Securency International Pty Ltd v DE Technologies Limited
[2011] APO 13
•25 February 2011
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Securency International Pty Ltd v DE Technologies Limited [2011] APO 13
Patent Application: 2005207096
Title:Diffractive, polarization modulating optical devices
Patent Applicant: DE Technologies Limited
Opponent: Securency International Pty Ltd
Delegate: Dr B. Akhurst
Decision Date: 25 February 2011
Hearing Date: Written submissions filed on 20, 24 & 28 January 2011.
Catchwords: PATENTS – section 223(2)(a) - extension of time to file a notice of opposition to grant of a patent - error or omission - relevance of publication not recognised within the prescribed time - contribution to failure to file the notice - extension of time allowed.
Representation: Patent applicant: Rachel Montgomery of Freehills Patent & Trade Mark Attorneys, Melbourne
Opponent: J Roger Green of Watermark Intellectual Asset Management, Melbourne
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2005207096
Title:Diffractive, polarization modulating optical devices
Patent Applicant: DE Technologies Limited
Date of Decision: 25 February 2011
DECISION
An extension of time to file a notice of opposition is granted. Costs awarded against DE Technologies Limited.
REASONS FOR DECISION
Background
Patent application 2005207096 in the name of David Ezra was filed on 19 January 2005 under the provisions of the PCT and published as WO 2005/071497 on 4 August 2005. In Australia, examination was requested on 29 February 2008 and acceptance advertised on 26 August 2010. Under regulation 5.3(1) the time for filing a notice of opposition to grant of a patent expired 3 months later on 26 November 2010.
On 10 September 2010, David Ezra requested application 2005207096 be assigned to DE Technologies Limited (hereafter ‘DE’), which was allowed on 26 November 2010.
On 2 December 2010, Securency International Pty Ltd (‘Securency’) filed a notice of opposition to grant of a standard patent for application 2005207096 under section 59 of the Patents Act 1990, together with a request under section 223(2)(a) for an extension of time in which to do so. Securency filed a declaration supporting its extension request on 6 December 2010.
On 17 December 2010, DE objected to the extension of time and requested to be heard, noting that:
“We will await the delegate’s advice as to whether an oral hearing is required or if the hearing will be based on written submissions.”
The delegate advised on 6 January 2011 that the facts of the case were comparatively simple and that it was possible to hear the matter on the basis of written submissions alone. Each party was allowed time to file submissions in the matter and further time to file responding submissions after which, the delegate advised, the case would be handed to a hearing officer to issue a written decision.
On 20 January 2011, both Securency and DE filed written submissions. DE filed responding submissions on 24 January 2001, stating in the accompanying letter that:
“We note that the delegate plans to issue a decision on the basis of written submissions alone. In the event that the delegate proposes to grant the application for an extension of time, we respectfully request to be heard in the matter prior to issuance of a decision.”
On 27 January 2011, DE filed a statutory declaration referred to in its first submissions. Securency’s responding submissions were filed on 28 January 2011.
The law
Section 223 of the Patents Act 1990 relevantly provides:
“(2) Where, because of:
(a) an error or omission by the person concerned or by his or her agent or attorney;
(b) …a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act.”
The meaning of the term “relevant act” is defined by section 223(11) and regulation 22.11(4)(a), and encompasses the act of filing of a notice of opposition to grant of a patent under regulation 5.3(1).
In applying the provisions of section 223, I am guided by the following principles derived from decided cases:
(i) The statutory provision to extend time is beneficial in nature and should be applied beneficially (Re Sanyo Electric Co Ltd and Commissioner of Patents [1996] AATA 832 at [16]; (1996) 36 IPR at 479).
(ii) While the applicant has the burden of placing before the tribunal the circumstances which it claims will justify the grant of an extension of time, that does not amount to a burden of proof and it is not appropriate that it should be so described (Re Sanyo [1996] AATA 832 at [16]; 36 IPR at 479).
(iii) For s 223(2)(a) to be enlivened, it must be shown that an error or omission had contributed to cause the failure to perform the relevant act (Kimberly-Clark Ltd vCommissioner of Patents (No 3) (1988) 13 IPR 569 at 570), i.e. there must be a causal connection between the error or omission and the relevant act that is required to be done within the stipulated time (Lazer Safe Pty Ltd v Commissioner of Patents [2001] AATA 967 at [11]).
(iv) The applicants for an extension of time must demonstrate that they had an intention to do the relevant act within the time prescribed, and that an error or omission on their, or their agent’s behalf, reasonably could be said to have frustrated that intention (Kimberly-Clark (No 3) 13 IPR at 579; Lazer Safe [2001] AATA 967 at [11]). However, there will be exceptional circumstances where the relevant error precluded the formation of a specific intention. In such cases the required causal connection is satisfied if the error contributed to the failure to form the intention to perform the relevant act (Apotex Pty Limited and Commissioner of Patents [2008] AATA 226 at [21]).
(v) “In order to make out a proper case justifying an extension an applicant would have to go beyond a mere disclosure of the processes by which an agent’s errors or omissions came to be committed and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes of the applicant … relevant to an understanding of the way the failure to do the act or take the step occurred, or relevant to an evaluation of the reasonableness of that conduct.” (Kimberly-Clark (No 3) 13 IPR at 571)
The application for an extension of time
Securency applied for an extension of one month until 26 December 2010 to lodge a notice of opposition to the grant of a patent for application 2005207096. The ground relied upon was an error or omission by the person concerned or their agent or attorney.
The evidence
To support their extension request, Securency provided a statutory declaration by attorney Kenneth Mark Simpson dated 6 September 2010 (‘Simpson#1’) accompanied by exhibits KMS-1 and KMS-2. The relevant sections of the declaration are as follows:
“1. I am a Registered Patent Attorney employed by WATERMARK Patent and Trade Mark Attorneys ('my firm'), attorneys for Securency International Pty Ltd ('Securency').
2. Securency is an Australian company which has research and development activities primarily being carried out at its facility in Craigieburn, Victoria.
3. Securency manufactures polymer substrates for use in banknote printing, and carries out research and development in relation to optical security devices used to protect banknotes against counterfeiting.
4. My firm is responsible for a large number of patent-related matters for Securency. Matters in which I have directly been involved include drafting and prosecution of patent applications, the conduct of freedom to operate searches, and maintenance of watches on patents and patent applications relevant to Securency's activities.
5. I consider myself to be well acquainted with Securency's technology, and with its business activities and commercial objectives.
6. Due to my frequent involvement in freedom to operate searches and watches as mentioned in clause 4 above, my usual practice when a relevant patent publication is drawn to my attention is to briefly assess whether the corresponding patent or application might impede Securency's freedom to operate, and to notify Securency accordingly.
7. As part of this assessment, I usually check whether any such patent publication has an Australian equivalent. I routinely check the status of any Australian application which is identified, and seek instructions from Securency as to whether my firm should monitor the application and/or oppose grant if the application has been accepted.
8. On 9 November 2011, my firm received an International Search Report (ISR) and Written Opinion in respect of Securency's PCT application no. PCT/AU2010/001006. Annexed hereto as Exhibit KMS-1 is a copy of the Notification of Transmittal of the ISR and Written Opinion, having a date of mailing of 8 November 2010.
9. My firm's reference number for PCT application PCT/AU2010/001006 is P31563PCAU, as indicated on Exhibit KMS-1.
10. On 15 November 2010, I reviewed the ISR to determine the relevance of the prior art cited therein. Annexed hereto and marked Exhibit KMS-2 is a Project Card containing a listing of time entries on case P31563PCAU, generated from my firm's case management software. The Project Card shows an entry of 0.8 hours on 15 November 2010.
11. In the course of reviewing the ISR my attention was drawn to PCT publication WO 2005/071497, which I had not seen before. I noted that it did not seem particularly relevant to PCT/AU2010/001006, but that it was potentially quite relevant to another Securency case.
12. I omitted to check on 15 November 2010 whether WO 2005/071497 had entered the national phase in Australia. At the time, I was more focussed on assessing the relevance of the other cited documents.
13. After 15 November 2010, I had more urgent deadlines to attend to on other cases, and so did not review the file for PCT/AU2010/001006 again until 1 December 2010. On that date, I spent three and a half hours reviewing the disclosure of the prior art documents in more detail, as shown by the second time entry of Exhibit KMS-2.
14. Late on the afternoon of 1 December 2010, it occurred to me that I had not checked for Australian equivalents of WO 2005/071497.
15. Shortly before I left work on 1 December 2010, I searched the AusPat database for WO 2005/071497 and discovered that it had entered national phase as Australian application no. 2005207096. I also noted that the Australian application had been accepted.
16. After checking the date of publication of acceptance l realised that the deadline for filing a Notice of Opposition, 26 November 2010, had already passed a few days previously.
17. Upon arriving at work on the morning of 2 December 2010, I therefore instructed my secretary to file a Notice of Opposition, simultaneously with a request for an extension of time under section 223.
18. The Notice of Opposition and extension request were sent to IP Australia by fax on 2 December 2010, the earliest possible date they could have been sent under the above circumstances.
19. Had I checked for Australian equivalents of WO 2005/071497 when first reviewing the ISR on 15 November 2010, as I should have done according to my usual practice, I would have located application no. 2005207096 and been in a position to file a Notice of Opposition before the deadline.
20. My firm is under standing instructions from Securency to oppose any Australian patent applications that are directly relevant to technology which relates to Securency’s current activities.
21. After the Notice of Opposition was sent to IP Australia, I contacted Securency, who confirmed we were to proceed with the Opposition.
22. My omission in failing to check for equivalents of WO 2005/071497 when first becoming aware of it on 15 November 2010 directly resulted in Securency missing the opportunity to file a Notice of Opposition before the deadline of 26 November 2010.”
Securency’s submissions of 20 January 2011 included a further statutory declaration by Mr Simpson dated 20 January 2011 (‘Simpson#2’) with exhibits KMS-3 and KMS-4; and a statutory declaration by Gary Fairless Power dated 20 January 2011. Filed with Securency’s responding submissions on 28 January 2011 were the written opinion in respect of Securency’s international patent application PCT/AU2007/000038; and the ISR, written opinion, and notification of transmittal of these documents, for Securency’s application PCT/AU2010/001006.
DE’s submissions of 20 January 2011 were accompanied by the front page and ISR of Securency’s PCT application WO 2007/079549. These submissions also made reference to a statutory declaration by Rene Hauser which was received by the Office on 27 January 2011 and dated 25 January 2011.
I must first establish whether there was an error or omission under the meaning of the Act and if so, whether Securency failed to file to notice of opposition within the prescribed period because of the error. If a causal connection is present, I must then determine whether the Commissioner’s discretion should be exercised to allow Securency the extension of time. I will refer to the relevant evidence where appropriate in my decision.
Was there a relevant error or omission?
The term “error or omission” in section 223 encompasses accidental slips, inadvertences and errors caused by faulty reflection (Kimberly-Clark (No 3) 13 IPR at 570 & 579 - 580); an unexpected failure to exercise due diligence and/or a flaw in mental function in carrying out an intention (Total Peripherals Pty Ltd v Commissioner of Patents [1998] AATA 784 at [14]); and a breakdown in procedure in effecting an intention (Amrad Corporation Ltd v Genentech Inc [1994] APO 17 at 7; (1994) 29 IPR 218 at 218). In contrast, the failure to perform the relevant act cannot itself be the “error or omission” by which the failure occurred (Kimberley-Clark (No 3) 13 IPR at 580) and a deliberate policy or decision that leads to the failure to perform the relevant act does not constitute an “error or omission” (Re Weir Pumps Ltd & Commissioner of Patents v Stork Pompen BV [1988] AATA 331; (1988) 13 IPR 163 at 163).
The evidence adduced by Securency establishes that Watermark Patent and Trade Mark Attorneys have responsibility for many patent-related matters for Securency, and that Mr Simpson has been directly involved in such matters (Simpson#1 at [4] - [6]; Mr Power’s declaration at [3] - [7], Simpson#2 at [3] - [4], [7] - [9]).
Mr Simpson states that his “usual practice when a relevant patent publication is drawn to [his] attention” includes a brief assessment of whether the corresponding patent or application might impede Securency’s freedom to operate, and to notify the company accordingly (Simpson#1 at [6]). His assessment usually includes a check for Australian equivalent applications and, where present, the status of any such documents, after which Mr Simpson would seek instructions from Securency as to how to proceed (Simpson#1 at [7]). I accept this to be Mr Simpson’s normal procedure when he becomes aware that a document is relevant to Securency’s interests.
Securency’s submissions were to the effect that on 15 November 2010, when Mr Simpson became aware of WO 2005/071497 and “immediately recognised its relevance to Securency”, Mr Simpson’s subsequent omission in failing to check whether the application had entered national phase in Australia as a matter of urgency was at least a flawed mental function or an error of judgement on his part.
DE submitted that given the short time he must have spent assessing WO 2005/071497 on 15 November 2010, Mr Simpson considered it to be potentially quite relevant as a prior art document, rather than an infringement concern. I agree with DE’s position, which is consistent with Mr Simpson’s evidence that he thought the citation was “potentially quite relevant to another Securency case” (Simpson#1 at [11], emphasis added). However, I do not consider that the distinction is pertinent to the present case. A prior patent document relevant to the novelty of Securency’s own patent applications, could reasonably be considered by their attorney to be of interest to Securency in the context of their freedom to operate. Therefore, I do not believe that the context in which he viewed WO 2005/071497 would have precluded Mr Simpson from carrying out his normal procedure had he come to a firm view that the document was relevant.
Mr Simpson’s assessment of WO 2005/071497 on 15 November 2010 was that it was only potentially quite relevant (Simpson#1 at [11]). The ISR for PCT/AU2010/001006 cites five prior art documents, and Mr Simpson appears at the time to have considered it more important to assess the relevance of the other documents than to check for Australian equivalents of WO 2005/071497 (Simpson#1 at [12]). As noted by DE, Mr Simpson would only have needed to turn to the last page of the ISR to find the Australian equivalent AU 2005207096. This leads me to believe that Mr Simpson’s preliminary assessment was not sufficient for him to form a concluded view that WO 2005/071497 was relevant to Securency’s interests. In the circumstances, Mr Simpson’s failure to check for Australian equivalents on 15 November 2010 was understandable, and cannot be considered an error or omission on his part.
On 1 December 2010, after spending more time reviewing the citations raised against PCT/AU2010/001006, Mr Simpson clearly did recognise the relevance of WO 2005/071497 to Securency’s interests and freedom to operate. He then implemented his normal procedure. Mr Simpson checked for Australian equivalents, filed a notice of opposition in respect of AU 2005207096, and notified Securency to confirm they wished to proceed with the opposition (Simpson#1 at [13] - [18] and [21]). I therefore agree with DE’s submission that the deadline to file a notice of opposition was missed because the relevance of WO 2005/071497 to Securency’s interests did not become apparent until 1 December 2010, when Mr Simpson reviewed the document in detail.
However, Mr Simpson’s firm Watermark “is under standing instructions from Securency to oppose any Australian patent applications that are directly relevant to technology which relates to Securency’s current activities” (Simpson#1 at [20], Simpson#2 at [7], Mr Power at [4] - [6]). Mr Simpson is well acquainted with Securency’s technology, and with its business activities and commercial objectives (Simpson#1 at [5]). In his position at Watermark, Mr Simpson is responsible for searching for and maintaining watches on patents and patent applications relevant to Securency’s activities (Simpson#1 at [4] - [5]). Nonetheless, on 15 November 2010 when Mr Simpson briefly assessed WO 2005/071497, he did not categorise the document as sufficiently relevant to Securency’s interests to give priority to performing his normal procedure for relevant documents. I consider this to constitute an error within the meaning of section 223, being an unexpected failure to exercise due diligence and/or a flaw in Mr Simpson’s mental function when first reviewing the prior art documents cited in the ISR in respect of PCT/AU2010/001006.
Did Securency fail to lodge a notice of opposition within the prescribed period because of the error?
Having established that there was an error, the next question is whether the there is a causal connection between the error and the failure to file a notice of opposition in respect of AU 2005207096 on or before 26 November 2010.
DE asserted that Securency was already aware of WO 2005/071497 prior to the opposition deadline and had no intention to oppose. The document was cited in an ISR in respect of a Securency PCT application in February 2007. In addition, a copy of WO 2005/071497 was given to Securency employee Odi Batistatos on 23 November 2010 during technical meetings with Swiss company 3D AG (Mr Hauser’s declaration at [4]).
In response, Securency submitted that the circumstances would not have given Securency sufficient awareness of the application to make a deliberate decision not to oppose it in Australia. Securency argued that WO 2005/071497 appeared in the ISR as a Y category document and was relied on only in combination with other documents, for its disclosure of a single feature relevant to the inventiveness of five dependent claims. Securency asserted that in this context, there would have been no reason for Securency or its attorneys to consider WO 2005/071497 as relevant for anything other than what it disclosed in the short passages explicitly cited. As to the document being provided to Mr Batistatos on 23 November 2010, Securency note that shortly thereafter, on being contacted by Mr Simpson, Mr Batistatos confirmed the opposition should proceed.
I am satisfied that the document WO 2005/071497 had been available to Securency and/or its agents before the end of the prescribed period for filing a notice of opposition. However, I agree that the circumstances in which WO 2005/071497 first came to Securency’s attention may not have prompted the company or its agents to assess the document in such a way as would identify it as relevant. Moreover, although DE have provided evidence that Mr Batistatos received WO 2005/071497 in Switzerland, 3 days before the opposition period expired, there is nothing in the evidence to suggest that he read it or was otherwise made aware of its disclosure, or that he appreciated that an associated Australian application could be relevant to Securency’s interests in Australia. It follows that there is nothing before me to suggest that prior to 26 November 2010 Securency had identified WO 2005/071497 as relevant to its interests and had made a deliberate decision not to oppose Australian application 2005207096.
I have found that Mr Simpson made an error in that he did not appreciate the relevance of application WO 2005/071497 to Securency’s interests until 1 December 2010, after the opposition period had expired. Securency’s standard practice is to oppose patent applications in technologies directly relevant to their current activities (Simpson#1 at [20], Simpson#2 at [7] - [9], Mr Power’s declaration at [3] - [8]). Mr Power, Director of Technical Sciences at Securency, has confirmed at [7] - [8] of his declaration that the technology of application 2005207096, is directly relevant to Securency’s activities. After the notice of opposition was filed by its attorney on 2 December 2010, Securency confirmed its wish to oppose the application. Therefore, I am satisfied that had Mr Simpson’s error not occurred on 15 November 2010 to prevent him from alerting Securency to application 2005207096 prior to 26 November 2010, Securency would have filed a notice of opposition within the prescribed period.
Should the discretion be exercised?
I have found that a relevant error occurred that prevented Securency filing a notice of opposition within the prescribed period. It remains to be considered whether the balance of relevant factors justifies the exercise of the Commissioner’s discretion in favour of Securency. The relevant factors to be considered were summarised in Vangedal-Nielsen v Smith (Commissioner of Patents) [1980] FCA 163; (1980) 33 ALR 144 at 150 as follows:
(i) whether the Commissioner is satisfied that a proper case has been made out justifying an extension;
(ii) whether a serious opposition has been foreshadowed;
(iii) whether there has been undue delay in seeking an extension of time;
(iii) the interests of the parties in refusing or granting an extension;
(iv) the public interest.
In balancing these factors, it is “more important to consider the consequences of extending or refusing to extend time than to debate the reasons why the act was not done in time” (ReSanyo [1996] AATA 832 at [16]; 36 IPR at 479).
Has a proper case been made out?
The evidence adduced by Securency contains a full and frank disclosure of the relevant circumstances in which the error occurred, and sufficiently attests to Mr Simpson’s conduct and state of mind, for me to be satisfied of the existence and nature of the error, and how it contributed to Securency failing to file a notice of opposition within the prescribed period.
Is a serious opposition foreshadowed?
Securency have confirmed their instructions to Watermark to proceed with the present opposition by carrying out a prior art search and commencing the preparation of a statement of grounds and particulars (Mr Power’s declaration at [10]). I have no evidence before me that would lead me to doubt that a serious opposition is in train.
Has there been undue delay in seeking the extension of time?
There is no dispute that Mr Simpson and Securency acted promptly once the error became apparent. The notice of opposition was filed the day after Mr Simpson realised WO 2005/071497 was relevant to Securency’s interests, which was only six days after expiry of the prescribed period for opposition of the corresponding Australian application 2005207096. This weighs in favour of granting the extension.
The interests of the parties
Securency contends that application 2005207096, if granted, will adversely impact its freedom to operate, and therefore its interests lay in the opposition being allowed to proceed. Conversely, DE’s interests lie in its application proceeding to grant, rather than it being held in opposition for a prolonged period by Securency. The interests of the parties are largely offsetting.
The public interest
The public interest lies in the efficient and orderly processing of matters before the Patent Office, and in ensuring invalid patents are not granted because insufficient opportunity has been afforded to oppose the grant.
The balance of these factors favours granting the extension. The consequence of refusing to grant the extension is that Securency would be denied the opportunity to mount a substantive opposition to the grant of a patent in respect of 2005207096. Granting the extension will mean that the opposition will proceed, protecting the public interest that invalid patents are not granted. Consequently, it is appropriate to exercise the discretion in this case.
Decision on the written record or an oral hearing
As noted at [6] above, DE indicated that they wish to be heard in the event that the Commissioner plans to issue an adverse decision on the basis of written submissions alone. However, a party cannot sit on the fence as to whether they wish to be heard orally. In the present case, the Commissioner indicated her belief that a hearing on the written record would be sufficient, and the parties proceeded on that basis. If either party had requested an oral hearing at the outset that request would have been granted. Re-opening the hearing for oral submissions is not required by either the Patents Regulations or natural justice.
COSTS
Securency submitted that costs should follow the event. DE in its response, made no comment. Securency International Pty Ltd has been successful in this action and I can see no reason to depart from the normal award of costs. I award costs in accordance Schedule 8 against DE Technologies Limited.
Dr B. Akhurst
Delegate of the Commissioner of Patents
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