Ethical Pharmaceuticals Limited v NAPP Pharmaceutical Group Limited

[1991] APO 7

PATENTS ACT 1952
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Application No. 589254 by ETHICAL PHARMACEUTICALS LIMITED, Opposition under S.59 by NAPP PHARMACEUTICAL GROUP LIMITED and an Objection to an Application for an Extension of Time under Reg 55 in which to serve evidence‑in‑support.

Background

Patent application NO 589254 for an invention entitled "Slow release formulation" was lodged on 13 February 1987.  The application was advertised accepted on 5 October 1989 and on 22 December 1989 NAPP PHARMACEUTICAL GROUP LIMITED ("NAPP") lodged opposition under s.59.
         Evidence‑in‑support was initially due by 22 March 1990 but the opponent sought, and was granted, three extensions of time to 22 December 1990.  The applicant ETHICAL PHARMACEUTICALS LIMITED ("ETHICAL") did not object to these extensions of time.  On 21 December 1990 the opponent sought a further extension of time, to 22 March 1991.  ETHICAL objected to this extension of time being granted and the matter was set down for hearing in Canberra on 29 January 1991.  Dr P. Stearne, patent attorney of Davies & Collison represented ETHICAL and Mr R. Walton patent attorney of Griffith Hack & Co represented NAPP.
         The circumstances and grounds given in the present extension of time application are as follows:

"Extensive work is being done by the opponent toward establishing insufficiency in the description of the complete specification under opposition and, whilst a draft Declaration has been prepared to detail the results of this work, further time is required to enable completion of the work and documentation of the results in final declaratory form.  Also, consultations have been held with an expert witness in Australia and further time is required to enable that person to study prior art documents in his possession preparatory to the drafting of Declarations."

Opponent's submission
     At the hearing Mr Walton lodged a statutory declaration that he had declared in support of the extension‑of‑time application.  A copy of the declaration had been served on the attorneys for ETHICAL several days prior to the hearing.
     Mr Walton's submissions on behalf of the opponent can be summarized as follows:

1. Although ETHICAL's attorneys have indicated that corresponding patents had already been granted for the invention overseas, at least the UK patent was believed to be under revocation action.  In any event, the status of corresponding applications or patents overseas seems irrelevant here given differences in the patent law between countries and the pre‑grant opposition available in Australia.

1. Considerable correspondence has passed between NAPP's instructing associates in the UK and its Australian attorneys since the time of lodging the opposition ‑ this correspondence has addressed the evidence to be served in support both in its nature and formulation.

1. A draft declaration addressing section 40 matters has been prepared by an employee of NAPP and after checking is intended to be served as evidence in the opposition.

1. Three patent specifications of prior art have been studied by employees of NAPP and its attorneys, and have also been considered in depth by two Australian technical experts.  This material is considered highly relevant to the opposition given verbal reports by the experts and steps are being taken to prepare relevant evidence based on this material.

1. The opponent has acted diligently in gathering material and processing the opposition so far, and is serious in its opposition to the patent application as is evident from the prompt lodgement of notice of opposition and its activities toward corresponding application/patents overseas.  Given that the opponent is located in the UK some communication problems and delays impact on the evidence preparation process.

1. NAPP's application for extension of time satisfied criteria for allowance as stated in decided cases.  Mr Walton referred to:

Vangedal‑Nielsen v. Smith (1981) 33 ALR 144

Nautical Services v. Hitech Distillation 7 IPR 567

Liquid Retaining Structures v. Delta Corp 13 IPR 363

CSIRO v. Western Mining 13 IPR 424.

In his submissions on behalf of ETHICAL in support of its objection to the extension of time, Dr Stearne made various points which I summarise as follows:

1. The onus is on an applicant for an extension of time to justify the case for such an extension (see regulation 83A).

1. The patent application is directed to "simple subject matter".  The opponent has had 12 months to serve its evidence in support, which in the circumstances seems an ample period of time.

1. A review of the previous extension of time applications suggest that the issue of sufficiency was only considered 6 months into the evidence period and that consultation with "an expert within Australia" was only undertaken some 3 months later.  There has been no explanation of the apparent delays in these activities during the evidence process, and even now a declaration by the expert is still to be prepared.  Suggested communication constraints between the opponent and its Australian attorneys, and patent law differences between Australia and elsewhere should not have presented major problems or proved delaying factors.

1. Given overseas litigation, NAPP should have been in possession of relevant background material on which to base evidence at an early stage of the proceedings.

1. Delay in the opposition proceedings is not in the interests of the patent applicant or the public.  ETHICAL indicated to NAPP in early October 1990 that any further applications for extension of time would be opposed as ETHICAL believed the opponent had had ample opportunity to file its evidence.

Decision
         The law and practice in relation to actions such as this is well established, that is, before granting an extension of time the Commissioner needs to be satisfied that the party seeking the extension has made out a proper case.  Furthermore, the interests of the respective parties and the public also need to be considered.  (See e.g. Nautical Services v. Hitech Distillation (supra) at p.571.)
         I agree with Dr Stearne and his comments to the effect that some of the apparent delays by NAPP in addressing certain opposition grounds and preparing evidence thereto have not been adequately explained.  It seems somewhat surprising to me that, for example, the question of sufficiency should only receive particular attention some 6 months into the evidence period ‑ or that Australian technical experts should only be consulted for evidence purposes at even a later time.  One would realistically expect an opponent who, as NAPP did here, files a notice of opposition well within the time permitted under the legislation to have serious opposition grounds under consideration at that time and be in a position to pursue those grounds by way of its evidence and any necessary investigations in a timely manner thereafter.
         Mr Walton submitted that because the opponent company was remote from its Australian attorneys, delays and difficulties in communication impacted on the evidence preparation process.  I agree however with Dr Stearne's submission that any such delays or difficulties should not have caused any significant delay in the proceedings.  In fact, I note that Mr Walton states in his declaration that some 22 letters have been sent by him to his instructing associates in England, and nearly an equal number of replies have been received "since the time of lodging the notice of opposition" ‑ this hardly confirms communication problems.
         The parties presented opposing views to me on the complexity of the subject matter of the opposed application and thus the time that may be required to prepare opposition evidence.  Whether complex or not, I think that the opponent has had available to it a significant period of time.  However in that time period, only a single declaration has been prepared, which is still in draft form, and a further proposed declaration by an expert is still to be prepared.  Given that the opponent's submissions and evidence have failed to explain why the time so far allowed has proved insufficient for it to serve evidence, I am inclined to the view that the extension of time sought does not seem justified.
         The opponent's submissions, together with Mr Walton's declaration however indicate to me that to date evidence on certain opposition grounds has been addressed in some manner although declarations are still to be prepared or finalised and served.  I am satisfied, given those submissions, that NAPP has several grounds of opposition under consideration, grounds which concern key validity matters.  Accordingly, I believe that NAPP has a serious opposition in train, a point which Dr Stearne tended to concede at the hearing given clause 9 of the statutory declaration.
         In deciding whether to allow the extension of time sought, I need to consider the interests of the parties and the public.  The applicant, quite understandably, claims that delay in the proceedings is not in its best interests although no specific reasons were advanced in support of this claim.  The opponent, on the other hand, has pursued certain matters in relation to its evidence in support in depth and requires more time to complete its evidence on these matters.  As to the public interest aspect, this is concerned with ensuring that worthless patents are not granted and that there are no unreasonable delays in proceedings.  Given that the opponent has foreshadowed several opposition grounds which it believes it can establish, there is a strong basis for the public interest to be well served if the opposition action is fully canvassed rather than the opponent be shut out with the possible consequence that a patent granted on the application be of questionable validity.  However I must say that the delay in the proceedings is, in the absence of a full explanation of the reasons generating that delay, tending to the point of becoming unreasonable.
         Whilst NAPP has not, in my view, adequately explained why the time available so far has been insufficient for it to serve its evidence, I am however satisfied that the opponent is engaged in a serious opposition and indeed has pertinent evidence assembled and virtually ready to lodge.  Accordingly, when viewed overall, I have come to the conclusion that there is justification for granting the present extension, as I consider that it would be in the public interest for any pertinent material in the possession of the opponent to be formally placed before the Commissioner to thus enable appropriate review of the application prior to grant.
         I therefore allow NAPP the extension of time sought and thus the time for service of its evidence is extended to 22 March 1991.
         On the question of costs, both parties sought an award in their favour.  The usual practice is that costs follow the event although in actions such as the present, this may be varied given the circumstances involved.  I agree with Mr Walton that the application for extension stated in concise terms the circumstances upon which the extension was sought.  However, perhaps not surprisingly, it was not sufficiently detailed to inform ETHICAL why still more time was needed especially in view of its notice to NAPP last October in which it stated its view that NAPP had had ample time to file evidence.
         The declaration by Mr Walton, a copy of which was provided to ETHICAL several days prior to the hearing, elaborates on matters stated in the extension application.  It was this elaboration which assisted me to decide that the extension of time should be allowed.  However, ETHICAL, not unreasonably in my view, initially objected to the extension application and maintained its objection to a hearing.  Thus even though the opponent has been successful with its application for extension of time, I feel that each party should bear its own costs associated with the action and hearing.  Accordingly I make no award of costs.

(T.R. BRUHN)

Patent attorneys for the applicant:  Davies & Collison, Melbourne