Langford and Commissioner Of Patents and Anor
[2010] AATA 663
•2 September 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 663
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/4982
| GENERAL ADMINISTRATIVE DIVISION | ) | ||
| Re | RONALD LANGFORD | ||
| Applicant | |||
| And | COMMISSIONER OF PATENTS |
| Respondent |
| And | DAVID CLARK |
| Party Joined |
DECISION
| Tribunal | M J Carstairs, Senior Member |
Date 2 September 2010
Place Brisbane
| Decision | The Tribunal sets aside the decision under review refusing the extension of time and substitutes the decision that the extension of time be granted. |
......................[Sgd]..................
Senior Member
CATCHWORDS
PATENTS – Lapsed patent – Renewal fee – Application for extension of time – Discretion to extend time where “error” – Decision set aside and substituted.
Patents Act 1990 (Cth), ss 143, 223
Chalk v Commissioner for Superannuation (1994) 50 FCR 150 at 155
GS Technology Pty Ltd v Commissioner of Patents and GSA Industries (Aust) Pty Ltd (2004) 63 IPR 9
Kimberly-Clark Ltd v Commissioner of Patents (1988) 13 IPR 569
Re GS Technology Pty Ltd and Commissioner of Patents [2004] AATA 1391
Re Sanyo Electric Co Ltd and Commissioner of Patents (1996) 36 IPR 470
Stork Pompen BV v Weir Pumps Ltd (1988) 11 IPR 542
| 2 September 2010 | M J Carstairs, Senior Member |
REASONS FOR DECISION
Ronald Neville Langford’s Australian Patent No 755035 lapsed when he missed the due date for payment of the patent renewal fee. Under the Patents Act 1990 (“the Act”) it was possible for Mr Langford to apply for an extension of time despite the due date having passed, and he applied accordingly.
Mr Langford’s application for an extension was advertised for opposition purposes in the Official Journal of Patents on 17 July 2008. David Clark opposed Mr Langford’s application. Having considered submissions by both parties, the Commissioner of Patents refused to grant the extension. Mr Langford now seeks review of that refusal. As appears to be the usual practice in matters of this kind, the Commissioner took no active part in the proceedings at the Tribunal.
THE LEGISLATION
A standard patent lapses if the patentee does not pay the renewal fee within the prescribed period.[1] The power to grant an extension of time is found in s 223(2) of the Act as follows:
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.
[1] Patents Act 1990, s 143.
The applicant relied only on the head of power provided for in s 223(2)(a) of the Act, and did not argue that there were relevant grounds under s 223(2)(b).
BACKGROUND
The following appeared not to be in dispute:
§ Mr Langford missed the final date for renewal for Australian Patent No 755035, which was 3 April 2008 allowing for the 6 months grace period;
§ He then applied for an extension of time on 30 May 2008; and
§ Mr Clark lodged his opposition on 25 August 2008, after the Commissioner advertised for opposition.
“ERROR OR OMISSION”
The evidence about the grounds of “error or omission” relied upon by Mr Langford was presented in statutory declarations from Mr Paul Francis Smith,[2] the managing director and sole employee of PSL Management Pte Ltd (“PSL”), a management consultancy based in Singapore, as well as statutory declarations from Mr Langford.
[2] T9, dated 23 June 2008; Exhibit A1, dated 19 April 2010.
Mr Langford, like Mr Smith, has an office in Singapore and travels extensively between Australia and Singapore. He had engaged PSL to provide him with patent renewal services, having carried this out himself the previous year when renewal fell due. Before that time, he had used the services of another company to manage his patent renewals but had been dissatisfied with them and was looking to find a replacement.
In about mid-2007, Mr Langford asked Mr Smith of PSL to implement a system and database for managing his patent renewals. To that end, Mr Smith purchased a database called “Salesforce” and collated into this database the information concerning Mr Langford’s patents. It was intended that the database would generate reports about twice yearly, to flag upcoming renewal dates. On generation of the report, Mr Smith was to liaise with Mr Langford about the timing and the method of payment of the renewal fee. Mr Smith said that about the time the patent fell due, this new system was in its infancy. He described it as a period of “transition”.
Mr Smith set out in his affidavits that during 2007 he suffered a series of illnesses and had been hospitalised at certain times, followed up by periods when he was undergoing treatment. This resulted in Mr Smith having lengthy absences from work. He set out in his affidavit at T9 that he had suffered tropical fevers, typhoid, and diverticulitis, as well as having had to undergo what he described as “post-operative treatment”, presumably after gall bladder surgery, also referred to in the affidavit.[3] Mr Smith stated that when the due date for the patent arrived, he was still “recuperating.” Mr Langford was away at that time and was not reminded that the due date was imminent.
[3] T9 at para 6.
Mr Langford stated that due to his own extensive travel between Australia and Singapore and elsewhere during 2007, and the small size of both his and Mr Smith’s businesses, there just were not the available people to make up for Mr Smith’s prolonged absences.
The due date for the payment of the patent renewal fee would have been some two months from the time PSL began implementing the new system.[4] However the implementation of the system was disrupted by Mr Smith’s lengthy illness during the year. In the event, no report was produced and so was not provided to Mr Langford. Having not been alerted, Mr Langford gave no instructions about the method of payment with respect to renewing the patent. Mr Smith stated that he had not been able to attend to normal procedures during this time.
[4] Exhibit A1, para 7.
Mr Smith said that there was no deliberate intention on anyone’s part to allow this patent to lapse. The patent was important as it was the parent patent for virtually all the patents Mr Langford holds. However Mr Smith was clear that he had been instructed by Mr Langford that the patent renewal fee was to be paid when it fell due.[5] Mr Langford’s statutory declaration confirmed that he had verbally instructed Mr Smith to that effect.[6]
[5] Exhibit A1 para 6; T9 at para 4.
[6] T8 at para 6.
It seems that it was only during May 2008 that Mr Smith became aware, after contact by a third party, that the patent might have lapsed, which was then confirmed by Mr Langford’s patent attorney in Australia.[7]
[7] T9 at paras 9-10.
SUBMISSIONS OF THE PARTIES
Mr W Hickey, who appeared on behalf of the applicant, submitted that the error or omission within the meaning of s 223(2) of the Act was the failure to either implement the new system or produce a relevant report from it.
He submitted that on the background of facts as now understood through the affidavit material, it ought to be accepted that Mr Smith knew that the patent was important, and that he was to see to its renewal. The implementation of the new system was part of ensuring that the patent was renewed.
Mr Hickey said that that the trend of (Court and Tribunal) decisions in this area of the law increasingly has been to favour a generous application of the provision to extend time. In that regard he noted that in addition to older cases, such as Kimberly-ClarkLtd v Commissioner of Patents (1988) 13 IPR 569, there is a considerable line of authority that confirms that the provision to extend time is not to be narrowly construed.
Mr Dimitriades submitted that the principles to be applied are well settled. He relied upon Kimberly-Clarke as requiring that there be:
§ error or omission by the person concerned or their agent;
§ a causal connection from the error or omission to the relevant act; and
§ something more than the mere failure to do the relevant act.
The case of Kimberly-Clark serves to emphasise that the phrase “error or omission” should not be given a restricted meaning.[8] That proposition obtains strong support in the decision of Spender J in G S Technology Pty Ltd v Commissioner of Patents and GSA Industries (Aust) Pty Ltd (2004) 63 IPR 9.
[8] (1988) 13 IPR 569 at 579-80.
The evidence confirms that Mr Langford was seeking to ensure that he had a good system in place for managing the patents, using PSL to do so. The system that he was trying to put in place was not accessed, mainly because of Mr Smith’s ill health and lengthy absences from his business at critical times.
The error here extends, in my view, to having no fail-safe in place that would ensure that what Mr Smith referred to as a “management process hole” in 2007 would not have the adverse result as here occurred. That is, there needed to be some back-up in place in the event that the system was not functioning in time to alert Mr Langford to the relevant period when the patent could be paid, or in the event the report that needed to be generated was not generated.
I do not agree with the party joined that the case in favour of extending time fails because the six month grace period available under the Act took matters into 2008, when it seems Mr Smith was no longer unwell. It seems to me that that submission misses the point: the system, having not earlier served to bring up the relevant date, was not going to do so at some time later in 2008. The error had an ongoing effect. As it turned out, Mr Smith was not alerted until after the final date had passed.
I am satisfied that the error is correctly identified in the applicant’s submissions as being that on Mr Smith’s part, of failing to access the database and/or have the database report generated. The failure to provide that report led to the failure to carry out the relevant act: that is, the causal connection is made out.
It seems to me that this case involves a relatively simple set of facts. As the delegate pointed out in his reasons,[9] “[w]hen all reasonable scenarios involve an error or omission, then an error or omission may be assumed even though the exact nature of the error or omission is not certain”. There is not much that can be said of the events as they unfolded here, except to observe that the patent holder had the intention to have a system in place that would avoid the result that the patent would lapse. What the facts show, in my view, is that there was a breakdown in a procedure[10] that was being put in place to ensure due dates were met. This satisfies the Kimberly-Clark test of “obviousness in error”.
[9] T2 at para 41.
[10] Stork Pompen BV v Weir Pumps Ltd (1988) 11 IPR 542.
It now becomes necessary to turn to the question of whether the discretion ought to be exercised in this case.
THE DISCRETION
In regard to the exercise of the discretion, I took into account that the delegate had accepted that Mr Langford had intended to pay the fee.[11] I am satisfied that the evidence points to there being no deliberate decision not to pay. As Spender J observed in G S Technology, s 223 of the Act operates in circumstances other than where there is a deliberate decision not to do the act or take the step.
[11] T3, at paras 34 and 42.
It also bears noting that there was no undue delay in seeking an extension of time once Mr Smith was alerted to the oversight. As soon as Mr Smith became aware that the fee was overdue, he arranged for the payment and applied promptly for the extension. These matters support a favourable exercise of the discretion.
I regard as sufficient the disclosure that has here been made about the circumstances leading to the oversight. Once proper account is taken that Mr Smith was operating the business on his own, it ought to be understood why his ill-health was so significant in what occurred. PSL was a one-man operation. I note that this fact was not known to the delegate, who made specific reference in his reasons to the lack of clarity about how many people PSL employed and why someone else in the business could not have taken on responsibility in Mr Smith’s absence. If there had been other employees at PSL to carry on the business activities in Mr Smith’s absence, the consequences might have been different.
As I see the facts here, Mr Smith failed to pay the fees or alert Mr Langford to the due date for reasons that ultimately relate back to Mr Smith’s ill-health and absences. I accept the evidence of Mr Smith in that regard. Indeed, there was no significant challenge to the content of his affidavit. In that regard, I am satisfied that there has been sufficient disclosure of the circumstances of his ill-health.
As the President of the Tribunal, Downes J, observed of the facts before him on the hearing of the remittal of the G S Technologies case to the Tribunal[12]—the facts of which were not dissimilar to those here—these are the kinds of error for which the legislation makes allowance: accidental and unintended slip-ups.
[12] Re GS Technology Pty Ltd and Commissioner of Patents [2004] AATA 1391.
As Davies J pointed out in Chalk v Commissioner for Superannuation,[13] “[m]ost provisions which authorise an extension of time are instances of beneficial legislation which, accordingly, should be applied beneficially”. Deputy President McDonald in ReSanyo Electric Co Ltd and Commissioner of Patents (1996) 36 IPR 470 confirmed the relevance of this approach to extending time in patent cases.
[13] (1994) 50 FCR 150 at 155.
In the exercise of this discretion it may be more important, as Davies J observed in Chalk, to consider the consequences of extending or refusing to extend time than to debate the reasons why the act was not done in time.[14] Balancing the interests here, it seems to me that a refusal would have serious consequences for Mr Langford, as Australian Patent No 755035 is the head patent and vital to his business interests. On the other hand, I do not consider that there is disturbance of the public interest in ensuring that patents are promptly renewed in circumstances where the applicant acted as promptly as was the case here. I accept that Mr Langford has been diligent in maintaining his pending patents and renewals, with this oversight being the exception.
[14] Chalk (1994) 50 FCR 150 at 156.
DECISION
The Tribunal sets aside the decision under review refusing the extension of time and substitutes the decision that the extension of time be granted.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member.
Signed: ................................[Sgd].................................
Mátyás Kochárdy, Associate
Date of Hearing 17 August 2010
Date of Decision 2 September 2010
Solicitor for the Applicant Mr W Hickey, Macrossans Lawyers
Counsel for the Party Joined Mr C Dimitriadis
Solicitor for the Party Joined Mr D Longstaff, Blake Dawson
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