Sandoz Ltd v Fujisawa Pharmaceutical Co Ltd
[1993] APO 53
•26 July 1993
official notice
decision of a delegate of the commissioner of patents
Application : No. 619772 in the name of Sandoz Ltd
Title : Topical tricyclo compounds
Action: Opposition thereto by FUJISAWA PHARMACEUTICAL CO LTD, and an application under regulation 5.10(4) to serve further evidence
Decision : Issued . Application
refused. Failure to show evidence could not have been obtained diligently at an earlier stage. When extension of time to serve evidence in support is refused, that evidence cannot be admitted as further evidence.
patents act 1990
decision of a delegate of the commissioner of patents
Re:Patent Application No. 619772 by SANDOZ LTD, opposition thereto by FUJISAWA PHARMACEUTICAL CO LTD, an application under regulation 5.10(4) to serve further evidence in opposition proceedings and an objection thereto.
background
Application 619772 was filed on 8 November 1988 as application 24902/88 by Sandoz Ltd (Sandoz). It was advertised as accepted on 6 February 1992, and a notice of opposition was filed by Fujisawa Pharmaceutical Co Ltd (Fujisawa) on 5 May 1992.
Due to delays concerning the service of the statement of grounds and particulars, the time for serving evidence-in-support was dated from 23 September 1992.
On 22 December 1992 the opponent requested an extension of time of 3 months for serving evidence-in-support, for a period ending 23 March 1993. On the same day the opponent served part evidence-in-support on the applicant.
On 15 January the applicant filed a notice of objection to the extension of time. The matter was heard in Melbourne on 17 February 1993 (hereinafter referred to as the previous hearing), and in a decision dated 3 March 1993 the delegate of the Commissioner granted an extension to time of 1 month, to 23 January 1993, for serving evidence-in-support. The basis for the decision was:
-there was justification for an extension of time of one month; and
-the opponent had otherwise not discharged its onus of establishing that an extension of time was justified, and in particular had not provided a full and frank disclosure of the facts which gave rise to the need for the extension of time.
On 23 March 1993 Fujisawa filed an application under regulation 5.10(4) to serve further evidence. The application was accompanied by a statutory declaration in the name of Hachiro Tagami together with Exhibits HT-1 to HT-7. This was described in the accompanying letter as constituting "a further part of the evidence-in-support...". On 31 March 1993 a statutory declaration in the name of John David McCormack together with Exhibits JDM-1 and JDM-2 supporting the regulation 5.10(4) application was filed.
On 13 April 1993 Sandoz indicated they wished to be heard concerning the regulation 5.10(4) request from the opponent. Accordingly I heard the matter in Canberra on 11 May 1993. Mr David Tadgell, patent attorney of Phillips Ormonde & Fitzpatrick, Melbourne, represented Sandoz by telephone at the hearing. Mr John McCormack, patent attorney of Griffith Hack & Co, Melbourne, appeared in person representing Fujisawa.
As the application was advertised after the commencement of the Patents Act 1990, the procedures are essentially governed by Chapter 5 of the Patents Regulations 1991.
evidence
The McCormack declaration supporting the application for further evidence makes the following points:
.The objection to the request for further time to file evidence-in-support was filed 2 days late and was not accompanied by an application under section 223 (para 2).
.The decision of the Delegate of the Commissioner in relation to the request for further time to file evidence-in-support "was influenced in part by the submissions of the attorney for the applicant" (para 3).
.The time up to 23 March 1993 was required by the opponent to finalise and execute the Tagami declaration (paras 4 and 5).
.The opponent may have been unfairly disadvantaged in not being given the full 3 month extension due to a misunderstanding in respect of the questions raised by the Delegate at the previous hearing and Mr McCormack's answers thereto (para 6).
.The nature of the further evidence "is a further elaboration and expansion of the points made in the outline of argument presented in Exhibit JDM-29 which was served as part of the evidence-in-support on 22 December 1992" (para 7).
.An additional declaration in the name of Dr Ian McKay will be served shortly. This "will be providing further evidence-in-support in respect of what was commonly known in the technology of the application in Australia at the relevant date" (para 7).
Mr McCormack served Dr McKay's declaration at the hearing and indicated that it had been served on the same day with the attorneys for the applicant.
submissions
At the start of the hearing Mr Tadgell indicated that he had not been supplied with a copy of the McCormack declaration. Accordingly the hearing was adjourned for 20 minutes in order to send a facsimile copy of the declaration to him and to allow him time to peruse it.
After having served Dr McKay's declaration Mr McCormack made the following submissions on behalf of the opponent:
.In contrasting regulation 5.10(4) of the 1990 Act with regulation 59 of the 1952 Act, there is no requirement to seek "special" leave of the Commissioner in the new Act and no "special" circumstances to be satisfied before the leave can be granted. The restraints under the old Act are therefore no longer applicable.
.The word "may" in the new regulations should be construed in a mandatory sense, following the rules of construction in Pearce D.C. & Geddes R.S., Statutory Interpretation in Australia, 3rd edition, Butterworths, 1988, Chapter 11. The wording of regulation 5.10(4) therefore almost places an obligation on the Commissioner to accept an application when it is made.
.There was a need to file further evidence to establish the prior art in Australia in relation to the ground of obviousness. Dr McKay needed to assess Prof Tagami's evidence and then prepare a declaration. Therefore there were special circumstances delaying the filing of Dr McKay's declaration. Because the evidence was so interrelated it was necessary that Prof Tagami's evidence be referred to in Dr McKay's declaration, and the application to file further evidence therefore relates to both declarations.
.Not to allow the opponent the opportunity to present the evidence is clearly a denial of natural justice. Failure to allow time to present evidence denies a person the right to be heard.
.The present situation can be distinguished from The DuppsCompany v Stord Bartz A/S 18 IPR 499. In that case there were 5 applications for extension of time to lodge evidence-in-support, whereas in the present case there was only one application for extension of time. The volume of evidence already served in this case indicates that a serious opposition is being mounted. The Dupps case was decided under the old Act and was based on the meaning of "special leave" and "special circumstances".
.The three criteria of Micronair (Aerial) Ltd v Waikerie
Co-op Producers Ltd (1986) 7 IPR 107 concerning an application to adduce further evidence have been satisfied in this case because:
a)Dr McKay could not have made his declaration until he had seen Prof Tagami's evidence. Therefore this evidence could not have been obtained earlier.
b)Clearly this evidence will have an important influence on the result since it establishes the prior art base in Australia in relation to obviousness.
c)Dr McKay is preeminent in his field and his evidence has a high degree of credibility.
.It is in the public interest that the opponent be allowed to present the best possible case. It is of overriding importance that manifestly invalid patents should not be granted.
.Because of a misunderstanding between the hearing officer and Mr McCormack at the previous hearing, only one month extension was allowed instead of the three months requested. Prof Tagami's declaration was filed within the three month time limit. To refuse this application to adduce further evidence would doubly penalise the opponent and thus natural justice will be totally denied to the opponent.
.The objection to the application for extension of time was made by the applicant after the normal 14 days during which such objections should be made. If the Patent Office had acted in accordance with the rules, the opponent would have automatically been granted a 3 month extension of time and would not have been disadvantaged.
.The criteria as described in paragraph 5.4 of the Hearings Manual, while relating to the grant of special leave under the old Act, are nevertheless satisfied. The evidence now sought to be adduced would lead to a more correct or just result since it relates to obviousness, there would be no unnecessary protraction of the proceedings and there would be no injustice to the applicant since the evidence is already on file, and clearly the opponent has been diligent in making every effort to get things done in time.
Mr Tadgell for the applicant responded by making the following submissions:
.The word "may" in regulation 5.10(4) should be interpreted as discretionary rather than obligatory. The arguments presented by Mr McCormack rely on very old case law which would now be regarded as questionable.
.The question to be answered is whether it is appropriate in all the circumstances to permit the filing of further evidence. The onus is on the opponent to justify the adducement of the evidence.
.This hearing is not the correct forum for deciding whether the allowed extension of time to file evidence-in-support was reasonable.
.There had not been any mention during the period for lodging evidence-in-support that Dr McKay was required to give evidence. This would seem to suggest that there had not been a full and frank disclosure at an earlier stage in the proceedings. It appears that it was a gross omission not to refer to the fact that Dr McKay was awaiting Prof Tagami's declaration. This omission seems to indicate that a declaration by Dr McKay was not considered at the time. It seems that this is an attempt to add evidence not considered initially.
.There is no evidence why it took Dr McKay a further 3 to 4 months to review Prof Tagami's evidence.
.According to his recollection of the extension of time hearing, the hearing officer had asked Mr McCormack to provide further reasons in relation to some relatively simple matters, but Mr McCormack did not take steps to provide the further justification required. Therefore there is no justification of the alleged misunderstanding.
.According to the regulations, it is not mandatory or obligatory that an extension of time objection has to be made within 14 days.
.Regulation 5.10(4) is not intended to be a means for circumventing time limits for filing evidence-in-support.
.The relevance of proceedings under the old Act is questionable in the present circumstances. The decision in Kent-Moore Corporation v Environmental Products Amalgamated Pty Ltd (1992) AIPC 90-915 put a different emphasis on opposition procedures. There must be diligence in prosecuting the opposition. In this case the diligence of the opponent is questionable since it was not until 31 March 1993 that the Patent Office became aware of Dr McKay's declaration, which was 9 months from filing the notice of opposition.
.The public interest is largely met by a bar to sealing action. The only public interest to be considered here is to ensure the proceedings are not unreasonably protracted.
Mr Tadgell contacted me by phone after the hearing had ended to ask whether he could put in further submissions, especially in relation to the Dupps decision (supra). This request was refused on the basis that he had already been given the opportunity to put his case fully at the hearing.
decision
In the first instance I must decide how the change of wording in the new Act has affected the law relating to the filing of further evidence.
Regulation 5.10(4) of the Patents Regulations 1991 reads as follows:
(4)The Commissioner may:
(a)on the application of a party; and
(b)on such reasonable terms (if any) as the Commissioner may specify;
permit the party to serve further evidence on the other party.
I disagree with the arguments made by Mr McCormack for the opponent that the word "may" in this regulation should be interpreted as "must". In other words I disagree with the submission that the Commissioner is bound to accept and cannot refuse the further evidence which is submitted. On this point I am in agreement with Mr Tadgell for the applicant, who argued that the word "may" is not mandatory and that the onus is on the opponent to justify the adducement of the evidence.
I note that the words "may" and "must" are used frequently throughout Chapter 5 of the Regulations. It seems to me that these terms are deliberately selected to show whether a particular act is discretionary (may) or obligatory (must). There is nothing in the purpose of the provisions to suggest that regulation 5.10(4) should be read as mandatory. Indeed I believe it would defeat the philosophy of the new provisions if that regulation was not discretionary. Therefore I believe the Commissioner has a discretion as to whether to permit the serving of further evidence. I contrast this in particular with regulation 5.10(5) which uses the word "must" and which therefore requires the Commissioner to be satisfied that the serving of the further evidence is appropriate in all the circumstances.
The old Act regulation 59(1) referred to special leave which was required to be sought of the Commissioner before further evidence could be adduced. In addition the further evidence was required to have special characteristics and had to be distinguishable from evidence that could have been lodged as evidence-in-support (Dupps v Stord Bartz (supra)).
There is no mention of special leave being required in the new Act, and because of this (in theory at least) the case law developed under the old Act cannot automatically be applied under the provisions of the new Act.
In deciding how regulation 5.10(4) should be interpreted I have also considered the other regulations which provide for evidence to be lodged. With this in mind I do not believe that regulation 5.10(4) exists to give unlimited time for the filing of evidence which should normally have been lodged as another form of evidence, such as evidence-in-support. In my opinion strict rules apply for the adducement of further evidence.
The criteria to be satisfied to grant a request under regulation 5.10(4) have not been considered by the Commissioner in any previous decision. However, in the context of adducing further evidence under regulation 59 of the 1952 Act, previous decisions have discussed certain matters which I believe are also appropriate to the new provisions. For example in Micronair (Aerial) Ltd v Waikerie Co-operative Producers Ltd (1986) 7 IPR 107 the hearing officer held that there were 3 matters to be considered in deciding whether leave should or should not be granted:
It must be shown that the evidence could not have been obtained with reasonable diligence at an earlier stage.
The evidence must be such that, if given, it would probably have an important influence on the result of the case.
The evidence must be such as is presumably to be believed, that is it must be apparently credible, though not necessarily incontrovertible.
In Mr McCormack's submission the present facts satisfied these 3 criteria. Certainly I would agree that criteria 2 and 3 are clearly satisfied. However the issue of criterion 1 is more difficult. The question to be answered is whether Dr McKay's evidence could have been obtained with reasonable diligence at an earlier stage.
The issue is complicated by the fact that this evidence refers to Prof Tagami's evidence which had previously been disallowed since it was filed outside the time allowed to serve evidence-in-support. Therefore I must also resolve the question of whether Dr McKay's declaration contains new evidence which could not have been obtained earlier.
In my opinion the McKay declaration does appear to introduce the added evidence of the state of the prior art in Australia by an Australian expert and also includes some discussion on the interpretation of the Fujisawa specification. Mr McCormack submitted that this declaration could only be prepared once Prof Tagami's declaration had been perused. If this is the case then, since the Tagami declaration was filed outside the extended time allowed at the previous hearing, I cannot see how it can be said that the McKay declaration was obtained with reasonable diligence. If the Tagami declaration was filed out of time and therefore not admitted as evidence, it seems to follow that the McKay declaration, which relies on the Tagami declaration and was filed subsequently, must in effect be equivalent to evidence-in-support which has been filed out of time.
It seems to me that a necessary first step in establishing obviousness would be to obtain information as to the prior art base in Australia. Without a close study of the evidence, which I do not believe is appropriate here, I am not in a position to decide which declaration logically should have been prepared first. I would note however that if the opponent knew they would need a declaration from an expert in Australia as to the state of the prior art, they should have been working on obtaining this from the start of the opposition proceedings. Therefore
I regard as significant in these circumstances the fact that Dr McKay had not been mentioned at an earlier stage as a possible declarant of expert evidence.
If the opponent knew at an earlier stage in the proceedings that the McKay declaration would be needed, then they did not give a full and frank disclosure of the facts which gave rise to the need for the extension of time to file evidence-in-support. Therefore the Commissioner should not now exercise a discretion to rectify the situation by allowing the service of further evidence.
In view of these matters I am unable to conclude that the McKay evidence could not have been obtained with reasonable diligence at an earlier stage. Therefore I do not believe that criterion 1 of the Micronair case (supra) is satisfied.
Mr McCormack referred to a misunderstanding between himself and the hearing officer at the previous hearing as to an offer to obtain and file further material. Had Mr McCormack obtained this material, it may have clearly established his diligence in prosecuting this matter. However there is no documentation on file concerning this material. I agree with Mr Tadgell that this hearing is not an appropriate forum to review a previous decision. It seems to me that if Mr McCormack believes that, as a result of a misunderstanding, an incorrect decision was made from the previous hearing, then the appropriate course of action would be to appeal that decision.
I will now consider whether the facts of the present case are the same as those in Dupps v Stord Bartz (supra). In that decision the opponent sought to adduce as further evidence the same evidence which failed to be lodged in time when (after 5 previous extensions of time) a further application for extension of time to file evidence-in-support was not granted. It was held that the further evidence therefore did not have "special characteristics" and also the hearing officer did not think the evidence would have an important influence on the outcome of the opposition.
Mr McCormack submitted that the present situation can be distinguished on the facts from the Dupps case. I would agree that, from the evidence so far filed, it seems Fujisawa is mounting a serious opposition and it is possible that Dr McKay's evidence would have an important influence on the outcome of this opposition. However in the present case it seems likely that Dr McKay's evidence really should have been included as part of the evidence-in-support. It appears that the opponent, when preparing the evidence-in-support, may have found they needed an extra declaration to support a previous declaration. Since the previous (Tagami) declaration was filed out of time, it would be inappropriate to exercise a discretion to allow the extra (McKay) evidence. The Dupps case makes it clear that when an application for extension of time to serve evidence has been refused, it is not appropriate to admit that evidence as further evidence. I believe this situation applies in the present case and therefore, following Dupps, I do not believe it is appropriate to admit the McKay declaration.
In view of the above I do not believe the opponent has justified that it is appropriate in all the circumstances for further evidence to be filed. In reaching this conclusion I have applied the criteria of the Micronair decision and found they have not been satisfied, and I have followed the Dupps decision. I believe there are also two other factors which should be considered in relation to regulation 5.10(4). These factors are a consideration of whether allowance of the request to serve further evidence:
.would cause unnecessary protraction of the opposition; and
.would result in any injustice done to the other party.
Since I am refusing to permit the service of the further evidence I do not need to decide on these matters in the present case.
Therefore I believe the opponent has not discharged the onus of justifying the service of further evidence insofar as Dr McKay's evidence is concerned It follows that the Tagami declaration, which was originally served as evidence-in-support, cannot be served as further evidence under regulation 5.10(4).
Having regard to the other matters raised by the parties, I agree that there has been a shift in emphasis in opposition procedures under the new Act with the diligence in prosecuting the opposition being of prime importance. In the present circumstances Fujisawa failed to serve all their evidence within the extended time allowed to serve evidence-in-support and therefore I cannot exercise a discretion for them to serve this evidence as further evidence.
Mr McCormack raised issues of public interest and natural justice. Mr Tadgell submitted that the public interest would be served during bar to sealing considerations. The public interest is concerned with the expeditious and correct determination of the opposition action. The public is aware of the basis of the opposition from the statement of grounds and particulars. Even though the Tagami and McKay declarations will not form part of the evidence in the substantive opposition, the public interest in ensuring that only a valid patent is granted will be largely met by consideration of this evidence at a bar to sealing action. The only remaining public interest therefore is in ensuring the proceedings are not unreasonably protracted (see the Kent-Moore decision (supra)). Fujisawa, in failing to file their evidence-in-support within the time allowed, and in now attempting to put in that evidence as further evidence, appear to be attempting to extend the proceedings unnecessarily.
On balance, having considered all the circumstances, I refuse to permit the serving of the further evidence.
conclusion
I have found that the serving of further evidence is not appropriate in all the circumstances and therefore I refuse to permit the opponent, Fujisawa, to serve the declarations of Prof Tagami and Dr McKay on the applicant, Sandoz.
In the decision concerning the application for extension of time to serve evidence-in-support, the delegate indicated that Sandoz could request directions concerning the time for serving evidence-in-answer. Sandoz, in a letter from their patent attorneys dated 12 March 1993, requested a direction and indicated that it was their understanding they would be allowed three months from 3 March 1993 in which to serve their evidence. Mr McCormack, in a letter dated 29 March 1993, suggested that the delegate review the proposal to direct that the time commence on 3 March 1993. Accordingly I extend the time for serving evidence-in-answer to 60 days from the date of this decision. At the end of this time the applicant will have had over 6 months since its original request for directions. I therefore consider this would be adequate time for the applicant to prepare any evidence-in-answer.
costs
Both parties agreed that costs should follow the event. I see no reason to depart from this, and therefore I award costs against Fujisawa.
Janet Werner
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Phillips Ormonde & Fitzpatrick, Melbourne
Patent attorneys for the opponent : Griffith Hack & Co, Melbourne
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