Flexible Steel Lacing Co v Beltreco Ltd
[1999] APO 2
•8 January 1999
OFFICIAL NOTICE
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Patent: No. 584013 in the name of FLEXIBLE STEEL LACING CO.
Title: Pulley Lagging
Action: Application under Section 223 for extension of time to pay a renewal fee, opposition to that application by BELTRECO LTD. and an application under Regulation 5.5(1) for dismissal of the opposition.
Decision: Issued .
Abstract
Application for dismissal of an opposition made under Section 223. Case for dismissal not made out.
Pursuant to Regulation 5.8(1)(a)(iii), Beltreco Ltd. has 3 months from the date of this decision in which to serve its evidence in support.
PATENTS ACT 1990
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Re:Patent 584013 in the name of Flexible Lacing Co., application under Section 223 for extension of time to pay a renewal fee, opposition to that application by Beltreco Ltd and an application under Regulation 5.5(1) for dismissal of the opposition.
BACKGROUND
Patent 584013 was filed as application 16370/88 by Zinis Investments Pty Ltd on 13 May 1988 as a divisional of 44164/85 (575408). It was advertised accepted on 11 May 1989 and subsequently sealed on 1 September 1989. The rights in the patent were transferred to the current patentee, Flexible Lacing Co., by an assignment dated 24 December 1991. This assignment was recorded on the Patent Register on 8 May 1992.
The twelfth year renewal fee for this patent was due on 25 June 1997 [by virtue of Regulations 6.3(f) and 13.6(1)]. However, the fee was not paid by this date or within the grace period to 25 December 1997, and the patent consequently ceased. This was advertised on 12 February 1998.
On 11 March 1998, the patentee (applicant) made an application for an extension of time under Section 223 from 25 June 1997 to 25 March 1998 to pay the renewal fee. This application was advertised for opposition purposes on 14 May 1998 and on 11 June 1998, Beltreco Ltd filed a notice of opposition to the grant of the extension. Beltreco served their statement of grounds and particulars on 11 September 1998 and on 6 October 1998, the applicant filed a request under regulation 5.5(1) to dismiss the opposition.
The matter was set for hearing on Friday 18 December 1998 in Canberra. The applicant was represented by Ms Julia Baird of counsel and the opponent was represented by Mr Russell Waters patent attorney of Phillips Ormonde & Fitzpatrick, of Melbourne.
THE STATEMENT OF GROUNDS AND PARTICULARS
The Grounds and Particulars of the opposition under Section 223 are as follows:
"GROUNDS
The applicant has not established that the relevant act not done was not [sic] because of,
(a) an error or omission by the person concerned or by his or her agent or attorney; or
(b) circumstances beyond the control of the person concerned.
PARTICULARS
The reasons for the failure to pay the renewal fee by the due date of 25 June 1997 have not been adequately explained.
The applicant has not provided any, or any adequate, explanation of the circumstances surrounding the non payment, including its arrangements and instructions regarding payment of the fee."
REQUEST FOR DISMISSAL AND APPLICANT'S SUBMISSIONS
The applicant's request for dismissal under regulation 5.5(1) filed on 6 October 1998 cited the following reasons for the request:
"The Applicant (i.e. the Patentee) has clearly established to the satisfaction of the Commissioner of Patents that the lapsing of Patent No. 584013 through late payment of a renewal fee was due to an error or omission by the Applicant's attorney, consistent with established precedent.
The Opponent's grounds for this Opposition are not clear and are ambiguous and seem to require something other than the establishment of an error or omission for the Patentee's obligations in seeking an extension of time to be discharged."
At the hearing, the applicant argued that the opponent's case was untenable as a matter of law because the particulars only relate to the explanation of the error rather than the error itself. Since Section 223 only requires that an error has occurred and that this caused a relevant act not to be done within a certain time, attacking the explanation is introducing an extra criterion into Section 223 above and beyond what has been legislated by that provision.
The applicant also argued that the opposition is untenable as a matter of fact. In Sanyo Electric Co Ltd v Commissioner of Patents 36 IPR 470, the Administrative Appeals Tribunal concluded inter alia that:
the applicant's burden of putting circumstances before the tribunal justifying the exercise of discretion is not a burden of proof; and
a legislative provision providing for the exercise of a discretion to extend the time is beneficial in nature and should be applied beneficially.
According to the applicant, they had provided to the Commissioner a full and frank disclosure of the circumstances of the error and had justified the extension. Requiring more information would raise the burden of proof required of Section 223. The benefit of doubt should be given to the applicant because there was a clear intention to keep the patent in force which could be demonstrated by a history of paying renewal fees, and letters establishing the applicant's intention to initiate legal action on the basis of patent 584013.
DECISION
The principles to be applied in considering a request for dismissal are well established and are similar to the reasons for summary dismissal which are described in General Steel Industries Inc v Commissioner for Railways (NSW) and others (1964), 112 CLR 125:
“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his cause of action - if that be the ground on which the court is invited .. to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them (the pleadings) to stand would involve useless expense".
At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that this is a case that does not admit of reasonable argument"; "so to speak apparent at a glance".”
On this basis, an opposition or a ground of opposition will be dismissed only if it is clear that the opposition could not possibly succeed. In bringing this action, the onus falls on the applicant to show that the opposition is clearly untenable.
I note that an action for dismissal of an opposition is not intended to be a de facto hearing of the opposition (see L'Air liquide, Societe Anonyme pour L'Etude et L'Exploitation des Procedes Georges Claude v The Commonwealth Industrial Gases Ltd 24 IPR 77). Barwick CJ in General Steel (supra) also warns that:
"...great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal."
Barwick CJ then goes on to add there might be occasions where extensive argument may be necessary to demonstrate that the case of the plaintiff is clearly untenable (see also Ronex Properties Ltd v John Laing Construction Ltd (1983) QB 389 at 408). However, he concludes:
"But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend on it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process."
In the current case, the applicant argued that the opponent's case was untenable as a matter of law because the particulars only relate to the explanation of the error rather than the error itself and this is outside the scope of what is required under Section 223. However, consideration of the explanation of the error could be relevant in determining whether an error occurred and whether that error caused a relevant action not to be done within a certain time (as required by Section 223). This is clearly within the scope of Section 223.
Further, Section 223 is a discretionary power. The Federal Court has concluded in Kimberly-Clark Ltd. v Commissioner and Minnesota Mining and Manufacturing Co, 13 IPR 569 that there are a number of issues which are relevant to the exercising of that discretion including:
whether the applicant has made a proper case justifying the extension; and
whether there has been "a prompt, frank, comprehensive and clear disclosure of all the circumstances relevant to the weighing of the discretionary considerations upon which grant or refusal of an extension of time will depend".
On this basis, a lack of an adequate explanation of an error could be relevant to whether the Commissioner's discretion to allow an extension under Section 223 is exercised and so, as a matter of law, the opposition is not clearly untenable.
The applicant then referred to the Federal Court decision in George Johann Faessler v Allan Neale and Cooinda Cotton Co. Pty. Ltd. and Malcolm Alistair Armstrong (1994) AIPC 91-080; 29 IPR 1. In that decision, Drummond J dismissed the proceedings because there was no arguable case of either infringement or passing off given the dissimilarity of the applicant's registered trade mark with material used as a mark by the respondents. The applicant submitted that, in the current case, because they had provided to the Commissioner a full and frank disclosure of the circumstances of the error, there could be no arguable case by the opponent. Further, to require further explanation from the applicant other than that already provided would raise the burden of proof required of Section 223.
In my view, the applicant's submissions appear to focus on the merits of their own case rather than shown that the opponent's case is so manifestly bad that it could not possibly succeed which is what is required in a dismissal action. The merit of the applicant's case is a question of fact that needs to be determined at the substantive opposition. As the opponent argued, the opponent has the right to challenge the explanation provided by the applicant and they have identified issues in the statement of grounds and particulars that are relevant to the exercise of the Commissioner's discretion under Section 223. In these circumstances, it is inappropriate for me to dismiss the action (as per General Steel [supra]). I do not accept that this somehow increases the burden of proof required on the applicant as the appropriate standard of burden of proof is applied at the substantive opposition.
Further, while the applicant may have provided enough evidence to establish a prima facie case to satisfy the Commissioner that the Section 223 should be advertised for opposition purposes, this does not mean that the opponent cannot challenge the evidence. In contrast to the Faessler v Neale [supra] case where there was manifestly no case to answer because of the dissimilarity of the marks, there are possible arguments about whether an explanation is adequate, as the opponent suggested, and there is nothing before me to suggest that these arguments could not possibly succeed.
The applicant also argued that the context of this Section 223 application is important. According to the applicant, this application was an extension of time to file renewal fees on a patent where there had been a past history of paying renewal fees, and where there were letters establishing the applicant's intention to initiate legal action on the basis of patent 584013. In such circumstances, the applicant argued that they had shown a clear intention to keep the patent in force and so an error must have occurred and the opponent's case must fail. Again I believe this argument relates to the merits of the applicant's case and not to whether the opponent's case is untenable. Therefore, for the same reasons as given above, I do not consider that the applicant has established that the opponent's case is untenable.
Finally, the applicant argued in their application for dismissal that the statement of grounds and particulars was unclear and ambiguous. This point was not seriously argued at the hearing except to note that there is a typographical error in the grounds ("not done was not" should have read "not done was not done"). Despite the typographical error, neither party at the hearing had any difficulty understanding what was intended by the grounds and particulars. I therefore conclude that the statement of grounds and particulars is clear and unambiguous and that the applicant has fair notice of the case they have to answer. Thus, the applicant has not established that the opposition is untenable based on the clarity of the statement of grounds and particulars and has therefore not made out a case for dismissal.
SUMMARY
I have found that the applicant, Flexible Steel Lacing Co, has not established that the opponent's case is untenable and therefore has not made out a case for dismissal of the opposition.
Pursuant to Regulation 5.8(1)(a)(iii) the opponent has 3 months from the date of this decision in which to serve on the applicant any evidence it intends to rely on in support of the opposition.
COSTS
The power of the Commissioner to award costs is based on Section 210 and Regulation 22.8. The power to award costs is discretionary, so I must take into account all relevant considerations (see American National Can Co. v W.R. Grace & Co.-Conn (1994) AIPC 91-063, 29 IPR 292).
The applicant, Flexible Steel Lacing Co, has been unsuccessful in its request for dismissal of the opposition and that being the case I award costs against them.
Karen Ayers
Acting Deputy Commissioner of Patents
Patent attorneys for the applicant : H R Hodgkinson and Co, Sydney
Patent attorneys for the opponent : Phillips, Ormonde and Fitzpatrick, Melbourne
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