Siemens Nixdorf Informationssysteme AG v KeyCorp Limited

[2001] APO 62

OFFICIAL NOTICE

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Application  :          No. 724901 in the name of SIEMENS NIXDORF INFORMATIONSSYSTEME AG

Title:          Network-Assisted Chip Card Transaction Process

Action:          Opposition under section 59 (Patents Act 1990) by KEYCORP LIMITED.  Application for an extension of time in which to serve evidence in support (regulation 5.10(2)).

Decision:          Issued            .

Abstract

A satisfactory explanation for the delay was not provided, but in all the other circumstances, including evidence of a serious opposition, some progress in the preparation of the evidence, lack of serious prejudice to the patent applicant, and the public interest in a serious opposition proceeding, the extension is appropriate.  In view of the lack of a satisfactory explanation for the delay costs are awarded against the opponent.

PATENTS ACT 1990

DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS

Re:Patent Application No. 724901 by SIEMENS NIXDORF INFORMATIONSSYSTEME AG, and opposition thereto by KEYCORP LIMITED

BACKGROUND

Patent application 724901 (the patent application) was filed as 63910/98 on 3 February 1998 under the provisions of the PCT in the name of SIEMENS NIXDORF INFORMATIONSSYSTEME AG (Siemens).  The application was advertised accepted on 5 October 2000.

On 5 January 2001 a notice of opposition was lodged by KEYCORP LIMITED (Keycorp), followed by a statement of grounds and particulars on 5 April 2001.  A first application for an extension of time of three months in which to serve the evidence in support was allowed without objection.

On 28 September 2001 a second application for extension was made, for a further three months until 5 January 2002, to which Siemens has objected.

The matter was set for hearing in Canberra on 25 October 2001.  Siemens was represented by Mr Lee Pippard, patent attorney of Spruson & Ferguson, who appeared by telephone, and Keycorp by Mr Allen Evans, patent attorney of Watermark, who appeared in person.

The application for extension of time

The reasons given supporting both the first and second extensions are as follows:

"The Opponent has conducted prior art patent searching and is seeking appropriate Declarants to provide expert evidence.  Further time is therefore required to finalise these Declarations and serve them as evidence in this opposition."

The relevant law

This matter comes initially under regulation 5.10(2), which reads as follows:

"(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)."

The time for service of evidence falls under regulation 5.8 and therefore the above regulation applies.  However the application of this regulation is governed by regulation 5.10(5) which reads (so far as is relevant to the circumstances of this case) as follows:

"(5) The Commissioner must not….grant an application under subregulation (2)….unless the Commissioner:

(ii) is reasonably satisfied that….an extension of time….is appropriate in all the circumstances."

These regulations have been judicially considered, the principal cases being Ferocem Pty Ltd v Commissioner of Patents (1994) 28 IPR 243, A Goninan & Co Ltd v Commissioner of Patents (1997) 38 IPR 213, and National Starch & Chemical Co v Commissioner of Patents [2001] FCA 33. The judgements show that this regulation confers a broad discretion, which cannot be reduced to an imperative compliance with particular requirements. It requires proper, genuine and realistic consideration of all the relevant factors. Relevant factors will include the provision of an explanation for the delay, and the interests of the parties and the public.

Expressed generally, in exercising the discretion, the Commissioner must:

(i) before allowing an extension, be satisfied that the person seeking the extension has made out a proper case justifying the extension; and in deciding this:

(ii) take into account, not only the private interests of applicants for patents and their opponents, but also the interest the public has in the granting of valid patents and the timeliness of proceedings before the Commissioner.

SUBMISSIONS

There was no real disagreement between the parties as to the relevant law and its meaning.  I will set out below only what seem to me to be the principal issues raised, which (again) relate mainly to the proffered explanation for the delay.

From Keycorp

· The application for the extension sets out the grounds and circumstances on which the extension is sought.  There has been no undue delay in putting the evidence together, and this is only the second extension applied for.

· There has been a full and frank disclosure of why the extension is necessary.  In any case Ferocem shows that an extension should not be refused only on the ground that a full and frank disclosure has not been made.

· Notwithstanding, should it be considered that a satisfactory explanation has not been provided, a statutory declaration by Allen Evans tendered at the hearing sets out some further details.  Namely that initially Keycorp itself set out to locate a suitably qualified expert but was unable to do so.  However by the beginning of October two experts had been retained by Keycorp's attorneys, the experts being identified as Mr Kenneth Hansen, private consultant, and Professor Graham Low, of UNSW.
· The decision in Gentia Software plc v The Arbor Software Corp (1999) 42 IPR 169 is precedent for the proposition that a satisfactory explanation for the delay can be provided by submissions at the hearing.

· It is expected that the evidence will be completed by the sought-after date of 5 January 2002, but the full period is needed.

· This is a serious opposition.  Keycorp is acting on advice from an independent expert that the invention is obvious, and Keycorp will be seriously disadvantaged if the extension is not granted.

From Siemens

· The principal reason for Siemen's objection to the extension is that, based on the statements in the respective applications, which are in fact identical, Keycorp has made absolutely no progress in preparing the evidence since the first extension was sought.

· From advertisement of acceptance of the application to the date of filing the present application Keycorp has had about 12 months in which to prepare their evidence.

· This lack of progress raises the question of whether Keycorp is conducting a serious opposition, or merely seeking to delay the grant.

· It is now apparent from Mr Evans' declaration, which was filed at the hearing, that at the date of the second application for extension, the application was not accompanied by a full and frank disclosure of the circumstances.  Had such a disclosure been made, Siemens may not have objected.

· At the least, failure to make a proper disclosure should be reflected in an award of costs.

· Any extension granted should be based on actual need; the delegate should consider a shorter extension than the three months applied for.

DECISION

Has the delay in preparing the evidence been explained?

The Ferocem judgement shows that, while the reasons for requiring the extension are a relevant consideration in reaching a decision, nevertheless a satisfactory reason  is not a mandatory precondition for the extension to be granted.

I have set out the identical stated explanations previously, and I think they are manifestly inadequate, even for the first extension.  There is a reference to having conducted prior art searching, which presumably relates to the determination of grounds and particulars, and therefore really has nothing to do with preparation of evidence. The only other item is that appropriate Declarants are being sought to provide expert evidence.  Well, of course, that is what always happens, it is not an explanation for the delay, and consequently it tells the other side and the Commissioner nothing.

However, in submitting that a satisfactory explanation could be provided at or just before the hearing, I was referred to Gentia Software (supra).  This was a decision by a delegate of the Commissioner relating to an extension of time to file evidence in answer, and the patent applicant (Arbor) did not appear at the hearing.  At page 172 the delegate states:

"(a) The provision of an explanation or justification for the delay

In the absence of any representations or submissions at the hearing Arbor can only rely on the grounds and circumstances given in the application for extension of time to provide an explanation or justification for the delay…."

This could be read as inferring that, had the patent applicant made further submissions at the hearing explaining the delay, the delegate would have taken them into account in deciding whether, overall, the explanation was adequate.  But it is only an inference, falls well short of saying that the party seeking an extension can rely almost wholly on submissions at the hearing, is not binding, and the circumstances were different.

I consider that a party seeking an extension has some responsibility to include all facts and circumstances known at the date of application, which are relevant to the need for the extension, in the application.  It is only if that is done that the other side can reach an informed decision on its position, and if there is no objection, similarly for the Commissioner in considering whether or not to grant the extension.

As it is apparent from statements in Mr Evans' declaration that substantially relevant matters were in existence but not included in the application, I consider the explanation for the delay is unsatisfactory.  However I must also consider other issues.

The interests of the parties

The interests of the parties are the usual opposing ones.  Whereas Siemens interest is in the expeditious progress of their application to grant, Keycorp's interest is in being able to support their opposition with evidence.  I consider it would be possible for the opposition to proceed without evidence in support, though at some disadvantage to Keycorp, as the particulars relied on consist only of three patent specifications, and Keycorp could attend and be heard at the substantive hearing.

On the other hand I do not think that granting the extension will cause any serious disadvantage for Siemens.  It was said at the hearing that their objection was not intended to shut out the opposition, they wanted to see the evidence, but their concern was that, based on the written applications, no progress was being made in its preparation.

The interests of the public

The public interest has two components.  First, that a serious opposition should be dealt with on its merits, as opposed to being shut down because of a procedural failure.  See Kaiser Aluminium & Chemical v The Reynolds Metal Co (1960) 120 CLR 136. This of course goes to the issue of public confidence in the validity of granted patents. Second, that proceedings before the Commissioner should be conducted in a timely and expeditious manner.

On the material before me this a serious opposition.  Grounds and particulars have been specified, and Mr Evans' declaration shows that experts have been identified and retained, and that some progress has been made in the preparation of the evidence.  I was advised at the hearing that it was expected that the evidence would be completed by 5 January 2002, but that the full time was required.

I will now consider the likely significance of the evidence.  The invention relates to an arrangement for processing transactions on a network using cards with an imbedded processor, and is of some complexity.  Though I consider that the opposition would not be entirely untenable in the absence of evidence, I think there is no doubt that the foreshadowed declarations from two independent experts has the potential to be of some importance in the opposition (Goninan), and may facilitate a more correct and just outcome.

CONCLUSION

In my opinion, weighing the various interests, it is preferable in the public interest that the evidence be filed.  In the circumstances I would be inclined to grant a shorter extension than that sought, but as I have mentioned, my advice at the hearing was that the full time would be needed. Given the relatively early stage of preparation revealed in Mr Evans' declaration this seems believable.  It also seems to me that it may not be entirely appropriate to visit possibly adverse consequences of the delays and regrettable lack of a proper explanation on Keycorp itself.

Taking into consideration all of the factors mentioned, I am reasonably satisfied that the extension is appropriate in all the circumstances.  Accordingly I grant an extension of time in which to serve evidence in support to 5 January 2002.

However I note that the extension has been granted largely on the basis that the evidence is likely to be completed and served within this time.  Further, as the only evidence mentioned has been prospective declarations by Mr Hansen and Professor Low, it is my expectation that this will be the only evidence filed.  It is also unlikely the Commissioner would favourably consider any further request for time to serve this evidence.

COSTS

In proceedings before the Commissioner costs normally follow the event.  In this case Keycorp has not provided a satisfactory explanation for the delay, and I consider that their case justifying the extension is only barely made out.  Consequently I consider it appropriate in these circumstances to award costs against the opponent, Keycorp Limited.

RG Tolhurst
Delegate of the Commissioner of Patents

Patent attorneys for the applicant  :  Spruson & Ferguson

Patent attorneys for the opponent  :  Watermark, Sydney