Flexible Steel Lacing Company v Beltreco Ltd

[2000] APO 29

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Patent:          No. 584013 in the name of Flexible Steel Lacing Company

Title:          Pulley Lagging

Action:          Application for an extension of time under Section 223 to pay the renewal fee and opposition thereto by Beltreco Ltd

Decision:          Issued            .

Abstract

Patent 584013 lapsed due to the renewal fee not being paid.  Applicant attempted to rely on evidence filed in earlier actions.  Regulation 5.11 invoked.  Failure to pay renewal fee found to be due to an "error of omission" by the applicant's attorney.  Application for an extension of time granted.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent No. 584013 by Flexible Steel Lacing Company application under Section 223 and opposition thereto by Beltreco Ltd.

BACKGROUND

Patent 584013 was accepted on 7 March 1989 in the name of Zinis Investments Pty Ltd.  Zinis Investments Pty Ltd assigned this patent to Flexible Steel Lacing Company on 24 December 1991.  On 25 June 1997 patent 584013 ceased when the renewal fee for the 12^th year was not paid by that date.  The patent was advertised as lapsed on the 12 February 1998.  On 11 March 1998 Flexible Steel Lacing (Flexible) filed a section 223 application for an extension of time in which to pay the renewal fee.  To support their application Flexible filed declarations and other evidence.  The application for the section 223 extension of time was advertised on 14 May 1998.

Beltreco Ltd filed a notice of opposition on 11 June 1998 and a statement of grounds and particulars on 11 September 1998.  Flexible requested dismissal of the opposition.
This request was refused by a delegate of the Commissioner, following a hearing on 18 December 1998. 

On 9 November 1998 Beltreco requested the Commissioner to order the production of correspondence and other documents concerned with the payment of renewal fees by Flexible.  This order was complied with by Flexible.

The period provided for evidence in support was deferred because of the request for dismissal and then extended after the opponent requested the production of documents but expired on 8 July 1999 with no evidence in support being served.

A hearing on the application for an extension of time was held in Canberra on 23 November 1999.
Beltreco was represented by Malcolm Bell patent attorney of Phillips Ormonde & Fitzpatrick, Melbourne.  Flexible was not represented at the hearing but written submissions were filed by their patent attorneys H.R. Hodgkinson & Co.  Following the Hearing the delegate invoked regulation 5.11 to have regard to evidence referred in the applicant's submissions but not filed and served in the current action.

APPLICATION FOR EXTENSION

A statutory declaration by Mr Walsh of H.R. Hodgkinson & Co, dated 11 March 1998, was filed in support of the application for an extension of time.  The following excerpt from this declaration sets out the circumstances in which the application was made:

"On March 1998 an officer of our policing department brought to my attention an anomaly which he detected in the policing records in that he noted a file cover bearing the date 25 June 1997 being the date for renewal of patent 584013 which had not been actioned.

I checked our policing records to find that the renewal due on 25 June 1997 had been erroneously deleted from diarising as if the renewal had been actioned.

As a result of this, the case was not renewed on 25 June 1997.  It appears from my investigation that failure to renew this case by the due date of 25 June 1997 was due to the erroneous deletion of the deadline.  The relevant file was destroyed after about eight years so there were no transactions on the original case file to alert me to any problem. 

I made every attempt to establish why the policing entry was deleted without appropriate action but am unable to establish this due to the absence of the relevant staff member who has now resigned.

Thus, renewal of this case was entirely dependent upon accurate policing by the renewals department."

THE LEGISLATION

The provisions of Section 223 relevant to the present request for an extension of time are as follows:

"(2) Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney; or…

a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.

(3) The time allowed for doing a relevant act may be extended, whether before or after that time has expired.

(4) Where an application is made for an extension of time for more than 3 months, the Commissioner must advertise the application in the Official Journal.

(6) A person may, as prescribed, oppose the granting of the application.

(7) Where:

(a) a patent application lapses, or a patent ceases, because of a failure to do one or more relevant acts within the time allowed; and
(b) the time for doing that act or those acts is extended;
the patent application or patent must be treated as having been restored."

(11) In this section:
"relevant act" means an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications.

Further definition of these provisions are given in subregulation 22.11(3):

22.11(3) For the purposes of the definition of "relevant act" in subsection 223(11) of the Act, each of the following actions is prescribed:
 (b)  paying a fee in a period that is extended because of subregulation 13.3(3) ("prescribed period: continuation fees") or subregulation 13.6(3) ("time for payment of renewal fee for standard patent").

EVIDENCE

Documents cited by the applicant in submissions in support of its application comprise:

1.        Statutory Declaration of J. R. Walsh dated 11 March 1998

2.Statutory Declaration of J. R. Walsh dated 8 April 1998 and annexure.

3.Statutory Declaration of J. R. Walsh dated 23 April 1998 and annexures

4.        Statutory declaration of H. R. Hodgkinson dated 11 December 1998

5.        Statutory declaration of P. R. Abecrombie dated 16 December 1998

6.Letter from H.R.Hodgkinson & Co dated 19 June 1998 to Mr P.R. Abecrombie of Belle Banne Flexco Pty Ltd

7.Memo dated 25 June 1998 from Mr P.M Ramsay of Flexible Steel Lacing Company to HR Hodgkinson & Co

8.Memo dated 21 October 1998 from Mr P M Ramsay of Flexible Steel Lacing Company to H R Hodgkinson & Co

9.Letter dated 26 October 1998 from H R Hodgkinson & Co to Mr P. M Ramsay of Flexible Steel Lacing Company.

Items 1-3 were filed by Flexible in support of the application for an extension of time.  Items 4-9 were brought to my attention by the Flexible's written submissions at the hearing, but had not been filed and served as evidence in the opposition.

Because of the relevance of items 4-9 to the issues before me, I proposed invoking regulation 5.11(1) to inform myself of facts in these documents. Beltreco objected and obtained a hearing on this matter. Beltreco's objection was dismissed for the documents of items 4-7 and 9, but upheld for the document of item 8. Accordingly in this hearing, I will refer to evidence from items 4-7 and 9, but not item 8. All matters relating to the decision to refer to this additional evidence are more fully discussed in Patent Office decision 584013 [2000] APO 24 (28 March 2000).

SUBMISSIONS

Submissions from each party are referred to in the decision.

DECISION

In order to enliven the provisions of Section 223 (2) (a) I need to be satisfied that the failure to pay the renewal fee was caused by an error or omission by either the applicant or the applicant's agent, or circumstances beyond the control of the person concerned.  The applicant has asserted that the failure to pay the renewal fee when it was due was caused by attorney error.  The error is described as arising from an erroneous deletion of the renewal deadline of 25 June 1997 from the firm's diary.

Belle Banne Flexco Pty Ltd and Flexible Steel Lacing Company
Some of the evidence before me relating to patent 584013, refers to the company Belle Banne Flexco Pty Ltd and H.R. Hodgkinson & Co as acting for them.  Belle Banne Flexco Pty Ltd is described as being owned by Flexible Steel Lacing Company and authorized to act on its behalf in Australia.  Statements were made to this effect by Mr Walsh his declaration of 23 April 1997, and by Mr Abecrombie of Belle Banne Flexco Pty Ltd in his declaration of 16 December 1998.  Mr Abecrombie also indicated that all communications on renewals went through Belle Banne Flexco Pty Ltd.  This evidence was not contested and I am satisfied that that H.R. Hodgkinson & Co and Belle Banne Flexco Pty Ltd were acting for Flexible in this matter.

The diary system used during 1997
The diary system used during 1997 was explained in a statutory declaration by Mr Hodgkinson dated 11 December 1998.  Also provided with Mr Hodgkinson's declaration are copies of relevant pages from the "Any Year" diaries used during 1997 and the file cover associated with patent 584013 which also contains renewal information.  Apart from the evidence of the diaries no evidence was provided by the applicant on the issue of whether any reminders were sent by H.R. Hodgkinson & Co, or if sent out, whether any reminders were received by Belle Banne Flexco Pty Ltd or Flexible before the due date in 1997.

Mr Hodgkinson indicated that the diary should contain three renewal prompts on each patent. The earliest is at three months before the due date, the next at one month before and the final one at the due date.  The first two prompts are actioned by the renewals clerk sending a letter out to the Patentee alerting them to the approaching renewals deadline and requesting instructions for payment.  When this reminder letter is sent out, the file with a copy of the letter is sent to the surveillance clerk who then strikes out the diary entry.  If no instructions are received in response to either of these reminder letters, then the final prompt is actioned by the renewals clerk faxing the patentee for instructions and, if no instructions are received, telephoning for specific instructions.  If the client instructs the firm to pay the renewal fee, then following sending the payment to IP Australia the due date is crossed out from the "Any Year" diary and from the file cover for 584013 and the new reminder dates are entered.  If the client instructs the renewal clerk that the client does not wish to renew the patent the due date is then crossed out from the "Any Year" diary.

The pages supplied from the Black "Any Year" diary have no record of the three month prompt for the renewal deadline of patent 584013.  This fact is referred to in Mr Hodgkinson's declaration and it does suggest an error in their record keeping.  However there are reminder entries at 25 May (the one month reminder) and 25 June (covering the date the renewal fee was due) for patent 584013 in 1997.  These have been crossed out.  But on the file cover for 584013 the 1997 renewal dates are not crossed off and no reminder dates have been entered for 1998. 

On the basis of the described procedures the deletion of the diary entries could have happened due to either of the following possibilities:

1) A one month reminder notice was sent to Flexible by H.R. Hodgkinson & Co and receipt of instructions not to renew the patent during the week before the due date for the renewal of the patent.

2) An error was made, for example, one or more of the reminder dates was erroneously crossed out in the diary as if actioned. This is of course consistent with the explanation in the Walsh declaration.  The omission in the diary of an entry at three months before the due date indicates the existence of irregularities in the renewal procedures or record keeping at that time.

Although not important in my decision, I also note that Mr Hodgkinson's declaration describes a second diary system (The Green "Any Year" diary) which was introduced at some point during 1997 and gradually replaced the Black "Any Year" diary.  Mr Hodgkinson suggested that renewal entries might have been erroneously deleted during the transfer of data from the Black diary to the Green diary.  However the diary pages provided as evidence from the Green diary do not appear to list any entries from before July 1997.  Because of this fact and the lack of any other indication, I am not confident that the Green diary was being relied on during June 1997 when the renewal fee was due for 584013.  I have therefore not attached any significance to the lack of 1997 renewal information on 584013 in the Green diary.

The intent of the applicant
To determine whether a relevant error or omission occurred, I need to assess whether the deletion of the diary deadlines reflects the intention of the applicant with regard to the renewal of 584013.  A breakdown in procedure effecting a party's intention may itself be found to be an error, this was indicated in an earlier Patent Office decision, Stork Pompen v Weir Pumps 11 IPR 542. Evidence relevant to the determination of the applicant's intentions includes indications of whether the patent was important to the applicant's business. On this matter the following correspondence annexed to the Walsh Declaration (of 23 April 1998) appears relevant:

18 October 1996        Letter to opponent asserting that Beltreco is importing stocking and selling ceramic pulley lagging in Australia which is believed to fall within the scope of the claims of patents 575408 and 584013.  Request to cease sales and importation of this pulley lagging.

3 January 1997           Letter to Phillips Ormonde & Fitzpatrick reiterating belief that the lagging falls within the scope of the claims of 575408 and 584013, threatening commencement of Federal Court action and seeking advice on whether they are willing to accept service of process on behalf of their client.

29 April 1997             Letter to Phillips Ormonde & Fitzpatrick, threatening commencement of Federal Court proceedings unless satisfactory reply obtained.

The most recent of these letters is within two months of the date by which the renewal fee on 584013 was due to be paid.  In late April 1997, the applicant was apparently relying on patent 584013 (along with 575408) to stop Beltreco from importing and selling pulley lagging products and considering commencement of proceedings in the Federal Court on the basis of these patents.

I think the evidence of these letters strongly supports the view that Beltreco intended to renew patent 584013, (I note that Flexible did renew 575408) and the failure to renew 584013 reflects a breakdown in procedure effecting their intention. 

Consistent with this view is the fact that the applicant applied to Federal Court to initiate an infringement action based on 584013 and 575408 on 12 November 1997.  This date is less than six months later than the due date for payment of the renewal fee and so is still within the "grace period' defined by subregulation 13.6(3).  It was suggested by Beltreco that the applicant may have intentionally not paid the renewal fee by the due date of 25 June 1997 and later subsequently decided to rely on 584013 in their Federal Court action.  If this was so, it is surprising that they did not invoke subregualtion 13.6(3) and so effected an extension of the prescribed period to pay the renewal fee.

Was the payment of renewal fee dependent on reminders from H. R. Hodgkinson & Co?
Beltreco argued that there was no evidence that the applicant relied on reminders from H.R. Hodgkinson & Co prior to payment of the renewal fee.  According to this argument the applicant has not shown that any error by the attorney firm led to the renewal fees not being paid.  I do not find this argument very persuasive.  In circumstances where the applicant's agent is providing a reminder system for renewals, I would need good reason to conclude other than that the applicant relied upon the provided system. 

Correspondence annexed to Mr Hodgkinson's declaration of 11 December 1998 provides a record of the reminder system during 1994 which is consistent with the assumption that the applicant relied on reminders from their patent attorneys for renewal dates.

11 April 1994             Letter from H. R. Hodgkinson & Co to the applicant informing them that a renewal fee was due on 25 June 1994, that the patent would lapse if this was not paid, and requesting instructions.

15 April 1994             The applicant responded to this letter confirming that they wished to proceed with the renewal of patent 584013 

17 June 1994             H. R. Hodgkinson & Co sent a letter to the applicant which confirmed that the fee was paid, informed them of the date the patent would be extended to and stated that they would be reminding the applicant of the need to renew the patent in good time prior to the due date.

This illustration of a previous renewal for 584013 supports the submissions made by the applicant that they have a history of payments prior to the due date.  I have no reason to consider that the applicant made a decision to postpone payment with a view to relying on subregualtion 13.6(3) to extend the deadline for renewal payments.

More evidence supporting the view that the renewal fee was not paid because of an error or omission by the patent attorney firm is provided the following correspondence between the applicant and H. R. Hodgkinson & Co following the lapsing of patent 584013.

19 June 1998              Letter from H.R.Hodgkinson & Co to Peter Abecrombie of Belle Banne Flexco Pty Ltd.  This letter described the lapsing of Patent 584013 as being due to clerical error in the renewal department.

25 June 1998              Memo from Mr P.M Ramsay of Flexible Steel Lacing Company to H.R. Hodgkinson & Co.  This document describes the receipt of news of the non payment of the renewal fee for 584013 as a "terrible shock".

26 October 1998        Letter from H R Hodgkinson & Co to Mr P. M Ramsay of Flexible Steel Lacing Company.  This details an assurance that the attorney firm of H.R. Hodgkinson & Co is accepting responsibility for the failure to renew patent 584013. 

Although I have kept in mind that these letters were written after the patent lapsed, I consider the letters provide credible evidence that the renewal fee for patent 584013 was not paid due to an error or omission by the applicant's attorney firm, rather than deliberate choice by the applicant. 

Having considered all the evidence before me, it is clear to me that the applicant did not advise
H.R. Hodgkinson & Co that they did not wish to renew patent 584013 at the due date.  The diary entry of 25 June 1997 for patent 584013 was thus crossed out in error.  The applicant at the relevant time, intended that patent 584013 be renewed.  I conclude that the failure to pay the renewal fee at the due date was due to an error or omission by staff in the firm of H. R. Hodgkinson & Co. 

I now need to decide whether to exercise my discretion and extend the period for paying the renewal fee.  Beltreco argued that the explanation given by the applicant was not "full and frank" and because of this, I should not exercise my discretion to grant an extension of time to the applicant.  For a guide as to what a "full and frank" explanation should entail, Beltreco cited Kimberly-Clarke v Commissioner of Patents and Another 13 IPR 569, in which Jenkinson J stated at p583:

"But what may just suffice to enliven the power cannot in this case justify its exercise, in my opinion.  The considerations which were identified by Bowen CJ in Vangedal-Nielsen v Commissioner of Patents (1980) 33 ALR 144 at 150 as relevant to the exercise of the power of extension conferred by s 59(1) will in my opinion be relevant also to the power of extension conferred by s 160(2)(a) in relation to the time prescribed by the former subsection for lodging a notice of opposition….

In order to make out the "proper case…..justifying an extension" to which Bowen CJ referred in that case, an applicant would in my opinion have to go beyond a disclosure of the processes by which an agent's errors came to be commited, and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes of the applicant (or in the case of the corporation aggregate, of the relevant officers and other agents) relevant to an understanding of the way the failure to do the act or take the step occurred, or relevant to an evaluation of the reasonableness of that conduct."

These remarks by Jenkinson J were recently considered in Sanyo Electic v Commissioner of Patents (1996) AIPC 91- 283. The decision under review there, also concerned an application under Section 223 (2) for an extension of time in which to pay a renewal fee. Deputy President GL McDonald discussed the applicability of the Sanyo decision:

"The comments made by Jenkinson J in Kimberly-Clark's case (supra) arose in the context of the court considering an application to extend time for the lodging of an objection to the grant of a patent under the then s.59(1)(d) of the Patents Act 1952 (Cth) - a context somewhat different from that under consideration by the Tribunal in the instant case. On the basis of that differing context Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) 49 FCR 205 distinguished the reasoning expressed in the Kimberly-Clark case cited in the passage quoted at paragraph 12 herein and said that the Court:

"…was not laying down rules for the exercise of general discretions to grant extensions of time."  (p.208)"

The applicant has the burden of placing before the Commissioner the circumstances that it claims will justify the grant of an extension of time, but this is not a burden of proof or a requirement for some particular level of detail.  There is no imperative that requires the applicant to provide all relevant details of all the conduct, knowledge, beliefs and mental processes of the applicant or in the case of the corporation aggregate, of the relevant officers and other agents, in order to justify the exercise of the discretion conferred by S 223(2).  Rather there simply needs to be enough information before me to satisfy me that the exercise of this discretion is warranted.

On the basis of the evidence before me, I consider that the explanation given by Mr Walsh on 11 March 1998 accurately set out the essential facts of the case.  There are no submissions on the public interest or concerning the interests or conduct of the parties that require especial consideration in this instance.  I am satisfied that the applicant acted diligently in applying for a extension of time shortly after discovering that the patent had lapsed.  I am also mindful that in general a legislative provision providing for the exercise of a discretion is beneficial in nature and should be applied beneficially, although it is still important to form a view as to whether it is in the interests of justice that time be extended: Robert Erwood V. Commissioner for Superannuation Federal Court decision No. 246/94 (1994) 19 AAR 45. In this case, I am confident that it would be in the interests of justice to allow an extension of time to enable the applicant to pay the renewal fee that was not paid in time due to an error by the applicant's patent attorney and that this extension is appropriate in the circumstances.

Accordingly I consider the request for an extension of time is justified, and grant the extension of nine months to allow the renewal fee to be paid.

COSTS

Costs normally follow the event unless other considerations prevail.  In this case I have needed to invoke Section 5.11 to consider all the evidence being relied on by the applicant and to satisfy myself that an extension of time was warranted.  This need to invoke regulation 5.11 arose in my opinion because the applicant failed to properly file and serve their evidence in the current action.  The applicant's actions in this regard have caused unnecessarily delay and complications in the determination of their extension of time application.  In these circumstances I consider it is appropriate to make no award on costs.

Ross Osborne
Delegate of the Commissioner of Patents

Patent attorneys for the applicant  :  H. R. Hodgkinson &Co.

Patent attorneys for the opponent   :  Phillips Ormonde & Fitzpatrick, Melbourne