Innovia Security Pty Ltd v Giesecke & Devrient GmbH
[2014] APO 38
•11 June 2014
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovia Security Pty Ltd v Giesecke & Devrient GmbH [2014] APO 38
Patent Applications: 2006254436 and 2007229741
Titles:Data carrier and method for the production thereof; and
Data storage medium and method for manufacturing it
Patent Applicant: Giesecke & Devrient GmbH
Opponent: Innovia Security Pty Ltd
Hearing Officer: P M Spann, Deputy Commissioner of Patents
Decision Date: 11 June 2014
Hearing Date: Written submission completed 21 May 2014
Catchwords: PATENTS – Costs – applications withdrawn – whether costs can be awarded – scale of costs – costs awarded in part.
Representation: Opponent: Watermark
Patent applicant: Cullens
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Applications: 2006254436 and 2007229741
Titles:Data carrier and method for the production thereof; and
Data storage medium and method for manufacturing it
Patent Applicant: Giesecke & Devrient GmbH
Opponent: Innovia Security Pty Ltd
Decision Date: 11 June 2014
DECISION
Costs in the oppositions are awarded against Giesecke & Devrient GmbH, limited as follows:
- For 2006254436, the amount set out in Schedule 8 Part 1 Item 4;
- For 2007229741, the amount set out in Schedule 8 Part 1 Item 4 for the opposition under section 59 and, for the opposition under section 104, the amount set out in Schedule 8 Part 1 Item 1 and the official fee paid for filing the notice of opposition.
REASONS FOR DECISION
This matter concerns whether an award of costs is appropriate in the circumstances where the patent applications were opposed but were withdrawn before the evidentiary stages were completed.
Background
Patent applications 2006254436 and 2007229741 were filed by Giesecke & Devrient GmbH (Giesecke) on 22 May 2006 and 15 March 2007 respectively. Both applications were accepted and subsequently opposed by Innovia Security Pty Ltd (Innovia).
In the case of 2006264436, evidence in support of the opposition was completed on 8 November 2013. Evidence in answer was then due by 8 February 2014 but on 22 January 2014 the application was withdrawn “without prejudice”. Evidence in support comprised a declaration made by Mr J Grace, a laser physicist, with 22 exhibits.
Evidence in support of the opposition to 2007229741 was competed on 16 April 2013 with evidence in answer then due on 18 July 2013. The evidence in support comprised declarations made by Mr D Lindsay (with 14 exhibits) and by Mr Grace (5 exhibits). Evidence in answer was not filed but on 5 August 2013 Giesecke filed a request to amend the complete specification. Leave to amend was granted and advertised. On 7 January 2014, Innovia filed a notice of opposition to the amendments. The patent application was withdrawn on 22 January 2014.
Innovia subsequently sought an award of costs in the oppositions. Giesecke opposed this, questioning both the Commissioner’s power to award costs and, in any event whether, in the circumstances, an award of costs would be appropriate.
The law
The Commissioner’s power to award costs arises from section 210 which provides:
“The Commissioner may, for the purposes of this Act:
(a) summon witnesses; and
(b) receive written or oral evidence on oath or affirmation; and
(c) require the production of documents or articles; and
(d) award costs against a party to proceedings before the Commissioner.”
Furthermore, Regulation 22.8 states in relation to proceedings before the Commissioner that:
"(1) The Commissioner must not award costs in proceedings to which this Division applies, other than costs specified in Schedule 8 unless each party to the proceedings has had the reasonable opportunity to make a submission on the matter of the award of those costs.
(2) The Commissioner may award an amount:
(a) for costs in respect of a matter specified in column 2 of an item of Part 1 in Schedule 8; or
(b) in respect of the expenses or allowances of a person in relation to proceedings to which this Division applies."
Does the Commissioner have the power to award costs where an application is withdrawn before the opposition is heard and determined?
Giesecke’s patent attorney has submitted that an award of costs in the present circumstances would be “contrary to established legal principles and judicial decisions”. Unfortunately in seeking judicial authority for his position he has erroneously attributed part of the Patent Office Manual of Practice and Procedure as it existed before 2006 to Justice Drummond in Stack v Commissioner of Patents [1999] FCA 148. In particular the sentence:
“If a matter was withdrawn prior to the hearing without there being a relevant determination by the Commissioner, there are no costs awardable under the Act because there have been no proceedings in the context of s.210(d).”
does not appear in his Honour’s reasons but was an extrapolation formerly applied by the Patent Office.
I fully considered the authorities raised by Giesecke, including Stack, in my decision in Super Internet Site System Pty Ltd v Sensis Pty Ltd [2006] APO 27. I found that the law did not preclude an award of costs where proceedings had been terminated before hearing, such as by withdrawal of the patent application or of the opposition. Subsequently the Commissioner’s practice and the Manual were changed to reflect this.
I find no reason to depart from my conclusion in Super Internet and it follows that the discretion to award costs applies in the present case. However, any award of costs needs to take into account the relevant circumstances.
Is an award of costs appropriate in the circumstances?
Giesecke asserts that:
· The opposition was filed according to an policy to oppose all applications made by it;
· The application was withdrawn because it was no longer of commercial interest;
· No agreement was reached to settle the opposition;
· The applications were withdrawn without prejudice and without admission than any ground of opposition had been established;
· The was no unconscionable or unreasonable behaviour by the applicant;
· Innovia did not contact the opponent before filing the notice of opposition; and
· It acted admirably to save the opponent further costs in the opposition.
For its part Innovia submits:
· The applications were opposed because they represented a threat to Innovia’s freedom to operate. Only a small number of Giesecke’s applications have been opposed;
· Giesecke delayed its offer to settle the opposition until after the evidence in support was completed;
· “commercial reasons” could include a realization that the applicant faced strong grounds of opposition and was unlikely to succeed at hearing;
· The oppositions have served the public interest in preventing potentially invalid applications proceeding to grant;
· The real reason for the applications being withdrawn appears to be for the applicant to avoid the commercial cost of preparing and filing evidence in answer and attending a hearing; and
· Innovia has incurred significant costs in filing the opposition, preparing the statement of grounds and particulars and filing it evidence while the applicant has incurred only minor expense.
In Super Internet I considered a number of authorities on the award of costs in circumstances where there has been no hearing on the merits. Those cases do not necessarily require “some unconscionable or unreasonable behaviour” and Preston CJ in Kiama Council v Grant [2006] NSWLEC 96 summarised the relevant principles at [80]:
“The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits:
(a) where one party effectively surrenders to the other party by:
(i) discontinuing without the consent of the other party; or
(ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party;
the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and
(b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless:
(i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or
(ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.”
I concluded at [15] that in the context of opposition proceedings:
“A particular feature of those proceedings pertinent to the current matter is that discontinuance occurs without leave of the Commissioner and, while settlement may be reached in some cases including as to costs, it is more common for proceedings to be terminated unilaterally by the withdrawal of the notice of opposition or patent application (or of a request or application under a variety of other provisions). These cases will in general have the character of the first class referred to by Preston CJ above and more particularly to being “discontinuing without consent”. As such it appears that it will often be appropriate for the Commissioner to conclude that the party withdrawing has “effectively surrendered” to the other and an award of costs will be made, save any consideration related to the conduct of the parties.”
While the attorney for Giesecke attempted to suggest that the decision to withdraw the applications was entirely independent of the filing of evidence in support of the opposition, and, in the case of 2007229741, opposition to proposed amendments, it is difficult to displace the reasonable apprehension that the events are related. This is particularly the case in face of substantive grounds of opposition supported by evidence and the absence of specific information on other factors (“some supervening event or settlement” in terms of Kiama) that may have led to the applications being withdrawn regardless of the oppositions. Ultimately the applicant’s submissions fall well short of convincing me that the oppositions were not a significant factor in the decision to withdraw the applications and it appears highly likely that absent the oppositions the applications would have proceeded to grant. Consequently it is reasonable to conclude that Giesecke has submitted in the proceedings.
Nevertheless, the present circumstances in the context of opposition proceedings are somewhat different to those leading to a full award of costs in cases where these principles have been applied and are quite different from those encountered in Super Internet. Accordingly, while I consider an award of costs to be appropriate in this case, I believe it should be limited to costs incurred after the applicant became reasonably aware of the case made against it, that is, after the filing of the Statements of Grounds and Particulars. Had the applicant acted at this point it would have allowed the opponent to avoid the significant cost of filing evidence in support, as well as the costs of opposing the request under section 104.
Conclusion
I award costs in the oppositions against Giesecke & Devrient GmbH, limited to:
- For 2006254436, the amount set out in Schedule 8 Part 1 Item 4;
- For 2007229741, the amount set out in Schedule 8 Part 1 Item 4 for the opposition under section 59 and, for the opposition under section 104, the amount set out in Schedule 8 Part 1 Item 1 and the official fee paid for filing the notice of opposition.
P M Spann
Deputy Commissioner of Patents
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