Pechiney Rhenalu v Corus Aluminium Walzprodukte GmbH

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 690433 in the name of PECHINEY RHENALU and a Request to amend under Section 104 of the Patents Act 1990

Title: Product for Obtaining Welded AlMgMn Alloy Structures with Improved Mechanical Resistance

Action: Opposition by CORUS ALUMINIUM WALZPRODUKTE GmbH to the Section 104 amendments and a request by the opponent for directions to defer the Section 104 opposition pending the outcome of the Federal Court appeal against the Section 59 opposition

Decision: Issued
Abstract

The opponent sought a direction to defer hearing of an opposition under section 104 pending resolution of the Federal Court appeal against the Commissioner’s decision on a substantive opposition to patent application 690433 in the name of Pechiney Rhenalu.
The teaching of Ferocem Pty Ltd v High Tech Auto Tools Pty Ltd (1993) 29 IPR 144, was applied. The opponent could not that establish that the pending court action was directly relevant to the s.104 opposition hearing before the Commissioner. The delegate found that the determination of the section 104 opposition at an early stage will best serve the public interest. The delegate determined that in all the circumstances the Commissioner should proceed to hear the s.104 amendment opposition. Consequently the opponent was granted an extension of time until 5 January 2004 to file evidence in support of the section 104 opposition.
Costs were awarded against the opponent Corus Aluminium Walzprodukte GmbH and in favour of the applicant Pechiney Rhenalu.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 690433 by PECHINEY RHENALU, a Request to amend under Section 104 of the Patents Act 1990, an opposition thereto by CORUS ALUMINIUM WALZPRODUKTE GmbH and a request by the opponent for directions to defer the Section 104 opposition pending the outcome of the Federal Court appeal against the Section 59 opposition.

BACKGROUND

Pechiney Rhenalu (Pechiney) filed patent application No. 690433 on 21 February 1996 under the Patent Cooperation Treaty. The application was examined and advertised accepted on 23 April 1998. The specification was twice amended after acceptance, the allowance of the amendments being advertised accepted on 26 November 1998 and 6 June 2002 respectively. Corus Aluminium Walzprodukte GmbH (Corus) filed a notice of opposition under section 59 on 21 July 1998. The hearing to deal with the substantive opposition was held in Canberra on 17 and 18 September 2002. A decision in the matter was issued on 10 April 2003 ([2003] APO17).
On 1 May 2003, Corus filed a Notice of Appeal (in the Federal Court) under section 60 of the Act against the delegate’s decision. Pechiney filed a request to amend patent application No. 690433 on 30 May 2003. The granting of leave to amend was advertised on 18 September 2003. Corus filed a Notice of Opposition under section 104 on 16 December 2003 and the Statement of Grounds and Particulars on 15 March 2004.
On being advised that Pechiney proposed to file a Notice of Cross-Appeal on the delegate’s decision (issued on 10 April 2003), Corus sought (by letters dated 15^th and 22^nd April 2004) a direction from the Commissioner pursuant to the provisions of Regulation 5.10 to stop the clock on the filing of its evidence in support of the section 104 opposition. The Commissioner granted that request on 19 May 2004.
On 2 July 2004, Pechiney withdrew its application to file a notice of cross-appeal in the Federal Court proceedings. Corus sought further directions from the Commissioner to stay current amendment opposition proceedings. The Commissioner’s delegate (by letter dated 11 August 2004) did not consider such a direction appropriate in all circumstances. Corus disagreed with the Commissioner’s interim decision and sought a hearing in the matter. The Commissioner’s delegate also directed that the time for serving evidence in support of the section 104 opposition was 5 October 2004. On 5 October 2004 the opponent sought an extension of time till 5 January 2005 to file evidence in support.
The hearing to deal with the request by Corus for directions was held in Canberra on 19 October 2004. Ms Katrina Howard of counsel instructed by Ms Delwyn Everard, solicitor of Spruson & Ferguson Solicitors, Sydney represented the applicant. Mr. Garry Fitzgerald of counsel instructed by Mrs Virginia Beniac-Brooks, patent attorney of Phillips Ormonde & Fitzpatrick, Melbourne represented the opponent.
SUBMISSIONS
The opponent’s submissions are summarised as follows:

1. The Commissioner has a broad discretion under Regulation 5.10, to give directions for the conduct of proceedings before the office, based on relevant factors or considerations, including the interest of the parties and the public interest (A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213, at 220-222 per Sackville J). This broad discretion should not be reduced “by a decision-maker to imperative compliance with particular requirements” (at 220).
2. Relevant factors/considerations in this case are:
a.Real and significant overlap between the issues before the Court in the appeal and before the Commissioner in the amendment application: in particular the feature of the dispersoids. This raises a real risk of inconsistent findings/decisions by the Court and the Commissioner on these matters.
b.The Court must decide on, among other things, the validity of unamended claims 12-19, the priority date for all claims, fair basis and the sufficiency of the specification regarding the dispersoid feature. Hence the parties will need to file substantial expert evidence in both the Court and before the Commissioner if the amendment proceeds. Also before the delegate on the original decision, Pechiney conceded that the earlier priority date of 24 February 1995 could not be maintained but in Court proceedings it has refused to make that concession. Thus Corus will be compelled to adduce evidence as to the adequacy of any disclosure of the dispersoid feature in the earlier priority document.
c.The practical effect of 3M v Tyco (2202) 56 IPR 248 (paragraphs [45]-[50]) by the Full Federal Court, is that different experts might need to be used for the Court action and the amendment action.
d.As Pechiney is maintaining its priority date in the Court action it could argue that claim 1 is entitled to claim priority from the earliest basic document because the feature of the dispersoids is inherent and is a consequence of the composition of the alloy. Thus if the Court finds in favour of Pechiney the current amendment proceedings will be otiose.
e.The Court will have to decide on issues of sufficiency and fair basis regarding the dispersoid feature. To address these issues in the section 104 opposition the parties will also be required to file evidence commenting on the same complex technical matters to be addressed and considered as the Court. There is a risk that should the Commissioner proceed, she would be proceeding on an erroneous basis as to sufficiency regarding the dispersoid feature.
f.These considerations suggest that the only real alternatives will be that the Court proceeding will determine if this amendment application is either a waste of time and money, or a nullity. Also before the Court, the parties and the Court will have the benefit of discovery, oral examination and cross-examination on evidence, which the Commissioner will not have. The scope of the appeal is wider in that the Court has to decide issues of novelty, inventive step and so on. It is likely that the more comprehensive and extensive evidence before the Courts will lead to a better decision on the merits. Thus if the existing claims are found to be invalid by the Court, the proposed amendments would also be invalid.
g.There is considerable time and expense in preparing evidence for both Court and Office proceedings. This evidence must of necessity both cover the same ground yet treat that ground differently. The savings in cost and time to the parties to not have to do this evidence twice but in different ways with different experts will be huge. It is expected that the unsuccessful party will appeal the Commissioner’s decision on the amendment. This would result in two separate Federal Court proceedings, both involving similar evidence, but on different legal principles and with different priority dates governing the applications – this will add to, not diminish or make easier the Court’s workload
h.The public interest is best served in the efficient and economic determination of disputes, including the saving to the parties and the public purse in the Commissioner not proceeding with and deciding the amendment until the Court appeal is determined on its merits, which will in turn determine the fate of the amendment application.
i.Corus relies in its application on the general principle articulated in Ferocem Pty Ltd v High Tech Auto Tools Pty Ltd (1993) 29 IPR 144, by Mr. Herald, delegate of the Commissioner who stated, “As a general proposition, where there is a pending court action of direct relevance to a matter before the commissioner, the commissioner prefers the court action to be concluded before determining the matter before him. This would seem to particularly apply where the matters in dispute are strictly between the parties, and have no significant consequential effect on third parties. Thus if the effect of the court action was in a practical sense confined to the parties, I think the Commissioner would be fully justified in deferring a hearing until the court action is determined – providing neither party would be significantly disadvantaged.” Corus submits that the Court proceedings are of “direct relevance” or have a “direct bearing” on the amendment application. The proceedings are in the sense referred to by Mr. Herald just a dispute between and confined to Corus and Pechiney, involving no third parties.
j.Neither party would be disadvantaged by the deferring of the amendment proceedings to await the Court’s determination. Both parties would benefit from this course by savings in costs and time, despite Pechiney’s opposition. The office and the wider public interest would benefit from this course by the savings on its resources and the guidance the Court would offer in its decision of the appeal proceedings. Corus would be disadvantaged or prejudiced should the two proceedings run at the same time, as indicated above particularly regarding evidentiary considerations.
k.There is only one real dispute between the parties as to the patent application’s validity. The bifurcation of this dispute by court proceedings and the office amendment application may be avoided in the circumstances by putting the amendment on hold until the Court determines the main opposition. That way, the court hearing will resolve all, by its decision on issues “of direct relevance” to the amendment application.

3. Corus (the opponent) requests a direction from the Commissioner deferring, staying or suspending the section 104 amendment application by the patent applicant (Pechiney), pending resolution of Federal Court proceedings between these parties on Corus’ appeal under section 60 of the Patents Act 1990 on its principal opposition to Pechiney’s patent application. Costs of the application should follow the event.

The applicant made the following submissions in response:
1.   If a stay of the amendment action is ordered it would lead to a duplication of costs, be against the public interests and would lead to uncertainty particularly in the form of the specification that would be the subject of an appeal.
2.   The decision of the Commissioner’s delegate made 11 August 2004 was correct and as noted by the delegate, there are no “orders of the court staying that part of the decision” and there is no “bar to the Commissioner dealing with any amendments filed by the patent applicant”. The delegate correctly disregarded speculation as to whether or not the patent applicant would attempt to re-file the Notice of Appeal. In any event the applicant does not intend to re-file its Notice of Appeal. As correctly noted by the delegate, the amendments are likely to narrow the issues on appeal. If the amendments are made, there will be no need for the applicant to rely upon the Notice of Contention and it does not intend to do so.
3.   The patent applicant wishes to have the amendments determined as expeditiously as possible so that there can be certainty as to the form of the specification before the hearing of the appeal in the Federal Court takes place. If the patent applicant were to seek a stay of the Federal Court proceedings pending the determination of the application to amend in the Patent Office, the Federal Court would be likely to grant the stay (see University of Georgia Research Foundation Inc v BioChem Pharma [2001] FCA688). The Federal Court granted a stay on the basis that “This accords with the general principle of avoiding a multiplicity of proceedings and the wastage of time and expense which may arise from the presentation and consideration of what may well prove to be irrelevant evidence or material.” As in that case, the determination of the amendment at an early stage will avoid the need to file evidence in the Court directed at both the unamended and amended forms of the specification and the need for the Court to consider both forms of the specification.
4. Jurisdiction to consider an amendment to a patent application is vested in the Commissioner and not the Court: see sections 104 and 105 of the Patents Act 1990 (see the view taken by Emmett J. in New England Biolabs, Inc v Hoffmann La-Roche AG [2003] FCA 1460). Accordingly, it is preferable for the Commissioner of Patents to first determine the amendments rather than have the Federal Court send the patent application back to the Commissioner of Patents to determine the question of amendment after an appeal has been heard and decided. This is the one distinction between this case and the decision in Ferocem Pty Ltd v High Tech Auto Tools Pty Ltd (1993) 29 IPR144, where there was coincident jurisdiction to hear the issues. In any event, no stay was granted in that case.
5.   There are several examples where a deferral (stay) has been refused. See RGC Mineral Sands Ltd v Wimmera Industrial Minerals Pty Ltd [1998] APO 43, ABB Engineering Construction Pty Ltd v A. Goninan & Co Limited [1998] APO 46, Genetics Institute Inc v Johnson & Johnson [1993] APO 20, and Yamazaki Mazak Corporation v Nakamura-Tome Precision Industry Co Ltd and six others [1992] APO 6.
6.   The onus is on the opponent to justify deferral of the opposition proceedings in relation to the amendment application. There are no circumstances that justify a deferral and the patent applicant is therefore entitled to have the amendment application determined by the Commissioner of Patents as expeditiously as possible.
7.   The patent applicant seeks an order upholding the decision of the delegate refusing to stay these proceedings and an award of costs against the opponent.
DECISION
In the matter of issuing directions, the Patents Regulations 1991, under Regulation 5.10 states:
(1) The Commissioner may, on his or her own motion or on the application of a party:
(a) give a direction that is not inconsistent with the Act or these regulations for the conduct of proceedings to which this Chapter applies; or
(b) determine that a period prescribed in this Chapter (except in regulation 5.3 or 5.3AA, paragraph 5.4 (a), subparagraph 5.8 (1) (a) (i) or regulation 5.9A) is to be extended by such further period as the Commissioner reasonably allows.
(2) …
(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.
Thus there is a clear requirement that the Commissioner must not give a direction unless she is reasonably satisfied that it is appropriate in all the circumstances. The Courts have indicated that in this matter (see A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213, at 220-222 per Sackville J):
“The broad discretion conferred by reg. 5.10 could not be reduced by a decision-maker to imperative compliance with particular requirements”.
The opponent had referred to the case of Ferocem Pty Ltd v High Tech Auto Tools Pty Ltd (1993) 29 IPR 144, where directions were sought to defer a petty patent extension of term hearing (before the Commissioner) pending resolution of revocation proceedings in the Federal Court. The delegate had stated:
“As a general proposition, where there is a pending court action of direct relevance to a matter before the commissioner, the commissioner prefers the court action to be concluded before determining the matter before him. This would seem to particularly apply where the matters in dispute are strictly between the parties, and have no significant consequential effect on third parties. Thus if the effect of the court action was in a practical sense confined to the parties, I think the commissioner would be fully justified in deferring a hearing until the court action is determined – providing neither party would be significantly disadvantaged.”
This ruling provided an indication of the circumstances which the Commissioner needs to consider in such actions. Thus the first issue is whether the pending court action is directly relevant to the s.104 opposition hearing before the Commissioner. The applicant was of the opinion that:
“Jurisdiction to consider an amendment to a patent application is vested in the Commissioner and not the Court”: see sections 104 and 105 of the Patents Act 1990 (see the view taken by Emmett J. in New England Biolabs, Inc v Hoffmann La-Roche AG [2003] FCA 1460).
Looking at sections 104 and 102 of the Patents Act, I note that the Commissioner has jurisdiction in this matter and that allowance of an amendment by the Commissioner is open to opposition proceedings before the Commissioner. The decision of the Commissioner in these opposition proceedings is open to appeal before the Federal Court. Further section 102 indicates that:
(1) An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed.
(2) An amendment of a complete specification is not allowable after the relevant time if, as a result of the amendment:
(a) a claim of the specification would not in substance fall within the scope of the claims of the specification before amendment; or
(b) the specification would not comply with subsection 40(2) or (3).
Thus the issues before the Commissioner relate to effects of the amendment on the specification regarding fair basis/section 40 issues and claiming matter not in substance disclosed in the specification as filed. It is not a consideration of section 40/fair basis, novelty, inventive step and manner of manufacture issues of the unamended specification (as is before the Court in the current appeal proceedings) but consideration of section 40/fair basis issues and claiming matter not in substance disclosed in the specification as filed arising purely as a result of the amendment (my emphasis). I do not consider that the pending court action is directly relevant to the s.104 opposition hearing before the Commissioner.

The opponent submitted that the proceedings (before the Court and the Commissioner) were a dispute between and confined to Corus and Pechiney, involving no third parties. The applicant did not dispute or challenge this statement. Regarding third parties, in Ferocem (supra) the delegate had determined that there was a significant public interest involved (which, in effect, constituted a third party to the proceedings). Though the circumstances in this case are quite different both parties have either directly or indirectly referred to the public interest. Thus the dispute in this case does involve a third party (the public interest).
The opponent contended that the public interest is best served in the efficient and economic determination of disputes, including the saving to parties and the public purse. The thrust of the applicant’s submissions supported this principle. The applicant referred to the teaching of the Court in University of Georgia Research Foundation Inc v BioChem Pharma [2001] FCA688. In that case the patent applicant sought a stay of the Federal Court proceedings (appeal against a decision of the Commissioner on an opposition to a patent application) pending the determination of the application to amend in the Patent Office. The Federal Court granted a stay on the basis that:
“This accords with the general principle of avoiding a multiplicity of proceedings and the wastage of time and expense which may arise from the presentation and consideration of what may well prove to be irrelevant evidence or material.”
The opponent had made several submissions on issues such as fair basis, priority dates and different experts required for the two actions. The section 104 opposition will not substantially affect the issue of fair basis in respect of the matter of dispersoids as claims 1 to 11 already claim the presence of dispersoids (missing from current claims 12 to 19). The matter of priority dates will not be affected by the section 104 amendment, which does not address this issue. In the matter of experts, the section 104 opposition is purely one of internal consistency between the claims and the description and whether as a result of the amendments an inconsistency is introduced.
In this case the unamended specification is before the Court. If the section 104 opposition before the Commissioner proceeds a clear indication will be received of what will constitute the specification under attack after the hearing (the amendment will either be refused or allowed). If the amendment is refused there is no impact on the case to be argued before the Court. If the specification is amended then both parties have certainty in terms of the case they have to prepare (both for and against). Also, if the decision of the Commissioner on the section 104 opposition is appealed to the Federal Court it can be heard simultaneously with the current Court appeal if the Court so decides.
If the section 104 opposition is deferred, then the Commissioner will have to wait for a settlement of the Federal Court action before she can proceed to determine the opposition with the clear possibility that her decision will be appealed to the Federal Court, thus generating a further action which has to be heard separately.
I shall now consider the weight to give to the various circumstances before me and the impact they have on the directions that I will issue. I have found that the section 104 opposition proceedings do not bear a direct relevance to the Federal Court appeal proceedings (other than possibly providing greater certainty of the specification to be addressed). Thus this factor does not favour a deferral of the section 104 opposition.
I had found that the matters in dispute are not strictly between the parties but that there is a third party and that there is a significant consequential effect on that third party (the public interest). I had found that the determination of the section 104 opposition at an early stage will best serve the public interest for the following reasons:
1. If the amendment is refused there is no impact on the case to be argued before the Court.
2. If the specification is amended then both parties have certainty in terms of the case they have to prepare (both for and against).
3. Also there are potential savings to both parties in that if the section 104 opposition is appealed, the action can be heard with the current Federal Court action (providing the Court so directs) thus providing for a proper disposition of the case.
I consider that the public interest carries the most weight in this matter and note that there are several matters (itemised above) which serve the public interest. Also as the opponent stated “...it (the public interest) is best served in the efficient and economic determination of disputes, including the saving to parties and the public purse.”
I consider that the determination of the amendment at an early stage will best serve the public interest. I also consider that overall it will provide certainty in the specification on which various issues are to be decided in the Federal Court proceedings.
I consider that in all the circumstances the Commissioner should proceed to hear the section 104 opposition. At present the opposition is at the stage where a Notice of Opposition was filed on 16 December 2003 and a statement of grounds and particulars was filed on 15 March 2004. Evidence in support was due to be filed on 5 October 2004. The opponent has requested an extension of time till 5 January 2004 to file evidence in support. In view of the uncertainty whether the section 104 opposition would or would not proceed the opponent was unsure as to when the evidence in support was required to be filed. As that uncertainty has now been resolved I grant the opponent an extension time until 5 January 2004 to file evidence in support of the section 104 opposition.
I direct that the Commissioner should proceed to hear the section 104 opposition in respect of patent application No 690433. I further direct that the opponent in respect of the section 104 opposition be granted an extension of time until 5 January 2004 to file evidence in support of the section 104 opposition.
COSTS
The applicant sought an award of costs against the opponent. The opponent submitted that costs should follow the event and be awarded pursuant to Section 210(d) of the Act. I have found in favour of the applicant in this matter. Hence in accordance with Section 210(d) and regulation 22.8, I award costs against the opponent Corus Aluminium Walzprodukte GmbH and in favour of the applicant Pechiney Rhenalu.
Jacob Elijah
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Spruson & Ferguson, Sydney
Patent attorneys for the opponent : Phillips Ormonde & Fitzpatrick, Melbourne

[2004] APO 27

3 November 2004