IGT v Aristocrat Technologies Australia Pty Ltd

[2007] APO 23

ABSTRACTS OF DECISIONS

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No. 751088 in the name of Aristocrat Technologies Australia Pty Ltd

Title:          Mystery Jackpot controller

Action:          Opposition under Section 59 by IGT, an objection to an application under Regulation 5.10(2) for an extension of time in which to serve evidence in reply

Decision:          Issued    29 June 2007.

Abstract

The opponent has not shown a lack of due diligence in the preparation of their evidence as the problems with the expert’s availability and late withdrawal were largely out of their control.  However, the opponent’s on-going problems cannot be used to justify indefinite extensions.  The current delays have to be considered in light of the total time the opponent has taken to prepare their evidence and what further delays are now being anticipated.  This opposition has been on-going since November 2002 and it is in the public interest to resolve questions regarding the validity (or otherwise) of the patent as soon as possible.  

The opponent has advised that they should be able to complete their evidence within the current extension period.  If the evidence is important as the opponent has alleged, the short extension is in the public interest.  However any further extensions are not appropriate. 

To that end, a conditional-type extension similar to that proposed by the delegate in Amcor Packaging (Australia) Pty Ltdv Barokes Pty Ltd [2004] APO 20 (14 July 2004) and Aristocrat v Acres Gaming [2005] APO 27 (20 May 2005) was allowed.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 751088 in the name of Aristocrat Technologies Australia Pty Ltd,  opposition under section 59 by IGT, an objection to an application under regulation 5.10(2) for an extension of time in which to serve evidence in reply          

BACKGROUND

1. Patent application 751088 was filed on 9 October 1999 by Aristocrat Technologies Australia Pty Ltd (“Aristocrat”) claiming divisional priority from a parent application  (24992/99) filed on 19 October 1995.  The divisional application was advertised accepted on 8 August 2002 and on 1 November 2002 a notice of opposition was filed by the then opponent, Acres Gaming Inc.  Acres Gaming Inc was formally acquired by IGT in October 2003 and the opposition is now proceeding in the name of IGT.  The opponent served their Statement of Grounds and Particulars on 31 January 2003 followed by their evidence in support on 30 November 2004. 

1. The applicant then finalised their evidence in answer on 27 January 2006 meaning that evidence in reply was initially due on 27 April 2006.  Since that time, the opponent has applied for (and been granted) four extensions of time to serve their evidence (all of which were unopposed).  The current (and fifth) extension request was filed on 27 April 2007.  The opponent is seeking an extension until 27 July 2007 to complete their evidence.  The applicant objected to this extension and the matter was set for hearing in Canberra on 5 June 2007.

2. The applicant was represented by Mr John Dower assisted by Mr Roger Henning both patent attorneys from Freehills Patent & Trade Mark Attorneys, Melbourne along with Mr Kieran Power in-house patent attorney from the client company.  The opponent was represented by Mr Richard McCormack of counsel instructed by Mr Boris Golja patent attorney from Wray & Associates, Perth. Both parties appeared by telephone and provided written submissions prior to the hearing.

   RELEVANT PROVISIONS

3. The Commissioner is empowered under regulation 5.10 to issue directions relating to the conduct of opposition proceedings, and to extend the time within which a party may take a step prescribed by Chapter 5, including the service of evidence in reply.  Regulation 5.10(5) relevantly provides that before granting an extension of time or giving a direction, I must be reasonably satisfied that the extension or the direction is appropriate in all the circumstances.

4. The principles applicable to the broad discretion conferred by regulation 5.10 to grant extensions of time were considered by the Federal Court in Ferocem Pty Ltd v Commissioner of Patents 28 IPR 243, A Goninan & Co Ltd v Commissioner of Patents 38 IPR 213, and National Starch &Chemical Company v Commissioner of Patents 50 IPR 398.

5. 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 cost, 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’”.

6. 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.  In National Starch 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.

   PREVIOUS EXTENSION REQUESTS  

7. A summary of the progress to date of the evidence in reply can be extracted from the reasons provided in previous extensions of time.

   The first extension request (27 April 2006-27 July 2006)

8. The opponent had reviewed the applicant’s evidence in answer including the witness’s commentary and analysis on aspects of bonus award systems and the contents of prior art documents.  The opponent had retained an expert witness who had been provided with a copy of parts of the applicant’s evidence in answer for review and consideration.  Once witness comments had been received, the opponent intended to prepare a statutory declaration and then provide their witness with the remainder of the evidence to consider.

   The second extension request (27 July 2006-27 October  2006)

9. The expert witness had provided his preliminary views on the first parts of the evidence in answer.  However since then, the expert had been heavily involved in other matters (including another opposition involving the applicant and opponent) and had not had the time to devote to the current opposition.  Despite this, the witness was important to the opponent’s case because he had provided the opponent’s evidence in support.   

The third extension request (27 October 2006-27 January 2007)

1. The opponent continued to have substantial difficulties with the availability of their expert but now he had at least provided his views on both parts of the evidence.  A conference was held with the expert who indicated he would provide “supplementary information”.  Whilst awaiting this material, the attorney was preparing a draft declaration for the expert.  In addition, following the conference, the opponent decided that they required additional evidence in response to some aspects of the evidence in answer and contacted a second witness.

   The fourth extension request (27 January 2007-27 April 2007)

2. The “supplementary information” had now been received and a draft declaration was apparently close to completion.  However, again the first expert witness’s availability was a problem and the declaration could not be finalised.  In addition, the second witness had indicated that they were available to assist with the opposition but had had serious health problems which prevented them from assisting in that extended period.

1. The opponent however anticipated that evidence in reply could be completed within the period requested because the draft declaration was close to completion and the material required from the second expert was not extensive.

   The fifth (current) extension request (27 April 2007 – 27 July 2007)

1. The opponent advised that the first witness has not been able to devote any time to the opposition in the previous 3 months and at the hearing, confirmed that the first witness was now not in a position to provide any evidence.  The second witness has also failed to eventuate.  The opponent has therefore located a third witness.  In contrast to the other witnesses, the third witness was semi-retired and is in a position to devote time to the opposition.  According to the opponent, they had now progressed their evidence to such a stage where a “declaration can be prepared for execution”. 

   DECISION

   The explanation of the delay

2. This opponent is involved in a complex legal dispute with the applicant involving around 9 oppositions.  They are also involved in another opposition concerning similar technology with a third party (Bally Gaming Inc).  The Commissioner has issued a number of decisions on objections to extensions of time during the evidence stages in these related oppositions.  These are summarised below in Table 1.

Table 1: Summary of extension of time decisions involving the current opponent (Acres Gaming or IGT) and either Aristocrat or Bally Gaming Inc

Decision	Patent application number/applicant	Evidence stage	Allowed?
Acres Gaming v Aristocrat [2006] APO 25 (30 June 2006)	752636 – Acres	EIA – 5th extension (Acres)	Yes (Note: Dimond named as potential  witness)
Acres Gaming v Aristocrat [2005] APO 6 (21 February 2005)	750775 – Acres	EIA – 4th extension (Acres)	Yes
Acres Gaming v Aristocrat [2005] APO 16 (7 April 2005)	750775 – Acres	EIA – 5th extension (Acres)	Conditionally granted (Octel type extension)
Aristocrat v Acres Gaming [2005] APO 27 (20 May 2005)	760716 –Acres	EIS -6th extension (Acres)	Conditionally granted [as per Amcor Packaging (Australia) Pty Ltd v Barokes Pty Ltd [2004] APO 20 (14 July 2004)]
Aristocrat v Acres Gaming [2005] APO 2 (17 Jan 2005)	754689 – Aristocrat	EIS – 6th extension (Acres)	Yes (note: Dimond named as potential witness)
Acres Gaming v Aristocrat [2004] APO 31 (30 November 2004)	752636 – Acres	EIS – 5th extension (Aristocrat)	Yes
Acres Gaming and IGT v Aristocrat [2003] APO 19 (17 April 2003)	748263 –Acres	EIS – 1st extension (Aristocrat)	Yes
Bally Gaming v IGT [2007] APO 7 (9 February 2007)	761822 – IGT	EIA -6th extension (IGT)	Not justified - Ferocem extension only
Acres Gaming v Bally Gaming [2005] APO 19 (15 April 2005)	761822 – Acres	EIS – 5th extension (Bally)	Yes

1. The parties agreed that the current case is distinct from the other oppositions and there is no suggestion that the current case is being delayed by the other actions.   However, there have been lengthy delays in all the oppositions mostly caused by the difficulty in locating witnesses or their lack of availability once they have been retained. 

1. The current case has had similar problems to the other oppositions in Table 1.  Almost all the delays to date in service of evidence in reply in the current opposition have been caused by the lack of availability of the opponent’s first witness (Mr Dimond).  The latest extension is required because Mr Dimond has withdrawn his services at the last minute forcing the opponent to secure a new witness.   It is unfortunate that Mr Dimond did withdraw at such a late stage in proceedings especially when the evidence was apparently so close to finalising.  However I accept that Mr Dimond’s actions (at this stage of proceedings) are out of the opponent’s control.  This particular witness has already provided evidence in support and therefore I understand why the opponent  persisted with him despite his lack of commitment to the task and the slow progress of his evidence.

1. The applicant argued that the opponent contributed to the delays by sending evidence in answer to Mr Dimond in stages rather than as a whole.  The opponent argued the observations by the full Federal Court in Minnesota Mining & Manufacturing Co v TycoElectronics Pty Ltd 56 IPR 248 [at 45] compelled them to collect expert evidence in relation to the question of obviousness in a step-wise fashion so as to avoid prematurely exposing expert witnesses to material that may colour their opinion:

   “The manner in which the evidence of some of the experts in the present case was bought into existence suggests that relatively little weight should be given to certain of that evidence.  For example, witnesses were provided with a copy of the patent.  They were either provided with a large number of other documents or found them in response to the task that was set them.  That is hardly calculated to result in objective evidence as to what the hypothetical uninventive but skilled worker would have done.  To give the patent to a prospective witness is tantamount to leading the witness.  Further, unless the other documents were part of the common general knowledge in Australia before the priority date, they are not relevant to any question of obviousness.”

1. However, as noted in Bally Gaming v IGT [2007] APO 7 (9 February 2007), it is not necessary to provide this type of evidence in oppositions before the Commissioner. Further, even where the approach has been adopted in other oppositions, it has only applied to the initial expert opinion on obviousness. It is difficult to see why parts of evidence in answer should also be withheld from an expert and the opponent failed to provide any real explanation for their approach. I therefore agree with the applicant that the opponent’s incremental approach to evidence in answer was unjustified and in hindsight has no doubt contributed to the current delays. However, my view is that this was simply misguided rather than a deliberate strategy to cause delay. I am therefore satisfied that the opponent has not shown a lack of diligence.

1. Although I accept that the delays in evidence in reply have not been deliberate, on-going problems cannot be used to justify indefinite extensions.  As the applicant noted, there needs to be some finality to these proceedings and after 17 months, the opponent has had more than ample time to complete their evidence in reply.  I am therefore not satisfied that there has been a satisfactory explanation of the delay.

The public interest

1. 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.

2. The public interest in determining a serious opposition on its merits is a relevant consideration. 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 [A Goninan & Co Ltd v Commissioner of Patents (supra)].

3. There can be no doubt from the statement of grounds and particulars and the evidence served to date that a serious opposition is in train.  In Kaiser Aluminium, Kitto spoke of the public interest in ensuring that a serious opponent is not shut out because of a failure in procedure.  At the hearing, the opponent submitted that evidence in reply will be crucial to the case and likely to lead to a better and/or more just opposition outcome.  However as the applicant noted, the evidence in reply is less likely to be determinative of the opposition compared with the other stages of evidence and hence the public interest in having the evidence-in-reply served is lower than at earlier evidentiary stages.

4. In support of their proposition, the applicant referred to the decision in Minproc Technology Pty Ltd, v. Commonwealth Scientific And Industrial Research Organisation [1996] APO 29 (31 May 1996) where the Delegate concluded that:

   “…the public has a lesser interest with the evidence-in-reply compared to the evidence-in-support or evidence-in-answer. The provision for evidence-in-reply is simply to allow the opponent a right of reply. There is no provision to allow the serving of new evidence at this stage of proceedings. Accordingly the public interest is not so enhanced at the evidence-in-reply stage over that interest at the preceding evidentiary stages. The public, through the Commissioner of Patents, is already aware of the basis of the opposition through the statement of grounds and particulars and the evidence-in-support. In this light I think the balance of the public interest is against granting the full extension of time sought.”    

5. I note that in Novo Nordisk A/S v Eli Lilly and Company [2000] APO 14 (9 February 2000) the Delegate considered that the previous comments “may be true as a general proposition” but stated that each case should be treated on its merits. In the current case, the opponent has not explained the importance of evidence-in-reply to the current proceedings nor is this readily apparent from the evidence itself. Under these circumstances, it is not clear what (if anything) would be added to the opponent’s case by evidence in reply. The opponent was unwilling to provide a specific explanation of the relevance of their evidence. This was apparently to avoid pre-empting their arguments at the substantive hearing. My view is that this approach is over-technical and unnecessary given that any such arguments should be readily apparent from the evidence itself. In any event even if I accept their argument, it is difficult to believe that they could have not provided a better explanation of the specific issues in dispute rather than relying on vague references to parts of the common general knowledge. As a consequence, the opponent has not convinced me that the evidence is as critical as they have claimed.

1. In addition to the relevance of the evidence, the public interest is concerned with the orderly progress of opposition proceedings.  The fate of the current application has been uncertain for a considerable period of time.  Because this application is a divisional application and there have been considerable delays in the opposition, over 12 years of the term of the patent will have expired if (and when) the application proceeds to grant.  It is clearly not in the public interest to prolong this opposition process indefinitely, and unless the evidence is completed in the immediate short term, I think that the need to bring some finality to the time for serving evidence in reply carries more weight than the likely importance of the evidence being pursued by the opponent.   As noted in Aristocrat v Acres Gaming [2005] APO 27 (20 May 2005), even in the diligent preparation of evidence there comes a time when searching for material has to cease and the application has to be progressed in an expeditious manner.

2. The opponent has advised that they were reasonably confident that their third expert could devote enough time to the opposition and that it was likely that their evidence could be completed before the end of the current extension.  I find it hard to believe that the case would take any longer given the apparent simplicity of the case.  The patent specification is only 8 pages long and has 6 claims.  The opponent argued that the specification was technically complicated because it required complex mathematical formulae to put into effect.  However, the specification and claims don’t include any mathematical formulae and none of the issues in dispute are based on mathematical formulae.  I therefore do not accept that the case is as technically difficult as the opponent has alleged. 

1. I note that the declaration filed in evidence in answer is a mere 11 pages long. The five citations discussed in evidence in answer are all under 15 pages long.  It does not appear to be an onerous task to reply to such evidence and I would reasonably expect that it could be finalised within the current extended period.  This is especially so given the amount of work that the opponent has apparently completed to date with their first witness who was close to finalising his declaration in April 2007 (see the previous extension request).

2. Given how close the opponent is to finalising their evidence, I am prepared to give them the benefit of doubt and accept that evidence in reply could be useful to clarify some of the issues in dispute.  The public interest would then be served by granting a short extension to allow this material.  However the balance significantly changes if further extensions are required beyond the current deadline of 27 July 2007.  I therefore flagged with both parties whether an extension conditional on evidence being filed by a certain time was appropriate.  Such conditional-type extensions were originally provided in ExxonMobil Chemical Patents Inc v The Associated Octel Company Ltd [2002] APO 34 (13 September 2002) and Amcor Packaging (Australia) Pty Ltd v Barokes Pty Ltd [2004] APO 20 (14 July 2004) and have been given in two of the nine extension of time decisions referred to in Table 1 above.

3. The applicant argued that the opponent should be denied an extension on any basis because of the opponent’s lack of progress to date.  I have some sympathy for the applicant’s position as the opponent has previously given assurances that their evidence was close to finalisation but has failed to meet their deadlines.  However as I noted above, the previous problems were caused by  Mr Dimond’s lack of availability and subsequent withdrawal both of which were outside of the opponent’s control.  Given that these problems now appear to be resolved and the opponent’s evidence is close to completion, I think it more appropriate to give them one final opportunity to serve it.    

4. The opponent argued that they should be given an unconditional extension because the problems with finalizing evidence were not their fault.  However regardless of the diligence of a party, there still has to be finality to the opposition proceedings.  Where an opponent has had more than ample time to finalise their evidence, it is entirely appropriate for the Commissioner to impose a final deadline for evidence.  If the opponent cannot meet the current deadline (absent force majeure), then they will have to forego evidence in reply.  As noted in Cryovac Inc v Pechiney Plastic Packaging Inc [2006] APO 15 (21 April 2006), an opposition is not the only forum where a patent can be challenged. If the opponent still has concerns about the validity of the patent, they can apply to a prescribed court under section 138 for revocation or request re-examination under section 97.

The interests of the parties

1. I accept that the applicant could be disadvantaged by a further protraction of proceedings if I grant the extension presently sought by IGT.  The applicant referred to the commercial importance of the patent to their business and the industry as well as an overseas dispute involving the same parties.  I also note that over 12 years of the term of the patent will have expired if (and when) the application finally proceeds to grant and I believe the interests of the applicant weigh heavily in favour of finalising the evidence.

2. In contrast, the opponent’s interests would be best served by granting an extension of time to enable them to finalise their evidence in reply.  I note that after 17 months, the opponent has had more than ample time to prepare their evidence in the opposition.   It is also not clear that the proposed evidence is important to the opposition and the opponent has other opportunities to challenge the patent.  On the other hand, it is possible that the extra evidence will be relevant and the opponent is confident that they can finalise their evidence in the current extended period.  In these circumstances (and given that the problems with the opponent’s evidence were largely out of their control), I believe that the opponent should have one last opportunity to finalise their evidence.  As this extension is short and final, it should not be overly detrimental to the applicant’s interests. However, this balance significantly changes if further extensions are required.

   CONCLUSION

3. The problems with Mr Dimond’s availability and late withdrawal were largely out of the opponent’s control and I am satisfied that the opponent has not shown a lack of due diligence in the preparation of their evidence.  However, the opponent’s on-going problems cannot be used to justify indefinite extensions.  The current delays have to be considered in light of the total time the opponent has taken to prepare their evidence and what further delays are being anticipated now.  As the applicant noted, there needs to be some finality to these proceedings and after 17 months, the opponent has had more than ample time to complete their evidence in reply. 

1. The opponent has advised that they should be able to complete their evidence within the current extension period.  If the evidence is as important as the opponent has alleged, the short extension is in the public interest.  However absent force majeure further extensions are not appropriate.  This opposition has been on-going since November 2002 and it is in the public interest to resolve questions regarding the validity (or otherwise) of the patent as soon as possible. 

2. To that end, I am prepared to provide a conditional-type extension similar to that proposed by the delegate in Amcor Packaging (Australia) Pty Ltd v Barokes Pty Ltd [2004] APO 20 (14 July 2004) and Aristocrat v Acres Gaming [2005] APO 27 (20 May 2005). I therefore make the following directions under regulation 5.10:

   Providing the complete evidence in reply is served on or before 27 July 2007, I will grant the extension of time that has been sought by the opponent otherwise the extension will be refused.

   It may be that new circumstances intervene that will prevent service of the evidence by 27 July 2007. Such circumstances, as indicated by the delegate in Amcor (supra), would likely need to be of a force majeur nature in order for me to reconsider the time for serving evidence in reply.

   COSTS

3. In matters before the Commissioner, costs usually follow the event.  While I have allowed the extension, it has only been with conditions and based on further reasons provided by the opponent at the hearing.  In these circumstances, I award costs against the opponent.    

   Karen Ayers
   Delegate of the Commissioner of Patents

   Patent attorneys for the applicant:  Freehills Patent & Trade Mark Attorneys, Melbourne

   Patent attorneys for the opponent:  Wray & Associates, Perth