Oz Technology v Boral Energy

[1999] APO 18

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No.690074 in the name of OZ TECHNOLOGY, INC

Title:          Process Utilizing a Propane and Butane Refrigerant Mixture

Action:          Objection by the patent applicant to a request by Boral Energy Ltd for an extension of time under Section 223(2)(a) to file a notice of opposition

Decision:          Issued           

Abstract

Boral Energy sought advice from Watermark on the patent application by OZ Technology, Inc.
The advice suggested that it would be difficult for the patent applicant to obtain a grant on its application.  The letter of advice did not contain any recommendation about placing a watch on the application.  This was contrary to the firm’s policy of recommending to clients, who had expressed concerns about the possibility of patent applications interfering with their operations, to maintain a watch on the progress of such patent applications.  Watermark made a further error in not following up on its advice to Boral Energy.  Acting on this advice, Boral Energy terminated the licencing negotiations with the patent applicant’s representatives and no more thought was given to the patent application. 

Boral Energy made an error in not instructing that a watch should be placed upon the patent application.  The evidence established that opponent would have intended to oppose the application if it were not for these errors and omissions.  There is no evidence to suggest that Boral Energy took a “calculated risk” with regard to the patent application or had “lost interest” in the patent application. 

The link between the error made by the attorney and the error made by the officer in opponent company was sufficiently established to be causally related.

A proper case for the extension was made out.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 690074 by OZ TECHNOLOGY, INC and objection by the patent applicant to a request by Boral Energy Ltd for an extension of time under Section 223(2)(a) to file a notice of opposition.

BACKGROUND

Patent application 690074 was advertised as accepted on 23 April 1998.  The time for filing a notice of opposition expired 23 July 1998.  On the 18 September 1998, Boral Energy filed a notice of opposition accompanied with a request under s 223 for an extension of time of two months to 23 September in which to file the notice of opposition.  Supporting evidence for the application for the extension was filed on 30 September 1998 and on 12 November 1998.

This supporting evidence consisted of three statutory declarations.  Declarations by J.A Christian Schieber, patent attorney for the s223 applicant and by John Johnstone (also known as Ian Johnstone) an officer of Boral Energy were filed on 30 September 1998.  A declaration by Laurence J Dyson, the then attorney responsible for Boral Energy, was filed on 12 November 1998.

The patent applicant objected to the s223 extension of time.  A hearing on the matter was held in Canberra on 18 November 1998.  Mr Peter Franke, Patent Attorney and Mr Christian Schieber, a European Patent Attorney employed by Watermark appeared on behalf of Boral Energy.  Elizabeth Eadie, a Patent Attorney from Callinan Lawrie appeared by telephone on behalf of the patent applicant, OZ Technology, Inc.

PRODUCTION OF DOCUMENTS

At the hearing, Ms Eadie made a request for the production of a document.  Specifically, she requested production of the document forming part of exhibit IJ-5 which was a letter of advice dated 3 September 1998 from Watermark to Boral Energy.  Ms Eadie requested production of the letter because it contained a number of blank pages with part of a paragraph on the final page been blanked out. 

In response to the request, I informed Ms Eadie that the delegation of power to conduct this hearing did not include action under s210 for the production of documents.  I further informed Ms Eadie that if she wished to pursue the matter then a request under s210 would need to be filed.  Hearing on the s223 application continued with the expectation that Ms Eadie would file the request under s210.

In a facsimile sent 3 December 1998, Ms Eadie stated that OZ Technology was not going to pursue the request under s210 for the production of the document.

PRIVILEGE

Mr Franke sought privilege in respect of the blanked out portions of the document.

Ms Eadie replied that partial waiver of a document is not possible.  Ms Eadie cited the case of The Attorney-General (N.T.) v Maurice (1986) 161 CLR 475 and made the point that where a document deals with a single subject matter it would be unfair to allow a party to use part of the document and claim privilege as to the remainder of the document. Hence, Ms Eadie argued the document shouldn’t be taken into account.

Christian Schieber submits that the blanked out portions relate solely to advice on the claims.  He states:

“In the attached copy, pages 2 and 3 have been blanked out as they contain advice in relation to the claims and as such this advice is considered confidential and subject to privilege.  Similarly, page 5 contains blackened lines for the same reason.”

In the facsimile sent 3 December 1998, Ms Eadie again submitted that I should not take into account the contents of the document for the same reasons that she had argued at the hearing.  Christian Schrieber for Boral Energy replied to Ms Eadie’s submissions on privilege in a facsimile sent 9 December 1998 and stated:

“…even if the letter dated 3 September 1998 the subject of exhibits CJS2 and IJ-5 is not taken into account, the statutory declarations contain a full and frank narration of the events that led the prospective opponent, Boral Energy Ltd, becoming aware that an error or omission had taken place which prevented them from filing the Notice of Opposition to the patent application in proper time.”

I have considered the submissions of both parties.  But, in my opinion the contents of the letter of advice deal solely with those matters that occurred after 26 August 1998.  There are no matters in the letter that relate to the issue of whether an error or omission occurred.  I agree with the Mr Schieber’s submission of 9 December 1998. 

Consequently, I see no need to consider the document, nor is there any need for me to further consider the issue of privilege.

THE S223(A) APPLICATION

From the s223(2)(a) application, the opponent states:

“Due to an omission by one of our officers as well as due to an omission by our attorneys, we failed to monitor the progress of the patent application and consequently were not aware of its acceptance, which was advertised in the Official Journal of Patents on 23 April 1998.  Accordingly, due to these omissions, we failed to give Notice of Opposition by 23 July as required under Reg 5.3.”

The declarations identify Mr Dyson as the then responsible attorney from Watermark and Ian Johnstone as the responsible officer from Boral Energy.  In essence, Boral Energy submit (i) that its attorney, contrary to the firm’s policy, failed to suggest that a watch service should be instituted on the patent application and that (ii) an officer of the company failed, as a result of the advice it received that it would be difficult for the application to go to grant, to realise that it should order such a watch.  Mr Franke, Patent Attorney for Boral Energy, argued that due to the potential impact a grant would have on its business that it would have opposed the patent application if it had not being for the errors and omissions.  Mr Franke also stated that the intention of Boral Energy, which would have been to oppose the patent application, was frustrated by errors and omissions made by its patent attorney and employee.

Ms Eadie for Oz Technology submitted that the Boral Energy have not made out a proper case.  Ms Eadie submitted that there is no evidence of any intention to file a notice of opposition within the required time and even if an error or omission were found, there was no causal link between the error and the failure to file the notice of opposition.  She further asserts that the balance of interests resides with the extension not been granted and that no serious opposition is foreshadowed.

In considering the application for the extension of time, I need to consider whether a proper case has been made out, whether there has been any undue delay, the relative weighting of the private interests of the parties against the public interest, and whether there is a serious opposition is in train.

(I) PROPER CASE: ERROR OR OMISSION BY PATENT ATTORNEY

In June 1986, Boral Energy was involved in licensing negotiations with OzTech Refrigerants [OzTech], an Australian company who then acted for the patent applicant, OZ Technology Inc.  Ian Johnstone, on behalf of Boral Energy, sought an opinion from the Patent Attorney firm, Watermark, as to whether the application would be accepted in Australia.  Mr Dyson gave the opinion in a facsimile sent on 18 June 1996. The facsimile include the front page of four US patent documents.  The confirmation copy was dispatched on 20 June 1996.

The relevant contents of this letter are as follows:

“A preliminary review of the prior art referred to on the I.S.R. appears to indicate that some difficulty will be experienced by the applicant in achieving valid granted claims on this invention.  It appears that there has been a prior disclosure of the use of a propane/butane mix as a refrigerant.

In addition, we are unable to find any disclosure in the specification of any specific features upon which the applicant can rely for supporting subject matter; ie, there is no reference to the use of specific additives to the hydrocarbon gas for better adapting the gas for refrigerant use.”

On the face of it, the validity of the claims in the patent application are suspect. We would recommend that you seek a professional opinion in respect of this patent application before your company makes any significant commitment or investment in the invention.”

Thus, in his advice, there was no suggestion that a watch should be placed on the patent application.

Mr Schieber declared that the normal practice in Watermark would be to recommend that a watch should be placed on the patent application.  He stated:

“I can state from my personal practice and from that followed by other members of Watermark, that in cases where there is a patent application which is of concern to a client of Watermark, or which has the potential to pose either an infringement risk or an obstacle to technology development conducted by the client, Watermark normally recommends instituting a watch service on such a patent application to monitor its progress, thereby to enable the client to make an informed decision upon acceptance of the patent application on whether or not it will be necessary to oppose grant of a patent on the application.”

Laurie Dyson also declared that the practice as of June 1996 was the same practice as of today.  He declared:

“I note expressly that I omitted suggesting to Mr Johnstone to maintain a watch service on the patent application.  I can state that the policy of patent attorneys in the employ of Watermark as well as principles of Watermark as of June 1996 and today is to recommend to clients, who had expressed concerns about the possibility of patent applications interfering with their operations, to maintain a watch on the progress of such patent applications.”

Mr Dyson goes on to declare that “only in clear cases” is a watch not recommended.  There is no evidence to suggest that the facts of this case fall within the exception.  Mr Dyson stated:

“Only in clear cases where a patent application discloses an invention which has no relevance whatsoever to the operations of a client, will members of Watermark including myself, have not suggested the need for maintaining a watch on such patent applications.

Furthermore, Mr Dyson declares that Watermark have procedures in place to conduct watching searches.  Mr Dyson declared:

“Watermark Search Department have well proven procedures in place to implement such watching procedures both for general watching as well as specific number watches such as in the current instance.”

The declaratory evidence submitted by both Mr Franke and Mr Dyson indicates a past and present policy in Watermark of advising its clients to maintain a watch on the progress of patent applications that may interfere with its client’s operations.  This being the case, the intention of Watermark was frustrated when My Dyson failed to recommend to Boral Energy that a watch should be set up on the patent application by Oz Technology, Inc.

In the decision of Stork Pompen v Weir Pumps 11 IPR 542 it was held that a breakdown in procedure effecting a party’s intention of a party may found an error. Accordingly, in my view, Mr Dyson, acting for Boral Energy, made an error or omission when he failed to advise his client of the need to consider placing a watch on the patent application by OZ Technology, Inc.

Furthermore, Mr Dyson, in his declaration, stated that he also failed to diary any follow-up action.  This would seem surprising as the tone of the letter of 18 June 1996 suggests that further communication between the client and attorney would occur.  Although, there is no evidence that a diary of follow-up action is part of the policy of Watermark, in my view, there is a sufficient connection with Mr Dyson’s failure to suggest that a watching service be placed on the patent application, for this error to be so linked.  Hence, I conclude that Mr Dyson made a further error in failing to diary any follow-up action.

(II) PROPER CASE: ERROR OR OMISSION BY PROSPECTIVE OPPONENT

The contents of the letter of advice from Laurie Dyson to the prospective opponent on 18 June 1996 are crucial for determining whether there is a causal link between the error made by the attorney and any error made Mr Johnstone. 

On the matter of validity, Laurie Dyson in his declaration stated:

“I note that in my letter of advice I expressed severe reservations about the validity of the claims.  It was my belief that the patent application would not proceed to acceptance with claims that could validly sustain a patent.  Notwithstanding my personal opinion, I suggested to Mr Johnstone to seek further professional opinion in respect of the Patent Application before making any significant commitment or investment in the alleged invention disclosed in the Patent Application.  It was my feeling that further prior art investigations beyond review of the ISR was necessary and more comprehensive and detailed opinion was in order if the project was proceeded with by the client.”

Further on in his declaration Mr Dyson stated his view that the “patent application would encounter unsurmountable obstacles in obtaining acceptance”.

Ian Johnstone stated in his declaration that he failed to take note of Mr Dyson’s recommendation on further professional advice. He stated:

“I must assume that upon receipt of the written report I must have omitted noting Laurie Dyson’s further professional advice.  I can further state that I did not provide Laurie Dyson with instructions for Watermark to keep me informed about the progress of the Patent application and appraised of its future development.”

Further on in his declaration Mr Johnstone stated that his omission was based upon Mr Dyson’s advice.

“I can only assume I omitted doing [instructing Watermark] this in light of the advice in Laurie Dyson’s letter of 18 June 1996.”

The verbal advice Mr Johnstone received from Watermark by telephone call on 20 June 1996 coincided with a meeting with OzTech, the then representatives of the patent applicant.  At that meeting, Mr Johnstone raised questions about the validity of the patent application.  He was unconvinced by the responses from the OzTech representatives.  Based on his personal knowledge, the discussions with OzTech and on the advice received from Mr Dyson, Mr Johnstone became convinced that “a patent on such a known use would certainly not be granted”.  Negotiations with OzTech were terminated that day and “no more thought “ was given to the patent application. 

In Mr Johnstone’s words the omission “to provide instructions to Watermark, to monitor the progress of patent application No. 48452/93, and in particular to install a watch to monitor its acceptance” led to the failure to file the notice of opposition within time.

On the point whether Mr Johnstone would have sought to oppose the grant, he stated in his declaration:

“It is my firm conviction and belief that would I have been advised that notwithstanding the opinion expressed by Laurie Dyson there was still the possibility of a patent being granted …that I would have instructed our patent attorneys Watermark, to monitor the application and report about the outcome of the Patent Application.

It is also my firm conviction and belief that if, contrary to my expectations held at the time, the Patent Application would proceed to acceptance, as has now happened, I would have instructed Watermark to oppose grant on the patent application.”

Mr Johnstone goes on to state the reasons behind his firm conviction and belief:

“This is so because acceptance of the Patent Application, which originally contained claims directed at the use of a refrigerant gas mixture composed of propane and Butane (eg LPG), would have a severe impact on my Company’s field of operations.  In particular, the above stated intention of my Company to enter the refrigerant gas market by setting up its own manufacturing and distribution infrastructures for LPG-based refrigerants, would be severely disrupted, if not completely prevented by a patent in this field.  In light of my prior knowledge that Butane and Propane gas mixtures had been used many years back for refrigeration purposes, as confirmed by Laurie Dyson’s above mentioned letter, I was convinced that a patent on such a known use would certainly not be granted.”

In summary, Mr Franke for Boral Energy argued that Mr Johnstone in acting upon the advice of his attorney made an error or omission in not installing a watching service on the patent application, such error or omission being causally linked to the errors or omissions made by Boral Energy’s patent attorney.

Ms Eadie’s submissions on whether a proper case has been made out began with reference to the decision in Kimberly-Clark v Commissioner of Patents (1988) 13 IPR 569 where Jenkinson J. stated that in order to make out a proper case justifying the extension:

“…an applicant would in my opinion have to go beyond a disclosure of the processes by which an agent's errors came to be committed, and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes of the applicant (or, in the case of corporation aggregate, of the relevant officers and other agents) relevant to an understanding of the way he failure to do the act or take the step occurred, or relevant to an evaluation of the reasonableness of that conduct. 

Ms Eadie suggested that the evidence filed in support of the s223 application was not sufficient to support the exercise of the power conferred by s223.  In particular, Ms Eadie argued that the advice sought from Mr Dyson related to licence negotiations rather than other matters.  I disagree with Ms Eadie.  The declaratory evidence states that Mr Johnstone sought advice not only about licensing but also about the patent itself.  Such advice did include advice on the validity of the patent. These matters are referred to in the letter. 

Furthermore, Ms Eadie argued that there was insufficient evidence of the details of the phone call of 20 June 1996 between Mr Dyson and Mr Johnstone on which to base any conclusions.  In Ms Eadie’s words;

“… the material before the delegate hardly justifies more than speculation as to the mental processes by which the decision was reached.”

Ms Eadie suggested that telephone notes could have been put into evidence.  Mr Franke responded by saying that they have put into evidence all that was available and that there were no phone notes.  However, as Mr Johnstone had stated in his declaration that “the report [ie confirmation copy of the facsimile] confirmed Laurie Dyson’s verbal advice of 20 June”, then I am of the view that the lack of phone notes is not crucial.

Ms Eadie for OZ Technology next cited Danby Pty Ltd v Commissioner of Patents (1988) AIPC 90-489 for the point that “one must show that a person desiring to oppose the grant of a patent application must give appropriate instructions to that end and that by an error of some kind such instructions were not carried out.”  Ms Eadie emphasised that there is no evidence of any intention to oppose the patent application and hence no proper case has been made out. 

Ms Eadie referred to Weir Pumps Ltd v Commissioner of Patents and Stork Pompen B.V. (1989) 13 IPR 163 as further case law demonstrating that the prospective opponent needs to establish an intention to oppose before the expiration of the period in which to oppose. Ms Eadie submits:

“In that case the company did not commission any search or watch in respect of patent claims because it did not occur to them that any patent claims could be made in a field with long-standing prior art. The court accepted that this was an error or omission and that there was an omission to take competent professional advice until the period of opposition had expired.  These circumstances are similar to the present case.  The opponents did not commission a watch and did not seek further professional advice on the basis that they did not believe any valid patent claims would be made, both in view of the advice from Watermark but also in view of Johnstone’s previous experience (see paragraph 17 of the Johnstone declaration).  This is not sufficient to grant the extension as no intention to oppose the application had formed before the expiry of the period for lodging the Notice of opposition.”

In reply, Mr Franke contended that this case can be distinguished as it was the “deliberate policy of Weir that it did not maintain a watch for pending patent applications or for their acceptance” that was fatal to their application under s223.  Clearly, the presence of such a deliberate policy negates any suggestion of an intention to file a notice of opposition.  However, I can find no evidence of any such deliberate policy on behalf of Boral Energy.  Neither can I find any evidence that suggests negation of intention to file a notice of opposition.  In my view, it is clearly implicit in the Weir Case (supra) that an error of judgement can form the basis for an error or omission.

The case of Biosys v Ecogen Australia Pty Ltd 26 IPR 629, (1993) AIPC 91-001 [1993], 44 APO (27 May 1993) is a case dealing with the application of s223 to a request to amend a statement of grounds and particulars. In that decision, the Hearing Officer applied the principle from Stork Pompen B.V. v Weir Pumps (1988) AIPC 90-480:

“Thus, it is apt to apply the following formulation:  "an error or omission has been considered to have occurred where there has been a breakdown in procedure in effecting a party's intention" (Stork Pompen v Weir Pumps 11 IPR 542 at 546; this point was not overturned in the decision of the AAT reported at 13 IPR 163). As a consequence, the intention of the party with respect to doing some act is an essential preliminary to the demonstration of an error or omission.”

Ms Eadie argued that this is another example of a decision of a Delegate of the Commissioner of Patents that demonstrates the important principle of law that intention is an essential preliminary to the finding of an error or omission.  Similar comments also apply to the case of Genentech Inc v Amrad Corp (1994) 29 IPR 218, [1994] APO 17 (22 February 1994) and Pertti Pietinen and Aslak Savonjousi v Sunds Defibralator Jylha Oy [1991] APO 45 (28 October 1991) which were cited to me. The case of Henkel Kommanditgesellschaft Auf Aktien v Fina Research Societe Anonyme (1993) 27 IPR 289, (1993) AIPC 90-999, [1993] APO 33 (11 May 1993), was cited as an example where the evidence was insufficient to find the relevant intention to oppose during the relevant period. The patent applicant argued that this was similar to the facts of the present case; i.e. there was no evidence of intention to oppose and therefore there was no chain of causation made out.

In my view the evidence demonstrates the importance of the patent application to the business of the opponent.  The declaration by Mr Johnstone attests to his convictions and beliefs.  Ms Eadie submitted that in 1996, the patent application may not have affected Boral Energy’s business development but in 1998 it does affect it.  And therefore,  Ms Eadie submitted that there was a lack of intention to oppose in 1996 that saw no action on the part of Boral Energy to request that a watching service be set up.  Ms Eadie for the patent applicant also argued that Mr Dyson merely stated that a grant was difficult, not impossible.  Further, that the evidence from Mr Johnstone and Mr Dyson on their recollection of events was “mere speculation with the benefit of hindsight”.

In support of her argument on “mere speculation”, Toyo Seiken Kaisha Ltd v Norsdon Corporation 5 IPR 388 was cited. In that case, the failure to lodge a notice of opposition was held not to be by reason of any error or omission of the searcher. In that decision, the hearing officer commented that he could equally speculate that the failure to initiate a search was because of an error or omission or for some other reason. The patent applicant argued:

“Similarly in the present case, it can be speculated that because of some omission the applicants failed to initiate a watch, but it could equally be speculated that the failure to initiate a watch was because the applicants had lost interest in licencing that particular technology.”

The evidence suggests that there was no need to pursue licencing the technology not because the prospective opponent had lost interest but because of the belief that no patent would issue.  The expressed difficulties the s223 applicant had with OzTech would have exacerbated this issue. 

From my reading of the declarations, the recollection of beliefs by Mr Dyson and Mr Johnstone are more than mere speculations.  To me, they seem a more probable explanation of events than the one provided by Ms Eadie.

Ms Eadie submitted that the case of Peter Hamilton Boyle v Storm and Security Roof Tile Fixing Pty Ltd [1996] APO 46 (2 October 1996) was similar factually to the present circumstances. From the headnote to the decision:

“Storm and Security had been carrying out a watch on the application for two years.  Following a review of the company’s patent files, Storm and Security made decisions with a view to rationalising the files and to avoid unnecessary costs.  They made a decision to discontinue any further watching on the application with a view to saving the costs involved and following advice from their attorney that it was probably unlikely that the application would be accepted, having regard to the form and content of the complete specification as filed.

The decision to cease the watch appeared to be a commercial decision based on the costs and risks involved, rather than an error of judgement in the sense referred to in Kimberly-Clark v Commissioner of Patents (No 3), 13 IPR 569.”

OZ Technology submitted:

“…there is no difference between instructing to cease a watch based on advice received from a patent attorney and a failure to instruct a watch based on advice of a patent attorney which was later shown to be incorrect.  In the Storm and Security case, it was clear from the evidence that Storm and Security at one time had the intention of opposing the application if it was accepted.  This was not even shown in the present case.”

Superficially, the argument presented by Ms Eadie is attractive.  From the evidence filed in the Storm and Security case (supra) the Hearing Officer inferred that ‘a decision to discontinue the watch after weighing up the costs and risks involved” was made by the person responsible for making the decision.  The Hearing Officer also took the view that this decision, although based upon advice received from a patent attorney that was subsequently shown to be in error, did not involve any “error or omission” in the ordinary meaning of words as per Jenkinson J in Kimberly-Clark v Commissioner of Patents (supra).  In other words, the firm Storm and Security made a commercial decision to discontinue the watch and its patent attorney’s correctly followed that instruction.

In the present case, no watch service was set up.  It was the failure to suggest to Boral Energy that it would be appropriate to set up a watch service notwithstanding the advice that a patent would be unlikely to be granted that grounds the error.  Moreover, from the evidence before me, I cannot infer a lack of interest on the part of the opponent that would demonstrate a lack of intention to oppose the patent application.  Hence, I cannot infer that a commercial decision was made by Boral Energy not to set up a watch service. 

Kabushi Kaisha Ishida Koki Seisakusho v Duro-Matic Pty Ltd [1983] APO 1 (24 February 1983), 1 IPR 309 was also argued because of its similar factual situation. This case was argued for the proposition that the word “omission” is not capable of including the failure to make appropriate enquiries by way of instructing an attorney to make a search that reveals the relevant information. The patent applicant argues:

“Similarly in the present case the attorneys did what was requested of them.  There is no error or omission in the relevant sense in a failure to make appropriate enquiries by way of instructing the attorneys to maintain a watch which would have revealed acceptance of the patent application.”

I disagree.  This is not an example of a case in which there was a failure of a patent attorney to carry out the client’s instruction.  This is an example of a case in which the attorney failed to properly inform his client with the consequence that the client did realise that a watch should be place on the patent application.

The Decision of the AAT in Total Peripherals v IBM and Commissioner of Patents No. N98/408, AAT No. 133336 issued 30 September 1998 is a case dealing with the application of s223 to pay a renewal fee.  Although neither party cited this case, it is relevant to my decision.  In reaching its decision the Tribunal noted;

“…the distinction drawn in decisions of the Commissioner between errors affecting the carrying out of parties' intentions and the consequences of deliberate decisions”.

And further;

“The Tribunal is satisfied that there has been an unexpected failure of a servant to exercise due diligence when giving directions.  There has been an unforseen and unexplained failure as far as IBM is concerned.  There has not been a failure to act by Mr Holcombe but rather, on review, a flaw in his mental function in carrying out his intentions, which is an error made by him.  The Tribunal is not satisfied that Mr Holcombe took a calculated risk in giving a direction to Ms Aridome.  Normal practice would be to maintain patents attracting royalty payments.  The error is obvious.  Mr Holcombe "went off the rails" for reasons which are not clear to the Tribunal.  Due to his move, he may have been under additional pressure at the relevant time.  This conclusion does not place a restricted meaning on the phrase "error or omission", but it recognises human frailty and does not so broaden the meaning of "error or omission" as to make those words otiose.”

Likewise in the present case, there has been a failure by Mr Johnstone.  In view of the importance attached to Boral Energy’s new business venture, the error is obvious.  The causal link between the error made by the attorney is sufficiently linked to the error made by the employee.

This is entirely consistent with the decision in Kimberly-Clark v Commissioner of Patents (supra) where His Honour in discussing the phrase "error or omission" said, at pages 579 and 580:

"...Further, the word 'error' is not easily assigned a clear meaning restricted by reference to one or several particular categories of flawed mental function.  The attempt is likely to lead to the drawing of fine and often unrealistic distinctions.  And some error of judgment by agents and attorneys may be as bizarre and as little to be anticipated as lapses of memory and accidental slips.

I do not think that the conclusion I have reached reduces s 160(2)(a) to a mere general power of extension.  By no means every judgement by 'the person concerned' or by 'his agent or attorney' which can be shown to have been mistaken will answer the description 'error or omission' in the ordinary meaning of those words, which in their context carry, in my opinion, a connotation of obviousness in error."

Reviewing the declaration of Mr Johnstone, I am not satisfied that there is any evidence of Mr Johnstone having “lost interest” in the patent application or taking a “calculated risk” in respect of the patent application.  Rather, the evidence suggests that Mr Johnstone did not believed that anything needed to be done.

Therefore, an error or omission occurred in the advice given by the patent attorney to his client and that the client acting upon this advice made a further error that resulted in a watch on the application not been placed.  Based on the evidence, if a watch had been put in place, a notice of opposition would have been filed within the proper time.  Hence, I am satisfied a proper case has been made out.

UNDUE DELAY

On 21 August 1998 Mr Johnstone was informed by a consulting engineer that a UK patent 2286194 relating to refrigeration gas blends had been granted to Oz Technology, Inc.  On 26 August 1998, Mr Johnstone, at a meeting with Mr Schieber of Watermark, requested a check on the status of the patent application 48452/93.  It was not until 4 September 1998 during a telephone conversation with Mr Schieber that Mr Johnstone became aware of the acceptance of the patent application.  Following further discussions and inquiries, it wasn’t until 11 September 1998 that Mr Johnstone became aware that it was “an omission or error of judgment that led to the failure to institute a watch on the patent application.”  As the application for the extension of time and the notice of opposition were filed on 18 September with supporting declarations filed 30 September and 12 November 1989, there was no undue delay in making the application.

PRIVATE INTERESTS V PUBLIC INTERESTS

Mr Franke for Boral Energy submitted that as the patent applicant is already facing one opposition it would be in the public interest that its proposed opposition is considered.  Furthermore, it points out that the proposed extension sought under s223 is small.  Ms Eadie for Oz Technology, on the other hand, submits that its opposition cost will double and this will be a detriment to the patent applicant.  The public interest is best served by primarily considering the merits of all oppositions independently of each other: ICI Australia Operations Pty Ltd v Dowelanco [1992] APO 12 (8 April 1992), (1992) AIPC 90-884. I agree with Mr Franke on this point.

In presenting his case for the proposed extension, Mr Franke referred to the behaviour of the representative of the patent applicant during licencing negotiations that took place in June 1996.  In uncontradicted evidence, Mr Franke alleged that the representative of the patent applicant impliedly threatened Boral Energy.  In reply, Ms Eadie stated that OzTech was no longer representing the patent applicant in Australia and that therefore these alleged threats are not relevant.  Mr Frank’s submissions do not convince me that this is a highly relevant factor in deciding the relative interests.  Therefore, I agree with Ms Eadie.

Mr Franke submitted that Oz Technology was seeking to monopolise the use of CFC replacement refrigerant that was known before the priority date of the application.  Mr Franke further submitted that as Australia has obligations under the Montreal Protocol to reduce CFC-emissions, it would be in the public interest to allow the opposition.  This argument is misplaced as the risk to the public interest relates to the risk of an invalid patent been granted and not to any another risk.

It is clear that the private interests of OZ Technology Inc are best served by refusing to grant the extension. It is equally clear that the private interests of Boral Energy Ltd are best served by allowing the extension.  These interests are equal.  The deciding factor lies with the public interest in that clearly invalid patents are not granted.  This is best served by allowing the extension sought.

SERIOUS OPPOSITION IN TRAIN

At the hearing, Mr Franke referred to an article attached to their handed up notes as prima facie evidence of how serious the foreshadowed opposition was been treated by Boral Energy.  Although, as rightly pointed out by Ms Eadie and with complete agreement from Mr Franke that matters of evidence properly belong to the substantive hearing on the matter, the gathering of evidence gives some weight to the seriousness of the foreshadowed opposition.  However, this is not persuasive.

What is more important is the history of the then relations between OzTech and Boral Energy and the potential impact of the grant of patent application would have on the opponent’s business.  As the patent applicant has not controverted these points, I am convinced that a serious opposition is foreshadowed.

EXERCISE OF DISCRETION

Given what I have concluded above, is it appropriate for me to exercise the discretionary power conferred by the statute?

From Kimberly-Clark v Commissioner of Patents (supra), Jenkinson J. stated:

Whether or not the error or omission of the agent which enlivened the power occurred without moral fault on his part, the applicant's claim to the exercise of the power cannot be judged without the means of evaluating the applicant's moral claim to an indulgence which will, to some extent at least, work a prejudice to the efficient operation of what Bowen C.J. in that case called "the system", even if no prejudice to the applicant for a patent.

In a similar vein, the AAT in Weir Pumps Ltd v Commissioner of Patents and Stork Pompen B.V. (supra) stated:

“Loss of opportunity to oppose is not disastrous.  A patent when granted is often not worth the paper it is written on until tested judicially, in revocation proceedings…”

On the evidence presented before me and on my conclusion regarding that evidence, it is appropriate for me to grant the extension sought.

CONCLUSION

After considering the material before me and hearing both parties, I am satisfied that there was an error or omission that resulted in the notice of opposition not being filed within the prescribed period.  I am also satisfied that the opponent Boral Energy Ltd has made out a proper case justifying the extension of time in which to file its notice of opposition.

Consequently I allow the extension of time under s223(2)(a) until 23 September 1998 in which to file the notice of opposition.

The allowance of the request validates the notice of opposition filed 18 September 1998.  Thus, filing of the statement of grounds and particulars will expire 3 months from the date of this decision.

COSTS

Costs normally follow the event. At the hearing, Ms Eadie for the patent applicant submitted that even if OZ Technology was unsuccessful there should not be an award of costs against it.  Firstly, Ms Eadie argues that the matter could have been dealt by a telephone hearing and secondly, there was no need for two patent attorneys to attend the hearing in Canberra.

On the first point,  I cannot agree with Ms Eadie as the opponent has the right to appear in person.  On the second point, Mr Franke replied that if successful they would not be seeking costs for the attendance of two patent attorneys.  I agree.

Ms Eadie further argued that the late service of the Dyson declaration (filed 6 days before the hearing was set down) meant that Oz Technology had insufficient time in which to decide whether to proceed with their objection to the extension of time.  Therefore, there should be no award of costs against it.  This does not convince me. The issues arising from the Dyson declaration were also raised in the other served declarations and the time taken to analyse the Dyson declaration would not have been long.  

If I were to accept that the service of the Dyson declaration was a factor in determining costs, Mr Franke submits that Ms Eadie’s application at the hearing for the production of documents means that the resolution of the s223 application would be delayed and this would be to the detriment of the opponent. However, the delay has not been excessive and in my view counterbalances the possible detriment suffered by the patent applicant. 

Hence, on balance, with the proviso that only the costs of attendance by one attorney will be sought, I award costs against the patent applicant, Oz Technology,Inc.

G.M.Cox
Delegate of the Commissioner of Patents

Patent attorneys for the applicant:  Callinan Lawrie, Melbourne

Patent attorneys for the opponent:  Watermark, Sydney