KGK Synergize Inc.
[2013] APO 72
•23 December 2013
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
KGK Synergize Inc. [2013] APO 72
Patent Application: 2013205995 and 2013205996
Title:Compositions comprising flavonoids and tocotrienols and methods thereof (2013205995)
Functional foods comprising flavonoids and tocotrienols and methods thereof (2013205996)
Patent Applicant: KGK Synergize Inc.
Delegate: Dr S.D. Barker
Decision Date: 23 December 2013
Hearing Date: Written submissions filed on 12 December 2013
Catchwords: PATENTS – extension of time to file divisional applications – failure to instruct payment of continuation fee was not causative – failure of docketing system was not an error or omission – extension refused
Representation: Patent applicant: Spruson & Ferguson
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2013205995 and 2013205996
Title:Compositions comprising flavonoids and tocotrienols and methods thereof (2013205995)
Functional foods comprising flavonoids and tocotrienols and methods thereof (2013205996)
Patent Applicant: KGK Synergize Inc.
Date of Decision: 23 December 2013
DECISION
Extensions of time to file divisional applications refused.
REASONS FOR DECISION
This matter concerns two patent applications filed by KGK Synergize Inc. (KGK). The applications were filed on 23 May 2013 and were assigned the numbers 2013205995 (the 995 application) and 2013205996 (the 996 application).
The 995 application is a divisional application of application 2005247162 (the 995 parent). The 995 parent lapsed due to the failure to pay a continuation fee that was due on 24 May 2010. A letter advising the lapsing was sent to the applicant on 8 December 2010.
The 996 application is a divisional application of application 2005247160 (the 996 parent). The 996 parent lapsed due to the failure to pay a continuation fee that was due on 24 May 2010. A letter advising the lapsing was sent to the applicant on 8 December 2010.
Since a divisional application cannot be made after the parent application has lapsed (section 79B(3)), KGK have sought an extension of time under section 223 to extend the time for filing a divisional application (in relation to both applications). The chronology of events in relation to the extensions of time are the same for both applications:
23 May 2013 Application for extension of time 28 May 2013 Applicant advised that the declaration had not been provided, and required to file one by 28 July 2013 5 August 2013 Delegate of the Commissioner advised that she intends to refuse as declaration not filed 21 August 2013 Time to file declaration extended to 4 September 2013 29 August 2013 Declaration filed by KGK 5 September 2013 Delegate of the Commissioner issues report identifying deficiencies, applicant allowed 2 months to respond 13 November 2013 Delegate of the Commissioner stated that she inteds to refuse as no response provided; KGK allowed two weeks to request a hearing 22 November 2013 KGK requests more time to respond 26 November 2013 Request for more time rejected 27 November 2013 KGK requests more time to respond, or a hearing if needed 29 November 2013 Request for more time rejected, hearing notice issues setting hearing date of 13 December 2013 11 December 2013 Applicant asks that hearing be deferred 12 December 2013 A Delegate rejects that request 12 December 2013 Submissions and new declarations filed The law
This matter is governed by section 223(2) of the Patents Act, which states:
Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney; or
(b) circumstances beyond the control of the person concerned;
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.A "relevant act" for the purposes of section 223 is defined in section 223(11) and means:
an action (other than a prescribed action) in relation to a patent or patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications.”
Kimberly-Clark Ltd v Commissioner of Patents (No 3) [1988] FCA 421, 13 IPR 569 considered the scope of an "error or omission" in the context of the equivalent provisions of section 160 of the Patents Act 1952. Jenkinson J stated at page 579, [9]:
"It is in my opinion difficult to suppose that only the inadvertences and accidental steps, and not errors resulting from faulty reflection, of the former class of persons were intended by the draftsman to be within s 160(1). Further, the word 'error' is not easily assigned a clear meaning restricted by reference to one or several particular categories of flawed mental function. The attempt is likely to lead to the drawing of fine and often unrealistic distinctions. And some errors of judgement by agents and attorneys may be as bizarre and as little to be anticipated as lapses of memory and accidental slips."
Jenkinson J rejected the argument that section 160(2)(a) excluded errors or omissions that were the products of deliberation. Consequently, the concept of what constitutes an error should be interpreted broadly and includes an error of judgement. But Jenkinson J also made the following comments at page 580, [10]:
"By no means every judgement by the 'person concerned' or by 'his agent or attorney' which can be shown to have been mistaken will answer the description 'error or omission' in the ordinary meaning of those words, which in their context carry, in my opinion, a connotation of obviousness in error."
At page 583, [17] Jenkinson J further found that, in order to make out a proper case justifying an extension:
"... an applicant would in my opinion have to go beyond a disclosure of the processes by which an agent's errors came to be committed, and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes (or, in the case of corporation aggregate, of the relevant officers and other agents) relevant to an understanding of the way the failure to do the act or take the step occurred, or relevant to an evaluation of the reasonableness of that conduct."
The facts
The evidence in these matters consists of declarations by Najla Guthrie. The first Guthrie declaration is dated 19 August 2013. The declaration filed in relation to both applications is identical, except for the application number cited. I will quote for the declaration filed in relation to the 995 application.
1. I am the President and Chief Executive Officer of KGK Synergize, Inc. (hereinafter referred to as 'KGK'). In this capacity, I have unfettered access to the records of KGK and the points attested to hereunder come from those records, supplemented by my own knowledge or the result of my personal investigations.
2. I have been advised that Australian Patent Application Number 2005247162 (hereinafter referred to as 'the Application') has lapsed, due to failure to pay a renewal fee by the deadline of 24 May 2010. While a divisional Application has now been filed, I further understand that divisional status has been refused, as the divisional was filed after the Application had lapsed.
3. The Application was filed by Wray & Associates, Patent & Trade Mark Attorneys (hereinafter referred to as 'Wray'). Wray was instructed by the firm of Davidson, Davidson & Knappel, LLC (hereinafter referred to as 'Davidson'), US attorneys who represented the interests of KGK in the United States of America and (through foreign agents) in other jurisdictions.
4. During 2008, Wray was notified that responsibility for the Application was transferred from Davidson to Lowenstein Sadler PC (hereinafter referred to as 'Lowenstein'), US attorneys who represented the interests of KGK in the United States of America and (through foreign agents) in other jurisdictions.
5. On 21 May 2010, Lowenstein instructed Wray not to pay the maintenance fee due 24 May 2010, and that they would instruct Wray whether KGK wanted to pay the fee within the grace period.
6. I further understand that Wray notified Lowenstein that the fee was not paid and indicating that the Application could be restored under certain circumstances if it was not KGK's intention to allow the application to lapse.
7. In January 2010, an Examiner's Report issued to Wrays, setting an absolute deadline of 19 October 2011 for obtaining acceptance of the Application.
8. In June 2010, KGK decided to dispense with the services of Lowenstein. This decision was made to reduce costs. Responsibility for the IP portfolio of KGK was transferred in-house and the legal department of KGK took on these duties.
9. While this was occurring, at the end of 2008, KGK was involved in a dispute with a licensee regarding a product referred to as 'Sytrinol'. The licensee, Source One Global, was served with a cease and desist letter and, in turn, sued KGK for damages. This resulted in lengthy litigation, which was only settled in January 2012.
10. While the legal department of KGK was occupied with the litigation referred to in point 9 of this declaration, it has subsequently become apparent that they did not properly monitor deadlines for the KGK IP portfolio outside the scope of that litigation. This included the prosecution and renewal deadlines for the Application. There was no properly-maintained docketing system in-house to monitor deadlines for intellectual property in the various jurisdictions.
11. Due to the issues raised in points 9 and 10 of this declaration, KGK did not instruct Wray to pursue the Application by way of filing a divisional application, in order to address the issues raised in the Examiner's Report. As such, the Application lapsed and the time frame for filing a further application claiming divisional status from the Application expired.
12. In early 2013, responsibility for this application was transferred to Spruson & Ferguson, Patent & Trade Mark Attorneys (hereinafter referred to as 'S&F'). S&F was instructed by the firm of Patton Boggs LLP (hereinafter referred to as 'Patton Boggs'), US attorneys who currently represent the interests of KGK in the United States of America and (through foreign agents) in other jurisdictions.
13. I can confirm that KGK received no communication regarding the lapsing of the Application until we made direct enquiry of S&F early in 2013. It was at this time that we were advised that the Application was lapsed and we were out of time to file a further application to claim divisional status from the Application. I immediately instructed S&F to investigate any options for having the Application reinstated, as it represents important technology to KGK. I understand that S&F filed a further application, claiming divisional status from the Application and filed a request to have the late filing of said further application accepted, with the claim of divisional status. This declaration is forwarded in support of that request.
14. I confirm that, at no time, did KGK intend to allow the Application to lapse, nor did KGK provide such instructions to Lowenstein. Rather, KGK definitely intended to pursue our interest in this invention (by way of filing a divisional application). As Lowenstein have now been disengaged by KGK, I cannot attest to the specific reason for Lowenstein providing instructions to Wray not to pursue the invention but can confirm that this did not reflect the intention of KGK, as Applicant. I believe that this was related to the change of responsibility for the portfolio around the time that deadlines became due. In turn, KGK's failure to maintain a proper docketing system meant that this problem was not recognised until sometime after the lapsing occurred.
15. I confirm that it was always the intention of KGK to pursue the invention. The fact that a divisional application was filed after the Application had lapsed occurred due to an error on the part of the previous agent for KGK, in not providing instructions to the Australian agent which reflected the intention of the Applicant.
A delegate considered this evidence, and was not satisfied that an extension of time was justified. On 5 September 2013 the delegate reported as follows:
I have considered your declarations but there is some further information which will help me to determine whether an extension of time can be allowed.
Did you instruct Wrays when you decided to transfer the responsibility for the IP portfolio in-house, in June 2012, as you had done when you transferred the responsibility from Davidson to Lowenstein in 2008?
In paragraph 11 you mention that you did not instruct Wrays 'to pursue the Application by way of filing a divisional application'. Was it your intention at that time to file a divisional application or to respond to the examiner's first report by way of argument and amendment? Was it your intention at that time to pursue the application at all, as you have indicated that the decision to move the responsibility for your IP portfolio in-house was based on financial considerations?
Did you understand the need to maintain a functional address for service of documents in Australia for the purpose of continuing the prosecution of these applications?
You are required to make a full and frank disclosure of all of the relevant circumstances that led to you failing to file a divisional application within the prescribed time.
A declaration by Guthrie dated 11 December 2013 provides some additional information. That declaration states:
1. I am one and the same Najla Guthrie, having executed a declaration on 19 August 2013 with regard to the above matter.
2. I have been advised that the Delegate of the Commissioner of Patents, having considered the declaration executed by myself on 19 August 2013, has invited further submissions to be made regarding the matter. This Supplementary Declaration is provided in response to that request. By this Supplementary Declaration, I confirm the points raised in my declaration of 19 August 2013 and add the points provided hereunder.
3. Regarding the inquiry as to whether Wrays was instructed as to the transfer of responsibility of the IP Portfolio in-house, I do not recall whether KGK Synergize, Inc or Lowenstein informed Wrays as to the transfer of the IP portfolio in-house in 2010. Due to the transfer of files, the correspondence records are not complete.
4. At all time, including at the time the IP portfolio was taken in-house, KGK Synergize, Inc. intended to pursue the application. Paragraph 11 of the 19 August 2013 declaration merely refers to the fact that no instructions were sent to Wray, regardless of whether the instructions would have been filing a response or a divisional application. Even with the financial considerations, KGK Synergize, Inc. intended to pursue the applications, but believed it would be more cost effective to dispense with outside U.S. counsel.
5. KGK Synergize, Inc. did not understand the need to maintain a functional address for service of documents in Australia.
6. I again confirm that it was always the intention of KGK to pursue the invention. The fact that a divisional application was filed after the Application had lapsed occurred due to an error on the part of the previous agent for KGK, in not providing instructions to the Australian agent which reflected the intention of the Applicant.
Consideration
What is the act that was not done in time?
The extension is sought in order to file a divisional application. Guthrie states that it was always KGKs intention to file a divisional application. This is peculiar, because it suggests that KGK was seeking to file a divisional rather than gain acceptance of the parent application. I have considered whether Guthrie intended to say that KGK wished to file a divisional application if it was not possible to place the application in order for acceptance before the time for acceptance expired. However, Guthrie's statements are clear and repeated. I do not consider that I should rewrite what Guthrie has clearly stated.
What was the error that caused the failure to file a divisional application?
Guthrie's evidence contains assertions of two different errors: (a) Lowenstein instructing Wrays not to pay the continuation fee, and (b) KGK not instructing Wrays to file a divisional. I will consider each in turn.
(a) The instructions given by Lowenstein
Guthrie asserted that there was an error by Lowenstein in instructing Wrays not to pay the continuation fee. If it is accepted that this was an error, the consequence was that the parent application lapsed. However, this did not cause the failure to file a divisional application, it only changed the date by which a divisional had to be filed. This error was not causative of the failure to file a divisional, so it is not relevant for the purposes of section 223.
(b) Failure to instruct the filing of a divisional
Guthrie declares that there was an intention to file a divisional, and draws a link between the in‑house legal department being distracted by the "Sytrinol" licence and the failure to instruct Wrays to file a divisional. This is merely speculation on Guthrie's part.
Guthrie also refers to the failure of the legal department to maintain a docketing system:
"There was no properly-maintained docketing system in-house to monitor deadlines for intellectual property in the various jurisdictions"
While it is ambiguous what, if any, system was in place, it is clear that the system was unable to monitor important dates, such as when continuation fees were due, when the applications lapsed for failure to pay continuation fees, the final date for acceptance of the applications, or when a divisional needed to be filed. The failure to have in place a "properly-maintained" docketing system reminds me of the situation in Re Weir Pumps Ltd and Commissioner of Patents and Stork Pompen BV [1988] AATA 331, 13 IPR 163, where Deputy President Bannon found that there was "a deliberate policy of Weir that it did not maintain a watch for pending patent applications or for their acceptance". This failure by Weir was not an error or omission, and the same conclusion is inevitable in the present case.
The failure to put in place a docketing system that was capable of monitoring important dates is unprofessional, and the consequential failure to be aware of those dates is not an error or omission, but rather is the inevitable outcome of a deliberate decision to use an inadequate system. There was no error or omission in this regard.
Conclusion
It follows that there was no error or omission that was causative of the failure to file a divisional application in time. Consequently, the extension of time must be refused.
Dr S.D. Barker
Delegate of the Commissioner of Patents
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