 738529, undergoing its own Section 28 matters, it was also in the public interest to have the present matter heard on its merits, despite concerns from the applicant that it may not have the opportunity to respond to any evidence which is not strictly in reply, yet considered as relevant.
Under the circumstances, a short Ferocem type extension was granted, allowing Jennmar seven days from the date of the hearing to serve any evidence-in-reply it had at hand.
It was proposed to issue a direction to have the opposition to an extension of term to the petty patent heard simultaneously with the substantive hearing for the present application, pending representations from either party concerning such a proposed direction.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 722243 by DYWIDAG-Systems International Pty. Limited and an application under Regulation 5.10(2) for an extension of time to serve evidence-in-reply of an opposition, by Jennmar Australia Pty Ltd

BACKGROUND

Patent application 722243 in the name of THE ANI CORPORATION LIMITED was filed 11 January 1999. The application was advertised accepted 27 July 2000, and the ownership of the application amended to DYWIDAG-Systems International Pty. Limited ("DYWIDAG") on 26 October 2001. Jennmar Australia Pty Ltd ("Jennmar") filed a notice of opposition on 26 October 2000 and completed service of its evidence-in-support on 16 August 2001 following two extensions. On 16 April 2002 DYWIDAG completed its evidence-in-answer, also after two extensions.
Evidence-in-reply was consequently due on 16 July 2002. However, Jennmar applied for, and received four extensions of time prior to this last application (requesting an extension of time from 16 July 2003 to 16 October 2003). It should also be noted that a hearing was set down for 7 November 2002 to hear an opposition to the second application for an extension of time. The opposition to this particular extension of time was withdrawn subsequent to five declarations being filed as part of the evidence-in-reply.
The present matter was heard in Canberra on 20 August 2003. DYWIDAG filed written submissions in support of its objection, and was represented by Mr Greg Gurr, patent attorney of Spruson & Ferguson by telephone, whilst Jennmar relied on written submissions lodged on 18 August 2003.
SUBMISSIONS
Both parties prior to the hearing provided written submissions, and I will refer to these where appropriate in the body of my decision.
The applicant also filed a declaration in the name of John Michael Afaras, dated 19 August 2003. Mr Afaras states he is a principal of the firm Sprusons:Solicitors, the solicitors that acted for DYWIDAG in relation to the negotiations which took place in an attempt to commercially resolve the opposition proceeding.
DECISION
The law on extensions of time
According to regulation 5.8(4), the time for serving evidence in reply is one month from the date of service of the evidence in answer or, if a notice of intention to serve evidence in reply is served within one month of the date of service of the evidence in answer, within three months of the date of service of the evidence in answer. This time may be extended under 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 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 subregulation (1) or grant an application under subregulation (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 own 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 ."
Thus 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 the circumstances.
Regarding the factors that must be considered in deciding whether or not the Commissioner should grant an extension of time, Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) 28 IPR 243 stated:
"The idea that such a broad discretion can validly be reduced by a decision-maker to an insistence upon 'imperative' compliance with particular requirements has repeatedly been rejected by the courts."
He concluded that:
"The determination of an application for an extension of time under reg. 5. 10(2) involves a balancing exercise, in which competing considerations must be taken into account. There are interests of the persons directly concerned in the application and opposition in question. There are also public interests, which are not necessarily ranged on the same side. They include the expeditious disposal of matters in the Patents Office, and questions of costs, of efficiency, and of insistence upon proper professional standards being maintained by those who deal with the office. But they also include, as Kitto J pointed out in Kaiser Aluminium & Chemical Corporation v The Reynolds Metal Co (1969) 120 CLR 136 at 143, ' 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 the merits, rather than it should be shut out in consequence of a failure of procedure, lamentable though the failure may be'. This proposition was cited by Bowen CJ in Vangedal-Nielsen v Smith (Commissioner of Patents) (1980) 33 ALR 144 (at 150), where he also set out some of the considerations involved upon an application for an extension of time."
These considerations were also raised in A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213 where Sackville J adopted the position that the decision-maker was required to give proper, realistic and genuine consideration to the public interest generally and specifically to the opposition proceeding being determined on its merits. In respect of this point, he stated:
"In order for the Commissioner or his delegate to give proper, genuine and realistic consideration to the aspect of public interest I have identified, it is necessary to consider the nature of the evidence the opponent seeks to adduce and the significance of that evidence for the opposition proceedings. I do not mean to suggest that the evidence has to be scrutinised in the same way as would occur at a hearing on the merits. But unless the delegate forms a view as to the issues addressed by the proposed evidence, and whether that evidence is likely to be important in the opposition proceedings, it is difficult to see how proper consideration can be given to the public interest in having such proceedings being determined on its merits."
The relevant principles developed in these decisions 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.
These principles were echoed in the more recent decision in National Starch & Chemical Company v Commissioner of Patents [2001] FCA 33. I will apply these general principles from the above cases to the present facts, recognising that I must not either grant the extension or refuse it without giving proper consideration to all, relevant circumstances.
It is clear that, as a prerequisite to any decision, the Commissioner must ensure that the other party has been notified, and that both parties have had the opportunity to make representations. An extension can then only be granted if the Commissioner is reasonably satisfied that it is appropriate.
RELEVANT CONSIDERATIONS
Explanation of the delay
The onus rests 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 extension. The circumstances in which, and the grounds upon which the application for extension of time was made are given as follows:
"There have been ongoing negotiations to commercially resolve this matter. After several draft settlement agreements, it has now only become apparent that the Applicant's understanding of the broad heads agreement on which settlement was to occur was fundamentally at odds with the Opponent's understanding of these heads of agreement. This has stemmed from omissions in the Applicant's communications with the Opponent in early April 2003, however, the Applicant has only this week confirmed that it refused to negotiate further without acceptance of their understanding of the initial heads of agreement. Given the considerable delay caused by this understanding, additional time is needed for the preparation of the evidence-in-reply."
I note there have been recent decisions in which the explanation of parties undertaking negotiations during the opposition process, was deemed to justify an extension of time, most noticeably Race Lotto v AWA Limited 1998 APO 78 and Eli Lilly and Company v Amgen Inc. 2000 APO 16. However before deciding whether or not the need for the extension has been justified with sufficient details and reasoning by Jennmar in its explanation, I am drawn to the following submissions.
The opponent submits in its written submissions that:
"The primary reason for the application for Extension of Time to effectively finalise Evidence-in-Reply, is to give the opponent an opportunity to clarify its case in the context of the fresh issues raised by the Evidence-in-Response which have direct relevance to the present opposition."
I note the "Evidence-in-Response" referred to by the opponent, relates to Petty Patent 738529, a related patent in which an extension of term is being sought and opposed. I shall refer to this matter below in greater detail.
In respect of the explanation provided, the applicant directed me to the declaration made by John Michael Afaras. In reviewing this declaration, I find most relevant the following passages:
"…By letter forwarded by facsimile transmission on 3 June 2003, inter alia, Sprusons:Solicitors identified clearly DYWIDAG-Systems' position in relation to that critical issue, (the basis for settlement, my addition) amongst other more minor issues…
In the circumstances, Jennmar Australia Pty Ltd was well aware by no later than 3 June 2003 of DYWIDAG-Systems' position in relation to the basis for settlement of the opposition. However it is asserted in the Application for an Extension of Time (Annexure "A" hereto) that considerable delay was caused by a "misunderstanding" in relation to the broad heads of agreement on which settlement was to occur. In DYWIDAG-Systems' view, there was no misunderstanding based on the correspondence and to the extent there may have been, it was made abundantly clear to Jennmar Australia Pty Limited by no later than 3 June 2003 (the date of the Sprusons:Solicitors' letter), the only basis upon which DYWIDAG-Systems was prepared to commercially resolve the matter."
Subsequent to this, the applicant asserted that the opponent's claim in its explanation of the delay that "the Applicant has only this week confirmed that it refused to negotiate further without acceptance of their understanding of the initial heads of agreement" was clearly not true. DYWIDAG further submitted there was no explanation provided as to why the evidence-in -reply was not able to be completed between 3 June 2003 and 16 July 2003 (the deadline for the previous extension).
In the absence of any evidence to the contrary, I accept Mr Afaras' declaration, and accept that the opponent knew of the applicant's refusal to continue negotiations based on the broad heads of agreement as of 3 June 2003.
In my view, the explanation of the delay, and the circumstances in which an extension is sought, do not justify an extension of time in themselves. The opponent themselves admit the primary reason for the application is not a delay caused by negotiations, rather an opportunity to clarify its case in the context of evidence raised in a related opposition. Such reasoning is not present in the application, nor is there any explanation as to why the evidence could not have been completed between 3 June 2003 and 16 July 2003.
Be that as it may, it is still for me to decide whether or not an extension of time is appropriate in all the circumstances relevant to this case.
The public interest
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 expeditious manner as set out in Ferocem (supra).
Expeditious disposal
I will first consider the issue of expeditious disposal of the opposition. As noted by the applicant, the opposition proceedings have been underway for nearly three years. Allowing this extension would mean the delays in evidence-in-reply taking 15 months. This cannot, in my view be seen as expeditious disposal.
Petty Patent 738529
The opponent, in its written submissions forwarded the view that for expeditious disposal, reason of costs, and efficiency, both the present application and the petty patent should be heard together.
However, to my mind the opponent's behaviour has not reflected this view. The applicant completed Evidence-in-Response for the petty patent on 20 Feb 2003. During negotiations between the parties and the Patent Office to determine a hearing date for the petty patent, no correspondence was received from the opponent requesting the matters be unified, despite present submissions that it intends to do so. Furthermore these negotiations to determine a suitable hearing date occurred in early August 2003, that is after the application for an extension of time was filed. The hearing was agreed for 16 September 2003 for the petty patent. It is unclear how upon agreeing to a hearing date of 16 September 2003, subsequent to requesting an extension until 16 Oct 2003, this reflects the opponent's desire to have the matters heard as one and expeditiously, as was submitted.
Despite this, in reviewing both the petty patent and the present application, it is indeed clear that they are closely related. As such I do believe it is in the public interest to have both matters heard simultaneously and as quickly as possible in order to establish the validity or otherwise of the present application (and petty patent).
Consideration of opposition on its merits
Turning to the need for an opposition to be considered on its merits. I note that in informing myself of the nature of the evidence the opponent seeks to adduce and the significance of that evidence, (as per Goninan (supra)), some evidence-in-reply has already been served. In particular, subsequent to the threat of an opposition to its second application for an extension of time, Jennmar served five declarations forming part of the evidence-in-reply.
In this consideration, DYWIDAG made the following relevant submission:
"As noted above, the Evidence-in-Reply must strictly be in rebuttal of the evidence-in-answer. In the Opponent's first application for extension of time a clear indication was made that the Evidence-in-Reply would be limited to statutory declarations from the two declarants who prepared the initial Evidence-in-Support …The Opponent has provided no indication as to the nature of any further Evidence-in-Reply to be served, apart from potential further Evidence-in-Reply responsive to evidence served back in February 2003 in relation to unrelated petty patent proceedings. As such evidence would not be admissible, given that it would not be strictly in reply, then there would be no adverse effect on the public interest, in so far as considering the Opposition on its merits would be concerned, by refusing the application for extension of time."
These is no evidence before me to suggest that whilst Jennmar is potentially tailoring its evidence-in-reply to address issues raised in the evidence-in-response to the petty patent, that this evidence does not similarly address issues raised by the evidence-in-answer served in the present case. Given that the two cases have material in common, it is not unlikely that the same issues will occur in both and be addressed in both proceedings.
In addressing DYWIDAG 's assertions that the evidence in response may not strictly be in reply, and therefore inadmissible, I am guided by the following comments made by the delegate in Snap-On Technologies v Beissbarth GmbH [2000] APO 53 (3 August 2000):
"…From the decision in RGC v Wimmera [1999] APO 79 (16 December 1999) I note that the Commissioner has an inquisitorial role in an opposition. While she must allow the parties natural justice to reply to evidence, she is not bound by the rules of evidence. Reflective of this, the Commissioner even has the power under regulation 5.11 to consider documents in an opposition that are not part of the evidence. In my view, the key question to consider is "how relevant is this material?" rather than 'is it strictly in reply?'."
I believe it is therefore incumbent upon the hearing officer at the substantive hearing to determine the relevance of the material. I would also point out that, if in fact the evidence is not admissible because it is not strictly in reply, the officer may choose hear the opponent on that evidence, and allow the applicant time to provide evidence in response thereto, in accordance with the rules of natural justice.

It is clearly in the public interest to have this matter heard on its merits, and have the validity or otherwise of this application established. This, in my opinion, outweighs the fact that the evidence to be forwarded may not be strictly in reply and potentially inadmissible.
Interest of the Parties
The applicant submitted that it was clearly in its interests to have the opposition proceedings dealt with expeditiously so as to provide the applicant with enforceable patent rights (assuming the substantive opposition is unsuccessful). Furthermore the applicant stated it is unable to commence any action to enforce its rights against any infringing party until a patent is granted.
I am inclined to agree that any further major delay in the opposition is clearly detrimental to the applicant's interests in this regard.
The applicant further submitted that the granting of an extension would not be in its interests, as, if the evidence served were not strictly in reply, and allowed by the Commissioner, the applicant would not be allowed the opportunity to respond to such new evidence. It continued by stating its position would also be prejudiced with respect to the petty patent, as the allowance of an extension for evidence-in-reply would effectively provide the opponent a reply to the evidence in response, to which it is not entitled.
As indicated early, in respect of the evidence not being strictly in reply, given the rules of natural justice, I do not necessarily agree with the applicant's position that it would not be allowed to respond to any new evidence as such. This view is similarly applicable to the proceedings of the petty patent.
The opponent submitted an extension is clearly in its interest, and part of its strategy to fast track both oppositions to a simultaneous hearing without compromising the opportunity for a complete reply to all the evidence.
I also note, the opponent has served several declarations as part of its evidence-in-reply, and as such would not be shut out entirely, if I were not to allow the extension. Consequently I believe the interests of the applicant carry more weight, and that it would be of greater detriment to them if the extension of time were allowed to run its full course.
CONCLUSION
In reviewing all of the relevant circumstances brought to my attention, I find the following:
I do not believe the explanation of the delay and the circumstances in which an extension is sought, justify an extension of time in themselves. There is credible evidence to suggest the opponent knew at least six weeks prior to the application for an extension of time that negotiations would no longer continue. In addition, Jennmar themselves admitted any delay caused by negotiations was not the primary reason for filing the application for an extension of time.
It is in the public interest to have this matter heard on its merits. Given there are two related cases, there exists the potential for uncertainty with respect to the validity of both the present application and the petty patent if the matter were not heard on its merits. I believe this outweighs the potential for the evidence in reply to be inadmissible. Given the delays to date, it is clearly also in the public interest to have this matter, along with the petty patent, heard as rapidly as possible.
Whilst not allowing the extension would not entirely shut out the opponent, it would not allow the opposition to proceed wholly on its merits. However, it is in the applicant's interest for no more major delays in proceedings to occur, and I note the opponent also wishes for matters to proceed rapidly.
In weighing up all of these interests, I do not believe the opponent has met its obligations in making out a proper case justifying the extension as it is required to do. However, I believe a Ferocem type extension of time is the most appropriate in the circumstances. Therefore I grant Jennmar an extension of time of seven days from the date of this decision to file any evidence in reply that they may have immediately to hand.
Furthermore, as both parties expressed a wish to have the matter proceed expeditiously, I believe the interests of both parties, as well as the public, may best be served by having the matters in the current application and petty patent 738529 held simultaneously, and as soon as practicable.
Therefore, I propose to direct a simultaneous hearing of the opposition to an extension of term to petty patent 738529 and the substantive matters relating to the present application at the earliest possible opportunity. 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
The power to award cost is based on Section 210 and regulation 22.8. The normal practice is that costs should follow the event. I see no good reason to vary from the norm. I have found that the opponent has failed to make a proper case justifying the extension of time sought in its application. Therefore I award costs against Jennmar Australia Pty Ltd.
Lars Koch
Delegate of the Commissioner of Patents
05 September 2003
Patent attorneys for the applicant : Spruson & Ferguson, Sydney
Patent attorneys for the opponent : Baldwin Shelston Waters, Sydney