Footwear Pty Ltd v Strongfoot Pty Ltd
[2006] APO 12
•11 April 2006
ABSTRACTS OF DECISIONS
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Application : No. 2004904066 in the name of Strongfoot Pty Ltd
Title: Safety Toe Cap
Action: Section 32/36 applications by Footwear Pty Ltd and an objection by Footwear Pty Ltd to an application by Strongfoot Pty Ltd for an extension of time to serve evidence in answer
Decision: Issued 11 April 2006.
Abstract
The appropriate test for determining whether an extension of time is allowable under regulation 22.24 is the same as that applicable under regulation 5.10 that is the Commissioner must be reasonably satisfied that an extension of time is appropriate in all the circumstances.
The explanation given for the delay was that after a settlement offer had been rejected by Footwear Pty Ltd, Strongfoot Pty Ltd had pinned their hopes on their belief that further negotiations would be successful. In following up through the negotiations and collecting the evidence, difficulties had been faced with contacting relevant parties over the Christmas New Year period. Ultimately, Strongfoot have had to give up on the prospect of a settlement and continue with the preparation of the evidence. The evidence in answer was filed on the last day of the extension sought.
The explanation for the delay was found to be genuine and credible. There were no discernable attempts at deliberately delaying the proceedings.
Public interest overall dictates that the evidence filed by Strongfoot, which was found to be prima facie relevant, should be considered in the determination of the sections 32 and 36 matters. The extension was allowed.
PATENTS ACT 1990
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Re:Section 32/36 applications by Footwear Pty Ltd regarding provisional patent application 2004904066 and an objection by Footwear Pty Ltd to an application by Strongfoot Pty Ltd for an extension of time to serve evidence in answer.
BACKGROUND
Provisional patent application 2004904066 directed to a safety toe cap was filed on 25 July 2004 by Strongfoot Pty Ltd (hereinafter referred to as “Strongfoot”). The application lapsed on the last day of the 12 month period as provided by section 142 (1).
On 23 August 2005, Footwear Pty Ltd (“Footwear”) filed applications requesting the Commissioner of Patents to (a) declare under section 32 (1) that Footwear is the nominated person; and (b) determine under section 36 the person who may proceed with the application and the manner of proceeding with that application.
Footwear filed their evidence in support on 28 October 2005, a single declaration by Mr. DeBarro. This was accompanied with a request for further time in which to complete the evidence, which was granted without any objection. However, subsequently on 17 November 2005, Footwear advised that they had no further evidence to file.
On 22 November 2005, Strongfoot was provided with a copy of the evidence in support and was given up to 22 Jan 2006 to complete their evidence in answer.
On 23 January 2006 (Monday), Strongfoot filed an application for an extension of time to serve the Evidence in Answer to 23 March 2006. This was opposed by Footwear.
The matter was set for a hearing in Canberra on 9 March 2006. Mr. Ian Rose of Middletons Lawyers, Melbourne represented Strongfoot and Mr Richard Baddeley of Watermark Perth represented Footwear. Both parties appeared by phone.
SUBMISSIONS
In their application, Strongfoot stated as follows:
“Settlement negotiations between the parties have been proceeding in good faith. However, on 17 November 2005 Footwear Industries Pty Ltd informed us that they intend to proceed with their applications under s32 and s36. It is the belief of Strongfoot Pty Ltd that an agreed settlement may still be possible and they have been considering various strategies that may lead to that settlement. However, the intervening Christmas / New Year period has caused delays in that critical parties at Strongfoot Pty Ltd (including the inventor) have been away at various times. For the same reason, there also has been a delay in the collection, collation and preparation of Evidence in Answer. Accordingly, further time is needed to complete the settlement offer and, if that fails, to complete the presentation of the Evidence.”
At the hearing, both parties mainly relied on oral submissions. Strongfoot also filed a statutory declaration dated 3 March 2006 by Guy Gregg.
Gregg declares that he requested Geoffrey O’Loughlin, a respected footwear industry consultant, to discuss matters in relation to the settlement with the directors of Footwear Industry. O’Loughlin advised Mr Gregg that some ill will had been generated between Footwear and Strongfoot following a meeting some time back. O’Loughlin further advised Mr. Gregg that between 17 and 19 of February 2006, Strongfoot and Footwear were to share a stand at the Australian Footwear Fair and directors of Footwear were expected to attend. This would provide an opportunity to address issues. As it turned out, directors of Footwear were absent from the fair. Gregg concludes by stating that they were “still anxious to have a dialogue with Footwear to attempt to understand at the very least what is at the commercial root of these s32 and s36 applications.”
10. Mr Richard Baddeley submitted that in the context of sections 32 and 36, the issue is about entitlement rights, who invented what. No progress has been made since the settlement offer was rejected in mid November despite there being no technical issues. The evidence should have been expeditiously prepared in a couple of months in accordance with patent office policy. The questions are has Strongfoot complied with the office policy? If not, what are the reasons for that?
11. Mr. Rose reiterated Strongfoot’s position that the applicant had pinned a lot of hope on their belief that a misunderstanding could be resolved and that they had believed that evidence will not be required to be completed in anticipation of negotiations being successful.
12. I will discuss the submissions of the parties as necessary in the reasons for my decision.
DECISION
The law
13. The Commissioner’s power to determine the practice and procedure under sections 32 and 36 derives from regulation 22.24 which states:
22.24Practice and procedure other than for opposition proceedings
(1)Subject to these Regulations:
(a)if the Act or these Regulations authorise the Commissioner to hear and decide an application or matter that is not an opposition; or
(b)in a matter being decided on the motion of the Commissioner;
the practice and procedure to be followed for the purposes of enabling the application or matter to be decided is to be determined by him or her.
14. Where the law confers such a broad discretion, paras. 5 (1) (e) and (2)(b) and (f) of the Administrative Decisions Judicial Review Act 1977 (ADJR Act) set the expectation that the decision maker must not fail to take a relevant consideration into account or follow a rule or policy without regard to the merits of the particular case.
15. Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) AIPC 91-057; 28 IPR 243 (Ferocem) and Sackville J in A Goninan & Co Ltd v Commissioner of Patents (1997) AIPC 91-330; 38 IPR 213 (Goninan) said that the broad discretion under reg 5.10 governing extensions of time in opposition matters cannot be reduced to imperative compliance with particular requirements. It is necessary to give genuine and proper consideration to all relevant considerations (Ferocem at AIPC 38,208; IPR 247-8, Goninan at AIPC 39,434; IPR 220).
16. In Khan v. The Minister for Immigration and Ethnic Affairs (FCA, 11 December 1987, pp 11 – 12, unreported), Gummow J said: “[W]hat was required of the decision maker, …., was that in considering all relevant material placed before him, he give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy: Howells v. Nagrad Nominees Pty. Ltd. (1982) 66 FLR 169 at 195, Kioa v. West (supra) at 604, Chumbairux v. MIEA (1987) 74 ALR 480 at 492-494. (underlining added).
17. Regulation 22.24 confers a broad discretion similar to the one in reg. 5.10. Thus, I consider that the appropriate test for determining whether an extension of time is allowable under regulation 22.24 is the same as that applicable under regulation 5.10 that is the Commissioner must be reasonably satisfied that an extension of time is appropriate in all the circumstances. Consequently, I consider that the broad principles developed in Ferocem and Goninan are equally applicable to the determination of extensions of time during section 32 and 36 matters.
18. The principles that were considered in Ferocem and Goninan are:
a) Explanation of delay: The reasons why the evidence was not served in time are a relevant consideration, but a satisfactory explanation is not a mandatory requirement. (Ferocem at AIPC 38,207-8; IPR 247)
b) The public interest: The public interest in determining a serious opposition on its merits is a relevant consideration. (Goninan at AIPC 39,435-6; IPR 222)
* In order to do this, it is necessary for the Commissioner to form a view as to the nature of the evidence that it is sought to adduce, and the significance of that evidence for the opposition proceedings. (Goninan at AIPC 39,438; IPR 225-6)
* The Commissioner must also consider whether a short extension should be given to permit the filing of any evidence which is immediately available. (Goninan at AIPC 39,438; IPR 225) Logically, this is only relevant if the Commissioner determines that the extension sought is not justified.
* The public interest is not protected merely because some evidence has already been served. (Goninan at AIPC 39,438; IPR 225)
c) The interests of the party seeking an extension: The interests of the party seeking the extension are a relevant consideration. (Ferocem at AIPC 38,208; IPR 247)
d) The interests of other parties: It is relevant to consider the disadvantage to the other party of delays in determining the opposition, and the effect of delays on the efficient and orderly administration of the Patents Office. (Ferocem at AIPC 38,208; IPR 247, Goninan at AIPC 39,436; IPR 222).
19. Accordingly, I will apply the principles from these cases to the determination of the current extension of time application.
Explanation of the delay
20. Strongfoot was supplied with a copy of the evidence in support on 22 November 2005 and given a period of two months ending on 22 January 2006 to complete the evidence in answer. It appears from Strongfoot’s submissions (e.g. para 7 last line) that the evidence was substantially put on hold until March 2006 when it became clear that the prospect of settlement was not real. Mr Rose conceded at the hearing that negotiations had stalled in November 2005 but argued that it had been Strongfoot’s continuing and genuine belief that settlement was still possible. The Gregg declaration clearly supports this position. In following up through the negotiations and collecting the evidence, it was submitted difficulties had been faced with contacting relevant parties over the Christmas New Year period. In any case, Strongfoot waited until the opportunity was to present itself at a fair in February 2006 to meet directors of Footwear.
21. While it is common ground that a settlement offer was rejected in November 2005, I do not know on what note the negotiations ended since no details have been provided to me by either party. Consequently, it is not clear at what stage the negotiations became clearly untenable. While Strongfoot’s belief in a settlement was possibly naive, all the evidence points to the belief being genuine and I do not discern any attempts by Strongfoot to deliberately delay the proceedings. Consequently, I consider that the principles of Race Lotto Pty Limited V Awa Limited [1998] APO 72 (24 December 1998) apply. I find that the explanation provided for the delay is credible.
The interests of the party seeking the extension
22. Subsequent to the hearing and on the last day of the extension sought, Strongfoot has filed their evidence in answer, a declaration by Adrian Cursio. The declaration directly goes to the question of who is/are the true inventor(s) and prima facie, the evidence appears to be highly relevant to the sections 32 and 36 matters. If I do not allow the extension, Strongfoot will be significantly disadvantaged in that the matter would be decided without consideration of the filed evidence with the potential for serious prejudice to Strongfoot’s interests.
Public Interest and interests of the patent office
23. It is in the public interest that the outcome of a serious ownership dispute should be settled on its merits. I have briefly reviewed the Cursio declaration and I consider that it is relevant to the section 32/36 matters. It is clearly in the public interest for the matters to be decided after considering the evidence from both the sides.
24. Neither the patent office’s interests nor the public interest are served by having the proceedings under sections 32 and 36 unduly protracted. Such delays lead to uncertainty in ownership of rights and loss of patent office efficiency. However, I note that it is quite common for parties involved in section 32/36 proceedings to agree to a settlement before the matter comes to hearing. Occasionally, this may happen even after negotiations have stalled once or more than once. The Commissioner’s view in these matters is that it is in the best overall interests of everyone that parties come to an agreed settlement where possible rather than have one imposed upon by the Commissioner that is not likely to favour both parties. A delay in the proceedings is justified as long as the prospect of a settlement is real and/or real progress is being made with a view to settlement. At any stage, if the negotiations become untenable though, the matter should proceed to evidence and hearing in as short a timeframe as possible. As I have found in para. 21, it is not clear to me that the negotiations had become untenable in November 2005 when a settlement offer was rejected. Strongfoot have indicated that they have now completed their evidence so there is no possibility of any further delays to the evidence in answer.
The interests of the other parties
25. Mr Baddeley submitted that Footwear’s commercial strategy was hampered by the current proceedings and this was a matter of great concern to Footwear. Any delay in these proceedings is clearly contrary to Footwear’s interests. While I accept that strictly a delay may not be in Footwear’s interests, this must be balanced against other interests. I note that Footwear has also contributed to about three weeks’ delay in October and November 2005 in seeking an extension which was granted.
Balance of considerations
26. In my view, the need to determine the matter on its merits based on all the relevant evidence that is available and the significant prejudice that Strongfoot may suffer if the extension is refused outweigh any considerations of loss of efficiency, expediency and uncertainty that are contrary to the interests of Footwear, the patent office and the public. The two month period is not excessively long given that Strongfoot has already filed their evidence.
Conclusion
27. Thus overall, I am satisfied that the extension of time is appropriate in all the circumstances. I allow the extension of time to 23 March 2006 as requested by Strongfoot to serve the evidence in answer.
Costs
28. The application for extension of time did not provide details of progress achieved with respect to the evidence in answer or further negotiations and/or a comprehensive explanation of the reasons for the delay. The Gregg declaration in support of Strongfoot’s application was filed only shortly before the hearing. I therefore believe that it was not unreasonable for Footwear to have questioned the basis for the request for an extension by way of an objection. Consequently, although I have found in Strongfoot’s favour, I award costs against Strongfoot.
Jagdish Bokil
Deputy Commissioner of Patents
11 April 2006
Patent attorneys for the applicant: Middletons Lawyers, Melbourne
Patent attorneys for the S32/36 requestor: Watermark, Perth
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