ERG R&D Pty Ltd v Octopus Cards Limited
[2006] APO 21
•5 June 2006
ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 2001272201 in the name of ERG R&D Pty Ltd
Title: A Card System
Action: Section 32 and section 36 requests by Octopus Cards Limited and an extension of time to file evidence in response by ERG R&D Pty Ltd.
Decision: Issued 15 June 2006 .
Abstract
Extension granted - The evidence proposed to be adduced is likely to be highly relevant to the determination of the section 32 and 36 requests and likely to lead to a more just and correct determination of the entitlement dispute which is in the applicant’s and public interest. While the applicant has been slow in preparing their evidence, they were always intending to defend their entitlement and the delays to date have been the result of poor case management rather than a lack of diligence. The evidence is close to finalisation and the applicant is also taking appropriate steps to complete their evidence within a reasonable time frame.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re: Patent Application No. 2001272201 by ERG R&D Pty Ltd, Section 32 and section 36 requests by Octopus Cards Limited and a request for an extension of time to file evidence in response by ERG R&D Pty Ltd.
BACKGROUND
Patent application 20012722201 was filed on 13 July 2001 in the name of ERG R& D Pty Ltd (“ERG”) under the provisions of the PCT claiming priority from an Australian provisional application PQ8776 filed on 13 July 2000. The PCT application entered the National Phase in Australia on 11 December 2002 and requested examination on 5 December 2003. On 29 March 2005, section 32 and 26 requests were filed by Octopus Cards Limited (“OCL”). Their evidence in support was served on 19 September 2005.
As per the Commissioner’s letter of 22 September 2005, the applicant initially had until 22 November 2005 to complete their evidence in response. This time period was extended after two extension requests (on 22 November 2005 and 31 January 2006) were allowed (the second after considering adverse comments from the section 32/36 requestor). Evidence from one of the inventors (Glyn Gregory Horne Denison) was filed on 31 January 2006. The applicant filed a third extension request on 6 April 2006 for 3 months. The section 32/36 requestor objected to this extension and the matter was set for hearing in Canberra on 24 May 2006. The patent applicant was represented by Richard McCormack of counsel instructed by David Webber, patent attorney of Davies Collison Cave, Melbourne (only the former appearing at the hearing) and the section 32/36 requestor was represented by Stephen Burley of counsel instructed by Robert Miller, patent attorney of Spruson & Ferguson, Sydney (who both appeared at the hearing).
SECTION 32 REQUEST
The facts outlined by OCL supporting their section 32 request are as follows:
ØIn and before February 1993, MTR Corporation Limited of Hong Kong (“MTRC”) developed a document known as “M&P/TS/CSC/1 Contactless Smart Card Specification, Draft Issue 1: 6th February 1993” (the “initial specification”) describing a proposed contactless smart card system (“CSC system”) for the Hong Kong mass transit railway. The subject matter contained within the Initial Specification was conceived and contributed principally by Mr Brian Chambers, an employee of MTRC and technical Manager of the CSC system Project (a copy of the Initial Specification was annexed to the request).
ØIn or about February 1993, MTRC issued the Initial Specification (or a document substantially in the form of the Initial Specification) to smart card industry participants, including ERG Australia Limited (now known as ERG Limited), for industry comment as a preliminary step before the issue of a Request for Tender for the proposed CSC System (the “Tender”). ERG R&D Pty Limited, the applicant of the Application is part of the ERG Limited group of companies.
ØIn or about May 1993, MTRC issued the Tender. The Tender documents included a version of the Initial Specification.
ØERG Australia responded to the Tender, and was subsequently contracted in June 1994 as “Contractor” for implementation of the CSC system under Contract 901-93(E) between ERG Australia Limited and Creative Star Limited (the “Contract”). At the time the Contract was entered into, MTRC had transferred to Creative Star Limited all rights in the Contract as “Employer”. In 2 January 2002, Creative Star Limited changed its name to Octopus Cards Limited.
ØThe Contract included as Parts VII to X a “Particular Specification” which included substantially all material in the Initial Specification together with certain other material developed by MTRC and its employees.
ØIn or about February 1994 Brian Chambers prepared and wrote the technical paper which also described the CSC System and delivered and published that paper at a UITP Conference in Bologna, Italy on 9-10 February 1994 (the “Paper” which was also annexed to the section 32 request).
ØOCL is the owner of all versions of the Initial Specification, including the particular Specification and the Paper and all intellectual and other propriety rights arising out of or in connection with any inventions or subject matter embodied or described in those documents.
ØThe earliest priority date of the patent application is 13 July 2000.
ØThe named inventors of the patent application (ie Ian Anderson, Michael Edward Abbiss and Glyn Gregory Horne Denison) each were involved in various capacities with implementation of the CSC system and earlier versions of the Particular Specification.
ØThe paper and relevant parts of the Initial Specification and subsequent Particular Specification disclose some or all of the features of one or more of the claims of the ERG application, and potentially other subject matter described in the ERG application but not yet claimed.
REQUESTS FOR EXTENSION OF TIME
The reason provided for the applicant’s first extension of time request was that the evidence filed by OCL was extensive and requires detailed consideration by at least one of the three listed inventors to assist with evidence in answer. However, unfortunately none of the inventors now work for the applicant or any members of the ERG group and it was difficult obtaining evidence from them.
The applicant advised that they had managed to obtain the services of one of the inventors (Mike Abbiss) but they then learned that he is not able to finalise his work on the matter until the end of January 2006 due to work commitments. Another inventor (Glyn Denison) was then engaged and the applicant’s understanding was that he should be able to complete his work on the matter more expeditiously. The applicant (at that time) has been unable to contact the third inventor (Ian Anderson) who was believed to be working in the United Kingdom.
The applicant was able to file some evidence (from Glyn Denison) within the first extended period but requested another extension to complete their evidence. The reason provided in this second extension request was that the applicant wanted to obtain further evidence from the other 2 inventors. They had been able to establish contact with Ian Anderson and he was considering providing evidence in this matter which they expected to complete by the end of March 2006. The remaining inventor (Mike Abiss) had advised that he was unwilling to assist with evidence but the applicant was hopeful that he would change his mind.
No further evidence was filed at the end of March but the applicant requested a further extension. The reasons provided for this current extension are that in March 2006, ERG retained independent counsel to assist with their case. As a result of that advice, the applicant now appreciates the need to further investigate particular aspects of the development of the invention in defending entitlement. In particular, the applicant intends to establish that:
- the Hong Kong Work is not an embodiment of the invention, but that the inventors built an embodiment that is a separate and different system to the Hong Kong work. That system is called the Multi Application Smart Card, abbreviated to “MASS”.
- the Hong Kong Contract does not detail an inventive step or, if it does (which is not admitted), that it is materially different to and separate from the inventive step represented by the Invention as described in claims 1-44 of the ERG specification.
According to the applicant, this will require the inventors to address “complex issues” over a period in excess of 7 years (May 1993 – July 2001) including their knowledge (if any) of the Initial Specification and the Particular Specification, their understanding of the prior art and the time and the invention they developed and how this differed from the contribution of OCL. The applicant alleges that this will require a detailed search through “an enormous volume” of documents produced in the course of inventing the invention and building its embodiment.
To give some idea of the volume of material that might be involved, the applicant pointed out that at its peak the R&D team had 130 staff working under the inventors’ direction and are likely to have generated extensive material that are likely to be relevant to the OCL requests including specifications, design documents, test plans, test results and reports, review meeting agenda and minutes, programmer’s notes and source code. Such documentation is not readily accessible through a central database or register and it would be necessary to search through the records of particular employees many of whom are no longer employed by ERG.
The applicant is also concerned that their evidence not include commercial in confidence material and advised they will need additional time to assess the evidence for confidentiality before filing. They suggest that this may take some time because of the complication of “various contractual obligations involving the named inventors”.
SPECIFICATION
The specification relates to a card system and in particular to a system for managing and processing transactions using cards such as smart cards. According to the specification, previous card transaction systems have been produced for specific applications by developing a system architecture specific to that application with discrete components for all of the different entities or actors of the system. Such system architecture is not readily configurable to different applications.
In contrast, the current invention provides a multiple application smart card system (referred to as MASS). In this system, the core components of the card system are readily adapted to different transactions apparently because of the hierarchical structure of the smart card infrastructure.
The specification ends with 44 claims only two of which are independent (claims 1 and 26). These are as follows:
1.A card system including a plurality of component infrastructures, said component infrastructures each having core components of said system, the infrastructures having a hierarchical relationship such that one infrastructure is dependent on components of a lower infrastructure, and the core components being configurable for different card transaction applications.
26.Software for a multiple application card system, stored on computer readable storage media, including a plurality of component infrastructures, said component infrastructures each having core components, said infrastructures having a hierarchical relationship such that one infrastructure is dependent on components of a lower infrastructure, and the core components being configurable for different card transaction applications.
RELEVANT LAW
The Commissioner's power to determine the practice and procedure under sections 32 and 36 derives from regulation 22.24 which states:
22.24 Practice and procedure other than for opposition proceedings
(1) Subject to these Regulations:
(a)if the Act or these Regulations authorise the Commissioner to hear and decide an application or matter that is not an opposition; or
(b) in a matter being decided on the motion of the Commissioner;
the practice and procedure to be followed for the purposes of enabling the application or matter to be decided is to be determined by him or her.
Where the law confers such a broad discretion, paras. 5 (1) (e) and (2)(b) and (f) of the Administrative Decisions Judicial Review Act 1977 (ADJR Act) set the expectation that the decision maker must not fail to take a relevant consideration into account or follow a rule or policy without regard to the merits of the particular case.
The broad discretion provided under regulation 22.24 is similar to that provided under regulation 5.10 which has judicially 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 where there is a broad discretion to allow an extension of time, this 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 include the relevance of the evidence sought to be adduced, explanation for the delay, the public interest and the interests of the parties. I will address each of these factors in my decision.
DISCUSSION
(a) Relevance of the evidence sought to be adduced
At the hearing, the section 32/36 requestor (OCL) confirmed that their claim for entitlement is based on the inventive contribution made by Brian Chambers, who was employed by OCL’s predecessor in title (MTRC). Chambers prepared the initial and particular specifications as part of the tendering process for the development of a multi-service provider smart card system for the Hong Kong transport system (the “Hong Kong project”). The patent applicant (ERG) won the tender for this system and proceeded to develop a smart card which could be used for all the transport providers in Hong Kong.
OCL’s primary claim to entitlement was that the invention disclosed and claimed in the current patent application was derived from Chambers’ work in generating the initial specification for the Hong Kong project tender. OCL’s secondary claim to entitlement was that Chambers had inventive input during the development phase of the Hong Kong project with ERG and derived additional entitlement through this work. I note that while OCL’s secondary claim is not particularly pressed in the evidence in support, it may become critical to OCL’s case at the substantive hearing. Chamber’s preliminary work may have been published prior to the priority date of the current claims (in a paper delivered by Chambers at the UITP Conference in Bologna, Italy in 1994). If this is correct, then Chamber’s alleged contribution (or at least part of it) could have already been in the public domain at the relevant priority date. In that case, the real problem with the specification may well be novelty rather than entitlement if (as alleged by OCL) Chamber’s preliminary work is within the scope of the current claims.
The applicant’s counter-argument to OCL’s claim is that the invention was created after the work on the Hong Kong project had been completed. According to one of the named inventors of the current application (Glyn Denison) in his evidence in response (paragraphs 13-15), ERG was involved in a number of international tenders for a multi-service provider contactless smart card system after the Hong Kong project (including Berlin, San Francisco, Rome and Singapore). As the requirements of the various tenders were considerably varied and complicated, the system delivered for Hong Kong could not be applied to deliver the systems for the other cities.
According to Denison, he and one of the other named inventors (Mike Abiss) decided that ERG needed to develop a smart card transaction system that was configurable and sufficiently flexible that it could be deployed in any environment or city. Abiss and Ian Anderson (the third named inventor) redeveloped what had been done by ERG up till then to make a “generic suite of software” that could be utilised in varying cities. The final design of the MASS system involved a comprehensive suite of software “Use cases” across 4 infrastructure layers of the architecture which allowed changes to be readily made to one part of the system without requiring the whole system to be changed. According to Denison, this results in far less development and cost and means a speedier implementation time for a smart card system in a new location.
Unfortunately, Denison has concentrated on the preferred embodiment of the invention (MASS) in his declaration rather than the considering the invention as broadly disclosed and claimed in the current application. As a consequence, while he has outlined the applicant’s basic argument in response, he does not appear to have fully addressed the case mounted by the section 32/36 requestor. In particular, he did not compare the invention as claimed or as broadly disclosed with that described in the initial and particular specifications prepared by Chambers.
In addition, Denison refers to a “generic suite of software” which had been prepared by ERG in previous projects (including (presumably) the Hong Kong project). He appears to acknowledge that this software was incorporated into their MASS system. However, it is not clear whether this earlier software (or approach) is critical to the development of the later MASS invention and hence whether the earlier contribution by Chambers could from the basis of a claim to entitlement.
The applicant intends to file evidence from two of the other named inventors (Ian Anderson and Mike Abiss) to further support their case. Ian Anderson is the inventor most involved in the development of the MASS architecture and is best placed to comment on the genesis of the invention and any potential overlap it has with the Hong Kong project particularly with regard to whether any software prepared for the Hong Kong project was used in preparation of MASS as part of the “generic suite of software”. Anderson would also be in a position to explain what role Chambers had in the development of the Hong Kong project and why they consider this to be unrelated to the current (claimed) invention. His evidence would also be particularly useful if it could discuss the differences between the claims and the initial Hong Kong specification rather than the preferred embodiment.
All this material is likely to be highly relevant to the determination of inventorship and my view is that Anderson’s evidence is likely to be critical to the current dispute before the Commissioner. However, it is not clear what insight Mike Abiss could add over and above Anderson’s evidence regarding the “genesis of the invention”. Counsel for the applicant suggested that Abiss’s evidence would corroborate Anderson’s evidence. However it is difficult to see that such corroborating material would have substantial weight given that neither Abiss nor Anderson is an independent witness.
Counsel for the applicant also suggested that Abiss could have been involved in a different aspect in the invention on which he may be better placed than Anderson to provide evidence. However, the applicant was unable back this claim with specific details presumably because they had not completed their discussions with Anderson. My view is that until more specific information is provided, it is not clear that Abiss’s evidence will add any insight over and above Anderson’s evidence and hence at this stage I am not convinced that Abiss’s evidence is highly relevant.
(b) Explanation of the delay
OCL argued that the applicant had not taken reasonable steps to prepare their case prior to the current extension and that because of their lack of diligence, the current extension should not be granted. I agree that progress in this matter has been slow. The issues in an ownership dispute are much narrower than in a normal section 59 opposition and the evidence required to support a case should be readily obtainable. Therefore the Commissioner’s expectation is that evidence in a section 32/36 matter would generally be finalised within the 2 month period initially allowed to file evidence.
In the current case, the applicant has had almost 8 months to prepare their case. The reasons justifying the previous request have been because of difficulties obtaining evidence from the inventors given that all three inventors no longer work with the patent applicant and Ian Anderson now lives in the United Kingdom and was uncontactable. While these practical problems appear now to be resolved, the evidence is still some time from completion. In fact, the reasons provided in the current request appear to suggest that the applicant has made no real progress over the intervening period and has only just started preparing their case. OCL argued that this delay strongly infers that the applicant was not seriously attempting to defend their entitlement before the current extension request (particularly as they only sought the involvement of independent counsel in March 2006).
I agree that the applicant should have sought independent counsel’s advice well before March 2006. However I am not convinced that this was because of a lack of diligence on the applicant’s part. Prior to the current extension, the applicant was solely focused on contacting and engaging the inventors. It seems likely that this “one track” approach was because the applicant believed the inventor’s input critical before they consulted independent counsel. Unfortunately this meant that the evidence was effectively stalled because of the on-going problems with obtaining the inventor’s co-operation. The current delays therefore seem to me poor case management rather than a deliberate strategy not to seriously defend their claim of entitlement.
From the submissions by the applicant at the hearing, I am satisfied that the applicant is now taking all appropriate steps to prepare their case as expeditiously as possible. They do not appear as far from completing their evidence as appeared to be inferred in their extension of time request. Both Anderson and Abiss are now co-operating with the applicant and Anderson is in Australia preparing a draft declaration. While the applicant would not commit to a firm deadline (or a guillotine order), they expect that Anderson’s evidence was likely to be substantially complete by the end of the current extension period.
The applicant also advised that they were not intending to conduct a major review of all the (extensive) material likely to be relevant to the OCL requests as they implied in their extension of time request (see paragraph 9 above). I note that such an approach would be very time consuming and potentially fruitless. As OCL observed, all the key documents should have been produced in response to an earlier notice of production from the section 32/36 requestor (for all documents related to the conception of the invention). All the key documents should have been located and produced at that time. It is not apparent why a second review is now necessary and what it is likely to find.
(c) Private and Public interests
OCL argued that the interests in a section 32/36 matter (in contrast to a section 59 matter) are mostly private rather than public interests. They conceded that there was no actual prejudice to them caused by the current delays. However, they argued that there is still a general principle that a litigant has the right to have their dispute heard at the earliest opportunity. According to OCL, the delays caused by the applicant should weigh against them being granted an extension. At some stage the Commissioner has to call a halt to proceedings where a party has had a reasonable opportunity to prepare their evidence but have failed to complete it.
OCL also suggested that the public has less interest in determining the ownership of a patent compared with determining the validity of the patent. The main public interest is therefore in the maintaining the efficiency of proceedings before the Patent Office. According to OCL, given that the applicant has caused serious delays, the public interest is weighed in favour of the Commissioner refusing the current extension.
In my view, the Commissioner has a public interest role in ensuring a “correct and just determination” in matters before her regardless of the dispute. The evidence that the applicant is currently preparing is likely to be highly relevant to the determination of the matter and appears reasonably close to finalisation. As noted above, while the applicant has been slow in preparing their evidence to date, this appears to be more poor case management rather than a deliberate strategy. I am satisfied that the applicant is now taking appropriate steps to complete their evidence within a reasonable time frame.
DECISION
The evidence proposed to be adduced is likely to be highly relevant to the determination of the section 32 and 36 requests and likely to lead to a more just and correct determination of the entitlement dispute which is in the applicant’s and public interest. While the applicant has been slow in preparing their evidence, I am satisfied that the applicant was always intending to defend their entitlement and the delays to date have been the result of poor case management rather than a lack of diligence. I am also satisfied that the evidence is close to finalisation and that applicant is taking appropriate steps to complete their evidence within a reasonable time frame.
Given this, the applicant's interest in having the extension granted outweighs the interests of the section 32/36 requestor in the short delay caused by granting the current extension. My view is therefore that an extension is appropriate in all the circumstances and I grant the applicant an extension until 30 June 2006 to file evidence in response. I note that the extension has been granted on the assumption that evidence will be complete or substantially complete within the extended period. If the applicant requires extensions beyond this deadline, then they will need to justify this fully by providing a detailed explanation of the relevance of the material they intend to file, any problems they have encountered in preparing this material and an estimated time for completion of the evidence. In this regard, I note that the Commissioner is unlikely to be sympathetic to further extension requests where the applicant is still searching their holdings for possible relevant documentation. In addition, the Commissioner is unlikely to agree to a deferral because of possible settlement negotiations unless both parties agree.
COSTS
In matters before the Commissioner, costs generally follow the event. In this case, I have allowed the extension requested by the applicant. However, the extension has been granted based on the extra explanation provided by the applicant at the hearing regarding the progress of their evidence. The applicant argued that the hearing was useful to both parties to provide some direction for the evidence required in the substantive matter. As a consequence, the applicant suggested there was clear benefit to both parties in holding a hearing and that there should be no award of costs.
In my view, any benefit to the parties was simply an unintended bonus of the hearing. The applicant’s extension request implied that they were re-starting the process of collecting relevant material for the hearing, that they had made no real progress with their evidence to date, and that they were still a long way from completing their evidence. In such circumstances, it is not surprising that the section 32/36 requestor objected to the extension request and perhaps if the applicant had provided better reasons in their original request, there would have been no need for the section 32/36 requestor to object. For this reason, I award costs against the applicant.
Karen Ayers
Delegate of the Commissioner of PatentsPatent attorneys for the applicant : Davies Collison Cave, Melbourne
Patent attorneys for the opponent : Spruson & Ferguson, Sydney
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