Fonterra Co-Operative Group Limited v Leprino Foods Company - [2014] APO 24

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Fonterra Co-Operative Group Limited v Leprino Foods Company [2014] APO 24

Patent Application: 2008325000

Title:Non-fat dry milk production processes

Patent Applicant:  Leprino Foods Company
Opponent:  Fonterra Co-Operative Group Limited
Delegate:  Matthew Lee
Decision Date:  1 May 2014
Hearing Date:  Written submissions dated 13, 14, 21 and 24 March 2014
Catchwords:  PATENTS – dismissal of multiple grounds of opposition – some grounds in statement of grounds and particulars are particularised – further and better particulars required for these grounds – other grounds of opposition dismissed – expert evidence cannot be relied on to compensate for absence of particulars - no award of costs due to conduct of filing late submissions

Representation: Patent applicant: Davies Collison Cave, Sydney
Opponent:AJ Park, Wellington, New Zealand

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2008325000

Title:Non-fat dry milk production processes

Patent Applicant: Leprino Foods Company
Date of Decision: 1 May 2014
DECISION

Grounds 6-10 are dismissed. Further and better particulars are required for the ground of novelty with regard to the allegations of prior use. I direct that the opponent has two (2) weeks from the date of this decision to file these further and better particulars. No award of costs.
REASONS FOR DECISION
Background
Leprino Foods Company (“applicant”) is the applicant for patent application 2008325000 which was advertised as accepted on 25 July 2013. A notice of opposition to the grant of the patent was filed by Fonterra Co-Operative Group Limited (“opponent”) on 25 October 2013. The statement of grounds and particulars (‘Statement’) was filed on 27 January 2014. Leprino requested dismissal of the opposition on 14 February 2014, and a hearing by written submissions was set.
The Written Submissions
The dates set for receiving written submissions were 14 March 2014 for initial submissions, and then 21 March for filing of submissions in response. Submissions were received from the opponent on 14 March and 21 March within these parameters. The applicant filed their initial submissions on 13 March; however their submissions in reply were filed on 24 March, outside the final deadline.
The applicant has requested an extension of time in order that their submissions in reply be considered for the purposes of this decision. In providing an explanation of this failure to meet the 21 March deadline the applicant stated that:
“The Applicant was considering not filing submissions in response, especially in light of the Opponent conceding to the dismissal of various grounds of the Opposition.
However, in the Opponent’s submissions in response, dated 21 March 2014, it was noted the Opponent had reversed their position in relation to a number of those grounds.
This reversal has required the Applicant to address these submissions in response by way of the attached Response to Written Submission, which we respectfully request to be taken into consideration in determining this matter.”
The opponent has since provided commentary on this matter in a letter dated 25 March 2014, stating that the ‘reversal’ of position (with regards to grounds 6 and 7) was due only to a typographical error, and was not actual consent to the grounds being dismissed. They further state that the applicant’s submissions are a ‘reply to a reply’ (as in providing submissions not only addressing the opponent’s original submissions but also addressing the opponent’s submissions in reply), and as a consequence I should “refuse to receive the applicant’s reply submissions, and decide this matter on the papers filed by 21 March”.
Although the applicant’s submissions are of the nature where they can be said to be a ‘reply to a reply’, this does not act as an automatic bar to them being considered as there is no formal requirement that the second set of submissions be strictly in reply to those made by the other party – rather, it simply affords a party a second opportunity to make further statements in the interests of their case. Nevertheless, having now read and considered the applicant’s submissions in reply I do not believe that they add any additional material of significance beyond what was said in the initial submissions of the applicant, and thus have no further persuasive value beyond what has been said in the initial submissions. Therefore the question of whether I should refuse to receive the applicant’s submissions in reply is moot, as deciding this question in either way leads to the same ultimate position.
With regard to the conduct of the applicant in preparing these late submissions, more will be discussed on this matter at the conclusion of this decision when making an assessment of costs.
Law on Dismissal
Dismissal of an opposition is provided for by regulation 5.17 of the Patents Regulations 1991 as follows:
5.17 Dismissal on request
(1) An applicant may request the Commissioner to dismiss an opposition:
(a) within one month from the day the Commissioner gives the applicant a copy of the statement of grounds and particulars under subregulation 5.5(3), 5.6(3) or 5.11(3); or
(b) if the applicant’s complete specification is re‑examined under subsection 97(1) of the Act—within one month from the day the re‑examination is completed as required by regulation 9.5.
(2) The request must be in the approved form.
(3) The Commissioner must give the opponent a copy of the request as soon as practicable.
(4) If the Commissioner decides to dismiss the opposition, the Commissioner must, as soon as practicable, notify the parties of the decision.
Guidance on the approach to be taken in dismissal matters can be found in Les Laboratoires Servier v Apotex Pty Ltd [2008] APO 11. At [18] the delegate provided a useful summary of key principles:
“I consider that several key principles flow through to patent oppositions from the changes to s 31A of the Federal Court Rules and the guidance provided by the above decisions:
·    An opposition need not be “clearly untenable” or “manifestly groundless” in order for it to be dismissed. An opposition may be dismissed if it is considered to have no reasonable prospects of success.
·    In determining whether or not there is a real prospect of success, consideration is given as to whether there is a real rather than fanciful issue to be decided. The onus will initially be on the applicant to show that the opposition has no reasonable prospects of success, but the onus may shift to the opponent to explain its case if a real issue is not self-evident. This will not involve an in-depth consideration of the substantive opposition, but may involve sufficient analysis to determine if a prima facie case has been established.
·    A dismissal will generally be inappropriate where expert evidence is required to determine an issue. However, this does not preclude dismissal of an opposition where there is a clear deficiency in the case to be argued, such as a technical divergence of a citation and the application or where an opposition involves issues of construction and expert evidence is not necessary to clarify technical terms or other matters that are in doubt.
·    Evidence of an “ambivalent character” will generally be sufficient to establish a reasonable prospect of success. However, if the evidence is only one-way, or can clearly lead only to a single conclusion, then a proceeding may be dismissed. If no particulars have been provided in relation to a ground of opposition then it may be considered to have no reasonable prospects of success.
·    Care must be taken not to cause an injustice to a party by dismissing an opposition.”
The definition of “reasonable prospect of success” was also discussed in the context of the Federal Court Rules in the High Court decision in Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118. At [59]-[60] the majority said:
“In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.
Rather, full weight must be given to the expression as a whole.”
An opposition can be dismissed by the Commissioner either in whole or in part (L'Air Liquide, Societe Anonyme pour l'Etude et l'Exploitation des Procedes Georges Claude v Commonwealth Industrial Gases Ltd [1992] APO 1; (1991) 24 IPR 77).
In instances where it may not be appropriate to dismiss a ground of opposition, it is open for the Commissioner to request further and better particulars (Mobay Corporation v. The Dow Chemical Company [1992] APO 25; 24 IPR 379; (1992) AIPC 90-895). This will depend on whether the grounds have been particularised with material facts, as discussed in Genelabs Technologies Inc. v. Murex Diagnostics Australia Pty Limited [1996] APO 47; 36 IPR 54:
“There may be circumstances where the particulars do not provide any material facts. In these circumstances further and better particulars are inappropriate and the Commissioner may direct that the ground is to be dismissed, if there are no remaining particulars, or that the particular is not to be relied on at the substantive opposition hearing.
There may be circumstances where the particulars do provide material facts but do not clearly or adequately describe the case to be defended. In these circumstances further and better particulars are required.
The adequacy of the statement of grounds and particulars in opposition proceedings before the Patent Office therefore appears, in my view, to relate to a question of whether or not the statement of grounds and particulars clearly and adequately describes the nature of the case to be defended. If it does clearly and adequately describe the nature of the case (and give material facts) then there is no need for further and better particulars.”
Identification of material facts with reference to specific examples was discussed in E.I. Dupont de Nemours and Company v Dowelanco [1994] APO 27; (1994) AIPC 91-067; 30 IPR 25:
“I understand the "material facts" of Mobay (supra) to mean the facts needed for the opponent to establish a prima facie case, but without legal argument, argument based on the facts, corroborative evidence, or references to legal precedent. In my view, an opponent needs to provide more than just a mere allegation of the case to be answered. For example, a reference to "prior knowledge, use and sale" or "mere mixture of known ingredients", without the facts to establish a prima facie case, does not provide an applicant with reasonable details of the case to be answered and so defend itself.
For example, for the applicant to understand the case it has to defend in the present circumstances, without placing an undue burden on the opponent, the particulars should briefly and generally include:
·    for documents, the relevance of the reference to the ground together with page and line references to direct the reader to the specific part of the document that is to be relied on. Also, where patent documents have been published in more than one version, then the version being relied on should be identified and if reference is made to patent family members then material facts relevant to the family member should also be clearly identified;
·    for common general knowledge, a brief description of the alleged common general knowledge and identification of the person skilled in the art including brief details of any material facts needed to establish a prima facie case;
·    for manner of manufacture, a brief description of the particular type of manner of manufacture, eg. a mere mixture of known ingredients, together with brief details of material facts to establish a prima facie case;
·    for matters such as prior knowledge, sale, prior use, a brief description of their relevance to the ground together with a brief details of the material facts to support a prima facie case, for example, (a) the date and place of any use, (b) the person or persons to whom the invention was allegedly disclosed or sold;
·    for trade marks or trade names, a brief description of the nature of the material together with a description of its relevance to the opponent's case. Of themselves, references to trade marks or trade names are meaningless particulars; it is quite possible for the constituents of a product to be changed and for the product to continue to be sold under the same trade mark or trade name;
·    for section 40 matters, a brief description of the specific subject matter causing section 40 not to be satisfied, a clear statement of the specific statutory requirement and the identification of the deficient part of the specification (by reference to page and line and/or claim numbers).”
The Statement of Grounds and Particulars
The applicant is seeking dismissal of grounds 4-10. The opponent has consented to the dismissal of grounds 8-10 regarding lack of clarity, lack of fair basis and the priority date of the patent application. The other grounds and particulars in contention are provided by the opponent as listed below.
Ground 4 - “Lack of novelty—prior use—ss18 (1)(b)(i), 59(b)”
4.1The opponent says that the alleged invention, so far as claimed in any claim of the opposed patent, is not novel when compared with the prior art base as it existed before the earliest priority date to which the claims are entitled.
4.2In particular, the opponent says that before the earliest priority date product was sold in one or more countries internationally that disclosed the essential integers of at least claims 1, 3, 9, 10, 17, 19 and 22.
4.3The opponent reserves the right to rely on further particulars to support this ground of opposition.

Ground 5 - “Lack of inventive step—ss18(1)(b)(ii), 59(b)”
5.1The opponent says that the alleged invention so far as claimed in any claim of the opposed patent does not involve an inventive step when compared with the prior art base as it existed before the earliest priority date to which the claims are entitled.
5.2The opponent says that the alleged invention so far as claimed in any claim of the patent would have been obvious to a person skilled in the relevant art in light of the common general knowledge as it existed in Australia before the earliest priority date to which the claims are entitled, separately or together with the prior art information.

5.3 The opponent says that the common general knowledge included at least the following:
5.3.1Removing calcium from milk, including skim milk, inhibits coagulation of rennet hydrolysed milk proteins.

5.3.2 Calcium can be removed by various techniques, including adding sequestrants.
5.3.3Adding calcium promotes coagulation of rennet hydrolysed milk proteins, thereby improving the properties of the resulting curd and the end-product cheese.
5.3.4Milk protein concentrate powders and non fat dairy milk powders can be used in cheese manufacture.
5.4The opponent relies on the information in the documents listed in schedule 1, and the information made publicly available through doing the acts in paragraph 4 above, or a combination of these pieces of information.
5.5The opponent says the prior art information it relies on is information that the skilled person could, before the earliest priority date to which the claims are entitled, be reasonably expected to have ascertained, understood, and regarded as relevant.
5.6The opponent reserves the right to rely upon further prior art documents that come to light to support this ground of opposition.

The particulars continue to include a discussion of prior art documents D1-D10 in items 5.7-5.16, and then proceed to “Sale of prior use product” under item 5.17:
5.17 Sale of prior use product
5.17.1 The opponent refers to paragraphs 4.2 and 4.3 above.
5.17.2Every claim of the opposed patent lacks inventive step in light of this enabling disclosure together with the common general knowledge.

Ground 6 – “Lack of utility—ss 18(1)(c), 59(b)”
6.1The opponent says that the alleged invention, so far as claimed in any claim of the opposed patent, is not a patentable invention because it is not useful.
6.2The object of the invention is the development of 'processes of making NFDM that give the milk proteins in the composition qualities that are more similar to treated proteins in traditional cheese curd' [0004]. This object is not achieved by the alleged invention as claimed.
6.3The opponent reserves the right to rely on further particulars to support this ground of opposition.

Ground 7 – “Lack of sufficiency—s59(c), s40(2)(a)”
7.1Fonterra says that the applicant has not sufficiently and fairly described its invention, and has not described the best method of performing it.
7.2The complete specification does not provide the skilled person with adequate directions to make a powdered dairy composition by the method claimed.
7.3The complete specification does not provide the skilled person with adequate directions to make the products claimed.
7.4The opponent reserves the right to rely on further particulars to support this ground of opposition.

Consideration
Ground 4

Section 18(1)(b)(i) requires that a patentable invention must be novel. Novelty is regarded as an individual and separate ground of opposition (Fujisawa Pharmaceutical Co., Ltd v Banyu Pharmaceutical Co., Ltd [1994] APO 52; (1995) AIPC 91-172).
In the Statement the applicant has split the ground of novelty into Ground 3 which covers prior publication, and Ground 4 which covers prior use. However, novelty is regarded as an individual ground of opposition (Fujisawa Pharmaceutical Co., Ltd v Banyu Pharmaceutical Co., Ltd [1994] APO 52; (1995) AIPC 91-172), so splitting novelty into Grounds 3 and 4 is only notional at best. Other considerations of prior publication and prior use only become relevant when assessing the prior art base within this ground of novelty.
Therefore Grounds 3 and 4 are to be taken as a single ground, albeit particularised under two different headings. The applicant has not provided submissions objecting to Ground 3, and I am of the opinion that had it been a separate ground it would have been adequately particularised. So regardless of the particulars provided for Ground 4, it must be said that the singular ground of novelty provides some particulars with material facts, and therefore should not be dismissed.
The more appropriate question to ask is whether the particulars of Ground 4, when combined with those of Ground 3, are so inadequate that further and better particulars are warranted. The only material facts given with relation to the alleged prior use is that sales occurred in one or more countries internationally. In accordance with E.I. Dupont (supra) no details have been provided regarding the date and place of any use or the person or persons to whom the invention was allegedly disclosed or sold. The opponent has also expressly acknowledged that the person with the most knowledge of the alleged prior use was unavailable at the time of filing the Statement, and that “it is intended that further particulars of the prior use will be provided when they become available”. I believe that further and better particulars regarding the alleged prior use are required.
Ground 5
The applicant has raised deficiencies with specific references to alleged common general knowledge and combination of common general knowledge with the alleged prior use of the product.

The ground of inventive step has been adequately particularised in the discussion of prior art documents D1-D10 in paragraphs 5.7-5.16 of the Statement and therefore the entire ground should not be dismissed. I have already stated that further and better particulars are needed regarding the alleged prior use with regard to novelty, and it is clear the provision of such details will alleviate any problems with any reliance on prior use disclosures for the purposes of inventive step.
Turning to the question of common general knowledge, the applicant has submitted that the items of alleged common general knowledge as provided in the Statement “taken alone are not sufficient to show lack of inventive step in any claims”. The applicant also specifically submits that “there is no suggestion that adding sequestrants to bind calcium ions to a level that prevents substantially all aggregation of rennet hydrolysed milk proteins is known or obvious in any way”.
It is not my place to consider the merits of the case put forward by the opponent as to whether the claims are obvious in light of the common general knowledge of the art. Having already come to the conclusion that the ground of inventive step has been particularised, this ground is not open to dismissal. Furthermore, the opponent has clearly provided a list of alleged common general knowledge under item 5.3 in the Statement. I consider that the ground has been adequately particularised such that a prima facie case could be established and the applicant has been sufficiently informed of the case to answer.
Ground 6
Paragraph 6.2 of the Statement only recites the object clause of the specification, and then says that this object is not achieved by the invention as claimed. No further details are provided of how the invention fails to meet this object clause, or what the particular failings of the invention as described are. In the absence of any of these details I am not satisfied that any material facts have been provided to possibly support a case with a reasonable prospect of success for this ground. Quoting the object clause and providing a statement that the object clause has not been met is simply a reiteration of the ground of usefulness, and does not constitute the provision of any material facts informing the applicant of the case to be answered.
The opponent has submitted that it has provided a particular and a material fact in support of this ground, and also that the issue of utility “is often not fully appreciated until after an expert witness has reviewed the patent. Until this has happened, the ground of lack of utility cannot be particularised in detail”.
I am somewhat sympathetic to the argument that a ground such as utility would rely heavily upon expert evidence and that particularising this ground in great detail can be difficult in the absence of such evidence. However, the case law relating to dismissal makes it abundantly clear that grounds must be particularised to at least some degree in order for a reasonable prospect of success to be displayed. I am not of the opinion that has occurred here.
With regard to the reliance on expert evidence to further particularise the ground, I turn to Pacific Enterprises (Aust) Pty Ltd v Assa Abloy Australia Pty Limited [2012] APO 73 at [17]-[18]:
“The applicant states that there are no material facts provided for this ground. The opponent has stated:
“The Opponent will lead evidence from the person skilled in the art as to why the invention as claimed in claim 13 will not work. In the absence of such evidence, the Commissioner is unable to consider whether there is no reasonable prospect of success and should not dismiss this ground of opposition.”
The opponent is not correct. The opponent is required to provide the material facts of their case in the Statement, and cannot simply wait until the service of evidence to make the case apparent. It is the Statement that must be examined, not evidence that has not yet been prepared.”
The opponent has an obligation to set out the grounds of opposition, and for each ground of opposition properly particularise the ground with material facts which could support a prima facie case with at least some reasonable prospects of success such that the applicant can answer the opposition. The failure to provide further details on how the invention fails to meet the object clause, or what the particular failings of the invention as described are means that no material facts have been provided for this ground, and in the complete absence of material facts the opponent cannot fill this void with a promise of providing expert evidence later.
I would therefore come to the conclusion that this ground should be dismissed.
Ground 7
The Statement only provides particulars under this ground that the specification lacks adequate directions to make a powdered dairy composition by the method claimed as well as other products as claimed. As with Ground 6, the opponent submits that they have provided particulars and material facts in support of this ground, and that “the full details of the sufficiency issue will only become apparent after the patent is reviewed by the opponent’s expert witness”.
It appears to me that this ground suffers the same deficiencies as those discussed in Ground 6. The specification quite clearly sets out a method of producing a powdered dairy composition and other products such as a cheese product. Therefore to display a reasonable prospect of success under this ground the onus is on the opponent to provide material facts in the particulars to point out which parts of the method are insufficiently described, or how the method is insufficiently described. The particulars provided only identify the products (either the powdered dairy composition or other ‘products claimed’) produced by the methods as claimed without making any reference to the specification. This is equivalent to restating the ground of opposition, and therefore I can only come to the conclusion that no material facts have been provided for this ground and that the ground has not been particularised.
Also similar to the discussions regarding Ground 6, I am of the opinion that the opponent cannot rely on expert evidence to compensate for the lack of particulars. If the Statement had provided some material facts identifying sufficiency problems then these material facts would provide a basis for expert evidence to be presented expanding on these allegations, as well as properly informing the applicant of the case to be answered. Once again no such material facts were provided, and therefore I would come to the conclusion that the ground should be dismissed.
Grounds 8-10
These grounds relate to lack of clarity, lack of fair basis and the priority date of the patent application. As noted earlier the opponent has consented to the dismissal of these grounds, and I am also inclined to agree to this dismissal.
Conclusion
Grounds 6-10 are dismissed. Further and better particulars are required for the ground of novelty with regard to the allegations of prior use. I direct that the opponent has two (2) weeks from the date of this decision to file these further and better particulars.
Costs
It is usually the case that costs follow the event. However, as alluded to earlier I am of the opinion that the conduct of the applicant in preparing the late submissions in reply should be taken into consideration when making an assessment of costs.
The initial submissions presented by the opponent clearly provide arguments relating to grounds 6 and 7, and also clearly consent to the dismissal of grounds 8-10. In contrast at paragraph 11.3 of their initial submissions the opponent summarised:
“The opponent consents to the dismissal of the grounds in paragraphs 6, 7, 8, 9 and 10 of the Statement of Grounds and Particulars.”
Whilst the above statement refers to the opponent consenting to the dismissal of grounds 6-10, on a fair reading of these submissions the overall meaning is clearly in favour of the opponent wishing to retain grounds 6 and 7 (as evidenced by the paragraphs of submissions devoted to this view), and that the inconsistency has been caused by a minor error in the conclusion (which has occurred through the inclusion of these numbers in the single sentence above).
Therefore I do not accept the reasons provided by the applicant that their submissions in reply were delayed due to the mistaken belief that the opponent had ‘reversed’ their position on grounds 6 and 7. I also note that the applicant has further used this delay to formulate a ‘reply to a reply’, which suggests that extra time was taken after the lodging of the opponent’s submissions in reply and causing the submissions to be late. The circumstances of filing the applicant’s submissions in reply leads me to a position where despite the applicant being partially successful in their request to have some grounds of opposition dismissed, I am of the opinion that no award of costs should be made.
Matthew Lee
Delegate of the Commissioner of Patents