Peter Raymond Utting v Clyde Industries Ltd

[1987] APO 1

In the Matter of the Patents Act 1952

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In the Matter of Patent No. 505615 in the Name of PETER RAYMOND UTTING

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In the Matter of Restoration Action under Section 97 and Opposition thereto by CLYDE INDUSTRIES LTD.

DECISION OF A SUPERVISING EXAMINER OF PATENTS:
Background
         Patent No. 505615 entitled "Movable Curtain Partition" was sealed on 15 May, 1980, and annual renewal fees fell due on 14 November each year.  The fee due 14 November, 1983 was not paid, and after expiry of the "grace period" (sub‑section 68(3)), the patent ceased on that date, the ceasing being advertised in the Official Journal of 5 July, 1984.
         Subsequently, an application for restoration was made in the name of Mrs. E.M. Utting, the widow of the patentee, the patentee himself having died in late 1983.  This application was subsequently amended to be in the names of the estate executors.  In due course the application was advertised pursuant to sub‑section 97(2), and Clyde Industries Ltd. lodged a notice of opposition pursuant to sub‑section 97(3).  The matter was heard in Canberra on 19 November, 1986.
         At the hearing Mr. David Catterns of Counsel advised by A.S. Cave & Co., Patent Attorneys, Sydney, appeared for the estate executors and Mr. Bruce Caine of Counsel advised by Mr. Graham

Cowin, Patent Attorney of Phillips, Ormonde and Fitzpatrick, Patent Attorneys, Melbourne, appeared for Clyde Industries Ltd.
History of the Patent
         The dates and events set out in this section of the decision were derived from Office records, the material on file concerning the application for restoration and the evidence lodged by the parties in respect of this action.  As there was no dispute, I accept the dates and events as fact.
         The patent was sealed on the basis of an application accompanied by provisional specification lodged on 7 December, 1976, followed by a complete specification lodged on 14 November, 1977.  The latter date established the date for annual payments of continuation fees (before grant) and renewal fees (after grant), so that the first fee fell due 14 November, 1979, and fees were due on the anniversary of that date in subsequent years.  As stated above, the fee due November 1983 was not paid, either by that date or within the "grace period" provided by sub‑section 68(3).
         The table of events is as follows:

Date  

22 July1983   Renewals Management Pty. Limited sent a reminder letter to Mr. Utting (the patentee) re payment of renewal fee due 14 November, 1983.

14 November     Patent No. 505615 ceased owing to non‑payment of renewal fee.

1 DecemberRenewals Management Pty. Limited sent a letter to Mr. Utting indicating ceasing of the patent.

19 December     Mr. Utting died.

5 July1984   Advertisement of ceasing of the patent appeared in the Official Journal.

11 JulyA.S. Cave & Co. lodged an Application for Restoration in the name of Evelyn Mary Utting, as "... Executrix and Beneficiary of the Estate ...".

24 December     A.S. Cave & Co. lodged evidence in support of the restoration application.

30 January1985   The Senior Clerk Patents sent a letter to A.S. Cave & Co., in the following terms:

"From the documents on file, it appears that Evelyn Mary Utting is not entitled to make the application for restoration but the executors and trustees named in the Will may be.

The attorney is invited to lodge a substitute Form 24 application in the names of the three executors and trustees, relying on Sections 97(1)(b) and or 97(1)(c).

Irrespective of which Section is relied on in any substitute application for restoration, it will be necessary to produce a copy of the grant of probate of the Will to establish the right of the applicant to apply for restoration."

10 AprilA.S. Cave & Co. lodged an amended restoration application in the names Brian John Herron, Richard John Sands and Peter Bruce Eldering, the trustees and executors named in the Utting Will; they also advised that probate had not been granted.

19 JulyA.S. Cave & Co. lodged a certified copy of the Certificate of Probate.

15 AugustAdvertisement of the application for restoration appeared in the Official Journal.

13 November     Clyde Industries Limited lodged notice of opposition.

17 April1986   By this date evidence in support and in answer have been lodged and served.  (No evidence in reply was subsequently lodged or served).

18 November     The matter was heard in Canberra.

Notice of Opposition
         The notice sets out the grounds of opposition and Clyde's interest in the following terms:

"(a)that failure to pay the prescribed fee, which led to the patent ceasing, was not unintentional; and

(b)that undue delay has occurred in the making of the application for restoration of the patent.

Our interest in this matter is based on the following facts:

We are manufacturers and marketers of drapery hardware, including curtain hardware, here in Australia, and took definite steps to avail ourselves of the subject matter of patent 505,615 after the patent was notified in the Official Journal as having ceased and before the date of the first advertisement of the application."

The grounds (a) and (b) reflect the requirements specified in sub‑section 97(2) which must exist before the Commissioner will advertise an application for restoration in the Official Journal.
         The statement of interest, particularly when read in the light of the evidence in support, clearly establishes locus standi for Clyde ‑ this matter was conceded by Mr. Catterns at the hearing.
The Evidence
(i)  For the Opponent
         There are two declarations in support, the first being by Graham Leslie Cowin.  He deposes about the UK, US and NZ patents corresponding to the one in suit.  It seems that the UK patent ceased for non‑payment of a renewal fee due on 17 November, 1983 : an application for renewal was arranged in 1984 and restoration took place in March 1985.  Renewal fees due on the NZ patent on 15 November, 1981 and 15 November, 1984 were respectively paid on 2 September, 1981 and 7 January, 1985, the latter payment being within an allowed grace period.  There are no renewal fees payable on US patents, consequently all three foreign patents are currently in force.
         The second declaration is by Anthony McGinley, the General Manager of Sylon International, a division of Clyde.  This declaration is quite extensive, and includes 25 exhibits.  Much of it is directed to material which establishes Clyde as a "person interested" (sub‑section 97(3)), and may also be relevant to any possible subsequent action taken under regulation 42.  However, it seems to me that little of what Mr. McGinley has deposed is relevant to conditions relating to restoration.  Nevertheless, I will briefly review the declaration.  Mr. McGinley states that Sylon has for many years made and sold in Australia hardware for suspending curtains so that they can act as room partitions, e.g. in hospital wards.  Sylon sought to develop and improve its own hardware and in 1979 developed hardware in which curtain support trolleys were mounted at each end of tracking rather than tracking being suspended from them.  Marketing of this particular hardware was commenced in 1979 and has continued since that time throughout Australia.  Early in 1979, Sylon became aware of a movable curtain partition system that was being marketed by Mr. Utting through two companies of his, Hardware Services Pty. Ltd. and Wright Utting Australia Pty. Ltd., both of 47 Wentworth Ave., Sydney.  Sylon arranged for Phillips, Ormonde & Fitzpatrick to perform a search to see if the system was patented; the search revealed a pending application in Mr. Utting's name, now become the patent in suit.  Sylon recognised that the Utting system had advantages over their own and consequently intermittently enquired into the status of the patent application, with a view to availing themselves of the subject matter thereof should the application lapse, or a subsequently granted patent cease.  On 18 March, 1985, Phillips, Ormonde & Fitzpatrick advised Sylon that the patent had ceased on 14 November, 1983 and had been so advertised in the Official Journal of 5 July, 1984.  Immediately, Sylon took steps to produce hardware incorporating the Utting improvements.  At the end of March 1985 Mr. McGinley received a telephone call from a Mr. Harry Phipps of Phipps Trading International of Sydney.  Mr. Phipps' Company had some commercial dealings with Sylon, and also with Wright Utting.  Mr. Phipps was concerned over Sylon's decision to manufacture and market the hardware incorporating the Utting invention, because of the Utting patent.  Mr. McGinley replied to Mr. Phipps that Sylon was aware of the patent, but that it had ceased.  Several weeks later  Mr. Phipps again called Mr. McGinley about the Utting patent, explaining that he had purchased an interest in Wright Utting and that he had arranged for the patent to be restored.  Sylon went ahead with its plans and during August 1985 sample trolleys had been supplied to fifteen potential customers.  In addition, Sylon went ahead with advertising and marketing preparations.
(ii)  For the Applicants
         There are two declarations in answer, one by Mrs. Utting, and one by Dr. Albert Freedman.  In addition, there is the document‑
ation accompanying the application for restoration including the probate of the will of Mr. Utting.
         Mrs. Utting states that her husband had a manufacturing business which resided in the manufacture and installation of curtains and the associated hardware.  She did not take part in her husband's business and was unaware of its details.  However, after the death of Mr. Utting on 19 December, 1983, Mrs. Utting found that of necessity she had to interest herself.  In July 1984 she became concerned about a number of patents which she found that her late husband had taken out, and as a result, consulted A.S. Cave & Co. who had been Mr. Utting's Attorneys.  At that time Mrs. Utting was informed that Patent No. 505615 had lapsed (sic) following failure to pay the renewal fee, and she gave instructions to have the patent reinstated.
         Dr. Freedman deposes that Mr. Utting was his patient for a number of years prior to his death on 19 December, 1983.  Mr. Utting underwent surgery for cancer in July 1979 and again in January 1983. Subsequently he underwent treatment by radio therapy, which proved unsuccessful.  From February 1983 until his death, Mr. Utting was in extreme and intractable pain ‑ he was administered large doses of morphine and other pain killers.  As a result of the terminal nature of his illness and the effects of the drugs, his thinking was considerably slowed and unclear, and his judgement impaired.  Dr. Freedman's final statement is that:

"In my opinion, Mr. Utting would not have been competent to handle his business affairs from February 1983, until his death."

Decision

Section 97 reads:

"97.(1)Where a standard patent has ceased (whether before or after the commencement of the Patents Act 1969) by reason of failure to pay a prescribed fee within the prescribed time ‑

(a)the patentee;

(b)if the patentee has died ‑ the legal representative of the deceased patentee; or

(c)a person who would, if the patent had not ceased, have been entitled to the patent,

may apply to the Commissioner for the restoration of the patent.

(2)The application shall contain a statement of the circumstances which led to the failure to pay the prescribed fee within the prescribed time, and if it appears from the statement that the failure was unintentional, and that no undue delay has occurred in the making of the application, the Commissioner shall advertise the application in the Official Journal.

(3)A person interested may, within such time as is prescribed, give notice to the Commissioner of opposition to the restoration and shall serve a copy of the notice on the applicant for the restoration of the patent."

Sub‑section 98.(1) provides that:

"The Commissioner shall hear the case and either restore the patent ... or dismiss the application."

Counsel were divided on the meaning of these provisions.  Mr. Catterns submitted that there were only two factors which I should consider viz. the intention of the patentee and the matter of undue delay.  Mr. Caine, on the other hand, drew my attention to the wording of sub‑section 97.(2) which, in his submission, merely requires the prescribed conditions for restoration to appear to be satisfied before  advertisement.  This is why, he said, that sub‑
section 98.(1) requires the Commissioner to hear the case irrespective of whether an opponent has come forward in response to the advertisement. I cannot agree with this submission. In my view, advertisement of an applciation for restoration of a patent is, in effect, a conditional acceptance of the application for restoration subject only to review in the light of further evidence which may be lodged on opposition. Accordingly, an application for restoration must be accompanied by sufficient evidence to enable the Commissioner to satisfy himself that the requirements for restoration have been complied with. It may be noted in passing that the terms of section 97 are identical to those of the corresponding provisions (section 20) in the UK Patents Act prior to the 1949 Act and the approach above corresponds with the approach adopted in respect of those provisions (see Brown's Patent 53 RPC 394 and Shepherd's Patent 64 RPC 1). The UK Patents Act 1949 changed the earlier provisions in terms effectively validating that approach. It follows that the only conditions precedent for the restoration of a ceased patent are that:

.ceasing was consequential upon the failure to pay a prescribed fee within the prescribed time;

.the failure was unintentional; and

.no undue delay has occurred in making the application for restoration.

Clearly, the first condition is satisfied here.  I will now consider the second condition.
         Mr. Caine submitted that the evidence shows that the patentee was incapable from February 1983; but there is no indication of any system which might have been set up to carry on the business, including payment of renewal fees.  Further, there is no evidence of who received the renewal fee reminder notice, no allegation that it didn't arrive, in fact, no evidence at all of how the Utting Companies deal with their patents.  Mr. Caine concluded that there is a duty on a patentee to have a system to pay renewal fees, and if he shows lack of care or negligence, the patent, if ceased as a result, ought not be restored.
         Mr. Catterns, for the applicants, submitted that as the patentee was incapable at the time the renewal fee fell due, he could not form the idea of intentionally not paying the fee.  Further, whilst under the UK Patents Act 1977 patentees have a duty to take reasonable care in this respect, this is not so under the Australian Act; further there is no evidence about any delegate of Mr. Utting who might have decided, as suggested by Mr. Caine, to allow the patent to cease.
         The effect on the conditions prescribed in sub‑section 97.(2) is to relieve a patentee of the irremediable loss of his patent through the failure to pay a prescribed fee in a prescribed time if, firstly, no undue delay is involved in making an application for restoration and, secondly, if the failure to pay that fee in time was unintentional.  By virtue of sub‑section 68(2), the responsibility to pay the fees necessary to avoid a patent ceasing lies with the patentee.  Accordingly, in determining whether the latter requirement has been complied with the Commissioner is required to satisfy himself that any intention not to pay the fee which resulted in the ceasing of a patent was not attributable to the patentee.  In this case Mr. Utting was the patentee and as he was alive at the date of ceasing of the patent, it is his intentions which I must consider.  Firstly, there is no evidence that Mr. Utting had delegated the task of deciding whether to maintain the patent to any person.  Secondly, there is no evidence that he himself had any ideas of not maintaining the patent in force for any reason.  The suggestion by Mr. Caine that Mr. Utting (or his delegate) may have decided to allow the patent to cease on the basis of lack of market penetration is far from being acceptable, having regard to the business of the Utting companies, and the recognition of the value of the patent by Sylon, evident from Mr. McGinley's declaration.  The fact is that there is no indication whatever that Mr. Utting would intentionally allow his patent to cease, and every indication that he considered it protected a valuable invention.  Thus patents for the invention are held in UK, US and NZ.  In addition I note that continuation/renewal fees were paid in this country which kept the patent in force well beyond the time that Mr. Utting became incapable.
There is the further matter raised by Mr. Caine on this point that any negligence or lack of care on the part of the patentee should mitigate against restoration. In this respect I find myself in agreement with the comments made in Salopian Engineers Ld. and Others' Application for Restoration of Letters Patent No. 624320 (1957) RPC 351 at page 356:

"In this connection, I do not consider that the adequacy or otherwise of the system adopted by the Applicants for the payment of renewal fees is relevant.  One firm of Patent Agents considers that it is lacking in reasonable care to rely solely on the official reminder notices; another firm finds it reasonable.  For my part, I do not find it unreasonable.  However that may be, negligence in the keeping of records gives no evidence as to the intention of a patentee as to a particular patent.  What I have to decide is whether the Applicant, knowing that this particular fee was due, deliberately decided not to pay it.  In Land's Patent, (1910) 27 RPC at p.483, Parker, J., said: "In order that an omission to pay a fee should be intentional, it is only necessary that it should be present to the mind of the person who has to pay the fee, that the fee is payable, and that he should deliberately elect not to pay it"."

Consequently, the second condition, that the failure was unintentional, is, in my opinion, satisfied.
The third condition is concerned with undue delay in making the application for restoration. In determining whether the condition that the application for restoration was made without undue delay, the relevant period of delay to be assessed is that commencing from the time when the application for restoration could first be made and extending until the time the application for restoration was made (see Board of Control of Michigan Technological University v. Deputy Commissioner of Patents ‑ AAT (1982) AOJP 1992; Federal Court 34 ALR 529; High Court 40 ALR 577).
         Under the terms of sub‑section 97.(1), the entitlement to apply for restoration arises immediately a patent has ceased.  However, by virtue of sub‑section 68.(3), the period in which an application for restoration of a ceased patent may be made does not commence until the expiry of the extension period allowable under that sub‑section since a patent cannot be deemed to have ceased under sub‑section 68.(2) until the expiry of the extension period provided in sub‑section 68.(3).  In the present case therefore, the date upon which an application for restoration could first be made was 15 May, 1984.  However the notice of ceasing appeared in the Official Journal of 5 July, 1984.  The situation is similar to that considered by the Administrative Appeals Tribunal in the University of Michigan case where a patent application for restoration of the application was lodged 2 years after the date of advertisement of lapsing in the Official Journal.  The Tribunal stated:

"Advertisement in the Journal may not be notice to an applicant personally, but, nevertheless, it was notice to the world at large including the applicant.  Its effect was to give public notification of the lapsing of the patent.  If an application for restoration was to be made thereafter, it had to be made without undue delay."

The notice in the Official Journal therefore constituted notice to the world at large, including the beneficiaries of the patentee and the executors of his estate.  In my view, in this instance, delay therefore commenced on 5 July, 1984.  The "first" application for restoration was lodged on 11 July, 1984 in the name of Mrs. Utting, but evidence in support thereof was only lodged on 24 December, 1984.  Mr. Caine submitted that, firstly, this application was a nullity, being made in a name other than one provided for by sub‑
section 97.(1).  Secondly, he said that the evidence to support the application was not forthcoming until almost six months had elapsed, and in any case, it was unsatisfactory as pointed out in the final paragraph of the Office letter of 30 January, 1985 (see "History of the Patent", supra).
         As I understand the judgements of the Administrative Appeals Tribunal, Federal Court and High Court in the Michigan case (supra), a delay constitutes undue delay if it was unreasonable in all the circumstances.  In this instance the circumstances can conveniently be listed:

(i)an application for restoration was lodged within a few days of the official advertisement of ceasing, albeit in the wrong name;

(ii)the evidence in support followed the application within 6 months;

(iii)the Office objected that official action depended on grant of probate;

(iv)the overall circumstances associated with the sickness and death of the patentee.

In considering these circumstances, I find that I cannot agree with the submissions made by Mr. Caine about the restoration application of 11 July, 1984 being a nullity.  It is true that the Commissioner would not advertise an application that did not satisfy the provisions of sub‑section 97.(1).  Nevertheless, in assessing undue delay, I consider that there was an application for restoration, and that it was lodged very promptly following advertisement of ceasing.  Mr. Caine's second point has more substance.  Perhaps the evidence in support could have been lodged earlier; however, in the overall circumstances ‑ which Mr. Caine himself described as tragic ‑ I do not consider this to have been undue delay.  The final circumstance affecting the matter was that in view of the contents of the Office letter of 30 January, 1985, it was clear that the final evidence in support could not be lodged until the grant of probate.  Again, this was done with reasonable despatch.  I find therefore that there has been no undue delay involved in the terms of sub‑section 97.(2).
Costs
         Mr. Catterns suggested that any award of costs should follow the event : Mr. Caine argued that even if I were to restore the patent, the opponent has performed a public service by forcing the matter into the open, and having the applicants justify such restoration.  I cannot agree with this view.  I have already noted that the bulk of the evidence lodged by the opponent is not relevant to this action, and while Mr. Caine did put further cogent arguments to me at the hearing, I have not agreed with the thrust of those arguments.  Consequently, I award costs against Clyde.
Conclusion
         I have found that ceasing was unintentional on the part of the patentee and that there was no undue delay in applying for restoration; therefore I shall restore the patent subject to lodgement of any appeal.

(J.L. ROVETA)

Patent Attorneys for the Applicants: A.S. Cave & Co., Sydney

Patent Attorneys for the Opponent  : Phillips, Ormonde & Fitzpatrick,