Plant Genetic Systems N.V. v Paladin Hybrids Inc

[1999] APO 24

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application:  No. 621113 in the name of Plant Genetic Systems N.V.

Title:  Plants with modified stamen cells

Action: Opposition under S.59 of the Patents Act 1952 by Paladin Hybrids Inc. Application by the applicant under Section 223 for extension of time to pay a continuation fee, opposition to that application, hearing.

Decision:  Issued  .

Abstract:Extension of time allowed.

Attorney's employee failed to update the firm's database to show that the firm had full responsibility for the payment of maintenance fees.

All the circumstances taken into account, Ferocem Pty Ltd v Commissioner [1994] AIPC 91-057, followed.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re: Application No. 621113 in the name of Plant Genetic Systems N.V, opposition under S.59 of the Patents Act 1952 by Paladin Hybrids Inc. Application by the applicant under Section 223 for an extension of time to pay a continuation fee.

BACKGROUND

Patent application 621113 was lodged on 27 April 1989 as a PCT application. It was advertised accepted on 5 March 1992 and a notice of opposition was filed on 5 June 1992. In a decision dated 7 June 1993, a delegate of the Commissioner allowed amendment of the Statement of Grounds and Particulars. The evidence-in-support was completed by 26 May 1995 and the opposition is now in the evidence-in-answer stage. The applicant made several requests to propose amendments to the specification under S.104, one set of amendments had been opposed by the opponent, and the evidence-in-answer in the substantive opposition was deferred, pending settlement of the S.104 issue. The opposition to the amendments ceased though when those amendments were withdrawn, and the evidence-in-answer then became due on 27 August 1998.  Since then the applicant has applied for three extensions of time under R.5.10(2) to serve its evidence-in-answer, the first extension being for 3 months to 27 November 1998, the second extension being for three months to 27 February 1999 and the third for three months to 27 May 1999.

An examiner's report on the latest set of proposed amendments was issued on 18 August 1998 and comments from the opponent were filed on 28 September 1998 (the opponent alleges that the amendments are not allowable under S.102) but these comments have not been considered by the examiner to date.

By letter dated 4 December 1998 the Patent Office informed the parties that the application had lapsed, and an application for extension of time under S.223(2) to restore the application was filed by the applicant on the same day. The opponent objected to the extension and the matter was heard in Melbourne on 23 February 1999. The applicant was represented by Mr John Slattery, patent attorney, and the opponent was represented by Ms Pamela Tate, of Counsel, Dr Vivien Santer, patent attorney, and Ms Carmela Monger.

The opponent's representatives presented two declarations at the hearing, both dated 22 February 1999, by Dr Santer and by Elke Reid, an employee in Dr Santer's firm. Mr Slattery submitted that I should not consider those declarations because the applicant had not had an opportunity to consider and comment on the declarations. I agreed with his submissions and decided not to adduce the declarations as evidence at that time.

S.223(2) APPLICATION

The patent application lapsed because a continuation fee due on 27 April 1998 was not paid, so the application under S.223(2) covered the period between 27 April and 4 December 1998, the day on which the continuation fee was paid, along with the fees for the S.223 extension. On 10 December 1998 the applicant filed a copy of a declaration by Beverly Jean Littlechild, with exhibits BJL1 and BJL2, as evidence-in-support of its S.223 application.

The body of the Littlechild declaration reads as follows:

"1.       I am employed by Davies Collison Cave ("the firm") [DCC], the agents of record for Australian Patent Application No. 621113, and part of my duties is to supervise operation of the department of the Melbourne office of the firm concerned with payment of continuation and renewal fees using the firm's computer system and database of patents and patent applications for which the firm is responsible.

2.        On 3 December 1998, the firm was advised by an officer of the Australian Patent Office that the continuation fee due 27 April 1998 in respect of Australian Patent Application No. 621113 had not been paid.

3.        I immediately checked the records of the firm and established that up until 1998, the firm had received instructions in respect of Patent Application No. 621113 from our French associates, Messrs.  Ernest Gutmann-Yves Plasseraud, of Paris, France [Gutmann], and the firm had been instructed by these French associates that payment of fees in respect of Application No. 621113 would be effected through a computer agency.  Accordingly, the firm's database reflected the fact that responsibility for payment of continuation fees in respect of this application rested with that computer agency and while the agency effected payments of these fees through the firm, the firm did not maintain an on-going and up-to-date record of payments of continuation fees of the application in its database, since responsibility for payment of these fees rested with the computer agency.  A copy of the relevant entry in the firm's database is attached and marked Exhibit BJL1.

4.        I also checked the correspondence received by the firm in connection with Application No. 621113, and established that a facsimile message dated 2 February 1998 was received from the Applicant, Plant Genetic Systems N.V. [PGS], advising that this application would no longer be handled by our French associates and that future instructions would be received direct from the Applicant.  A copy of this facsimile message is attached and marked Exhibit BJL2.

5.        From my review of the database and records of the firm, however, it appears that when this facsimile message was received, no action was taken to update this database to the change in the Applicant's instructions, and in particular to ensure that reminders in connection with the payment of future continuation fees would henceforth be directed to the Applicant, as instructed in the facsimile message of 2 February 1998.

6.        It is my practice on receipt of instructions such as those in the facsimile message of 2 February 1998, to alter the database, maintained by the firm so as to change the address to which future correspondence, reminders and the like are to be sent, and to check the continuation/renewal fee status of the relevant cases.  Furthermore, if there is any doubt as to whether or not all continuation/renewal fees are paid on the relevant cases at the time of receipt of such instructions, I would normally check the official Australian Patent Office database.

7.        In the case of Patent Application No. 621113, for reasons which I cannot now determine, it appears that I did not follow my normal practice as set out above, and accordingly no update was made to the firm's database on receipt of the Applicant's facsimile message of 2 February 1998.  As a result, no reminders in respect of the continuation fee due 27 April 1998 were sent to the Applicant.

8 .       It is relevant to point out that the computer-based database system maintained by the firm does not issue any reminders in respect of continuation/renewal fees in respect of patents/patent applications where the firm is not responsible for payment of fees.  Accordingly, in view of the arrangements in place up until 1998 for payment of continuation fees in respect of Application No. 621113 through a computer agency, the firm's database provided no indication that the continuation fee on Application No. 621113 had not been paid in the situation where the entry in the database in respect of Application No. 621113 had inadvertently not been updated as set out above.

9.        Since Patent Application No. 621113 is currently under opposition and application has been made to voluntarily amend the accepted claims of this application, it is apparent that it was not the intention of the Applicant to allow this application to lapse.  Accordingly, the failure to attend to payment of the continuation fee by the due date of 27 April 1998 was the result of an error or omission, and was not the result of a deliberate decision not to renew this patent application."

In paragraph 1 of its written submissions, the opponent sets out a summary of its objections to the extension of time. The opponent objects to the grant of an extension of time on the grounds that the applicant has failed:

• to identify properly what was the relevant error within the meaning of s.223 …

• to identify clearly who committed the error;

• to identify who was responsible for the error;

• to disclose whether or not the error was committed in the grace period, because, if it was, s.223 is not available to extend the time;

• to give to the delegate a full and frank disclosure of the circumstances surrounding the alleged error.

DECISION

Re whether the applicant failed to identify properly what was the relevant error within the meaning of s.223; the opponent submitted that:
   1. if the error was Ms Littlechild's it is not clear when the error occurred;

2. the error may have been a failure on DCC's part for not maintaining a database of records of payment of continuation fees;

3. renewal fees for a divisional application had been paid on time, so the error may have been the failure to pay the continuation fee for the parent at the same time as the fee paid for the divisional.

Considering the third point first, I note that the Patent Office PATADMIN records show that a continuation fee, due on divisional application 52245/96 on 27 April 1998, was paid on 2 March 1998. The opponent thus seems justified in asking the question why the two continuation fees were not paid at the same time. This question is not addressed in Ms Littlechild's declaration, but I note that the Table in the PGS fax (BJL2) lists Gutmann as an agent for application 621113, but not as an agent for 52245/96. It seems logical to conclude therefore that DCC were fully responsible for the maintenance of the divisional application, and not reliant on Gutmann and the abovementioned computer agency.

On the second point, I have nothing before me to conclude that DCC's normal practice should be to maintain a database of all maintenance fee payments. Computer-based agencies which maintain patent applications are established in the industry, I assume they provide some benefit to applicants and patent attorney firms, and it is not for me to say that an attorney firm is in error by sometimes relying on these agencies.

On the first point, the evidence I have before me clearly indicates that the error was Ms Littlechild's failure to update DCC's database to give that firm full responsibility for maintenance of the present application. The issue of when the error occurred I will deal with below.

Re whether the applicant failed to identify clearly who committed the error, the opponent submitted that the error may have been made by a person with the initials "MH", which appear in a field of the database, viz:

"Change of ins from 188903 (Gutman) to 188911 (Plant), cc 188903, rec'd 3/5/96 MH. Deleted cc 188903 (Gutmann) rec'd 3/2/98 MH."

and which appear as handwritten initials on the PGS fax. The opponent also submitted that there is nothing in the evidence explaining other handwritten initials, reference numbers and other markings on the copy of the PGS fax. Mr Slattery submitted that it is relevant that Ms Littlechild declares that "part of [her] duties is to supervise operation of the department of the Melbourne office of the firm …", and that she "did not follow [her] normal practice" to alter the database. Mr Slattery also submitted that it is not always possible to determine exactly what went wrong.

On this issue I think it is likely that the database entries and markings on BJL2 indicate that some other people in DCC at least handled the PGS fax, and possibly took some action with DCC's database, but this is not to say that those other people should have updated the database to effect the firm's full responsibility for paying the continuation fees.
On the other hand, I have Ms Littlechild's declaration indicating that it was her job and therefore her error.  I assume therefore that MH's action on the database was some action other than the relevant action referred to by the declarant.

Re whether the applicant failed to identify clearly who was responsible for the error, the opponent submitted that the error may have been Mr Slattery's because The PGS faxed letter of instructions bears the handwritten initials "JMS" and is marked to his attention.

It seems appropriate to me that Mr Slattery did have some responsibility in the matter, but so did Ms Littlechild. I see no reason why shared responsibility should lead me to conclude that an extension of time is not appropriate.

Re whether the applicant failed to disclose whether or not the error was committed in the grace period, the opponent submitted that the evidence "is consistent with there being an intention on behalf of the applicant's patent attorneys to pay the renewal fee within the grace period and an error having occurred within that period which caused a failure to pay." 

The "grace period" is a period of 6 months after the due date, which, under R.13.6(3), provides for an automatic extension of time for payment of a continuation or renewal fee without the need for justification or explanation.  In Re Application by Beckswift (1997) 39 IPR 666, the Commissioner's delegate refused to grant an extension of time to pay a renewal fee on the basis that S.223 is not available to extend the time where the error or omission has occurred after the due date for payment has passed, the due date being the anniversary of the patent and not the expiry of the 6-month grace period.

Ms Littlechild's declaration does not directly state when the error or omission occurred. However I note that there was a period of about 11 weeks between the date of receipt of the PGS fax by DCC and the date the continuation fee was due to be paid, and it seems likely to me that if  Ms Littlechild had updated the database she would have taken such action within this 11-week period. In my experience in the Patent Office, most straightforward administrative actions of this kind would normally occur within about one week after receipt of an instructing letter. If DCC would normally take longer than 11 weeks to make the changes to its database, it would imply that DCC's administrative systems would not be running efficiently, but I have no evidence before me to suggest that that is or was the case. Also I note from my PATADMIN report that the previous years' fees were all paid on dates between 22^nd March and 3^rd April, so if DCC had followed this pattern it seems likely that, had the error or omission not occurred, the fee would have been paid before the due date.

Re whether the applicant failed to give full and frank disclosure, the opponent submitted that there is no evidence "that diligent inquiries have been made by Ms Littlechild, Mr Slattery or anyone else to determine how the error occurred."  The opponent suggested that declarations should have been made by "MH" and by Mr Slattery.  In this matter I was referred to the delegate's decision in Kent-Moore Corporation v Environmental Products Amalgamated Pty Ltd (1992) 25 IPR 233 at 237 and 241-242, and the judgement of the Federal Court in Kimberly-Clark (No.3) (1988) 13 IPR 569 at 583-584.

In this matter I think there is some more recent and more relevant precedent. Whilst the basic requirement of a "prompt, frank, comprehensive and clear disclosure of all the circumstances" is a relevant consideration from the Kimberly-Clark  judgement, the imperative compliance with particular requirements discussed in the Kent-Moore decision has been rejected by the Federal Court in Ferocem Pty Ltd v Commissioner [1994] AIPC 91-057. In the circumstances before me I am satisfied that the applicant's evidence is sufficient disclosure to comply with the law. It is possible that "MH" was somehow involved in the circumstances of this case, but nevertheless, I think Ms Littlechild has provide sufficient information for me to decide that she made an error or omission of the type envisaged by S.223(2)(a), and that this error or omission was the direct cause of the continuation fee not being paid by the due date. The amount of disclosure in this present case is similar to that discussed in IBM v Total Peripherals Pty Ltd [1998] APO 14, where the delegate found that the evidence was "sufficiently complete and frank to support the conclusion that there has been a relevant error or omission." That decision was affirmed by the AAT in No. N98/408.

Having decided that there has been an error or omission is not the end of the matter though, since the wording of S.223 still allows the Commissioner some discretion in the matter.  In the Ferocem case the Federal Court indicated that in exercising discretionary powers relating to extensions of time in opposition procedures, the emphasis should be on taking all the circumstances of the case into account.

In cases relating to extensions of time to restore an application, the applicant's interests are paramount because refusal of the extension is an abrupt end to the applicant's rights to its invention. One important consideration in these matters is whether the failure to pay the continuation or renewal fee was intentional. See for example Paracel Holdings Pty Ltd v Commissioner [1994] AIPC 91-053. In the present case there is an opposition in train, the applicant has proposed amendments to its specification, on 15 July 1998, after the due date for the continuation fee, and the continuation fee was paid on the divisional application. These facts suggest to me that the applicant did not deliberately allow its application to lapse. I distinguish the present case from the circumstances in the Paracel Holdings case and from those in the case discussed in Reilly v Commissioner (1996) 36 IPR 314; in both those cases it was shown that there was a deliberate decision not to pay a continuation or renewal fee.

Another issue to consider is whether there was any undue delay in applying for the extension of time. In this case the applicant filed its S.223 application on the same day as it became aware that its application had lapsed, and the declaration in support was filed about a week later. Clearly there was no delay in these circumstances.

Another relevant issue is the public interest in allowing opposition proceedings to be determined on their merits. This factor was an important consideration in the Ferocem case, and in Goninan & Co Ltd v Commissioner & Anor. [1997] AIPC 91-330. The opposition evidence and correspondence on file suggest that both parties are actively involved in the opposition procedure, and, although opposition generally is an inconvenience to an applicant, in the present circumstances it seems preferable that the opposition should continue.

Thus I conclude prima facie that it is appropriate to exercise my discretion to allow the extension of time.

Finally, I have read the Santer and Reid declarations given to me at the hearing. These declarations re-itrerate the opponent's written submissions, or its submissions at the hearing, and deal with matters I have already discussed, such as the divisional application and the PATADMIN report. The declarations contain comments on Ms Littlechild's declaration, and what the declarants would have done in similar circumstances at their patent attorney firm. I am satisfied that there is no matter in these declarations which leads me to change my prima facie conclusion on this matter.

Taking all the circumstances of this case into account, I think the applicant has made out a proper case. Thus I allow the extension of time under S.223(2)(a) to pay the continuation fee and restore the patent application.

COSTS

The power of the Commissioner to award costs is based on Section 210 and Regulation 22.8, and in matters before the Commissioner costs usually follow the event. In this case I see no reason why I should not follow the usual practice, so I award costs associated with this S.223 matter against the opponent  Paladin Hybrids Inc.

John Welsh
Delegate of the Commissioner of Patents

Patent attorneys for the applicant :  Davies Collison Cave,  Melbourne

Patent attorneys for the opponent : Griffith Hack,   Melbourne