Kimberly-Clark Corporation v the Procter & Gamble Company

[1991] APO 56

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Application No. 586633 by KIMBERLY-CLARK CORPORATION, Opposition by THE PROCTER & GAMBLE COMPANY and Objections to Extension of Time to File Evidence-in-Support

BACKGROUND

This decision is one of several matters concerning patent application 586633 which are pending before this Office.  I set out the history of the application in more detail below.  Briefly, the Procter & Gamble Company lodged a notice of opposition to application 586633.  That noticed recited several grounds of opposition, but not that of obtaining.  Subsequently, because of information disclosed in pending civil proceedings in the United States, the opponent decided that it additionally wanted to rely on the ground of obtaining.  To that end, the opponent has:

.requested, under regulation 76 of the Patents Regulations 1952, amendment of the original notice of opposition to incorporate the ground of obtaining;

.applied for several extensions of the time, under regulation 55 of the Patents Regulations, to serve evidence-in-support of the opposition; and

.requested an extension of time, under section 160 of the Patents Act 1952, in order to lodge a notice of opposition which incorporates the ground of obtaining.

The present decision concerns the applications under regulation 55.

HISTORY OF 586633

Patent application number 586633 by Kimberly-Clark Corporation is entitled "Diapers with Elasticized Side Pockets". It was advertised accepted on 20 July 1989. On 12 October 1989 the Procter & Gamble Company lodged notice of opposition under section 59 of the Patents Act 1952 to the grant of a patent on the application. Subsequently, the opponent was granted three unopposed extensions of time totalling eight months in which to serve its evidence-in-support of the section 59 opposition. Kimberly-Clark objected to a fourth application for an extension of a further period of two months until 12 November 1990. A hearing was held in Canberra on 5 October 1990. In a decision dated 30 November 1990, the delegate allowed the extension of time.

On 12 November 1990, Procter & Gamble sought a fifth extension of time to lodge evidence-in-support of three months to 12 February 1991.  Kimberly-Clark initially objected to this, but withdrew its objection on 11 February 1991.  On 12 February 1991, Procter & Gamble requested a sixth extension of three months, to 12 May 1991, and once again Kimberly-Clark objected.  The matter was set down for hearing, but the hearing could not be held before the period of extension expired.  On 10 May 1991 Procter & Gamble applied for a seventh extension to serve its evidence-in-support, this to 12 August 1991.  Kimberly-Clark also objected to this extension.  The applications for extension of time were heard in Canberra on 24 May 1991.

After this second hearing, the delegate refused the extensions of time in a decision dated 21 June 1991.  The opponent sought an order of review in the Federal Court of Australia, on the ground that the delegation to the hearing officer was (erroneously) of the Commissioner's powers under regulation 44, not regulation 55.  Accordingly, the hearing officer had no power to hear an application for extension of time under regulation 55.  The Federal Court, by a consent order dated 13 September 1991, set aside the decision of 21 June 1991 and ordered that the applications for extension of time be re-heard.  That re-hearing was in Canberra on 27 September 1991.

Procter & Gamble was represented by Mr David Shavin of Counsel, instructed by Mr Geoff Pryor, patent attorney of Davies & Collison, Melbourne.  Kimberly-Clark was represented by Mrs Annabel Bennett of Counsel, instructed by Mr Greg Turner, patent attorney of Spruson & Ferguson, Sydney.

On 12 August 1991 Procter & Gamble lodged an eighth application for extension, to 12 October 1991, and on 11 October 1991 it lodged a ninth application for extension, to 12 January 1992.  The patent applicant has not had an opportunity to date to consider these latest applications.

Other actions on the section 59 notice of opposition have been proceeding in parallel with the actions for extensions of time to serve evidence in support of the opposition. On 13 September 1990 the opponent requested amendment of the section 59 notice of opposition to introduce the ground of obtaining. On 21 December 1990 the Office informed the opponent that:

"The delegate of the Commissioner is not prepared to allow the request [for amendment] because it is, in effect, an attempt to lodge a new notice of opposition outside the time limits set by sub-section 59(1). Thus the request under Regulation 76(3) cannot be processed, but an appliction to lodge a new notice of opposition under section 160 MAY be appropriate."

Subsequently (on 9 January 1991) the opponent lodged an application, under section 160 of the Patents Act 1952, an application for an extension of time, from 20 October 1989 to 13 October 1990, to file notice of opposition.

On 8 April 1991 the opponent was informed that "the delegate of the Commissioner has reconsidered your request under Regulation 76(3) ... to amend the notice of opposition.  Accordingly details of the request will be advertised in the Official Journal ...".  The regulation 76 request was advertised on 26 April 1991, four days before the repeal of the Patents Act 1952.  This gives rise to the jurisdictional issue of whether, subsequent to the repeal of the Patents Act 1952, the Commissioner has the power to amend the notice of opposition under regulation 76 of the repealed regulations.  On 26 July 1991, the patent applicant opposed the regulation 76 request to amend.  It has not yet lodged any evidence-in-support of the opposition to the amendment.

On 13 September 1991 Procter & Gamble's attorneys made submissions to the Office relating to the timing of the hearings on the regulation 55 and regulation 76 matters.  Kimberly-Clark indicated that it was not prepared at that time for a hearing on the regulation 76 matter.  Consequently, in a letter dated 23 September 1991, the Commissioner's delegate informed Procter & Gamble's attorneys as follows:

"As I understand your request, you are concerned that if the reg 55 matter was to be heard before the reg 76 matter is determined, the decision may be different to that if the reg 55 matter was heard after the reg 76 matter.  You are concerned that if the reg 55 matter is heard first, a result could be the refusal of the extension (as was indicated in the purported decision by Mr Knock); that the time for serving evidence in support would be concluded; and that if the reg 76 amendment is subsequently allowed the opportunity to file evidence in support of the new ground of opposition would be cut off.  As a result you believe that a serious injustice would be done to your client.

In response to your request, I make the following points:

1. If an amendment to the notice of opposition to include a new ground of opposition is allowed after the time for serving evidence in support of the opposition has expired, I do not believe that the opponent would be (nor should be) cut off from filing evidence in support of that new ground.  In my view there are adequate mechanisms for filing that evidence; one possibility was canvassed in the purported decision by Mr Knock; another avenue is to adduce the material as further evidence.

1. This matter is not a request for a deferment of a short period of time to enable an event that would almost certainly occur, to happen.  Rather the request involves a deferment of at least several months, and potentially could be in excess of a year (if subsequent to a hearing in the matter the Commissioner concludes that reg 76 continues to apply, the evidentiary cycle for the opposition to reg 76 request will have to be completed, and a hearing into that matter held.  After either hearing an appeal might be initiated).  In my view, public interest dictates that any administrative deferment of a hearing should, if given at all, be only for a short period; otherwise administrative deferment would override the regulatory requirements governing the times for serving evidence, and this would be an abuse of process.

Also, it is far from certain that at the end of that process the amendment will have been made; I refer you to the office practice in relation to amendments of the notice of opposition under regulation 76, which is set out in paragraph 17.6.15.1 of the Hearings Manual.  I note the precedent that exists in the case of Naarden International N.V. v International Flavours and Fragrances Inc (1977) 47 AOJP 4247.  I also note that the patent applicant, by filing a purported notice of opposition to the reg 76 amendment, has not acceded to the amendment.

1. In reg 55 matters, it might be inferred from a number of decision that if the party seeking an extension lodges their evidence before the decision is issued, the extension will usually be granted.  If such a practice can be inferred, its basis rests on the fact that there will be no further delays incurred by allowing the extension; the time for serving the next stage of evidence will only commence on the date of that decision.  In general, to exclude evidence lodged in such circumstances would be against the public interest.

The present circumstances are, however, vastly different to this.  The only possible purpose of your request is to take advantage of the above inferred practice by deferring the reg 55 hearing until the reg 76 matter is determined; that is, to obtain a different outcome in the reg. 55 matter by seeking to deliberately delay the hearing in that matter.  In my view, if an extension under reg 55 cannot now be justified on its merits, it would be an abuse of process for me to take an administrative action whose only purpose would be to (possibly) enable a different outcome on the reg 55 extension.

4.The order of Mr Justice Jenkinson made on 26 August 1991 requires the Commissioner to hear and determine according to law each of the applications for extension of time.  This order is not conditional upon the Commissioner hearing any other matter.  In my view the Commissioner would be in breach of that order if he were to administratively defer the hearing into the extension of time in the manner you have requested.

5.For these reasons, I do not consider there to be any basis for me to depart from the normal procedure for setting the reg 55 and reg 76 matters for hearing.  On this basis -

the reg 55 matter, previously set down for Friday Sept 27, will proceed accordingly - subject to any agreement to the contrary between the parties;

the reg 76 matter will be set down to be heard as soon as possible, subject to agreement between the parties of a suitable date to be heard, or (failing that) 10 days notice."

On 15 October 1991 a delegate of the Commissioner heard the jurisdictional issue under regulation 76.  A decision on that matter issues concurrently with this decision.

Applications for extension of time

The circumstances and grounds given in the sixth
application for extension of time, to 12 May 1991, are as follows:

"Counsel is currently being briefed to advise generally on the further evidence to be filed in the matter and steps to be taken in relation to such evidence.  Further time is required to enable Counsel to complete his consideration of the matter and to place the evidence in order for filing and service."

The circumstances and grounds given in the seventh application for extension of time, to 12 August 1991, are as follows:

"Further time is required to resolve the outstanding issues with respect to the time for completion of the evidence-in-support and if necessary to prepare and serve further evidence."

A declaration, dated 20 May 1991 by a Mr Sweeney, was lodged on 23 May 1991, in support of the seventh application.  This declaration referred to the said proceedings in the United States, to evidence on obtaining coming from those proceedings and to the need for more time to completely analyze that evidence.

The circumstances and grounds given in the eighth application for extension of time, to 12 October 1991, are as follows:

"The opponent's evidence relating to the issue of obtaining has been substantially prepared but more time is required to finalise the evidence and arrange for service on the applicant.

The evidence proposes to exhibit parts of documents known as Proposed Findings of Fact and Conclusions of Law.  These documents summarise most of the significant facts and legal points which were in issue during a trial in Seattle in the United states concerning a related United States patent.  These documents were not completed until 30th July 1991 and therefore more time is required in order to properly exhibit relevant parts of the documents in the opponent's evidence-in-support."

The circumstances and grounds given in the ninth application for extension of time, to 12 January 1992, are as follows:

"Part of the opponent's evidence relating to the issue of obtaining has been completed and served upon the applicant.  Advice has been obtained from Counsel that the opponent's case would be strengthened if supplementary evidence were filed from employees of the opponent company who reside in the United States of America.  In order for that supplementary evidence to be satisfactorily prepared, it would be necessary for the opponent's Australian patent attorney and possibly Counsel to travel to the United States to interview the witnesses.  As the cost involved would be very substantial, the opponent does not wish to incur these very substantial costs whilst the Regulation 76 amendment to include the ground of obtaining remains unresolved.  Further, making the necessary travel arrangements suitable to all parties requires additional time."

SUBMISSIONS

Mr Shavin's submissions at the hearing of 27 September 1991, seeking the extensions of time, are summarized as follows:

.The opponent should not be disadvantaged by delays in the US proceedings.

.The regulation 76 matter has not already been decided because of procedural delays in the Patent Office.

.There are problems associated with filing evidence as further evidence under regulation 59, such as unextendable 30 day limits for each party to lodge its evidence and no right of evidence in reply.

.Some evidence relating to obtaining has already been lodged, on 23 August 1991, thus no further delay will occur by granting the extensions at this stage.  The Commissioner is obliged to consider the evidence now that it has been lodged.  See Brickwood Holdings v ACI (1983) VR 587.

.It is the usual practice of the Office to grant an extension where some evidence has already been lodged.  In this case evidence relating to validity was lodged on 11 April 1990 and 4 June 1990.

.The delegate's procedural decision to hold the R.55 hearing before the R.76 hearing could cause Procter & Gamble "to suffer a substantial prejudice", the present case involves "unusual circumstances" and the opponent should not be denied "natural justice".

.There would be no prejudice against the applicant if the extensions were allowed, cf. "real prejudice" against the opponent if the extensions were not allowed.

Mrs Bennett's submissions at the hearing are summarized as follows:

.At the time of the sixth and seventh applications for extension of time there was no indication of obtaining being the principal ground of opposition; it was not a ground referred to on the notice of opposition and no evidence on that ground had been lodged.  A change of tack in the opposition is not sufficient justification for an extension.  See The Dupps Company v Stord Bartz A/S 19 IPR 17.

.The R.76 matter is not relevant to the applications for extension of time.  This was a finding of the delegate in her decision of 30 November 1990.

.The opponent has had sufficient time to complete its evidence-in-support, viz. two years, it has a "vested interest in delay" and the patent applicant is "entitled to finality".

.The Commissioner should not consider evidence filed out of time; such a practice would lead to a "free for all" in the filing of evidence.

DECISION

In consideration of the matter of extension of time under Regulation 55 I am required to have regard to the respective interests of the patent applicant, the opponent and the public.  The opponent carries the burden of establishing a case to justify the extension, there should be a good reason why the evidence has not been served within the time allowed under the regulation, there should be some indication that there is a serious opposition and there should be no unreasonable delays.  See Vangedal-Nielsen v Commissioner of Patents and Gelphen Nominees 33 ALR 144 and Nautical Services Pty Ltd v Hitech Distillation (Australia) Pty Ltd 7 IPR 567.

In her decision of 30 November 1990, Mrs Werner found that evidence relating to obtaining was "irrelevant to the application for extension of time since obtaining is not a ground of opposition at present".  The hearing on the R.76 matter on 15 October 1991 did not involve the issue of opposition to the proposed amendment, and a decision on allowability of the amendment is not imminent at this stage.  Thus, the situation before me is the same as that before Mrs Werner: obtaining is not a ground of opposition; and I have no reason to differ from her opinion on the relevancy of evidence relating to such a ground.

The circumstances of this case may be unusual, as suggested by Mr Shavin, but this is so mainly because of the opponent's own actions in the prosecution of the opposition.  I do not think that hearing the R.76 matter has been delayed by the Patent Office, since, in a letter to the Office dated 29 April 1991, Procter & Gamble withdrew its earlier request to be heard on the matter.  A new request to be heard was later received in a letter dated 27 August 1991.  I think the delegate's decision to hold the R.55 hearing before the R.76 hearing was appropriate for the circumstances at that time, and now I think it would be inappropriate for me either to await the outcome of the R.76 matter before making a decision on the extensisons of time or to allow the extensions merely to await the outcome of the R.76 matter.  Such action would in itself cause further delay.  Thus it is necessary to further consider the merits of the applications for extension.

Mrs Werner's decision indicates that the opposition is serious, since some evidence on validity had been served prior to her consideration of the fourth application for extension of time.  That application was allowed on the basis that the evidence relating to validity would be completed in one or two months.  However, no such evidence has been served, perhaps understandably, since the opponent is now pursuing the ground of obtaining.  Consequently, I have doubts on the seriousness of the opposition on the validity grounds, but the opponent does appear to be serious on the matter of obtaining even though obtaining is still not a ground of opposition.

The Federal Court, in the Vangedal-Nielsen case supra, referred to "operating the [opposition] system efficiently and without unreasonable delays".  I think this includes delays which may have occurred up to the time of the application for extension of time, and "further" delays which would be likely to occur if the extension was allowed.  Typically, the former type of delays may be due to a series of applications for extension of time and the processing of those applications.

In the present case, the opponent's sixth and seventh applications for extension and Mr Sweeney's declaration of 20 May 1991 are rather vague as to how much time is required to complete the evidence in support; consider paragraph 5 of Mr Sweeney's declaration for example:

"I have not yet had time to fully analyze the further evidence of Ms. Bentgen and to assess the significance of the further materials to the issues in this Opposition and to obtain from her a further statutory declaration in relation to those materials.  It will not be possible for me to do so until the completion of the Seattle trial, and also, as above stated, I believe further evidence may emerge at or before that trial which would need to be included in the evidence in support of this case."

Notwithstanding the matter of whether there had been any unreasonable delay up to the time of the applications for the sixth and seventh extensions, I think that in considering these applications one gets the impression that completion of the evidence-in-support would not be likely in the immediate future.  The applications and declaration are not clear on how long the trial might go on and they give the impression that further extensions would be necessary.  If I had considered these applications at the time, I would have concluded that the likely resulting "further" delays would be an unreasonable imposition on the patent applicant and the public.

However I am now placed in the position of deciding on the allowability of these extensions some five to eight months after the applications were made.  The second batch of evidence on obtaining was lodged on 23 August 1991; this was outside the period of the seventh application for extension, and was some nine months after the date on which the matter of obtaining was first raised as an issue in the opposition.  I think that this period of nine months was a period of unreasonable delay in the opposition since during most of this period Kimberly-Clark had no indication of how long the matter might continue.  Delays have also occurred because of the series of applications for extension and the necessary consideration thereof by all parties involved.

Regarding the submission that it would make no difference if I allowed the sixth and seventh (and eighth) extensions since those periods applied for have already elapsed, I do not agree that it would make no difference.  To allow the extensions would be to admit the obtaining evidence as evidence-in-support; the patent applicant then has to consider this evidence in preparation of its evidence-in-answer which could lead to further delays.  Conversely, if the obtaining evidence is not admitted as evidence-in-support, the Commissioner would not be required to consider that evidence since it is not related to validity grounds.  It is office practice to consider only validity issues in ex-parte bar-to-sealing actions; see Re Gould Inc. (1989) AIPC 90-560 and paragraph 6.2 of the Hearings Manual.

I agree with Mr Shavin that it is the usual practice of the Office to allow an extension of time where some evidence has already been lodged.  But in this case this has already been done: the opponent's third, fourth and fifth extensions were all allowed after the initial evidence-in-support was lodged.  I think there has to be a limit to the number of extensions which should be made.  Mrs Werner's decision clearly indicates that the fourth extension was allowed for the opponent to complete its evidence with regard to validity.  It is in the patent applicant's interest and the public interest to draw the line when, at a point fifteen months after the advertisement of acceptance, when the opponent has almost completed its evidence-in-support on one set of grounds, it then seeks to change tack to a new ground.  Especially in this case, where even now there is no clearly apparent completion date and where the new ground is not included on the notice of opposition.

Clearly, it is in Procter & Gamble's interest that I allow the extensions, but Kimberly-Clark have indicated that the opponent has been selling a product which the applicant alleges is an infringement of the claims of the specification; therefore it is also clear that allowing the extensions would be against Kimberly-Clark's interest.  The public interest primarily is that, if a patent is granted, it is a valid patent, and that delay in granting the patent is minimized to avoid uncertainty in the market.  There is also some public interest in obtaining since a potential licensee or investor should know who is entitled to own the patent.  Generally though, validity is a more important issue since it relates to whether or not a competitor may be infringing.  I think the public interest in minimising delays in the present case is more significant than the public interest in ownership, so it is not in the public interest to allow the extensions.

CONCLUSION

I have found that there has been unreasonable delay associated with the period of the opponent's sixth and seventh applications for extension of time.  Despite the fact that those periods have now elapsed and some evidence was subsequently lodged, I do not think it is appropriate for me to now allow those extensions since to do so would be to condone actions which were against the interests of the patent applicant and the public.  The eighth and ninth applications for extension logically cannot be allowed if the earlier applications are not allowed.

Furthermore, the evidence sought to be admitted relates to a ground which is not included in the notice of opposition and which is of minimal public interest.

Therefore I refuse to allow the sixth, seventh, eighth and ninth applications for extension of time to serve evidence-in-support.

The opposition period for serving evidence-in-answer under regulation 56 begins from the date of this decision.

I award costs against Procter & Gamble.

(J.I. WELSH)
  Delegate of the Commissioner of Patents

Attorneys for the applicant: Spruson & Ferguson, Sydney
Attorneys for the opponent : Davies & Collison, Melbourne