Khoury v Sherrard Pty Ltd
[2018] APO 20
•19 March 2018
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Khoury v Sherrard Pty Ltd [2018] APO 20
Patent Application: 2013354886
Title:Bin lid closing device
Patent Applicant: Sherrard Pty Ltd
Requestor: Edward Joseph Khoury
Hearing Officer: Dr S.D. Barker – Deputy Commissioner of Patents
Decision Date: 19 March 2018
Hearing Date: Final date for written submissions expired on 14 March 2018
Catchwords: PATENTS – section 36 – eligible person – specification is drafted with particular emphasis on the design developed by Mr Khoury – inventive concept understood in this context – parties found to be co-inventors – requestor is an eligible person
Representation: Patent attorney for the applicant: Watermark Intellectual Property Pty Ltd
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2013354886
Title:Bin lid closing device
Patent Applicant: Sherrard Pty Ltd
Date of Decision: 19 March 2018
DECISION
Pursuant to section 36(1), I declare that the following persons are eligible persons in relation to patent application 2013354886:
Sherrard Pty Ltd and
Edward Joseph Khoury.
This declaration is based on a finding that the following persons are inventors of patent application 2013354886:
Phillip Harry Sherrard,
Janelle Faye Sherrard and
Edward Joseph Khoury.
Pursuant to section 36(4) the persons declared may file an application under section 29.
The findings of this decision will probably apply to patent application 2017208266. The parties should consider dealing with that application consistent with this decision without the need to bring a separate action under section 36.
Pursuant to section 36(5) this decision can be appealed to the Federal Court.
REASONS FOR DECISION
Patent application 2013354886 (the application) was filed on 29 November 2013 under the provisions of the Patent Cooperation Treaty by Sherrard Pty Ltd. The inventors are listed as Phillip Sherrard and Janelle Sherrard (the Sherrards). The application entered the national phase in Australia, and examination commenced on 29 July 2016. The application lapsed for failing to gain acceptance in time. A divisional application number 2017208266 was filed on 26 July 2017.
On 26 July 2017 Edward Joseph Khoury filed a form headed "Request for Determination of a Dispute Between Applicants", which refers to section 32 of the Patents Act (the Act). Section 32 deals with disputes between co-applicants. Mr Khoury is the Managing Director of Form Designs Australia Pty Ltd (FDPL). As Mr Khoury is not a co-applicant, the form that he had filed was understood by IP Australia as a request under section 36 (a section dealing with eligible persons) who acknowledged the request as made under section 36. In this case the meaning of the document is clear - it is a request by Mr Khoury to be included as an inventor, and thus also as an applicant. The use of the wrong form is regrettable, but it does not obscure the intention. IP Australia gave effect to the clear purpose of the form, consistent with the practice of the office.[1] Nothing flows from Mr Khoury's use of the wrong form.
[1] See Commonwealth Scientific and Industrial Research Organisation v H.B.H. Technological Industries P/L [1992] APO 9; 24 IPR 90.
The parties have filed evidence in support of their positions. On 17 January 2018 I wrote to both parties seeking further information. I have taken that information into account in this decision.
The invention
The invention relates to a closing device for use with household rubbish bins of the type often referred to as 'wheelie bins'. The device can be clipped onto the handle of the bin and causes the lid to flip into the closed position when not in use. The device is illustrated in several drawings, some of which are reproduced here as an aid to understanding.
The specification ends with 10 claims. Claim 1 is the independent claim:
A bin lid closing device comprising: a handle engaging portion having a recess for receiving a cylindrical handle of a bin; a side engaging portion extending outwardly from the handle engaging portion; and a resilient lid engaging portion extending outwardly from the handle engaging portion; wherein the side engaging portion engages the side of the bin to prevent rotation of the handle engaging portion relative to the handle and the lid engaging portion is engaged and flexed by the lid of the bin during opening such that a force is applied to the lid by the lid engaging portion to close the lid.
It is apparent that the device that is claimed is a generalisation of the device in the drawings.
The facts
Before setting out the relevant facts in detail, I will give a brief overview.
Late in 2012 the Sherrards approached FDPL in relation to designing a new product for closing bin lids. FDPL produced a design, and a provisional application was filed. Subsequently the business relationship between the Sherrards and FDPL broke down. Each now claim to have invented the product.
The start of the relationship – the Sherrards meet FDPL
In 2012 the Sherrards approached FDPL to carry out some work in relation to a bin closing device. A confidentiality agreement was signed on 25 October 2012. That document does not reveal anything of assistance to the present matter.
A Service Contract was signed by the Sherrards and FDPL on 20 November 2012. This document has a provision headed INTELLECTUAL PROPERTY. This provision relevantly states:
"Should any intellectual property be created from this design project it will become the property of the 'CLIENT' upon the 'CLIENT' entering into a royalty agreement with 'FDPL'."[2]
[2] 'CLIENT' is defined as the Sherrards.
It is important to note that it was envisaged that FDPL might create intellectual property in the course of their work, but that such intellectual property was intended to be transferred to the Sherrards upon the agreement of a royalty arrangement. The significance of this will become apparent later.
What did the Sherrards provide to FDPL
A document dated 29 October 2012 contains a description of work that is relevant. It starts with a background statement:
"Wheelie bins are used all over the world and usually come with an integrated hinged lid, and as can be expected, rubbish in rubbish bins produces odours and attracts flies causing diseases. Keeping the lid down on the rubbish bin at all times is a desired practice but unfortunately does not always occur.
This is the subject of a proposed product development addressing the problem, keeping the lid on the rubbish at all times when it is not being manually opened to fill, or emptied, in the usual manner.
Jannelle and Phillip Sherrard have identified a market opportunity and a solution to the problem by introducing a spring loaded apparatus that can be attached to any 'Wheelie Bin' with a hinged lid, to bias it into the closed position."
This document then lists some of the requirements for the work:
"• Research and identify the geometry of wheelie bins used in Australia to ascertain common dimensions for the attachment of a device to the handle and or lid. This data should be used to establish the spring connection between the bin and the lid.
• Keeping it simple, design a mechanism that is quick and easy to attach to the rubbish bin by unskilled persons.
• The device should be cost effective. Use economical manufacturing methods and materials. This apparatus will be manufactured in large volumes so use processes that are not labour intensive. The proposed retail price should be around $20.00.
• The device should be durable and robust as it will be used in harsh dirty environments and may be subject to harsh cleaning chemicals in certain countries.
• Reduce dirt traps where possible and consider self cleaning mechanisms and shapes to allow rain and wind to wash away dust etc.
• A light weight compact device is desirable.
• Consider cantilever and weights as an option, even though a spring is the obvious choice.
• Consider packaging, transportation and merchandising while designing the apparatus.
• It would be advantageous to produce a design that has intellectual property protection in the form of a patent and / or design registration so consider any innovations that may add value."
This suggests that the Sherrards had identified a problem with bins. The solution that they envisaged was a spring loaded apparatus to close the bins. There is nothing in the document to indicate that FDPL were given any drawings or prototypes.
In a declaration dated 16 February 2018, Mr Sherrard declared that he developed a prototype in August 2012, and in October 2012 he confidentially showed the prototype to trusted family and friends. A second prototype was subsequently developed on an unspecified date. Mr Sherrard declares that Mr Khoury was shown the first prototype:
"On 25th October 2012, we met with Edward Khoury from Form Designs and showed him our first prototype."[3]
[3] Sherrard declaration dated 16 February 2018 at [15].
Bruce Free, Murray Criddle and Graeme Healey confirm that the Sherrards developed a prototype. They provide no information on what the Sherrards told Mr Khoury.
Mr Khoury stated that the Sherrards provided a model:
"The Sherrard's never provided FDPL with any drawings of any kind. From what I can remember, Phillip Sherrard brought in a piece of wood that was weighing the lid down, which had no relevance or practical application. We do not have any record of this model in our system."[4]
[4] Khoury declaration dated 15 February 2018 at 2.1.
The only evidence of the nature of the first prototype is the following image that appears in the declarations of Sherrard, Free, Criddle and Healey:
I believe that the evidence of Mr Sherrard is consistent with that of Mr Khoury. The first prototype developed by the Sherrards used a piece of wood attached to a mechanism mounted on the handle of a bin, and this prototype was shown to Mr Khoury. It is not possible to tell how the first prototype operated, but it seems unlikely that it conveyed to Mr Khoury any information beyond the general concept.
I conclude that the Sherrards provided an idea and a simple prototype. FDPL were given a wide brief to take this idea forward.
What did FDPL do
Two documents called "Rubbish Bin Closer V1" and "Rubbish Bin Closer V2", both on FDPL letterhead, form part of the evidence. The documents are stamped APPROVED and signed by Janelle Sherrard and a representative of FDPL. The drawings appear to be substantially identical to several of the drawings in the present application. It seems clear that the physical form of the device as shown in the drawings was achieved by the work of FDPL. Mr Khoury stated that he carried out the design work at FDPL:
"I am the Managing Director of Form Designs Australia. I am also the design director of every project that begins and ends at Form Designs. The drawings presented were sketched by myself and were used to direct the design concept to the CAD operator who produced a 3D model of the Bin Spring. This was solely my direction, as always."[5]
[5] Khoury declaration dated 15 February 2018 at 2.2.
I am satisfied that Mr Khoury carried out the development work at FDPL.
The provisional is filed
On 3 December 2012 provisional application 2012905243 was filed by the Sherrards, who are named as the applicant. No inventor is identified. The drawings in the specification are clearly based on those in the two documents produced by FDPL. The text of the specification has clearly been written by a patent attorney.
The relationship ends
On 10 December 2013 Sharon Khoury of FDPL emailed the Sherrards a copy of a draft Royalty Agreement. On 20 December 2013 Janelle Sherrard emailed Sharon Khoury inviting a discussion about the Royalty Agreement, and including Christmas wishes. It is apparent that there was a positive relationship between the parties.
On 3 February 2014 the lawyers for the Sherrards wrote to FDPL as follows:
"I write to notify you that my client will not be signing either of the Royalty Agreements. Further, it is likely that they will be entering into a new service agreement with an alternative industrial designer, to commission a new method of manufacture for Patent Number 2012905243 (Patent)."
This letter goes on to state:
"My clients intends [sic], therefore, that you treat this letter as a notice that they intend to amicably part ways with Form, but more specifically that:
19.1 they will not execute the royalty agreement, and so will not obtain the intellectual property you have developed (and will also refrain from using the Mould);
19.2 Form will not be compelled to transfer the intellectual property it has created, but will not receive a royalty;
19.3 my clients will develop a new method for exploiting their invention (in isolation from their former dealings with Form); and
19.4 Form will abstain from making any attempt to use, sell or otherwise deal with the intellectual property, which my clients commissioned it to make."
This supports a conclusion that the intellectual property rights of FDPL (whatever they may be) had not been transferred to the Sherrards. However, there is no admission that Mr Khoury is an inventor with regard to the application.
Mr Khoury confirmed that the Royalty Agreement was not signed:
"A royalty agreement was prepared and sent to the Sherrard’s but was never executed by the Sherrard’s. There is no other agreement relevant to transferring the rights to the Sherrard’s."[6]
The PCT is filed
[6] Khoury declaration dated 15 February 2018 at 2.3.
On 29 November 2013 international application number PCT/AU2013/001391 was filed by Sherrard Pty Ltd. The international application claims priority from the provisional application. The inventors are identified as the Sherrards. The drawings and the description are clearly heavily based on the provisional application. That application has entered the national phase as the present application.
The law
The present matter arises under subsection 36(1), as amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.[7] The subsection reads:
[7] The amendments apply because the section 36 request was filed after the commencement date of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.
If:
(a) a patent application has been made and, in the case of a complete application, the patent has not been granted; and
(b) an application for a declaration by the Commissioner is made by one or more persons (the section 36 applicants) in accordance with the regulations; and
(c) the Commissioner is satisfied, on the balance of probabilities, in relation to an invention disclosed in the specification filed in relation to the application for the patent:(i) that the nominated person is not an eligible person, but that the section 36 applicants are eligible persons; or
(ii) that the nominated person is an eligible person, but that the section 36 applicants are also eligible persons,the Commissioner may declare in writing that the persons who the Commissioner is satisfied are eligible persons are eligible persons in relation to the invention so disclosed.”
The present case satisfies paragraphs 36(1)(a) and 36(1)(b). The only question is whether Mr Khoury is an eligible person on his own or in addition to the Sherrards.[8]
[8] The lapsing of the application does not prevent a declaration being made: section 36(2).
Schedule 1 of the Act defines an eligible person as:
"eligible person", in relation to an invention, means a person to whom a patent for the invention may be granted under section 15.
and subsection 15(1) provides:
Subject to this Act, a patent for an invention may only be granted to a person who:
(a) is the inventor; or
(b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person mentioned in paragraph (b); or
(d) is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).In other words, the eligible person is the inventor or any person who has acquired ownership from the inventor. The Federal Court has stated that the determination of who is an eligible person is approached as follows:
(i) identify the "inventive concept" of the invention as defined by the claims;
(ii) determine inventorship including the person responsible for the inventive concept and the time of conception as distinct from its verification and reduction into practice; and(iii) determine how any contractual or fiduciary relationships give rise to proprietary rights in the invention.[9][9] University of Western Australia v Gray [2009] FCAFC 116; 82 IPR 116.
Significant in this case is the question of when was the invention conceived. In University of Western Australia v Gray (No 20)[10] French J listed the following principles:[11]
[10] [2008] FCA 498; 76 IPR 222.
[11] at [1426].
i.Conception is the touchstone of inventorship, the completion of the mental part of inventions.
ii.Conception is the "formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention as it is hereafter to be applied in practice". It is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice without extensive research or experimentation.
iii.An inventor need not know that the invention will work for conception to be complete. The inventor need only show that he or she had the idea. The discovery that an invention actually works is part of its reduction to practice.
iv.It is not the law that the inventor’s definite and permanent idea must include a reasonable expectation that the invention will work for its intended purpose even when it deals with uncertain or experimental disciplines where the inventor cannot reasonably believe that an idea will be operable until some result supports that conclusion.
Consideration
It is clear that the Sherrards had the idea of a self-closing device that attaches to the handle of bin, and had produced a prototype. Mr Khoury developed the idea into the simplified form of a single piece device (I will refer to this as the Khoury device). As far as can be determined from the photo provided by Mr Sherrard, the mechanism of operation of the prototype is quite different to that of the Khoury device.
What is the inventive concept?
Is the inventive concept the broad idea of a self-closing device, or does the inventive concept include elements of the Khoury device?
The application was not accepted, and novelty and inventive step objections were raised by the examiner during examination. It seems likely that amendment of the claims would have been necessary before the application could have been accepted. However, it seems clear to me that the specification, including the claims, was drafted with particular emphasis on the Khoury device, rather than the prototype developed by the Sherrards. This is evident in the fact that the prototype does not clearly fall within the scope of claim 1 - specifically it is not apparent that the prototype has a recess to receive the handle of the bin, it is uncertain whether the prototype has a side engaging portion, and the lid engaging portion of the prototype appears to be a piece of wood that would not be expected to flex during opening. The specification does refer to biasing the members by using a spring, which might be part of the operation of the prototype.
The specification as drafted is so heavily directed to the Khoury device that I consider that the inventive concept is a self-closing device having the general features of the Khoury device.
When was the inventive concept conceived?
It follows that the invention was not conceived when the Sherrards began their relationship with FDPL. The inventive concept was conceived when FDPL produced the drawings.
Who was responsible for the inventive concept?
The Sherrards were responsible for the basic idea and the prototype. Mr Khoury took the idea and turned it into the inventive concept. Are they co-inventors? To determine whether a person should be regarded as a co-inventor, I am guided by the views of the Administrative Appeals Tribunal in Re Upham and Commissioner of Patents:[12]
· Primarily, there must be an objective assessment of the person's contribution simpliciter to the invention.
· In assessing the weight to be given to that contribution, one should ask firstly whether their contribution beneficially affected the final concept of the claimed invention and secondly, whether that final conception would have been less efficient without their contribution.
· It is also legitimate to ask whether the invention would have occurred without the person's involvement.
· Evidence of collaboration is useful in assessing objectively whether there has been a relevant contribution.
[12] [1998] AATA 852, see [20].
The relationship between the Sherrards and Mr Khoury was collaborative (at least at the start). The Sherrards had more than just a bare problem, they had general ideas for how it could be solved and a simple prototype. Mr Khoury improved the Sherrards' ideas. Without the contribution of each the inventive concept would not have been conceived. I am satisfied that both the Sherrards and Mr Khoury were responsible for conceiving the inventive concept. The Sherrards and Mr Khoury are co-inventors.
Have the rights been transferred?
The Service Contract makes it clear that the ownership of any intellectual property was to be transferred to the Sherrards upon them entering into a royalty agreement. The evidence is clear that a royalty agreement was not established. It follows that the rights of Mr Khoury have not been transferred.
For the purposes of this decision I will assume that the rights of the Sherrards have been transferred to Sherrard Pty Ltd.
Conclusion
I am satisfied that the inventors are the Sherrards and Mr Khoury.
I am satisfied that Mr Khoury is an eligible person along with Sherrard Pty Ltd.
Dr S.D. Barker
Deputy Commissioner of Patents
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