Nautical Services Pty Ltd v Hitech Distillation (Australia) Pty Ltd

[1986] APO 37

In the Matter of the Patents Act 1952

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In the Matter of Patent Application No. 549841 in the Name of NAUTICAL SERVICES PTY. LTD.

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In the Matter of an Opposition by HITECH DISTILLATION (AUSTRALIA) PTY. LTD.

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In the Matter of an Objection to an Application for an Extension of Time to Serve Evidence in Support.

DECISION OF A SUPERVISING EXAMINER OF PATENTS:
Background
         Patent application No. 549841, entitled, "De‑Salinator For Brackish or Salt Water", was advertised accepted on 13 February, 1986, and Notice of Opposition was lodged on 9 May, 1986 by HITECH DISTILLATION (AUSTRALIA) PTY. LTD.
         On 8 August, 1986 the opponent applied for an extension of time until 9 November, 1986 in which to serve evidence‑in‑support of its opposition.  The applicant objected to this application for an extension of time.
         A hearing was set down in Canberra on 26 September, 1986 to enable both parties to be heard.  Dr. I Ernst, patent attorney of Shelston Waters, appeared for HITECH, and Mr. W.L. Thomson, patent

attorney of W.L. Thomson and Associates, appeared for Grant Adams and Company, the attorneys representing NAUTICAL SERVICES.
         The circumstances and the grounds referred to in the application for extension of time are as follows:

"More time is required in which to gather, sift, collate and formalise evidence."

However, on 24 September, 1986 the opponent lodged what purported to be an amended application for extension of time in which to lodge evidence in support.  The grounds and circumstances referred to in this document read as follows:

"The opponent has been actively and diligently engaged in acquisition of formal evidence in support.

It believes it now has strong prima facie evidence of lack of Novelty and additional relevant raw evidence is still coming to hand or promised as a result of enquiries initiated months ago of third parties.

Time so far allowed has not been sufficient to finalize detailed evidence because some potentially material evidence relates to matters which took place up to 15 years ago and in other states.  As such, it has proved difficult to locate and interview material witnesses and find relevant documents.

Some material evidence is believed to be obtainable from desalinator manufacturers no longer in business and it has been difficult to locate those witnesses.

The opponent cannot control the speed of response by third parties to enquiries made and diligently followed up.

Formal evidence that certain facts were common general knowledge, which may or may not be required, involves collection of evidence from a wide range of relevant sources and this, together with other evidentiary requirements, has required more time than has hitherto been reasonably available to the opponent's employees."

Prior to the hearing the applicant lodged written submissions explaining the reasons for its objection to the extension of time and these submissions read as follows:

1.The applicant opposes any extension of time for the Opponent to lodge its evidence‑in‑answer (sic).

2.The Opponent has been aware of the existence of the Patent Application since June 1985 and we have evidence to show the Opponents intention to challenge the application.

3.Despite their intention to challenge the application, the Opponents filed their notice of opposition just before the due date and then waited just before the due date for lodgement of their evidence‑in‑support to seek three month's extension of time to do so.

4.The time delay, and the stated reasons for the extension clearly indicate that the Opponents have no evidence to support their opposition and that they wish to continue a fishing expedition in the hope that some may come to light, while delaying the grant of the Patent, to the commercial disadvantage of the applicant, as long as possible.

5.At the date of filing the Notice of Opposition i.e. 9th May, 1986, the alleged locus standi of the Opponent did not exist and it cannot claim to be "an interested person" within Section 59 of the Patents Act so as to enable it to oppose the present application.

Evidence
         At the hearing Dr. Ernst lodged two statutory declarations made by Dr. Farhad Shafaghi.  He stated that HITECH would serve the first of these declarations as part of its evidence‑in‑support if it was granted an extension of time.
         In the second declaration, Dr. Shafaghi declares that he is acting as a consultant to HITECH and he also declares that he has responsibility for collecting and collating evidence for use in the opposition proceedings.  Dr. Shafaghi says that he has not been dilatory in carrying out his assignment.  The declaration continues as follows:

"Steps I have taken include instituting a search of records belonging to Hitech Distillation (Australia) Pty. Ltd. and to its predecessor companies for evidence of sale of relevant desalinators.  These records extend over the last 15 years and are located in New South Wales, Victoria and South Australia.  Older records are not readily accessible.  I have to depend on the co‑

operation of persons located in those states to assist me.  That search has not yet been completed.

I have also instituted contact with manufacturers of desalination equipment in Australia and overseas to obtain firm evidence concerning the sale of, or publication relating to, relevant desalinators in Australia prior to 1982.

I have also instituted a search for certain individuals who I believe to have been engaged in desalinator manufacture in Australia, but who are no longer carrying on business and whose present address is not known to me.

In addition to the foregoing, I have instituted searches of relevant bodies of literature in Australia and the U.S.A.

Although substantial evidence of invalidity of at least some of the claims of the Nautical Services Pty. Ltd. patent application is in hand, I have been advised that further evidence is required to put invalidity of other claims beyond any doubt.  Evidence is in process of being obtained."

I turn now to the situation before me.
Locus Standi
         Objection 5 in NAUTICAL SERVICES' written submissions disputes the locus standi of HITECH.  Mr. Thomson raised a similar objection at the hearing and alleged that the opponent had ceased trading as manufacturers and designers of desalination equipment on 31 December, 1985.  Mr. Thomson supported this allegation with a reference to an advertisement in the Official Journal which advertises the assignment of three patents from HITECH to Vacqua Pty. Ltd.  Dr. Ernst replied by asserting that HITECH was not opposing as a patentee of desalination apparatus but because of its past and future intention to manufacture this kind of apparatus.  Moreover he thought the question of locus was best left to the hearing of the s.59 opposition.
         I consider that the applicant can raise the matter of locus standi at any stage of s.59 opposition proceedings.  However it seems to me that there would need to be incontrovertible evidence supporting the lack of locus before I could refuse to grant an extension of time to serve evidence‑in‑support of the opposition.
         The evidence adduced by the applicant merely indicates that the opponent has assigned its interest in three patents to another company.  There is no evidence before me that the opponent has ceased all its interest in the manufacture and design of desalination apparatus.  Therefore I cannot agree with the applicant's contention that the present evidence demonstrates that the opponent does not have locus standi.  However I do not rule out the possibility that the applicant at a later stage may adduce other evidence which shows the contrary to be true.
Amended Application
         Mr. Thomson submitted that I should not consider the purported amended application because an application for an extension of time could only be amended by action under Reg. 76.  In his opinion I should only consider the grounds given in the application lodged on 8 August, 1986.  Dr. Ernst submitted that the opponent was not seeking to lodge another application for extension but to merely amend the words of the original application.  He pointed out that such an action was allowed in the case of Dunlop Australia Ltd. v. The Goodyear Tire and Rubber Co. (1970 AOJP 4143) and in the case of Sunbeam Corp. v. General Electric Co. (1970 AOJP 4145).
         The document lodged on 24 September, 1986 purporting to be an amended application for an extension of time is in a different situation to the amended applications in the cases referred to by Dr. Ernst.  At the hearing of those matters, the Deputy Commissioner granted the applicant who was seeking the extension, extra time in which to lodge an amended application.  In the present situation the document was lodged 2 days prior to the hearing and I agree with Mr. Thomson that further action under Reg. 76 would be required to amend the original application.
         The provisions of the industrial property legislation material to extensions of time in opposition proceedings have been considered by the Federal Court in Vangedal‑Nielsen v. Smith (1980) 33 ALR 144 and in Lyons v. Registrar of Trade Marks (1983) 50 ALR 496, 1 IPR 416. These decisions show that:

.The applicant seeking the allowance of an extension of time carries the burden of establishing an appropriate case to justify the extension.  That is, an extension cannot be granted merely because the other party has been unable to show that an extension should not be granted.

.In deciding whether the applicant for extension has made out a proper case justifying extension, the Commissioner must take all relevant considerations (and no others) into account.  (See also Reg. 83A).

These cases also show that in meeting the onus upon it, the applicant for the extension of time is not limited to reliance upon facts proved by formal evidence adduced by it.  It may be able to point to background material or to material publicly available or even to facts proved by the opponent's evidence.  Factors to be considered in deciding whether an opponent should be granted an extension of time include:

.the public interest in ensuring that worthless patents are not granted because sufficient time has not been allowed to prepare and serve evidence in support of an objection,

.the public interest in ensuring that there are no unreasonable delays inproceedings,

.The opponent's interest in preventing the grant of a patent which will curtail its activities.

It follows from the preceding summary of the law that I should have regard to all material that HITECH places before me in respect of its application for an extension, even if the material is not presented as formal evidence.  In my opinion the purported amended application explains in more detail why HITECH needs more time to gather, sift, collate and formalise evidence.  Therefore the document contains material relevant for my consideration of whether to grant HITECH an extension of time and I will include it in my deliberations.
Decision
         Dr. Ernst submitted that a relevant circumstance I should consider was the fact that this is the first application for an extension of time and he pointed out that it was a notorious fact that the gathering of evidence from third parties usually takes considerable time (Lyons case supra page 500).  Dr. Ernst explained that certain events had occurred in 1971 and it was difficult to locate the people who had witnessed these events.  He also stated that some of these witnesses were no longer readily available.
         Mr. Thomson submitted that the onus was on the applicant for the extension of time to explain the circumstances why further time should be granted.  He considered that the application lodged on 8 August, 1986 was deficient because it did not mention the need to locate people who witnessed events in other states in 1971.
         Dr. Ernst replied by pointing out that extensions of time had been granted in the Lyons case (supra page 498) and in two unpublished cases (application No. 521725, Hitachi Ltd. v. Byrne and Davidson Industries Ltd. and application No. 533370, Hitachi Ltd. v. Hoover (Australia) Pty. Ltd. and Simpson Ltd.) which were based upon similar brief grounds.
         Whilst I agree with Dr. Ernst that the collection of evidence in support of an opposition generally takes considerable time; this does not, of course, excuse an opponent from making out a proper case justifying an extension of time.  I also consider that the cases relied on by Dr. Ernst do not support an argument that a brief statement of the grounds is sufficient in all applications for an extension of time.  In all the cases he mentioned the grounds were considered together with the surrounding circumstances.  For example in the Lyons case Beaumont J. considered that the hearing officer had evidence upon which he could rely in order to justify the grant of an extension.  In the unreported cases referred to by Dr. Enrst, the surrounding circumstances which the hearing officer considered included the fact that material had to be translated from English to Japanese and from Japanese to English and in one case the fact that the subject matter was the comparatively new and complicated technology of microprocessor control.
         None of the circumstances in these unreported cases are found in the present situation there appears to be no need to have material translated and the technology is not new or complicated.
         The grounds given in the application are that the opponent needs more time to gather, sift, collate and formalise evidence.  The purported amended application explains that some potentially material evidence relates to matters which took place up to 15 years ago in other states.  Because of this it has proved difficult to locate and interview witnesses and find relevant documents.  It is apparent from Dr. Shafaghi's second declaration that HITECH and its predecessor companies possess some of the evidence, however I consider that the location of some evidence, e.g. technical brochures and the location of some witnesses, e.g. people no longer employed by HITECH, would still present difficulties because of the long time span involved.  In my opinion the fact that some potentially material events took place up to 15 years ago is supported by an exhibit to Dr. Shafaghi's first declaration.  This exhibit, which is entitled "Report on the Operation of Waste Heat Desalination Plant", was prepared for the South Australian company Auscoteng Pty. Ltd. in 1971.
         The purported amended application also states that some material evidence is believed to be obtainable from desalinator manufacturers no longer in business, and Dr. Shafaghi declares that he does not know the present address of the individuals concerned.  Dr. Ernst alluded to the problem of obtaining formal evidence to establish what was common general knowledge.  The purported amended application also refers to the collection of evidence from a wide range of relevant sources concerning common general knowledge.  Prima facie it seems to me that HITECH should have few difficulties in this regard because the technology of the patent application is not complex and on the opponent's own admission the art is at least 15 years old.  It also seems to me that HITECH, as a manufacturer and designer of desalination apparatus, would have the relevant non‑inventive skilled persons readily available to it.
         Thus the present situation resembles that in the Lyons case because the brief reasons in the application for an extension of time have been supported with evidence lodged after the application but before the date of the decision.  Therefore I am satisfied that HITECH has made out a proper case justifying an extension of time.
         The fourth objection in NAUTICAL SERVICES written submissions and a factor referred to by both attorneys at the hearing was whether HITECH was involved in a serious opposition.
         Dr. Shafaghi's first declaration includes 5 exhibits which describe desalination apparatus and if I grant an extension of time this declaration will form part of the evidence in support of the opposition.  I conclude from the technical nature of the material already gathered by the opponent that it is involved in a serious opposition.
         Because HITECH has made out a proper case justifying an extension and, as it is also prosecuting a serious opposition, I consider that it is in the public interest to extend the time for HITECH to serve the evidence‑in‑support of its opposition.  I therefore allow the extension of time until 9 November, 1986.
Costs
         Mr. Thomson submitted that irrespective of whether an extension of time was granted or not, the applicant was entitled to its costs.  This was because NAUTICAL SERVICES may not have objected to the application for an extension of time if it had contained the grounds that were given in the purported amended application.  However Dr. Ernst argued that the opponent was entitled to its costs, because in the unreported cases to which he had previously referred, the applicants had been awarded costs based on grounds similar to those in the application lodged on 8 August, 1986.  Moreover he asserted that HITECH had provided a more detailed explanation of its reasons, including the purported amended application, in sufficient time for the applicant to decide whether to maintain its objection to the extension.
         I have already distinguished the present situation from that found in the unreported cases previously mentioned therefore I consider that these cases provide little guidance in determining costs in the present matter.
         I consider that NAUTICAL SERVICES received the purported amended application for an extension of time 2 days before the hearing because Mr. Thomson did not deny this fact.  Despite this NAUTICAL SERVICES decided to continue with the hearing of the matter.
         My decision to grant the extension of time relied not only on the reasons given in the purported amended application but also relied on the declarations made by Dr. Shafaghi which were lodged at the hearing.  Under these circumstances I consider that costs should be awarded against HITECH.

(M. KENDALL)