Ferocem v High Tech Auto Tools

[1993] APO 58

official notice

decision of a delegate of the commissioner of patents

Patent:    No. 621027 in the name of HIGH TECH AUTO TOOLS PTY LTD

Title:    A Method of Cleaning an Electronic Fuel Injector

Action:    Setting a date for a hearing.

Decision:    Issued            . 

Pending court action for revocation of a petty patent, and a request for an extension of term. Parties could not agree to a hearing date.

Discussion of general principles for setting a hearing, when a relevant court action is pending.

Having regard to the public interest, hearings under section 69 in respect of a request for an extension of term of a petty patent should be heard without significant delay. Deferral of the hearing until after the conclusion of a relevant court action is generally not appropriate.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Petty Patent No. 621027 by HIGH TECH AUTO TOOLS PTY LTD, a notice under section 28 by FEROCEM PTY LTD, and the date of a hearing.

background

Petty patent 621027 (Application 83484/91) in the name of HIGH TECH AUTO TOOLS PTY LTD was sealed on 15 January 1992.  The Petty Patent was filed as divisional application of standard patent 621447 (application 47783/90) [which is itself under opposition by the informant of the present proceedings; and in a decision dated 3 Dec. 1992, a delegate of the Commissioner refused to grant an extension of time for the opponent to serve evidence in support of that opposition - that decision was appealed.]

On 11 December 1992 the petty patentee applied for an extension of term of the Petty Patent. On 15 December 1992 FEROCEM PTY LTD filed a notice under section 28(1) of the Patents Act 1990, together with its evidence; subsequently the petty patentee filed its evidence in response on 12 May 1993.

On 24 May 1993 both parties were informed by the Patents Office that a hearing in the matter would be set down within the next few days.  In subsequent correspondence the petty patentee submitted that Patent Office practice would indicate that the matter should be deferred pending the outcome of concurrent Federal Court proceedings.  On the other hand, the informant requested that the matter be set down for a hearing without further delay.

[In the concurrent Federal Court proceedings (G633/1990) the applicant in the Federal Court proceeding (the present informant) apparently alleges inter alia unjustified threats and seeks revocation of the petty patent.  The respondent (petty patentee) alleges patent infringement.  I understand that the hearing in that matter has been set down for 21 March 1994.]

The parties failed to reach an agreement on a date for the hearing before the Commissioner in respect of the extension of term of the petty patent.

The present matter involves a procedural issue of some importance. The Petty Patent system clearly enables court actions for revocation to be instituted but unresolved before the time at which the Commissioner would normally expect to be deciding whether or not to grant an extension of term. In the past, it would seem that in such situations the parties reached agreement on whether or not to proceed with a hearing before the Commissioner while the court action was pending, and the Commissioner proceeded accordingly. In the present case (and in Yamazaki Mazak Corporation v Interact & ors 24 IPR 321, 1992 AIPC 90-879) the parties could not reach agreement.

As a result of the lack of agreement, I wrote to the parties in the following terms:

"In the absence of agreement between the parties as to the date of the hearing, I intend to conduct a hearing in the matter of when the Commissioner should conduct a hearing regarding the extension of term of the petty patent. At that hearing, I would expect submissions on (inter alia) the following matters:

a.why the hearing should be heard before/after (as the case may be) the Federal Court decision on the revocation action, and not vice versa;

b.the relevance of the Commissioner not being supplied with relevant material before the Federal Court, as required by the Federal Court rules, and as requested in our letter of 24 June 1993;

c.whether the matter before the Federal court is the same as that before the Commissioner in all material respects; and if not, the nature of the differences;

d.the relevance of the following decisions (inter alia):

-Thornton v Repatriation Commission 35 ALR 485

-Raw v. Pharmacy Restructuring Authority and ors (unreported decision of the Federal Court, delivered 25 June 1993, in G368 of 1993).

e.for the case that I determine the hearing should not await the Federal Court decision, appropriate dates for the hearing."

Subsequently, the matter was heard in Canberra on 24 September 1993.  Mr. J.R. Walsh, patent attorney of Davies Collison Cave, filed written submissions in advance of the hearing on behalf of the informant.  Mr. F.P. Old, patent attorney of Spruson and Ferguson, appeared by telephone for the petty patentee.

Submissions

Mr. Old submitted that the present situation could be distinguished from the cases I referred to in my letter. He asserted that the Commissioner of Patents must not only consider the two protagonists in an action before him or her, but (unlike the tribunals in those cases) must also consider the public interest. In particular, he observed that section 68(2) explicitly provides that the extended term of a petty patent runs from the end of the initial term without reference to when the decision to extend the term was made.

Mr. Old submitted that under these circumstances a failure to decide on an application for an extension of term amounted to a de facto extension of the term of the patent in a commercial sense - as the general public were left in limbo as to whether they could use the invention or not.  In the present case, any deferral of the hearing would be advantageous to the patentee, as it would extend its de facto extension of term.

Mr. Walsh's submissions concentrated on the undesirability of the Commissioner determining the extension of term matter before the court action is finalised.

In particular he submitted that in relation to the claims of prior use the appropriate place to hear the evidence is before the court where cross examination of witnesses can take place and where corroboration of affidavit evidence is required.  Furthermore he submitted that there is no guarantee based on the evidence presently filed by the informant that suitable evidence of common general knowledge will be adduced on which the Commissioner could make a determination of obviousness (or lack of inventive step).  He also stated that additional documents and material, including confidential material, filed at the Federal Court was not available to the Commissioner.  He submitted that it was undesirable that the Patent Office act on insufficient or incomplete evidence, stating that if a full hearing was deferred the Commissioner could avail himself of additional relevant evidence arising from the court decision.

Mr. Walsh also submitted that it was undesirable to hear and determine the matter prior to the court proceedings in view of the "not improbable" prospect of the court arriving at a decision contrary to that of the hearing officer rendering efforts of the parties and the Commissioner in vain.  Furthermore, a hearing now could result in an appeal and that the informant would be in no better position to make a commercial decision concerning use of the invention than if the hearing was deferred until after the court case.

He also expressed concern that if the Commissioner were to proceed to hear the matter, the patentee would have to present the arguments that it would be using in court; as a result, the informant would obtain an unfair advantage in the court proceedings through knowing the arguments the patentee would be relying upon.

Mr. Old drew my attention to the comments in Kaiser Aluminium and Chemical Corporation v. Reynolds Metal Co. 120 (1969) CLR 136 at 143. In response to a request by both parties to remit the case to be decided on the merits in the Patent Office Kitto J. stated:

"I agree that there is a judicial advantage in the courts having the benefit of the Commissioner's expertise and that the use of proceedings before the Commission may act as a filter to reduce the burden on the courts.  I believe that these benefits outweigh the perceived disadvantage of the Commissioner not having full access to the evidence available to the Federal Court."

The Legislation

Section 69 of the Patents Act 1990 relates to the extension of term of a petty patent of which s.69(1)-(3) are relevant.

69. (1)A patentee of a petty patent may apply to the Commissioner, in accordance with the regulations, for an extension of the term of the petty patent.

(2)The Commissioner must decide an application in accordance with the regulations.

(3)The Commissioner must not grant an extension without giving each person who has given the Commissioner a notice under section 28 in relation to the petty patent a reasonable opportunity to be heard.

There are several points of note with these provisions. Firstly, there is nothing (including in the regulations) which specifies when the matter must be decided. Secondly, the procedure for hearing such matters is not prescribed, but is governed by the Commissioner in accordance with regulation 22.24. Thirdly, there is no provision in the Act or Regulations concerning the procedure to adopt where court proceedings are co-pending.

Patent Office Practice

Part 24 of the "APO Manual of Practice and Procedure - Oppositions, Courts, Extensions and Disputes" relates to the extension of term of petty patents.  Paragraph 24.10 sets out the practice to be followed when court action is pending.

"24.10 HEARING WHEN COURT ACTION PENDING

Frequently a petty patent is obtained to enable the patentee to take action for infringement at the earliest opportunity.  As a result, at the time when the Commissioner is required to consider whether or not to extend the term of a petty patent (which involves a consideration of the validity of the petty patent), there may be a pending court action in which the validity of the petty patent is in dispute.

For administrative convenience, the Commissioner prefers not to hear and decide the extension of term of the petty patent, pending the outcome of the court action.  However where the patentee wants the matter of the extension of term determined, there is no bar to the Commissioner proceeding to determine the matter on the basis of the pending court action, and the Commissioner will proceed with the determination."

The authority behind this practice is a Patent Office decision Re Yamazaki Mazak Corporation (1992) AIPC 90-879. In this case a decision of the Federal Court was issued after the end of the initial term but before the Commissioner proceeded to determine the extension of term. The Federal Court decision was appealed. The patentee sought a determination of the extension of term as soon as possible so that they could seek an injunction to restrain ongoing infringement. The delegate found that, in these circumstances, if the patentee wants the matter determined then the Commissioner should proceed.

Further cases in which an extension of term proceeding has been heard notwithstanding concurrent court proceedings are Gerber Scientific Products Inc. v. North Broken Hill Ltd (1990) AIPC 90-660 and Queensland Metal Frames Pty Ltd v. Lakecroft (1987) APOR 8.  In the latter case the hearing officer stated:

"The matter has arisen for decision after proceedings have been instituted in a prescribed court for infringement of the petty patent during its late term.  The questions which have to be decided in the present proceedings are also questions which may arise in the infringement action.  However, notwithstanding the possibility of contrary conclusions, that does not appear to me to be justification for deferment of the present proceedings.  Firstly, the matters to be decided here are based on evidence which is not necessarily the same as that in the infringement proceedings.  Secondly, a decision in these proceedings will not preclude the prescribed court from making whatever determinations it considers appropriate in respect of the petty patent.  It is undesirable in my view in the interests of both the patentee and the public that the question of extension of the term of the petty patent, which is not itself an issue in the infringement proceedings, should be subject to possibly extensive and unnecessary delay."

Although I agree fully with these comments, the context in which they appear should be noted.  In particular, there was apparently no dispute between the parties of whether or not to proceed, and the action was apparently an action for infringement, not revocation.  None of these decisions consider the situation where the patentee prefers the hearing be deferred but the informant wants the matter heard as soon as possible.

Decision

As a general proposition, where there is a pending court action of direct relevance to a matter before the Commissioner, the Commissioner prefers the court action to be concluded before determining the matter before him.

This would seem to particularly apply where the matters in dispute are strictly between the parties, and have no significant consequential effect on third parties. Thus if the effect of the court action was in a practical sense confined to the parties, I think the Commissioner would be fully justified in deferring a hearing until the court action is determined - providing neither party would be significantly disadvantaged.

However, the submissions of Mr Old clearly demonstrate that for an application for the extension of term of a petty patent, there is a significant public interest involved. Celotex orders are not relevant to petty patent extensions of term. As a result, there is a clear advantage in a patentee seeking to defer the determination of the extension if the validity of the patent is in dispute; until the extension has been determined by the Commissioner, interested third parties will probably have to conduct their business on the assumption that the petty patent is valid and the term will be extended. In my view this situation is not in the public interest.

For this reason, I consider it inappropriate for the Commissioner to defer a section 69 hearing for any significant period, including awaiting the decision of a court.

Furthermore, I am pursuaded by the comments of Kitto J in Kaiser Aluminium and Chemical Corporation v. Reynolds Metal Co. (supra), that it would generally be beneficial for the Commissioner to hear and determine the matter, even if the material before the Commissioner differs somewhat from that before the Court.

I do not consider the possibility that the hearing before the Commissioner may be a waste of time or money if the court comes to a different finding, to be persuasive. The court and the Commissioner are at least as likely to agree. Additionally, it may be that, following the decision by the Commissioner, the parties will not proceed with the court hearing, thus saving time and money.

Finally, even though the issues before the Federal Court may be somewhat different to that before the Commissioner, I see no reason for not proceeding. The matters that the Commissioner has to consider are those set out in the s.28 notice and its accompanying evidence, and the evidence in response by the patentee. This material has all been filed (with the exception of some exhibits, which are before the Federal Court). Thus the Commissioner has before him all the material relevant to his considerations. And to the extent that there are differences between the material before the Commissioner and before the Court, the observations of Kitto J above are directly relevant.

Subsidiary Matters

The Commissioner has had great difficulty in obtaining from the parties information regarding the court action.  Clearly where there is a court action related to a matter before the Commissioner, the Commissioner is not desirous of proceeding with a hearing if he is in virtual total ignorance of the matters before the Court - the more so if there is any suggestion that the Commissioner is being deliberately kept in ignorance by the parties.

Subsequent to my letter set out above, the Commissioner received a full copy of material filed in the Federal Court by one of the parties. Also at the hearing Mr Old explained the history of the court action. I now see no reason in these matters for not proceeding with the hearing.

Conclusion

I have found that a hearing into the extension of term of petty patent 621027 should proceed before the Commissioner, and not await the outcome of the copending court action.

Having regard to the submissions by the parties of their dates of availability, the parties are hereby advised that the hearing will be held in Canberra on November 22   1993, commencing at 10 am. The usual hearing notice, setting out further details relating to the hearing, will be issued in due course.

Costs

Costs normally follow the event, and I see no reason to depart from this practice in the present matter. I award costs against Hi Tech Auto Tools Pty Ltd.

D. HERALD

Assistant Commissioner of Patents

Patent attorneys for the patentee   :  Davies Collison Cave, Sydney

Patent attorneys for the informant  :  Spruson & Ferguson, Sydney