Nippon Steel Corporation v Bhp Steel (Jla) Pty Ltd

[1999] APO 44

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No. 674783 in the name of NIPPON STEEL CORPORATION

Title:          Thin Cast Piece and Thin Sheet of Straight Carbon Steel Containing Large Quantity of Copper and Tin and Method of Manufacturing the Same

Action:          Opposition under section 59 (Patents Act 1990) by BHP STEEL (JLA) PTY LTD, and an objection to an application by the applicant to serve further evidence (regulation 5.10(4))

Decision:          Issued            .

Abstract

Upon the evidence in reply being filed, the applicant sought to adduce further evidence on the basis that the evidence in reply had not been properly in reply.  The evidence is not yet to hand.

It was found that it was not possible in the present proceedings to conclude whether the evidence in reply was actually in reply, and that it should be determined as part of the substantive opposition.  In light of that, having regard to usual criteria for allowing further evidence to be adduced and having regard to all the circumstances of the case, it was held that the application to file further evidence should be granted, but any further evidence was only to be admissible to the extent that it was in response to any of the evidence in reply that was ultimately determined to not be in reply.

The applicant was allowed 1 month in which to serve its further evidence, and the opponent was allowed one month from the serving of the further evidence in which to file evidence in response to the further evidence.

No award of costs was made.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 674783 by NIPPON STEEL CORPORATION, opposition thereto by BHP STEEL (JLA) PTY LTD, and an objection to an application by the applicant to serve further evidence (regulation 5.10(4)).

BACKGROUND

Patent application 674783 was filed as 75461/94 in the name of Nippon Steel Corporation (the applicant) and advertised accepted on 9 January 1997.  On 7 April 1997 a notice of opposition was filed by BHP Steel (JLA) Pty Ltd (the opponent), followed by a statement of grounds and particulars on 17 April 1997.  Serving of evidence in support, answer and reply was completed on 17 March 1999 after several extensions of time.  One such application, by the opponent for an extension of time to file evidence in support, was objected to by the applicant, and was the subject of a hearing and a decision issued 12 March 1998.  Amendments to the specification were filed on 12 May 1998 and the allowance thereof was advertised on 4 March 1999.

On 20 April 1999, the applicant filed an application to serve further evidence.  The Commissioner advised both parties that if he were to allow the applicant further evidence, he would make it a term of that granting that the opponent would have one month in which to serve the evidence and the opponent would have one month in which to serve evidence in response.  The opponent was invited to make representations regarding the Commissioner's terms, and indicate whether or not it wished to be heard in relation to application to serve further evidence.  The opponent advised on 28 April 1999 that it objected to the extension and that it did wish to be heard.

The matter came to a hearing on 23 June 1999 in Canberra.  The opponent was represented at the hearing by Geoff Mansfield, patent attorney of the firm Griffith Hack, Melbourne.  The applicant was represented at the hearing by Andrew Lee, assisted by Dr Colin Bodkin, patent attorneys of the firm Spruson & Ferguson, Sydney.

THE APPLICATION TO SERVE FURTHER EVIDENCE

The reasons given in the application for making the application are as follows:

“1.The Opponent's Evidence-in-Reply has introduced new evidence to which we seek leave to respond.  In particular, the Statutory Declarations which form the Evidence-in-Reply attack the statements made in our Evidence-in-Answer and we seek the opportunity to rebut these statements by filing further evidence before the hearing.  These declarations also introduce new documents specifically Exhibits LS-29, LS-30, LS-31 attached to the Statutory Declaration dated 12 February 1999 by Lazar Strezov in respect of which we seek to file further evidence.

2.We submit that the further evidence to be served is in respect of the statements made in the Evidence-in-Reply only and that there will be no substantial protraction of the opposition proceedings.

3.We request a period of 2 months in which to prepare and serve our further evidence on the opponent.”

The actual evidence is yet to be adduced, although at the hearing the applicant indicated that it was in draft form, and gave an outline of it as follows:

"Our further evidence proposes to comprise a declaration from Roy Thomas Southin rebutting the statements made by Lazar Strezov, Alan Cramb and Iain Farr, and particularly in respect of new documents exhibited as LS-29 to LS-31 to the Strezov declaration and IWF-14 attached to the Farr Declaration.  The preparation of the evidence is advanced and should be served soon after the hearing, if leave is granted, and certainly within the 1 month deadline proposed by the Commissioner."

SUBMISSIONS

Mr Lee began for the applicant by citing a number of cases (Sandoz Ltd v Fujisawa Pharmaceutical Co Ltd 27 IPR 421, Imperial Chemical Industries PLC v Mitsubishi Gas Chemical Co 29 IPR 285, Simac SpA Macchine Alimentari v Semak Electrics Pty Ltd
5 IPR 281, Emory University v Biochem Pharma Inc 39 IPR 603, Optech International v Buxton Hicarium Ltd 28 IPR 649 and National Search and Chemical Investment Holding Corporation v Goodman Fielder Ltd 43 IPR 421) as establishing the criteria (set out later in this decision) to be met in order for an application to file further evidence to be allowed.

Mr Lee then turned to the facts of this case.  He asserted that much of the opponent's evidence in reply challenging statements in the evidence in answer could and should have been included in its evidence in support.  He also noted three documents attached as exhibits to one of the statutory declarations in the evidence in reply, claiming these were new evidence to which the applicant had not had a chance to reply, and if it was not afforded with an opportunity to do so there would be a denial of natural justice.  As well, another exhibit annexed to a statutory declaration was singled out because it had not been particularised in the statement of grounds and particulars.

Mr Lee noted a number of cases where further evidence had been permitted to be served because evidence in reply had not been properly in reply, namely Imperial Chemical Industries PLC v Mitsubishi Gas Chemical Co (supra), Emory University v Biochem Pharma Inc (supra) and Simac SpA Macchine Alimentari v Semak Electrics Pty Ltd (supra).  (The last of these cases is a Trade Mark decision.)  On the basis of these cases Mr Lee contended that all five of the criteria adverted to above had been met.

Mr Mansfield commenced his submissions by basically agreeing with Mr Lee's assessment of the law relating to serving further evidence, but noting that in ABB Engineering Construction Pty Ltd v A Goninan and Co Limited [1999] APO 16 (2 March 1999) the hearing officer determined that a number of other factors (set out later in this decision) also needed to be taken into account.

After giving a brief analysis of the evidence in reply in which he asserted that it was properly in reply, Mr Mansfield then addressed, in turn, each one of the above criteria and factors in relation to the facts of this case, and asserted that the application to file further evidence should be refused.

I will refer to the submissions of both parties in more detail where relevant in my following decision.

DECISION

Subregulations 5.10(4) and (5) of the Patent Regulations 1991 provide the statutory basis for the Commissioner to allow further evidence to be served.  These subregulations are as follows:

"(4)   The Commissioner may:

(a)  on the application of a party; and
(b)  on such reasonable terms (if any) as the Commissioner specifies;
permit the party to serve further evidence on the other party.

(5)The Commissioner must not give a direction under subregulation (1) or grant an application under subregulation (2) or (4) unless the Commissioner:

(a)  if he or she proposes to grant an application by a party - is reasonably satisfied that the other party has been notified of the application: and
(b)  if he or she proposes to act on his or her own motion - ensures that the parties are notified of the proposed action; and
(c)  in either case:
(i)  gives the parties a reasonable opportunity to make representations concerning the application or proposed action; and
(ii)  is reasonably satisfied that a direction, an extension of time or the serving of further evidence is appropriate in all the circumstances."

From this, I conclude that I must be reasonably satisfied the serving of further evidence is appropriate in all the circumstances.  If I am so satisfied and I allow the serving of further evidence then I may specify reasonable terms for the service of that evidence.  In the present case such reasonable terms might include a direction that the applicant is able to or is not able to serve evidence in response to the further evidence.

I agree with the position advocated by both parties that the following criteria provide a basis for determining whether allowing the application to serve further evidence is appropriate in all the circumstances:

1.    Has the party applying to serve further evidence shown that the evidence could not have been obtained with reasonable diligence at an earlier stage?

2.    Is the evidence such that, if given, it would probably have an important influence on the result of the case?

3.    Is the evidence such as is presumably to be believed, i.e. is it apparently credible, though not necessarily incontrovertible?

4.    Would allowance of the application to serve further evidence cause unnecessary protraction of the opposition?

5.    Would there be any injustice done to the other party?

I also agree with the view expressed by Mr Mansfield that the following additional factors are required to be taken into account when deciding whether to allow the application:

·an explanation of why the evidence was not served at an earlier date;

·the nature and significance of the evidence yet to be served; and

·the interests of the respective parties including that of the public.

The reason given by the applicant in its application to serve further evidence is that the evidence in reply introduces new evidence and "attacks" statements contained in the evidence in answer.  As I observed at the hearing, this is what one would expect in evidence in reply, and there is nothing untoward about evidence in reply being "new" so long as it is in reply.  Indeed, it would be somewhat curious if it were to be "old" evidence.

However, at the hearing it emerged that the applicant's real quarrel with the evidence in reply was that it was not properly in reply.

There has been a consistent line taken in Patent Office decisions involving circumstances such as at present that generally it is impractical and inappropriate at this stage of the opposition to come to a concluded view on the question of whether the evidence in reply is in fact properly in reply.  For example, in Emory University v Biochem Pharma Inc (supra), the delegate of the Commissioner stated:

"In dealing with this request, the delegate of the Commissioner considered that both options would require the commissioner to determine whether or not the evidence in reply is properly in reply which is not appropriate outside the s59 hearing……

I am similarly of the view that it is not appropriate to make a determination on whether or not the evidence in reply is properly in reply outside the s 59 hearing."

It would only be in the clearest of cases that it would be possible to conclusively determine outside the hearing of the substantive opposition that the evidence in reply was or was not properly in reply, and I think those case would predominantly be where the evidence was not in reply (such as in Imperial Chemical Industries PLC v Mitsubishi Gas Chemical Co (supra)).  It would be very difficult to say conclusively that particular evidence did not raise new issues without having considered the issue in the context of all the circumstances pertaining to the opposition.

I do not think that this matter falls into the category of cases where it is possible, in the present forum, to come to the conclusion that the evidence in reply is or is not properly in reply.  On a superficial consideration there does not appear to be all that much wrong with the evidence.  It appears to be tied back to specific points of the evidence in answer, and to respond directly to those points.  Exhibits LS-29, LS-30 and LS-31 all appear to have been published in 1998 - well after the priority date - and at most can only serve as explanatory material.  Exhibit IWF-14 is apparently from a standard text, and likewise would appear to only have relevance as background material.  At the hearing the applicant sought to attach some significance to the fact that the evidence in reply included documents that had not been included as particulars in the statement of grounds and particulars.  I fail to see the logic of this.  The fact of whether a document is or is not particularised would seem to be unrelated to the question of whether it is admissible as evidence in reply.

The applicant also criticised the evidence in reply because, it asserted, it included evidence that could have been included in the evidence in support.  The opponent had, according to the applicant, waited to see what the applicant put into its evidence in answer then rectified the deficiencies in the opponent's evidence.  If the applicant is suggesting that the opponent acted according to some premeditated stratagem, this would appear to me to be unfounded speculation.  Moreover, I consider that it can be said of any evidence in reply that it "could" have been included in the evidence in support.  So long as the evidence in reply is "confined to rebutting" the evidence in answer (Phipson:The Law of Evidence, 9th edition) and is not merely "additional evidence to strengthen his own case" (Ernest Scragg & Sons Ltd's Application [1972] FSR 219) then the evidence will be properly in reply.

Mr Mansfield conceded that the evidence in reply "bolstered" the opponent's evidence in support, but contended that the applicant had not been able to point to any "new issues" raised in the evidence in reply, such as had been referred to in Simac SpA Macchine Alimentari v Semak Electrics Pty Ltd (supra) and subsequent cases (Emory University v Biochem Pharma Inc (supra) and Imperial Chemical Industries PLC v Mitsubishi Gas Chemical Co (supra)) where further evidence had been permitted to be filed.  He stated:

"The applicant should be prepared to identify the new issues to be addressed, and identify the nature and significance of the evidence to be served.  In previous cases where the filing of further evidence had been allowed, the evidence had either been produced or it was possible by the facts to determine that new issues had been introduced by the other party's evidence."

In responding to Mr Mansfield, Dr Bodkin attempted to give an indication of the "new issues" that had been raised in the evidence in reply.  I am by no means certain that he was successful in this, even putting aside the consideration that the matters he referred to seem to me to be issues that arose directly out of the evidence in answer.  Mr Bodkin made reference to some calculations and theoretical relationships between parameters contained in the evidence in reply, but these were, I gather, mere exemplifications.  I do not feel that on the basis of what Dr Bodkin has said that I could give a direction as to what specific aspects of the evidence in reply the further evidence should be confined to, even if I were to agree with Dr Bodkin's view that they were in fact new issues.

Nevertheless, this matter is a technically complex one, particularly in the nature of the opposition that is being mounted.  As Mr Mansfield put it, aspects of the evidence involve a painstaking analysis from first principles of relevant metallurgy.  There appears to be a fundamental disagreement between each side's experts on relevant metallurgical principles.  Basic metallurgical principles and theories are used to argue issues of insufficiency (at times verging on inutilty) and inventive step.  Thus I think in the circumstances I must accept the distinct possibility that portions of the evidence in reply might, when subjected to full scrutiny at the hearing of the substantive opposition, be held to raise new issues and not fulfil the requirements for being in reply, notwithstanding the failure of the applicant to satisfactorily identify new issues arising as a result.

Turning now to the first of the criteria referred to above, I note that the applicant has filed its regulation 5.10(4) application only about a month after the evidence in reply had been served.  Using the same reasoning as was used in Emory University v Biochem Pharma Inc (supra), if the evidence in reply indeed contains new matter, then the applicant could not have obtained its further evidence at any earlier stage as it simply did not know it was required.  I am satisfied that the applicant acted with reasonable diligence in filing its application to serve further evidence.  Furthermore it would appear that the applicant has acted with reasonable diligence since then to have the evidence in draft form.  This is notwithstanding indications at the hearing that work on preparing the evidence may have ceased for a short time when doubt arose whether it would be allowed to be served as further evidence.  Had the period of time involved been extensive, I would have viewed that with concern, given the indulgence being sought and the importance which is attached to the actual evidence in determining the regulation 5.10(4) request to serve further evidence.

As regards the second and third criteria, I do not, of course, have the evidence before me and I am therefore unable to assess directly its impact or its credibility.  Nevertheless, I cannot reject the application on the grounds that the evidence has not yet been filed - see Emory University v Biochem Pharma Inc (supra).  On the basis of the admittedly rather patchy details the applicant has provided of the content of the evidence, the lengths to which the applicant has gone to have it adduced and the apparent good faith with which the applicant has acted, I incline toward finding the second and third criteria satisfied.

In relation to the fourth criteria, the applicant indicated that if its application to serve further evidence was granted, it would be able to serve its further evidence within a month.  For reasons I will go into presently, I consider that the opponent should be allowed a month to respond to that further evidence.  Thus the delay directly attributable to granting the regulation 5.10(4) application would be relatively insignificant.  However a complication with this is that the hearing of the substantive opposition has been set down for 30 and 31 August 1999, and this may have to be delayed.  I understand from what Mr Mansfield said at the hearing that the opponent considers it would be significantly disadvantaged by any delay in hearing the substantive opposition because of circumstances peculiar to the opponent.

As to whether an injustice would be done to the opponent if the application was granted, any injustice can only arise from protraction of the hearing.  I think that if the applicant's concerns regarding the evidence in reply are well founded, then it is fair that it should be allowed to have further evidence taken into account, and vice versa.  This is provided any evidence served as further evidence which is not in response to evidence not properly in reply would be inadmissible at the substantive hearing.  I consider such a proviso appropriate, as not only would it be in line with previous Patent Office decisions such as Emory University v Biochem Pharma Inc (supra), but also it would be in line with what the applicant is seeking in its request under regulation 5.10(4).

Regarding the three additional factors to be taken into account, the first rests on the applicant's view of the world that the evidence in reply raises new issues while the second is deprived of significance by lack of information about the evidence.  In the case of the various interests of the parties, setting aside the issue of the potential protraction of proceedings I think that the interest of both parties and the public would lie in granting the regulation 5.10(4) application.  Having all the available evidence considered in the opposition will lead to a better outcome of the opposition proceedings and reduce the likelihood of appeal proceedings being necessary.

While there is a clear danger there could be a substantial protraction of the opposition by granting the regulation 5.10(4) request, I believe that this consideration, the impact of which is uncertain, is outweighed by the other considerations obtaining in this matter, which by and large favour granting the request.  On balance, having considered all the circumstances, I am reasonably satisfied that allowing the applicant to serve further evidence is appropriate in all the circumstances.

Accordingly I grant Nippon Steel Corporation's request to serve further evidence in response to such of the evidence (if any) served as evidence in reply in this matter which is not properly in reply.  Taking account of all the circumstances, including indications given by Nippon Steel Corporation at the hearing, I allow Nippon Steel Corporation a period of one month from the date of issue of this decision in which to serve its further evidence.

It is normal practice in these circumstances to allow the other party a period of time in which to respond to the further evidence.  Given that the further evidence will, effectively, be confined to evidence in reply which is not truly in reply to the applicant's evidence in answer, I have given consideration as to whether it really is appropriate to allow BHP Steel (JLA) Pty Ltd a right of response to the further evidence.  In the end I have decided not to vary the normal practice.  By being allowed to file further evidence Nippon Steel Corporation is being extended a substantial indulgence, and to allow it to serve its further evidence unanswered would, in my view, be to extend the indulgence too far.  I allow BHP Steel (JLA) Pty Ltd a period of one month from the date of issue of this decision in which to serve evidence in response to that further evidence.

CONCLUSION

I have found that, having regard to all the circumstances of this matter, it is appropriate to grant the request by the applicant, Nippon Steel Corporation, to file further evidence, and I grant that request.  The further evidence must be served within one month of the date of issue of this decision and must be confined to evidence which is in response to such of the evidence (if any) served as evidence in reply in this matter which is not properly in reply.  Any evidence not meeting this requirement will be inadmissible in relation to the substantive opposition.  I furthermore allow the opponent, BHP Steel (JLA) Pty Ltd a period of one month from the date of issue of this decision in which to serve its evidence in response to that further evidence.

COSTS

The general principle normally applied in matters such as these is that costs follow the event.  However, the regulation 5.10(4) application filed by the applicant does not provide any basis upon which the request might be granted.  There is not even any indication that the application is predicated upon the evidence in reply not being strictly in reply, and it was not until the hearing took place that the opponent understood to any extent the basis upon which the application was being made (albeit, even then only in a very general sense).  For this reason I think it is appropriate that I make no award of costs.

Accordingly I make no award of costs.

E. J. Knock
Delegate of the Commissioner of Patents

Patent attorneys for the applicant:         Spruson  & Ferguson, Sydney

Patent attorneys for the opponent:        Griffith Hack, Melbourne