Race Lotto Pty Ltd v AWA Ltd

[1998] APO 72

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No.684731 in the name of Race Lotto Pty Limited

Title:          Gambling Games

Action: Opposition under section 59 of the Patents Act 1990 by AWA Limited and objection to an application for an extension of time in which to serve evidence in support.

Decision:          Issued            .

Abstract

No evidence at all in support of the opposition has been served by the opponent.  Nor has it provided any indication of the nature of the evidence for which the extension is sought or if preparation of the evidence has even begun.  It was thus not possible to consider the nature of the evidence or its relevance to the proceedings but it was concluded that it is likely that a serious opposition is in train and that the public interest would not be served by the opponent being unable to serve evidence in support of the opposition.  On balance it was found that the public interest lies in the extension being granted.

AWA Limited and Race Lotto Pty Limited have been in negotiations for some time regarding the licensing of Race's patent application.  AWA gave, as reasons for the delay in serving evidence, that it did not wish to jeopardise the negotiations.  However, it was concluded that negotiations have now broken down but AWA's reasons were found to be believable since it is unclear when negotiations became untenable

In view of all the considerations, an extension of time to 8 January 1999 in which to serve the evidence in support of the opposition was granted.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 684731 by Race Lotto Pty Limited, opposition under section 59 of the Patents Act by AWA Limited and an application for an extension of time in which to serve evidence in support.

background

Patent application 684731, in the name of Ollington Gaming Pty Limited, was advertised accepted on 8 January 1998. Notice of opposition under section 59 was filed by AWA Limited (hereinafter referred to as AWA) on 8 April 1998, followed by a statement of grounds and particulars on 8 July 1998. On 1 July 1998, Ollington Gaming Pty Limited requested that the Commissioner direct the application to proceed in the name of Race Lotto Pty Limited by virtue of an assignment dated 30 June 1995. The application is now proceeding in the name of Race Lotto Pty Limited (hereinafter referred to as RACE).

On 30 October 1998, AWA applied for an extension of time of three months from 8 October 1998 to 8 January 1999 in which to serve evidence in support of the opposition.  This application for extension of time was objected to by RACE and the matter was set down for hearing in Canberra on 4 December 1998.  At the hearing RACE was represented by telephone by Mr Robert Miller, patent attorney, of Spruson & Ferguson, Sydney and AWA was represented by written submissions from Mr Chris O'Sullivan, patent attorney, of F. B. Rice & Co, Sydney .

Application FOR THE EXTENSION OF TIME

The application for the extension of time in which to serve evidence in support, dated 30 October 1998, states that the circumstances and grounds on which the application is made is "Set out on the Statutory Declaration which follows shortly".  However, no such declaration was provided.

SUBMISSIONS BY AWA

Mr O’Sullivan, for AWA, did not appear at the hearing but, in a letter dated 3 December 1998, advised that AWA would rely on written submissions and two declarations by Ann Rosa Mary Slater.  Ms Slater declares she is a lawyer with responsibility for instructions to F. B. Rice on behalf of AWA.

Mr O’Sullivan’s letter states:

"Our submissions in this matter relate to the fact that settlement negotiations have been conducted by the parties since before the Notice of Opposition was filed, and are continuing.  Current expectation is that a settlement agreement will be signed on Monday, 7 December.  In anticipation of an agreement being signed, we submit that the status quo should be maintained, and that no action should be taken which would have the effect of prejudicing one side or the other at this delicate point of the negotiations.

We understand the reason the application for more time was filed late is that settlement was expected earlier, and then delayed by Race Lotto."

Ms Slater’s declaration of 2 December states:

"2I am aware that the Applicant and its predecessor Ollington Gaming Pty Ltd have been in consistent and constant negotiation with the Opponent since at least the date of filing of the Notice of Opposition and negotiations have been in respect of the settlement of the present opposition and a potential commercial relationship with each other.

3The negotiations referred to in paragraph 2 above have involved lengthy trials of relevant technology and I am particularly aware of these facts because I am the lawyer that drafted the original documents for the said commercial relationship.

4I am instructed that a settlement meeting is scheduled for 7 December 1998 and that the Opponent expects that the commercial relationship referred to in 2 above will be entered into at that date or if not then in the immediate future."

Ms Slater adds in her 3 December declaration that:

2"I refer to my statutory declaration of 2 December 1998 in this matter and further advise that I am aware that Evidence in Support was not lodged within the statutory period because the Opponent had considered that the parties had reached verbal agreement on the settlement of the Opposition and that the commercial relationship referred to in paragraph 2 of my declaration of 2 December 1998 would be entered into in the immediate future."

SUBMISSIONS BY RACE

At the hearing, Mr Miller made submissions which I have summarised:

• Evidence in support should have been served by 8 October 1998 but the application for extension of time was not applied for until 30 October.  There is no indication why this was not applied for before 8 October.

• The onus is on the opponent to justify the granting of an extension.  There is nothing to suggest that the preparation of the evidence has advanced at all and even the documents referred to in the particulars have not been put into evidence.

• No statutory declaration has been filed to explain the reasons for the request for extension of time.

• The power to grant an extension of time under regulation 5.10 is discretionary and there are circumstances where an extension may be refused.

• The public interest in not granting invalid patents must be weighed against the private interest of the applicant in having the opposition dealt with expediently.

Mr Miller also filed a declaration, dated 3 December 1998, by Mr Andrew Sigalla, who states he is a director of Race Lotto Pty Limited.

"4Since acquiring the Patent Application in 1995, Race Lotto has been developing an equal chance gaming system for a wide area network that embodies the invention disclosed and claimed in the Patent Application ("Race Lotto Animated Horse Race System").

5On or about 23 August 1996, Race Lotto introduced the Race Lotto Animated Horse Racing System to John Ralph, Group General Manager of AWA Gaming and Wagering Division, a division of AWA Limited ("AWA"), for its application either as an add-on to its existing Keno Lottery Game or as a stand alone game as a licensed use of our Patent Application.

6In or about January 1998 I re-opened negotiations with AWA in respect of the introduction of the Race Lotto Animated Horse Race Systems into clubs in which AWA operated its Club Keno throughout New South Wales and as a result of those negotiations AWA undertook to carry out a trial of the Race Lotto Animated Horse Race System during 1998.

9The trial of the Race Lotto Animated Horse Racing System……was to be undertaken in conjunction with a trial of an AWA developed animated racing game ("Race Keno Gaming System") and the negotiations included the granting of a licence of its Patent Application to enable the trial to be conducted and more specifically for AWA to conduct its trial of the Race Keno Gaming System that, it is thought would otherwise be an infringement of a subsequently granted patent pursuant to the Patent Application.

11As it transpired there were significant deficiencies in the AWA technical specifications resulting in Race Lotto being unable to run the Race Lotto Animated Horse Race System in a competitive trial with the Race Keno Gaming System."

It seems that AWA intend to conduct a trial of their own Gaming System.  Mr Sigalla declares that this trial and the delays in completing negotiations will result in significant commercial impact on RACE.

A further declaration by Mr Sigalla dated 9 December 1998 was sent to me subsequent to the hearing to confirm Mr Miller's assertions concerning the 7 December meeting between RACE and AWA.  Mr Sigalla declares that:

"4.I crave leave to refer to the Declaration of Ann Rosa Mary Slater of Dunhill Madden Butler sworn 2 December 1998 and say as follows:

(a)       As to paragraph 3 there have been no trials of the relevant technology and in fact due to deficiencies in the technical specifications prepared by AWA the anticipated trial of the Race Lotto technology will not now take place as planned and further that documents drafted by her did not encompass the commercial relationship of the parties at all.

(b)       As to paragraph 4 at the time of swearing her Declaration there was no meeting scheduled for 7 December 1998 nor was it possible that the commercial relationships between the parties would be finalised at that date or indeed the immediate future and further that whilst a meeting did take place on 7 December 1998 between the parties it was at the request of and arranged by Race Lotto representatives on 7 December 1998 after a request by AWA on that day for a meeting to be arranged for Tuesday 8 December 1998."

DECISION

The law on extensions of time

The time for serving evidence in support of an opposition is three months from the date of serving the statement of grounds and particulars (regulation 5. 8).  This time can be extended under regulation 5.10(2):

(2)  The Commissioner may:
(a)  on the application of a party in the approved form;  and
(b)  on such reasonable terms (if any) as the Commissioner specifies;

extend the time within which the party may take a step prescribed in this Chapter, not being a step that is taken under regulation 5.3 or paragraph 5.4(1)(a).

This provision must be read in conjunction with regulation 5.10(5):

(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 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.

It is clear from this that the Commissioner must ensure that the other party has been notified, and that both parties be given the opportunity to make representations.  An extension can then only be granted if the Commissioner is reasonably satisfied that it is appropriate.

Burchett J in Ferocem Pty Ltd v Commissioner of Patents (1994) 28 IPR 243 states:

"The determination of an application for an extension of time under reg 5.10(2) involves a balancing exercise, in which competing considerations must be taken into account"

The delegate in ABB Engineering Construction Pty Limited v A Goninan & Co Ltd, AIPC 91-430 reviewed the principles governing extension of time to serve evidence in support as considered by Burchett J in Ferocem Pty Ltd v Commissioner of Patents (supra) and Sackville J in A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213.  These principles can be summarised as follows:

a)        The power is discretionary;
b)        An explanation of the delay is a relevant consideration, but not mandatory;

c)The public interest in determining a serious opposition on its merits is a relevant consideration;

d)The interests of the opponent and other parties are a relevant consideration; and

e)The interests of other parties is a relevant consideration.

I will apply the general principles from these cases to the present facts.  The power to grant an extension under regulation 5.10 is discretionary, that is that I may grant the extension or I may refuse it, but I must not take either course of action without giving proper consideration to all relevant considerations.

Explanation of the delay

The application for the extension of time was not accompanied by any reasons why the evidence in support was not served before 8 October 1998 or why the application for extension was only made on 30 October1998.

From Mr O'Sullivan's letter of 3 December, it seems that the opponent, AWA, believed that negotiations with RACE, concerning a commercial relationship between the two parties, were proceeding well and that settlement was imminent.  AWA was apparently unwilling to file evidence as it felt that may damage the settlement negotiations.  This is confirmed by the declarations of Ms Slater.  Thus, the explanation for the delays in both serving evidence and in applying for an extension of time appears to be that AWA was of the belief that a settlement would be negotiated and that, presumably, the opposition would not continue once an agreement was signed.

However, from submissions made by Mr Miller at the hearing and the declarations by Mr Sigalla, it is apparent to me that RACE is not of the same view about the state of the negotiations.  Settlement would seem to be some way from agreement and certainly did not occur on 7 December.  Mr Sigalla, in his 3 December declaration refers to "misrepresentations by and failures on behalf of AWA", which is not suggestive of agreement between the parties.  In his 9 December declaration, Mr Sigalla states that the trial of the RACE technology will not now take place and, in his 3 December declaration, that AWA are conducting a trial of their own gambling system.

AWA has a declarant who is willing to swear on oath that she believes a settlement will be reached in the immediate future and that the serving of evidence may be detrimental to the negotiations.  I have no reason to doubt Ms Slater's declarations but also have no reason to doubt Mr Sigalla who swears on oath that the commercial relationship is not expected to be finalised in the immediate future.  Negotiations have already been in progress since at least January this year.  I must conclude that these differences are unlikely to be resolved quickly and, in fact, there is nothing before me to confirm that negotiations are ongoing or when agreement is expected

I have some sympathy for AWA and the reasons given for the delay that it did not want to jeopardise negotiations but I must conclude that negotiations have now broken down and that preparation of evidence in support of the opposition should be proceeding.  However, since it is not clear exactly when negotiations became untenable, I must give the opponent the benefit of the doubt and find that, because of their understanding of the state of negotiations at the time, their explanation of the delay to be credible.

The public interest

The public interest certainly lies in determining a serious opposition on its merits.  According to Sackville J in A Goninan & Co Ltd v Commissioner of Patents (supra):

"In order for the commissioner or his delegate to give proper, genuine and realistic consideration to the aspect of the public interest I have identified, it is necessary to consider the nature of the evidence the opponent seeks to adduce and the significance of that evidence for the opposition proceedings."

In this case, no evidence at all has been served and no submissions have been given concerning the nature of the evidence for which the extension has been sought.  As Mr Miller pointed out, even the patent specifications referred to in the statement of grounds and particulars have not been included as evidence.

The opponent has served a statement of grounds and particulars outlining six grounds for the opposition. These include that the nominated person is not entitled to the grant of a patent and that the invention is not patentable, not novel, does not involve an inventive step and does not comply with section 40 of the Patents Act. In regard to novelty and inventive step, ten patent documents are cited and I note that these are not merely documents raised in the international search report or by the examiner during the examination process. Often, during an opposition, the opponent will proceed with only some of the grounds outlined in the statement but AWA has not given me any indication at all of what their evidence is concerned with or which grounds of opposition it is relevant to. However, I would comment that I find it hard to believe that inclusion of the above mentioned patent specifications into evidence would jeopardise negotiations since RACE is already aware of them from the statement of grounds and particulars. Evidence concerned with common general knowledge or with the entitlement of the applicant to the grant of a patent would possibly be of great significance to the eventual outcome of the opposition but I cannot assume what the nature of the evidence is likely to be. Given this, I am unable to assess the relevance of any evidence which may be filed.

I find that although AWA has identified serious issues in its statement of grounds and particulars no evidence has been served, nor has AWA given me any indication of the nature of the evidence. As a result, it is difficult to for me determine whether a serious opposition is in train on the basis of no evidence.  I can only conclude that it is likely that a serious opposition is underway.  Since this is the case, the public interest would not be served by the opponent being unable to serve evidence in support of the opposition.

It is not in the public interest for the opposition to be delayed indefinitely on the basis of negotiations between the parties although these negotiations now seem to be stifled.  Despite Mr Miller's comments at the hearing concerning revocation and re-examination, I do not believe that these processes serve the public interest to the same extent as allowing the opposition to proceed.

The public interest issues seem to be finely balanced but overall I find that it is in the public interest for the extension of time to be allowed.

The interests of the opponent

If this is a serious opposition, I believe it would be very difficult for AWA to effectively argue its case without any evidence to support their grounds of opposition.  I have concluded above that it is likely that a serious opposition is in train.  Negotiations seem to have come to a standstill and thus AWA would be seriously disadvantaged by the request for extension of time being refused.

The interests of other parties

It is clearly in the interest of RACE to hold a valid patent and for any opposition action to proceed without undue delay.  However, the opposition is still in its early stages and this application only represents the first application for an extension of time.  I do not believe this represents a serious delay in the overall process.

It is also in the interest of the Patent Office that opposition proceedings are not unreasonably protracted but the Patent Office also has a role in looking after the public interest which, in this case, far outweighs any administrative concerns.

Conclusions

Although both AWA and RACE agree that negotiations have been taking place for some time, it is my view that there are serious differences between them and that negotiations have broken down.  The reasons given by AWA for the delay lie purely in the delicate state of negotiations and in not wishing to jeopardise this.  These reasons are credible in the circumstances and AWA would now be seriously disadvantaged in the opposition process by their request for extension being refused.  This is the first request for extension of time and does not represent a serious delay to either RACE or the Patent Office.

Although evidence in support of the opposition should have been served by 8 October 1998, AWA has not as yet served any evidence or provided me with any indication of the nature of the evidence for which the extension of time is sought.  I am thus unable to make any comment on the relevance of the evidence other than that it may be significant and that this is likely to be a serious opposition.  However, I have already concluded that the public interest weighs in favour of the extension being granted.

Thus, overall I am satisfied that the extension of time is appropriate in all the circumstances and the request for an extension of time to 8 January 1999 to serve evidence in support is granted.  However, the Commissioner would expect that both parties will now proceed with all diligence in preparing and serving evidence, whether or not negotiations recommence at some time in the future.

Costs

I have granted the request by AWA for an extension of time to serve evidence in support of the opposition but AWA did not make an appearance at the hearing and it is thus not appropriate to award costs.

Gillian Jenkins
Delegate of the Commissioner of Patents

Patent attorneys for the applicant   : Spruson & Ferguson, Sydney

Patent attorneys for the opponent   : F. B. Rice & Co, Sydney