General Electric Company v Vestas Wind Systems A/S

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 737762 in the name of GENERAL ELECTRIC COMPANY

Title: Variable Speed Wind Turbine Generator

Action: Opposition under Section 59 by VESTAS WIND SYSTEMS A/S, and objection to an application under Regulation 5.10(2) for an extension of time in which to serve evidence in support

Decision: Issued .
Abstract

The opponent cited the need to finalise the evidence of their Australian expert witness and to secure the services of an overseas expert as a major reason for needing the extension of time.
The opponent has not provided a satisfactory explanation of the need for the extension as the delay in serving evidence in support was not due to unusual or extraordinary circumstances in the context of opposition proceedings. However this was outweighed by the public interest in having the opposition determined on its merits, together with the interests of the opponent.
The extension sought was considered to be appropriate in all the circumstances. Costs awarded against the opponent.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No.737762 in the name of General Electric Company, opposition under section 59 by Vestas Wind Systems A/S, and objection to an application under regulation 5.10(2) for an extension of time in which to serve evidence in support

BACKGROUND

Patent application 737762 was filed on 7 August 1998 by Zond Energy Systems, Inc under the provisions of the Patent Co-operation Treaty. The application was advertised accepted on 30 August 2001 and is now proceeding in the name of General Electric Company (GEC).
Powercorp Pty Ltd (Powercorp) filed a notice of opposition to the grant of a patent on 29 November 2001. Further notices of opposition were filed on 30 November by Vestas Wind Systems A/S (Vestas), NEG Micon A/S (NEG) and Western Power Corporation (WPC). The Powercorp and WPC oppositions were subsequently withdrawn.
The following deals exclusively with the opposition by Vestas.
Vestas applied for and was granted unopposed an extension of time until 28 August 2002 in which to serve their evidence in support. On the final day of the initially granted extension Vestas requested an extension of a further three months to 28 November 2002. GEC objected to the further extension and the matter came to hearing in Canberra on 15 October 2002. GEC were represented by Mr Leon Allen, patent attorney of Davies Collison Cave, and Vestas were represented by Mr Richard Baddeley, patent attorney of Watermark. Both parties appeared by telephone.
REASONS FOR EXTENSIONS OF TIME
The reasons given by Vestas in their first application for an extension of time from 28 May to 28 August 2002 are as follows:
The Opponent is a foreign entity and being advised by a foreign agent. Watermark, the Australian Attorneys representing the Opponent correspond with the foreign agent and this manifests some delays. Considerable time has been spent attempting to locate suitable Declarants to provide expert evidence in the above matter. In correspondence dating from 7 November 2001 (prior to filing the Opposition) to 21 March 2002, Watermark notified the foreign agents of the Opponent of the requirements for suitable Declarants for the above matter, including the relevant timing provisions in relation to serving the evidence in support, sought the foreign agents' assistance in identifying suitable Declarants, and reminded the foreign agents of same. One expert not resident in Australia was initially identified as a possible Declarant in early February 2002. However, there was still the requirement to locate an Australian resident expert as a suitable Declarant. In correspondence received from the foreign agents of the Opponent, dated 26 March 2002, an appropriate Australian resident Declarant was identified. The Declarant is Dr R E Betz, Associate Professor, Head of School, School of Electrical Engineering and Computer Science, University of Newcastle, Australia. He has a very busy work schedule including commitments to overseas visits. Watermark proceeded to contact Dr Betz in early April 2002. At that time Dr Betz was committed to a heavy work schedule and also went overseas. Dr Betz returned contact with Watermark on 23 April 2002 and arrived back in Australia on 28 April 2002. Watermark wrote to Dr Betz on 3 May 2002 forwarding, by express courier, prior art material and instructions for proceeding in the above matter in accordance with Federal Court practice directions. However, Dr Betz did not receive the documents forwarded by courier until 6 May 2002. Watermark received a preliminary report in relation to the evidence in support from Dr Betz on 20 May 2002. The declarations, which will complete the Evidence in Support, are currently being prepared in this respect and will need to be reviewed by the Opponent. Thus the extension of time to 28 August 2002 is required to enable completion, execution and service of the declarations.
The reasons for the present extension application are stated as being:
1.   A preliminary report prepared by an expert declarant (Dr R E Betz) is yet to be finalized as a declaration suitable for filing as evidence.
2.   A second declarant has been identified however we are yet to finalize the engagement and terms of reference for the declarant. Consequently, we are not in a position to file supporting evidence.
3.   Further, foreign experts having a knowledge of the subject matter of the opposed application and more over the applicability of this knowledge in Australia prior to the priority date are also being investigated.
4.   A list of prior art documents having direct relevance to the patentability of the opposed application have been identified and will be filed shortly and so form part of the evidence in support.
5.   A further three months extension from 28 August 2002 until 28 November 2002 in order to finalize the remaining evidence-in-support is therefore respectfully requested.
Mr Baddeley indicated at the hearing that Vestas were no longer pursuing overseas expert witnesses as stated in item 3 above. The list of prior art documents referred to in item 4 was filed as partial evidence in support on 27 September 2002 which date falls within the period of extension presently sought by Vestas.
THE LAW
Chapter 5 of the Regulations sets out the procedure and time limits governing opposition proceedings. According to regulation 5.8, the time for serving evidence in support of an opposition is three months from the date of serving the statement of grounds and particulars. A party to an opposition may apply to the Commissioner to extend this time limit pursuant to regulation 5.10(2):
"The Commissioner may extend the time within which the party may take a step prescribed in this Chapter (not being a step that is taken under regulation 5.3 or 5.3AA, paragraph 5.4(a) or subparagraph 5.8(1)(a)(i)):
(a) on the application of a party in the approved form; and
(b) on such reasonable terms (if any) as the Commissioner specifies; and
(c) after the party has served a copy of the application on the other party."
Regulation 5.10(5) relevantly provides that before granting an extension of time I must be reasonably satisfied that the extension is appropriate in all the circumstances, and in this I am guided by the now well known principles set out in Ferocem Pty Ltd v Commissioner of Patents 28 IPR 243 and A Goninan & Co Ltd v Commissioner of Patents 38 IPR.
These principles do not demand an imperative compliance with particular requirements, but rather as said by Burchett J in Ferocem involve:
"a balancing exercise, in which competing considerations must be taken into account. There are the interests of the persons directly concerned in the application and opposition in question. There are also public interests, which are not necessarily all ranged on the same side. They include the expeditious disposal of matters in the Patents Office, and questions of costs, of efficiency, and of insistence upon the professional standards being maintained by those who deal with the office. But they also include, as Kitto J pointed out in Kaiser Aluminium & Chemical Company v Reynolds Metal Co (1969) 120 CLR 136 at 143, 'the public interest that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on the merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though the failure may be.'"
In Goninan Sackville J said that in order to give proper consideration to the public interest in opposition proceedings being determined on their merits, it is necessary to consider the nature of the evidence for which the extension of time is sought and the significance of that evidence for the opposition. The principles applicable to the discretionary power conferred by regulation 5.10 to grant extensions of time were more recently considered in National Starch & Chemical Company v Commissioner of Patents 50 IPR 398 where Goldberg J went further in saying that, in the absence of direct material on the point, the significance of the evidence sought to be adduced might be determined from:
·     the technical nature of the invention apparent on the face of the specification;
·     the technical nature of the documents referred to in the statement of grounds and particulars;
·     the statement of grounds of opposition and the particulars relating to each ground;
·     the role and importance of experts in an opposition proceeding; and
·     statements in submissions by the party seeking the extension on the nature of the evidence to be relied upon.
I will take these principles into account when deciding whether the presently sought extension of time is appropriate in all the circumstances.
DECISION
The explanation of the delay
The present application for extension is the second filed by Vestas and represents a total extension sought of six months. In considering the explanation for the delay, it is legitimate to have regard to the reasons given to justify the total extension (Goninan at page 223):
"Nor do I think that there is any substance in the contention that the finding that the first application was not properly based was "wholly irrelevant" to the determination of the second application. One of the factors to be taken into account in determining whether a further extension should be granted was the extent of any delay in filing evidence and whether Goninan had offered a satisfactory explanation for the delay, or any part of it. As Ferocem shows, this consideration cannot be regarded as paramount in the sense that it forecloses proper consideration of other relevant factors. But it was clearly a relevant factor in the delegate's deliberations and he was entitled to take into account that at no stage had a satisfactory explanation for the delay been forthcoming."
Essentially Vestas rely on the need to finalise the evidence of Dr Betz and to secure the services of a second declarant. In written submissions filed by Mr Baddeley this prospective declarant is identified as Prof Blabjerg, an expert based in Denmark.
Mr Allen submitted that Vestas had failed to make a full and frank disclosure of the facts which give rise to the need for an extension. However, it is quite clear from Ferocem that although the reasons why the evidence was not served in time are a relevant consideration, a satisfactory explanation is not a mandatory requirement.
Nevertheless, the explanation of the delay seems to me to be inadequate since it does not establish why it has taken so long for Vestas to engage or even identify expert witnesses.
Vestas have attempted to justify the need for an extension by difficulties they have encountered in pursuing evidence from Dr Betz due to his competing academic commitments including overseas travel. However, activities of this kind have been consistently rejected by the Commissioner as constituting extenuating circumstances in the context of opposition proceedings such as may support an extension of time. See in this regard Eleven Lighting Pty Limited v Interium Pty Ltd [2002] APO 25, Imarx Pharmaceutical Corp v Mallinkrodt Medical Incorporated [2001] APO 10, Lesaffre et Cie vBurns Philip Research & Development Pty Ltd (1997) AIPC 91-360, ABB Engineering Construction Pty Limited v A Goninan &Co Ltd [1997] APO 65, and Minproc Technology Pty Ltd v Commonwealth Scientific and Industrial Research Organisation 35 IPR 48. As stated in Minproc for example:
"… I am also mindful of the ongoing work commitments of experts in other activities besides the need to provide commentary on evidence. However I do not think that these situations are different from the normal occurrences in opposition proceedings. Analysis of the evidence-in-answer, drafting declarations, forwarding them to experts in Australia and overseas, reviewing the evidence and declarations, awaiting replies, and prioritising other work commitments are routine activities in opposition proceedings. Normal timing provisions in the patent regulations make allowances for all these circumstances. I do not think these activities, alone, justify an extension of time."
In Henkel Corporation v Makhteshim Chemical Works Limited [2000] APO 51 the delegate took into account the business commitments of specialist medical practitioners when deciding that the delay in completing the evidence sought to be adduced had been satisfactorily explained. However, aside from the delegate's primary reliance on other factors in reaching this decision, none of the material before me indicates that a similarly unique field of technology is involved here.
In fact I see nothing overall to suggest that the delay in obtaining evidence from Vesta's declarants is due to circumstances that are out of the ordinary. Dr Betz's academic commitments could hardly be described as unexpected (cf. Novo Nordisk A/S v Eli Lilly and Company [2000] APO 14) and nor does it appear to be the case that his evidence is unusually voluminous or complex. It is also notable in this regard that while the first application for extension of time foreshadowed the "completion, execution and service" of Dr Betz's evidence in support, the present extension application does not explain why several months later the finalisation of his evidence has not progressed any further. Dr Betz is said to have compiled a preliminary report in May 2002 for review and subsequent preparation of declaratory evidence. However, the simple explanation now given that the preliminary report "is yet to be finalized as a declaration" is wholly silent on what steps have actually been taken to put the evidence of Dr Betz into an appropriate form, and thus reinforces the impression that Vestas have not moved with due expedition to prepare their case.
Vestas have also pointed to the identification of a prospective overseas declarant as another reason why their evidence was not served in time. Although I am conscious of the desirability of providing evidence from multiple declarants, it has not been made clear to me whether there is a scarcity of suitably qualified experts in Australia (cf. Iowa State University Research Foundation, Inc et al [1998] APO 61) so as to justify an attempt by Vestas to acquire the services of an overseas expert. In any event, the amount of time taken by Vestas to locate an expert who is resident in Denmark seems inordinate given that Vestas are themselves a Danish company.
For the reasons discussed above I consider that Vestas have not provided a satisfactory explanation of the delay. However, and as noted earlier, this does not foreclose proper consideration of other relevant factors.
The public interest
As made clear in Ferocem, the public interests are not all ranged on the same side. While these interests are certainly in favour of seeing matters before the Commissioner pursued diligently, they must be balanced against the need to ensure that a serious opposition is dealt with on its merits.
While Vestas' delay in preparing their case and the failure to satisfactorily explain this delay may suggest otherwise, I am satisfied that a serious opposition is in train. The statement of grounds and particulars raises a number of important and comprehensive issues including novelty and inventive step and there are indications that the evidence on which Vestas intend to rely is either immediately to hand or in various states of preparation.
The public interest in determining a serious opposition on its merits requires me to form a view as to the nature and significance of the evidence that it is sought to adduce. I am guided here by what Sackville J said in Goninan said at pages 225-6:
"I do not mean to suggest that the evidence has to be scrutinised in the same way as would occur at a hearing on the merits. But unless the delegate forms a view as to the issues addressed by the proposed evidence, and whether that evidence is likely to be important in the opposition proceedings, it is difficult to see how proper consideration can be given to the public interest in having such proceedings being determined on their merits."
The evidence immediately to hand clearly goes to the question of novelty and, although there is no direct material on the point, from a brief perusal of other material before me it is apparent that a significant part of Vestas' case relates to grounds in which the question of what information was common general knowledge in Australia is likely to have an important bearing. It is well settled in law that the state of the common general knowledge must be determined on the basis of evidence from suitably qualified experts of what was known by the person skilled in the relevant art. I am therefore satisfied that the evidence which is already available together with the expert evidence sought by Vestas is potentially relevant to a determination of the opposition on its merits.
Although not pressed by Mr Allen at the hearing, it is open to me to grant Vestas a limited extension (per Ferocem at page 248) to validate the service of the partial evidence filed by them on 27 September 2002. However, I am not convinced that granting a short extension for this purpose would preserve the public interest in the validity of granted patents which favours a proper determination of the opposition (see eg. Novo Nordisk). Although a short extension would enable Vestas to put the documents listed by the statement of grounds and particulars into evidence, they may as a result be precluded from arguing their case on the important ground of inventive step without confirmatory expert evidence of what is common general knowledge.
In reaching this conclusion I have not overlooked the fact that this aspect of the public interest could be protected without Vestas' involvement if the opposition by NEG continues and is successful, but of course this is not certain. In my opinion this uncertainty may be prejudicial to the public interest.
I am also mindful that granting this extension will cause a further delay of three months. However, I believe the effect of this delay on the expeditious disposal of matters before the Commissioner represents a comparatively minor inconvenience in the present case. Relevantly, as the opposition by Vestas is running concurrently with the NEG opposition, neither opposition can proceed to hearing until the evidentiary stages of the other have been completed. In fact as pointed out in Resolute Resources Limited v Billiton SA Limited [1999] APO 82 the oppositions will, as a matter of practice, be heard jointly. Thus I do not consider that the hearing of the parallel oppositions will be unduly protracted if I were to grant the extension presently sought by Vestas.
On balance I consider the public interest in providing Vestas with an opportunity to obtain relevant evidence that would allow a more just determination of the opposition outweighs any delay in the opposition proceedings.
The interests of the parties

Clearly Vestas' interests would be best served by granting an extension of time. On the other hand, I accept that GEC could be disadvantaged by a further protraction of proceedings if I grant the extension now requested. Nevertheless, none of the material before me suggests that such protraction would have the same undue effect on GEC as the effect on Vestas. Indeed, and given that to date no evidence at all has been served, Vestas would be effectively shut out entirely if the extension they seek is not granted. As noted above, this could also be detrimental to the public interest notwithstanding the concurrent opposition by NEG.
In my view the balance of the parties' interests at this stage of proceedings weighs in favour of allowing the extension.
CONCLUSION
I have found that Vestas have not provided a satisfactory explanation of the need for a further extension of time. However, this factor is outweighed by the interests of the public and Vestas which support the granting of an extension. I am therefore satisfied that on balance an extension of time is appropriate in all the circumstances, and I grant Vestas an extension until 28 November 2002 in which to serve evidence in support.
However, I have previously expressed my concerns about Vestas' progress in these proceedings. Mr Baddeley was unable to guarantee that Vestas would finalise their evidence within the extended time and indeed the present extension application raises the suspicion that the collection of evidence from their overseas expert has not yet commenced. As a consequence, Vestas should not expect an additional extension to be granted absent clear evidence that they are proceeding with due diligence to complete the service of evidence in support.
COSTS
The power of the Commissioner to award costs is discretionary, so I must take into account all relevant considerations.
In matters before the Commissioner, costs usually follow the event. In the present case Vestas have succeeded in their request for a further extension, despite the fact that they have not provided a satisfactory explanation of the need for the extension sought. Instead, the extension has been granted on consideration of the interests of the public and Vestas.
Accordingly, I award costs against Vestas.
O L Haggar
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Davies Collison Cave, Melbourne
Patent attorneys for the opponent : Watermark, Melbourne

[2002] APO 43

15 November 2002