Innovia Security Pty Ltd v JDS Uniphase Corporation - [2014] APO 5

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovia Security Pty Ltd v JDS Uniphase Corporation [2014] APO 5

Patent Application: 2006230761

Title:Patterned optical structures with enhanced security feature

Patent Applicant:  JDS Uniphase Corporation
Opponent:  Innovia Security Pty Ltd
Delegate:  Dr S.D. Barker
Decision Date:  4 February 2014
Hearing Date:  Written submissions filed on 9 and 10 January 2014
Catchwords:  PATENTS – extension of time to file evidence in support – regulation 5.10 of the Regulations as in force immediately prior to 15 April 2013 – negotiations by parties – inadequate explanation of delay – public interest does not support extension – extension refused

Representation: Patent applicant: Fisher Adams Kelly Pty Ltd
Opponent:Watermark Patent and Trade Mark Attorneys

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2006230761

Title:Patterned optical structures with enhanced security feature

Patent Applicant: JDS Uniphase Corporation
Date of Decision: 4 February 2014
DECISION
I refuse the extension of time to file evidence in support.
I allow Innovia Security Pty Ltd a period of one week from the date of this decision to file any evidence already available.
REASONS FOR DECISION

Patent application 2006230761 in the name of JDS Uniphase Corporation (JDSU) was advertised as accepted on 17 May 2012, and a notice of opposition to the grant of a patent was filed by Securency International Pty Ltd, which subsequently changed its name to Innovia Security Pty Ltd (Innovia).
Innovia filed its statement of grounds and particulars on 19 November 2012. The time for filing evidence in support has been extended to 19 November 2013 without objection. On 19 November 2013 Innovia made an application to extend the time for filing evidence in support until 19 February 2014. A delegate of the Commissioner sought further information from Innovia, and on 2 December 2014 advised Innovia that he was not satisfied that an appropriate case had been made out. Innovia requested to be heard.
The hearing was conducted by means of written submissions. Both parties filed written submissions.
The law
On 15 April 2013, the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 (No 1) (the Amendment Regulation) commenced. The Amendment Regulation significantly amended the Patents Regulations (the Regulations) as they apply to patent oppositions. The law governing extensions of time to file evidence in a patent opposition depends upon the date on which the relevant evidentiary period commenced. Where the evidentiary period commenced before 15 April 2013, the extension is governed by regulation 5.10 of the Regulations as in force immediately prior to 15 April 2013. Where the evidentiary period commenced on or after 15 April 2013 in any opposition commenced before 15 April 2013, or in a substantive opposition commenced after 15 April 2013, the extension is governed by regulation 5.9 of the Regulations as in force on 15 April 2013. This follows from regulation 23.36(2), item 2, of the Amendment Regulation.
The present evidentiary period (for filing evidence in support) commenced on 19 November 2012, i.e. before 15 April 2013. Consequently the extension of time is governed by regulation 5.10 of the Regulations as in force immediately prior to 15 April 2013.
One relevant consequence of the amendments to Chapter 5 is that evidence that is required to be served on or after 15 April 2013 is to be filed with the Commissioner rather than served. Consequently in this decision I will make reference to the filing of evidence where that is to happen on or after 15 April 2013.
Regulation 5.10(2) of the Regulations gives the Commissioner the power to extend the time for filing evidence in support. The Commissioner must not grant an extension unless satisfied that the parties have been notified of the application for extension (reg. 5.10(5) (b)), has given the parties a reasonable opportunity to be heard (reg. 5.10(5)(c)(i)), and is reasonably satisfied the extension is appropriate (reg. 5.10(5)(c)(ii)). In the present case the parties have been notified and have had an opportunity to be heard. The only remaining question is whether it is appropriate to extend the time.
The considerations relevant to this question have been considered several times by the Federal Court (Ferocem Pty Ltd v Commissioner of Patents [1994] FCA 981; 28 IPR 243, A Goninan & Co Ltd v Commissioner of Patents [1997] FCA 424; 38 IPR 213 and National Starch & Chemical Co v Commissioner of Patents [2001] FCA 33; 50 IPR 398). In summary, the power to extend time is discretionary, so it is necessary to give genuine and proper consideration to all relevant considerations. (Ferocem at 247-8, Goninan at 220). Relevant considerations include:
Negotiations
Innovia referred to part 3.11.3.2.6 of the Manual of Practice and Procedure, which says:
"Where it is clear that both parties are involved in negotiations, the Commissioner may be reasonably satisfied that a short extension is 'appropriate in all the circumstances' provided that:
·if the extension is for more than 1 month, the application for the extension includes something from the other party to confirm that negotiations are occurring;
·where negotiations have been occurring for more than 3 months, the Commissioner will expect to be provided with details of why negotiations have not yet been concluded and an indication of when agreement is likely. The Commissioner will not grant an extension unless conclusion of negotiations appears to be imminent."
This practice relates to negotiations that are conducted expeditiously, and a short extension will allow completion of the negotiations. The extension sought in the present case is three months (which is not a short extension), and comes after informal discussions began in October 2012, were discontinued in April 2013, recommenced in August 2013, and are not yet complete (at least, the parties have not advised me that the negotiations are complete). The present extension of time is not of the type envisaged by the Manual. It is necessary to consider carefully the criteria laid down by the Federal Court.
Explanation of delay
The application for extension of time stated that the parties are in negotiations to settle the opposition, and these negotiations are expected to be completed by 19 February 2014. Further, the expert has been unavailable due to other commitments, and it is intended to have a meeting with him before the end of the year to prepare evidence in case settlement is not reached.
The delegate noted in correspondence that it had been almost a year since the initiation of settlement negotiations, and that it appeared there had been a decision not to bother collecting evidence because of the settlement negotiations. On 9 December 2013 Innovia indicated that a draft settlement agreement had been sent to JDSU for review.
The written submissions filed by Innovia elaborate on the unavailability of the expert. The expert is providing evidence in "over 10 oppositions", and a decision was made that he should "concentrate more on other oppositions in which there are no settlement negotiations rather than the present opposition in which a settlement has been likely since August 2013". It is trite to note that the settlement has proven to be less straight forward than anticipated.
A decision to cease preparation of evidence while a settlement is negotiated is reasonable if settlement is achieved quickly. In a situation such as the present, a lengthy delay with uncertain prospects of settlement is not reasonable. The explanation of delay is clearly inadequate.
Public interest
In its submission on the public interest, Innovia drew attention to its filing of a statement of grounds and particulars, and the filing of a declaration with prior art documents on 19 February 2013 as evidence of a serious opposition. Innovia also pointed to the public interest in avoiding the expense of a substantive hearing to determine the opposition if there is a settlement. The expenses involved seem more a matter of the interests of the parties than the public.
Innovia have said that the settlement they are negotiating is "a settlement involving a licence agreement which would result in withdrawal of the opposition", so Innovia are prepared to withdraw the opposition without the need for amendment to the specification (once they have secured a licence). This raises the inevitable rhetorical question: why would Innovia be prepared to withdraw the opposition without amendment of the specification if there is a serious opposition? The actions of Innovia lead me to conclude that it is unlikely that a serious opposition is in train.
JDSU has suggested that there is also a public interest "that patented inventions are exploited", and a licence agreement satisfies this interest. While the presence of an opposition may give Innovia a bargaining position in its negotiations, the parties are free to negotiate a licence regardless of whether there is an opposition.
The evidence suggests that there is not a serious opposition. Consequently the public interest does not support the extension.
Interests of the parties
This case is unusual in that both parties have indicated that they support the extension of time. I accept that the interests of the parties support the extension.
Conclusion
I am satisfied that there is not an adequate explanation of the delay, and the public interest does not favour allowing the extension. On the other hand, the interests of the parties favour the extension. The balance of these considerations lies against allowing the extension of time.
In such cases I must consider whether to allow a short period for the unsuccessful party to file evidence readily to hand. It is unclear whether any evidence exists. However, I will allow a short period of one week.
Dr S.D.Barker
Delegate of the Commissioner of Patents