Razer Industries Pty Ltd v Robert R. Law (Corrected Version) - [2010] APO 8

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 784051 in the name of Robert R. Law

Title: Conveyor Belt Cleaner

Action: Objection by Razer Industries Pty Ltd to a direction under regulation 22.21

Decision: Issued 27 May 2010
Abstract

The matter for determination was whether it was reasonable for the Commissioner to direct that a copy of an application for a licence be served on a person who did not have a direct interest in the patent.
Concluded that it is reasonable for the Commissioner to direct that a copy of an application for a licence be served on a person whose rights or interests would be affected by the decision. It is also reasonable to serve a copy of the application on a person who could be aggrieved by the decision.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 784051 by Robert R. Law, and an objection by Razer Industries Pty Ltd to a direction under regulation 22.21

DECISION

I direct that Razer Industries Pty Limited and Tuffstuff (Qld) Pty Limited each serve a copy of their respective Application for a Licence to Exploit an Invention on each other.
The costs of Tuffstuff (Qld) Pty Ltd are awarded against Razer Industries Pty Limited. I make no award of costs in relation to Mr Law.
REASONS FOR DECISION
Background
Patent number 784051 in the name of Robert R. Law ceased due to failure to pay the sixth, seventh and eighth renewal fees. The patent was subsequently restored under section 223.
On 23 December 2009, Tuffstuff (Qld) Pty Limited (hereafter referred to as Tuffstuff) applied for a licence under regulation 22.21. On 18 February 2010, Razer Industries Pty Limited (hereafter referred to as Razer) applied for a licence under regulation 22.21. Both applications have been opposed by Mr Law. On 4 March 2010, Tuffstuff requested that the Commissioner direct Razer to serve a copy of their application on Tuffstuff. The Commissioner proposed the following direction:
Razer Industries Pty Limited and Tuffstuff (Qld) Pty Limited each serve a copy of their respective Application for a Licence to Exploit an Invention on each other.
Razer indicated that they disagreed with the direction, and all parties asked to be heard on the direction.
The hearing was held in Canberra on 3 May 2010. Mr Neil Murray, assisted by Dr Simone Mitchell, appeared on behalf of Razer. Ms Phoebe Arcus appeared on behalf of Tuffstuff. Mr Julian Cooke assisted by Mr Simon Williams and Mr Rohan Singh appeared by telephone on behalf of Mr Law. The submissions on behalf of Tuffstuff included a statutory declaration by Amy Joy Griffin.
The law
The Patents Act provides that a ceased patent may be restored pursuant to section 223. However, subsection 223(9) of the Act provides for protection or compensation of persons who exploited the patent during the time that the patent was ceased:
Where the Commissioner grants:
(a)an extension of more than 3 months for doing a relevant act; or
(b)an extension of time for doing a prescribed relevant act in prescribed circumstances;
the prescribed provisions have effect for the protection or compensation of persons who, before the day on which the application for extension of time is advertised under subsection (4), exploited (or took definite steps by way of contract or otherwise to exploit) the invention concerned because of the failure to do the relevant act within the time allowed, the lapsing of the patent application or the ceasing of the patent, as the case may be.
The key feature of the protection or compensation regime is that under subregulation 22.21(2) the Commissioner can grant a licence to a person who exploited the invention:
Persons who availed themselves of or exploited, or took definite steps by contract or otherwise to avail themselves of or exploit, inventions:
…
(c) in the case of inventions to which subsection 223(9) of the Act applies – within the period of time extended under that subsection;
may apply, in the approved form, to the Commissioner for the grant of licences to exploit the inventions.
An application for a licence is made to the Commissioner, but a copy must be served as specified by subregulation 22.21(3):
An applicant for a licence must serve a copy of the application on a person whose application or patent:
(a)was so restored; or
(b)is referred to in subsection 41(4) of the Act;
and to such other persons as the Commissioner reasonably directs.
The significance of service of the application is that subregulation 22.21(4) grants a limited right to oppose the grant of a licence:
A person on whom a copy of an application has been served may oppose the grant of a licence.
Licences under regulation 22.21 were considered by the Deputy Commissioner in HRC Project Design Pty Ltd v Orford Pty Ltd [1997] APO 12, (1997) AIPC 91-362, 38 IPR 121. The Deputy Commissioner noted that restoration of a patent is not the full restoration of the rights of the patentee. The rights of the patentee are restored subject to any rights that were created by exploitation during the period of cessation. A compulsory licence affords protection from infringement action to the licensee in recognition of those created rights.
The question that arises in the present case is when is it reasonable for the Commissioner to direct that a copy of the application be served on a person other than the patentee. Service gives a person standing to oppose, so the question might be rephrased as who should have standing.
The parties put different views on this question. Mr Murray argued that only a person with an interest in the patent should have standing. A person having a commercial relationship with an applicant for a licence does not have such an interest. Ms Arcus took the view that standing should extend to those who have a commercial interest. Mr Cooke argued that the threshold for standing in an application for a licence should be low, and include rival traders and those who may possess information relevant to the matter. The parties were unable to refer to any authorities directly relevant to the matter.
Administrative law recognises a general right to be heard that extends to persons whose rights or interests will be affected by the decision. The patentee has a clear interest, and their standing is not in doubt. Similarly, an exclusive licensee has an interest that is likely to give them standing. I am mindful that there are other persons who would have standing to challenge a decision of the Commissioner under regulation 22.21, and it would be reasonable to accord them standing before the Commissioner. To do otherwise would force them to appeal the decision of the Commissioner in order to be heard in the matter, which is clearly inefficient and not in the interests of justice.
Relevant rights exist under section 192 of the Patents Act and under the Administrative Decisions (Judicial Review) Act. In both situations, standing is given to a person “aggrieved”. The question of who is “aggrieved” in the context of the Administrative Decisions (Judicial Review) Act was considered in Tooheys Ltd v Minister for Business and Consumer Affairs (1981) 36 ALR 64 at 79. Ellicott J stated that:
“it at least covers a person who can show a grievance which will be suffered as a result of the decision complained of beyond that which he or she has as an ordinary member of the public. In many cases that grievance will be shown because the decision directly affects his or her existing or future legal rights. In some cases however the effect may be less direct. It may affect him or her in the conduct of a business or may, as I think is the case here, affect his or her rights against third parties.
In the context of trade mark matters, the High Court recently decided in Health World Ltd v Shin-Sun Australia Pty Ltd [2010] HCA 13 that for the purposes of standing to bring an action for cancellation and removal of a mark, the word “aggrieved” should be liberally construed.
It is clear that a broad class of persons would have a right to challenge a decision under regulation 22.21. Contrary to the submission of Mr Murray, standing in relation to regulation 22.21 should similarly be interpreted in a broad way that is not limited to persons having a direct interest in the patent.
It is open to speculation whether a person who has information relevant to whether to grant a licence should have standing on that basis alone. While it is clear that as a general proposition the Register should be an accurate reflection of rights, it is uncertain how this proposition applies to the private rights created by a compulsory licence. This is an important question, but it is not necessary to form a view for the purposes of this case.
I am satisfied that it is reasonable for the Commissioner to direct that a copy of an application for a licence be served on a person who could be aggrieved by the grant of a licence. This includes a person having relevant commercial interests.
I note Mr Murray’s concern that this would enable competitors to stifle competition. I do not agree. The fact that a person has standing does not mean that they are compelled to oppose, and it is quite distinct from whether they will be successful at opposition.
The facts
Razer manufacture, stock and distribute Tuffstuff’s products, including in-line blades which may fall within the scope of the present patent. There is a contract between Tuffstuff and Razer in relation to the in-line blades, the terms of which are not otherwise relevant to this decision. Both Tuffstuff and Razer believe that their activities in relation to in-line blades are sufficient to entitle them to a compulsory licence. I am satisfied that Tuffstuff and Razer both carry on business in the field of the patent. If there were any doubt about this conclusion, I note that both Tuffstuff and Razer are being sued by Mr Law for infringement of the present patent.
Conclusion
It is evident that the grant of licences by the Commissioner may affect the business interests of Tuffstuff and Razer. It may also affect their rights in relation to the existing contract. I believe that this is sufficient to make each a person aggrieved, and give each standing in relation to the licence sought by the other. It is reasonable to give the proposed direction.
Costs
I have come to the conclusion that Razer’s objection to the direction is not sustainable, and thus Tuffstuff have been successful in their request for a direction. I am satisfied that the costs of Tuffstuff should be awarded against Razer.
Mr Law’s position is different. He did not seek the direction, and did not oppose the direction. He is essentially not a party in relation to the direction. I consider that there should be no award of costs in relation to Mr Law.
Dr S.D.Barker
Delegate of the Commissioner of Patents
27 May 2010
Patent attorneys for Mr Law : Spruson & Ferguson, Sydney
Solicitors for Mr Law : Spruson & Ferguson Lawyers, Sydney
Patent attorneys for Tuffstuff : Cullens, Brisbane
Patent attorneys for Razer : Fisher Adams Kelly, Brisbane