Primmcoy Pty Ltd v Barry Charles Teer

[2003] APO 37

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No. 734632 in the name of Primmcoy Pty Ltd

Title:          Information Registration Apparatus

Action: Opposition under section 59 of the Patents Act by Barry Charles Teer and request under section 32 by Barry Charles Teer for determination of a dispute between interested parties in relation to the application.

Decision:          Issued 10 September 2003.

Abstract

Found on the on the balance of probabilities that the applicant is entitled to a grant of a patent for the invention but only in conjunction with some other person. Mr Jones appears to have left the employ of a company Scan Right and, shortly after, taken steps to patent and commercialise a solution to a problem being investigated by that company. At the same time his evidence is suggestive of an intention to hide an inventive contribution made by him in relation to provisional application PP9489 and consequently an adverse inference can be drawn concerning the fiduciary duty owed to his former employer. The invention was developed further from that point but benefited significantly from the earlier work attributable to Mr Jones.

Two months allowed from the date of the decision for the applicant to request amendment of the request and notice of entitlement or, alternatively, for the parties to file submissions, consistent with the decision, on how the delegate should proceed.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 734632 by Primmcoy Pty Ltd; Opposition under section 59 of the Patents Act by Barry Charles Teer and request under section 32 by Barry Charles Teer for determination of a dispute between interested parties in relation to the application.

BACKGROUND

1. Provisional applications PP9489 and PQ1116 were filed on 30 March 1999 and 23 June 1999 respectively, both in the name of the applicant Primmcoy Pty Ltd (Primmcoy) and relating primarily to apparatus for registering customers entering a club. These provisional applications were subsequently associated with the present complete application 734632 (22649/00) which was filed by the applicant on 30 March 2000. Relevantly, the name of the inventor listed on the patent request, and on the subsequently filed notice of entitlement, is John Anthony Primmer from whom the applicant is said to derive entitlement.

1. An application under section 36 of the Act was filed on 19 May 2000 by Barry Charles Teer  in relation to PP9489 and evidence served by both parties. This application however was abandoned prior to hearing.

1. Acceptance of the present application was advertised on 21 June 2001. Mr Teer on 6 September 2001 filed a request under section 32 for determination of a dispute between interested parties and on 18 September 2001 filed a notice of opposition to the grant of the patent.

1. A delegate of the Commissioner subsequently determined that both proceedings should progress jointly and after completion of the evidentiary stages the matter came to hearing in Canberra on 31 March 2003. Primmcoy was represented by Ms S Goddard of counsel instructed by Mr M Saunders, solicitor, of Russell McLelland Brown, Wollongong. Mr Teer represented himself.

1. As Mr Teer indicated at the hearing that potentially determinative material existed that had not been served in evidence, I permitted him 14 days in which to apply for leave to serve further evidence and he was subsequently invited to file the evidence sought to be adduced. In the event, however, I did not grant leave for the reasons given below.

SPECIFICATION

1. The specification in suit is directed to information recording and processing equipment and more particularly to apparatus for registering patrons entering a club. As background it is indicated that licensed clubs are required under relevant laws to record names and addresses of member and visitors entering club premises. This information must be kept for a number of years by the club but patrons are also required to keep a copy of their registration information with them during their stay. For this reason duplicating books of the "carbonless" or "NRC" type are used with each patron writing their details on a pre-printed form which is torn off and kept by them while the duplicate remains in the book which is retained by the club. These books are said to be "expensive and bulky to store" and it is difficult for the club to process and analyse the records for other purposes.

1. The specification acknowledges that paperless registration systems have been proposed previously but that these have been difficult for elderly persons to use.

1. Claim 1 reads as follows:

"1. An information registration apparatus for club or other commercial use, said apparatus including means for display of a form for the entry of said information on a front thereof by a user, means for capturing said information from the back side of said form and means for storage and/or transmission of said information to a viewing station."

1. The preferred embodiment described is a box like device having an open rectangular window on its upper surface at which pre-printed sign-in dockets are presented from a continuous roll. Such forms, in use, are supported by a transparent plate below which is located an angled mirror that directs a reversed image of the underside of the form to a camera. Once a patron manually fills in the details required by the form they operate a control which effects an image capture process. This allows the image to be displayed to club staff for verification purposes and for the image to be stored as a bit map for record keeping requirements. The form itself is advanced through the device to a guillotine which separates it from the roll and is presented at an exit slot for retention by the patron. A number of optional features and uses are also described.

10.This embodiment is essentially disclosed in provisional application PQ1116 but PP9489 is somewhat different. Rather than capture the reverse side image of the form, it provides that after completion the form is advanced through a scanner which captures the required information for storage and display. The original form is retained on the roll for retention by the club while the information is printed on a separate docket which is provided to the patron. The means for presenting the form to a user, electronic capture and storage of the form details and elements of the sign in procedure are however common to both the earlier provisional and the invention now described. 

STATEMENT OF GROUNDS AND PARTICULARS

11.The only ground of opposition is that specified in section 59 (a), that is:

"(a) that the nominated person is either:

(i)  not entitled to a grant of a patent for the invention; or

(ii) entitled to a grant of a patent for the invention but only in conjunction with some other person;"

Consequently the issues to be considered in the section 32 request and the section 59 opposition are effectively the same.

EVIDENCE

12.The evidence in support of the opposition and section 32 request is principally contained in a declaration made by Mr Teer on 12 November 2001 with 25 Exhibits. Mr Teer states that he is a director of a company know as Scanwise Pty Ltd (Scanwise) but previously as Scan Right Corporation Pty Ltd (Scan Right). Additional declarations in support of Mr Teer's case are provided by a number of persons including Paul Drinkwater and Peter Smith who were also said to have been involved in the development of a patron registry system with Scan Right.

13.In answer, the applicant provided declarations by John Anthony Primmer and Norman Ronald Jones. Mr Primmer is the sole director and shareholder of the applicant Primmcoy while Mr Jones indicates that he is an ex-employee of Scan Right but subsequent to that employment had developed an idea for a door entry system which he brought to the attention of Mr Primmer.

14.I will refer to this evidence in greater detail in my decision as well as to the relevant submissions of the parties.

FURTHER EVIDENCE

15.As indicated above, Mr Teer sought leave to file further evidence following the hearing and in fact did provide a number of additional statutory declarations. The present proceedings are, at least in relation to the section 59 opposition, governed by Chapter 5 of the regulations but the considerations that apply under regulations 5.10(4) and (5) are also relevant to a matter brought under section 32 and, in essence, require that before allowing a request to adduce further evidence I must be reasonably satisfied that the serving of further evidence is appropriate in all the circumstances. In deciding whether to exercise my discretion in this regard I am mindful of the well known principles set out in A Goninan & Co Ltd v Commissioner of Patents 38 IPR 213 and Ferocem Pty Ltd v Commissioner of Patents 28 IPR 243 as affirmed in National Starch & Chemical Company v Commissioner of Patents [2001] FCA 33. Hence, in determining what is appropriate, I must give consideration to a number of competing considerations including the interests of the parties as well as that of the public. In relation to the latter, it is the case that when a question of ownership arises, as was pointed out by the delegate in Spencer Industries Pty Limited v Anthony Collins and B & J Manufacturing Company [2002] APO 4 (18 January 2002), the public interest lies very much "against compromising any legitimate claim to the invention through a failure to determine the matter on its merits".

16.On the other hand, there is also a strong public interest in the orderly administration of the patent system and expeditious resolution of disputes. Allowing evidence to be filed after the substantive hearing would appear to run contrary to those interests and will almost inevitably be prejudicial to the other parties to proceedings. Nevertheless, in a case where the party seeking further evidence has had no earlier opportunity to present that evidence and it is potentially determinative of the matter, the balance of interests may still lie in granting the request. This is not such a case. Here the additional evidence apparently could have been obtained earlier and, prima facie, is corroborative of other material served rather than being, in itself, determinative of the opposition. In that light I refuse the request for leave to serve further evidence.

DECISION

17.As I understand it, Mr Teer is alleging that the company Scanwise has entitlement to the present invention, either solely or in conjunction with another party, because the benefit of an inventive contribution to which it was entitled was derived by Primmcoy through Mr Jones. The applicant on the other hand submits that the subject invention is substantially different to any invention that Scanwise may be entitled to and that Mr Teer has not otherwise demonstrated such entitlement to the required standard of proof.

18.The general circumstances or assertions most relevant to the determination of the present matter appear to be:

·     In 1997 Mr Jones was involved in discussions with others concerning the development of a system to electronically achieve club records. During meetings with North Sydney Leagues Club on this subject in late 1997 the desirability of an automated sign in procedure was raised and Mr Jones agreed to look into this.

·     Jones, Teer and Mr Paul Drinkwater of CV Services International (CVSI) met during February 1998 and discussed the development of a patron registry system (PRS). CVSI produced a Project Outline (dated 10 March 1998) which was based on a touch screen system with visitor signatures captured with an electronic pen.

·     Scanwise (then Scan Right) was incorporated on 3 March 1998 with Mrs Lynette Jones as the sole shareholder. Prior to this date Norman Jones appears to have been trading under the name Scan Right and later, on his own evidence, became an employee of the company.

·     A heads of agreement was drafted on 13 March 1998 between CVSI and Scan Right for a joint venture to develop PRS and appears to have been signed shortly after by a CVSI branch manager and by Mr Jones for Scan Right. Below his signature is the title "Managing Director" although other evidence suggests that while Lynette Jones was a director and shareholder, Mr Jones was not. The agreement specifies a 50/50 share of costs and profits between CVSI and Scan Right.

·     CVSI produced a Requirement Specification for PRS on 21 May 1998 (BCT-8). This document illustrates changes to the concept including use of a business card scanner to capture patron details from either an acceptable ID card, eg drivers license or, if not available, from a completed form. A Feasibility Review dated 27 July 1998 (BCT-12) however indicated that available system components would not give acceptable performance and that the project specification should be revised.

·     Mr Jones says he left the employment of Scan Right on 28 August 1998. This is disputed by Mr Teer who says Mr Jones resigned verbally in February 1999. Christine Teer says she was present when Mr Jones resigned on 7 February.

·     A meeting is said by Mr Teer to have occurred on 10 September 1998 between himself, Mr Jones and representatives of CVSI. At this meeting it is alleged that the concept of capturing an image or bitmap using a digital camera was discussed. CVSI is then said to have produced a "screen cam" demonstration file for a proposed solution and to have sent it to Mr Jones by email on 27 October 1998.

·     Christine and Barry Teer purchased Lynette Jones' Scan Right shares in February 1999.

·     In early March 1999, Mr Jones approached Mr Primmer with an idea for an automated entry system with the two subsequently reaching an agreement on the development of the idea and ultimately filing the patent applications mentioned above.

·     Also in early March, Mr Jones sought and obtained documents relating to the PRS from CVSI and more particularly the Requirement Specification and Feasibility Review mentioned above.

19.A difficulty Mr Teer faces in making out his case on obtaining is that there is practically no documentary evidence to demonstrate the progress of Scan Right’s development of PRS with CVSI’s after 27 July 1998. Even were I to accept that the drawings contained in BCT-13 were made at a meeting in September 1998, other than mentioning a "Camera/Scanner" as a data capture device, they are practically meaningless. As it is they are undated and are not corroborated by anyone else said to be at the meeting. The undated sketches of BCT-15 show more information but were said to be produced in a period between December 1998 and September 1999 and hence useless in demonstrating the development of the present invention by Scan Right prior to the period in which it is said to be obtained. It is in any event not particularly helpful to Mr Teer's case in that the process outlined on the first sheet clearly concerns the scanning of an ID card and later diagrams show the use of a digitizer pad in addition to a camera suggesting a very much different solution to that now proposed. The fact that the camera operates by pressure on a clear platen further suggests to me that its purpose was for scanning of an existing identity card and not for capturing information from the rear side of a form presented for completion by a user.

20.Similarly much is said about the "screen cam" demonstration file but this file or a printout was not provided in evidence despite ample opportunity and hence evidence as to whether it was or was not sent to Mr Jones becomes academic.

21.As a consequence the only basis I can proceed on is that the extent of development of PRS carried out generally by Scan Right (as opposed to that which may have been made by Mr Jones independently as discussed below) was as contained in the Requirement Specification and Feasibility Review dated 21 May 1998 and 27 July 1998 respectively. These documents, while relating to a similar problem, do not disclose means for capturing information from the rear of a form as claimed nor other features of the invention as described and claimed and consequently it can not be concluded that the invention as a whole was developed by Scan Right and/or CVSI and then "obtained" from this source by Primmcoy.

22.Another possibility is that Mr Jones developed the invention in its final form independently of others while still an employee of Scan Right. This seems unlikely even if one accepts a resignation date as late as 7 February 1999 because, in the absence of other evidence, I can only assume the present form of the invention was developed between the filing of PP9489 on 30 March 1999 and PQ1116 filed on 23 June 1999. As indicated previously the earlier provisional PP9489 discloses an entry system wherein the form after completion is drawn across a scanner. There are no clear instructions to capture the information from the rear side of the form.

23.This leaves at best that Primmcoy may have benefited in part from an inventive contribution to which Scan Right may have been entitled to through an independent inventive contribution by Mr Jones.

24.What amounts to an inventive contribution has been held in a number of Australian decisions to be one such that a "person's contribution, either solely or jointly with others, had a material effect on the final concept of the invention" (see, for example, Row Weeder Pty Ltd v Neilsen and Ors (1998) AIPC 91-438). A notable US authority, which has been said to underlie this approach, puts it in these terms:

"The exact parameters of what constitutes joint inventorship are quite difficult to define. It is one of the muddiest concepts in the muddy metaphysics of the patent law. On the one hand, it is reasonably clear that a person who has merely followed instructions of another in performing experiments is not a co-inventor of the object to which those experiments are directed. To claim inventorship is to claim at least some role in the final conception of that which is sought to be patented. Perhaps one need not be able to point to a specific component as one's sole idea, but one must be able to say that without his contribution to the final conception, it would have been less - less efficient, less simple, less economical, less something of benefit. This Court has found no case in which co-inventorship status was recognised where the alleged co-inventor was not deemed in some way, at least presumptively, to have beneficially affected the final concept of the claimed invention, and if such a case exists, it would be so anomalous as to warrant little attention." (Meuller Brass Co v Reading Industries 176 USPQ 361 @ 372)

25.The terms "final concept" or "final conception" used here have their basis in US patent law, as observed by the Deputy Commissioner in Harris v CSIRO (1993) 26 IPR 469, and do not imply that all parties need to be involved in developing the final form of the invention. Rather I note from the decision in Monsanto Co. v. Kamp 154 USPQ 259, that

"Each needs to perform but a part of the task if an invention emerges from all of the steps taken together. It is not necessary that the entire inventive concept should occur to each of the joint inventors, or that the two should physically work together. One may take a step at one time, the other an approach at different times. One may do more of the experimental work while the other makes suggestions from time to time. The fact that each of the inventors plays a different role and that the contribution of one may not be as great as that of another, does not detract from the fact that the invention is joint, if each makes some original contribution, though partial, to the final solution of the problem."

26.I take this to mean that where one party takes an initial step leading from the problem toward the ultimate solution and their work is taken up and finalised by another, both may be considered to have jointly contributed to the invention. This of course does not generally apply to someone who merely points out the state of the art or explains well known principles. The step must be one that materially contributes to the invention ultimately described or claimed and hence the question sometimes put is whether the invention would have occurred without the involvement of the party seeking to claim entitlement - see Harris v CSIRO (1993) 26 IPR 469 and Costa v GR & IE Daking Pty Ltd (1994) 29 IPR 241.

27.In this matter it is apparent that Mr Jones made initial steps in developing a solution when he reflected on the comments made by representatives of the North Sydney Leagues club in December 1997. Consequently he mentioned the possibility of using “a combination of key board and touch screens for direct entry of club visitors information” to Mr Drinkwater of CVSI at their meeting of 6 March 1998 and says that he contributed with Mr Deane to the Project Outline of 10 March 1998. This Outline refers to data entry using a touch screen with signature capture by electronic pen. Scan Right was incorporated and a Heads of Agreement signed with CVSI concerning the PRS about the same time. As indicated previously the Requirements Specification produced on 21 May 1998 by CVSI introduced the use of a card scanner as the primary method of information acquisition, including from ID cards but also filled-in forms. Mr Jones says the feasibility study produced by CVSI (27 July 1998) indicated that the direction they were proposing to take would never work. He also said at the time of his and Mr Teer’s meeting with the Liquor Administration Board that the idea would not gain approval because the scanning of driver’s licences or pension cards at the point of entry would not be permitted. It is at this point Mr Jones says he resigned from Scan Right believing that their PRS proposal would not work. He indicates however that he continued to consider the problem and that in March 1999 came up with an idea that would work. The “idea”, at least as may be reflected in the first of the provisional applications, involved the drawing of a completed form on a roll across a scanning device. Subsequent developments produced the invention now described and claimed.

28.I believe, however, that it is highly probable that Mr Jones did not leave the employ of Scan Right at the date he asserts and that he continued to independently work on the PRS problem while he was an employee of that company, most likely up to 7 February 1999. In regard to his employment relationship with Scan Right, I accept the weight of evidence including Mr Drinkwater's statement and various invoices and letters which point toward continued activity by Mr Jones under the Scan Right name. For example, the Scan Right invoice dated 4 January 1999 relating to bill acceptor hardware that is clearly signed by Mr Jones and relates to activity Mr Jones says he took up after leaving Scan Right. Another relevant factor is that Mr Jones' was clearly the prime intellectual driver and business manager for Scan Right and consequently the sale of Lynette Jones' shares in the company to the Teers in February 1999 is far more consistent with a breakdown in the relationship at that point than it is with Mr Jones leaving its employ at an earlier time. If, as Mr Jones says, the company was in financial trouble in August 1998 and he did not believe Scan Right had projects that would "come on line in the near future" it seems rather surprising that no earlier attempt was made to sell his wife's shareholding. BCT-16, which is a letter from Mrs Jones' solicitor, further suggests that prior to February 1999 the Jones' were responsible for the "running of the business".

29.It is not known what Mr Jones may have had in his mind concerning the PRS in early February 1999 but Mr Jones evidence indicates that:

-In early 1999 he gave further thought to "a door entry system"

-In early March 1999 he approached Mr Primmer with an idea

-On or before 5 March, he asked for a copy of the CVSI documentation "to ensure that my idea and the Primmcoy invention was not the same as the prior art"

-On 7 March he faxed documents and plans for the invention to a patent attorney

-Primmcoy was incorporated on 11 March 1999

-In a letter to their patent attorneys dated 26 March 1999 Jones on behalf of Primmcoy instructs that:

"this is to confirm that we wish the Patent for the Club Registry System to be entered in the name of Primmcoy Pty Ltd ACN 086649309 at the address of 79 Kenny Street Wollongong NSW 2500.

Satisfactory arrangements (Letter of Assignment) has been negotiated between the two parties namely Primmcoy and Norm Jones.

I hereby instruct you to submit John Anthony Primmer as the inventor"

30.Mr Primmer says that in March 1999 Mr Jones approached him with an idea for the development of an automated entry system to allow visitors to sign-in to registered clubs. They decided to look at it further and put in place an arrangement to make an application for a provisional application. There were also discussions between him and Norm Jones how the project should be progressed, how it should be funded, and who would have responsibility and ownership for it. The result was that after 26 March 1999 Mr Primmer was responsible for the development of the project with Norm Jones, as an employee of Primmcoy, assisting in trials and developments. Mr Primmer says he acquired Primmcoy "to be my company to pursue the matter".

31.This narrative is quite unsatisfactory and was not explained at the hearing although I invited comment on it. All that I can conclude is that Mr Jones appears to have acted in a way that is consistent with a intent on his behalf to hide his inventive involvement with the applications filed by Primmcoy. His idea was sufficiently developed by 7 March not only to have retained a patent attorney but to have faxed information that one could assume was for the drafting of a specification. Similarly Primmcoy was acquired or incorporated by 11 March. On this basis it seems most likely that the invention or "idea" was substantially developed by early March and that significant discussions had occurred with Mr Primmer before that time. If I accept Mr Primmer's evidence, he could not possibly have made a significant contribution to the earlier provisional and, in fact, there is hardly anything in evidence to support Mr Primmer's claim of inventorship at any stage even though he indicates that he kept "minutes/notes/details". Hence Mr Jones' instructions for the patent attorney to submit John Anthony Primmer as the inventor could not have been made in good faith. The discussion of assignment merely confirms that there was something of value to assign. In the circumstances, I am obliged to draw an adverse inference and this must be that Mr Jones was primarily or totally responsible for the invention in PP9489 and that Scan Right had a valid claim on that contribution through Mr Jones' employment which he set out to circumvent. While Mr Jones possibly could have developed his idea fully between leaving the employ of Scan Right some time in February and early March it does not appear probable in the circumstances and the consequences of nominating Mr Primmer as sole inventor are so serious that the onus clearly has reversed such that Primmcoy was obliged to demonstrate that Mr Jones made the invention of PP9489 without any obligation to Scan Right.

32.It is true in this regard that I have little specific evidence as to the employment relationship between Mr Jones and Scan Right in the form of employment records however the central role of Mr Jones in the activities of the company, the significant shareholding of his wife and other factors indicate to me that clearly a fiduciary relationship did exist and the impression I have is that the responsibility Mr Jones owed to the company was equivalent to that of a general manager who also had a significant product development role. If this is not the case it was open for Primmcoy to provide contradictory evidence but it did not do so. In my view it is clear that the entitlement to an invention made by Mr Jones during his association with Scan Right would flow to the company (eg Fine Industrial Commodities Limited v Powling, 71 RPC 253).

33.The question then is whether Mr Jones' work, as reflected in the earlier provisional, amounted to a material contribution to the development of the present invention. On the principles indicated above I believe this is the case. The final form of the invention is different, particularly in relation to the camera arrangement, but a number of the features, both described and claimed, are common and clearly PP9489 reflects an important step towards the development of the final concept. As such I believe it can be concluded that what was gained from Mr Jones' "idea" beneficially contributed to the final form of the invention or, in its absence, the invention was “less efficient, less simple, less economical, less something of benefit”. I believe it could also be said that the invention would not otherwise have occurred.

34.That being the case I am satisfied that Primmcoy is entitled to a grant of a patent for the invention but only in conjunction with Scan Right, or as it is now known, Scanwise. I do not believe that there is sufficient evidence to conclude that anyone else, and particularly CVSI, made or is entitled to an inventive contribution.

CONCLUSION

35.I find on the balance of probabilities that Primmcoy is entitled to a grant of a patent for the invention but only in conjunction with Scanwise. The evidence of Mr Jones and Mr Primmer is open to an adverse inference with the effect that I have found it probable that the invention disclosed in provisional application PP9489 was primarily made by Mr Jones while he had a fiduciary duty to Scan Right. The invention was developed further from that point but benefited significantly from this contribution.

36.Consequently, I can take one of three courses of action. I could refuse the application leaving the parties the option of filing a further application pursuant to section 33(2), I could direct that the patent be sealed in the name of both Primmcoy and Scan Right (Austgen Biojet Holdings Pty Ltd v. Mervyn Goronszy [1997] APO 49) or I can allow the parties time to agree to amendment of the request and notice of entitlement or to file submissions otherwise as to how I should proceed (Encoret Limited v Dexterity, Inc [2001] APO 12). In the circumstances I believe I should follow the latter course.

37.Subject to any appeal, I allow a period of two (2) months from the date of this decision for the applicant to request amendment of the request and notice of entitlement to reflect my decision or, alternatively, for the parties to file submissions, consistent with my decision, on how I should proceed. If a request or relevant submissions are not filed in that period I will direct that the patent be issued jointly in the names of Primmcoy Pty Ltd and Scanwise Pty Ltd.

COSTS

38.Costs normally follow the event and I can see no reason to depart from that practice in the present case. Consequently I award costs pursuant to schedule 8 against the applicant Primmcoy.

P M Spann
Delegate of the Commissioner of Patents

Solicitor for the applicant:    Russell McLelland Brown, Wollongong