Somnomed Ltd v Commissioner of Patents
[2006] FCA 765
•23 JUNE 2006
FEDERAL COURT OF AUSTRALIA
Somnomed Ltd v Commissioner of Patents [2006] FCA 765
ADMINISTRATIVE LAW – judicial review - where Deputy Commissioner of Patents required concurrent filing of evidence in relation to an application under s 36 of the Patents Act1990 - whether reviewable decision under the Administrative Decisions (Judicial Review) Act 1977 – whether rules of natural justice breached or error of law committed in course of conduct for the purpose of making a decision
PATENTS – nature of decision under reg 22.24 of the Patents Regulations 1991
PATENTS – whether an applicant under s 36 of the Patents Act 1990 bears an onus of proof
Administrative Decisions (Judicial Review) Act 1977 (Cth)ss 5 and 6
Patents Act 1990 (Cth)ss 36
Trade Marks Act 1995 (Cth) s 33
Patents Regulations 1991 (Cth) regs 3.2A, 22.24
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Commissioner of Taxation v Beddoe 148 ALR 383
Director-General of Social Services v Chaney 31 ALR 571
Ferocem v Commissioner of Patents (1994) 28 IPR 243
Geographic Indications Committee v O’Connor (2000) 64 ALD 325
Iluka Midwest Ltd v Technological resources Pty Ltd (2002) AIPC 91-782
Public Service Board of NSW v Osmond (1986) 159 CLR 656
Riordan v Connor (1981) 53 FLR 112
SOMNOMED LTD v COMMISSIONER OF PATENTS AND ATUL S. MEHTA
NSD 1268 of 2005
MOORE J
23 JUNE 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1268 OF 2005
BETWEEN:
SOMNOMED LTD
APPLICANT
AND:
COMMISSIONER OF PATENTS
FIRST RESPONDENT
ATUL S. MEHTA
SECOND RESPONDENT
JUDGE:
MOORE J
DATE OF ORDER:
23 JUNE 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The application be dismissed.
The applicant pay the first respondent’s costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 1268 OF 2005
BETWEEN:
SOMNOMED LTD
APPLICANT
AND:
COMMISSIONER OF PATENTS
FIRST RESPONDENT
ATUL S. MEHTA
SECOND RESPONDENT
JUDGE:
MOORE J
DATE:
23 JUNE 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
Mr Palmisano invented a device to prevent snoring. He patented his device. The patent was assigned to Somnomed Ltd. Mr Mehta worked with Mr Palmisano when the device was invented. Mr Mehta claims an interest in the patent as a co-inventor. This is disputed by Somnomed. Mr Mehta wants his position as a co-inventor recognised by the Commissioner of Patents. The Deputy Commissioner has required Mr Mehta to provide evidence supporting his claim. The Deputy Commissioner has required Somnomed to provide evidence opposing the claim at the same time. Somnomed claims this is unfair and it should see Mr Mehta's evidence first. This course has been rejected by the Deputy Commissioner. Somnomed challenges the procedure adopted by the Deputy Commissioner in this application to the Federal Court.
Somnomed's application was for an order of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) of a decision (a determination requiring the concurrent filing of evidence) of the Deputy Commissioner of Patents of 6 July 2005 made in relation to an application under s 36 of the Patents Act 1990 (Cth) ("the Patents Act"). In effect, that section enables (in a case such as the present) a person to apply to have the Commissioner determine whether they are a co-inventor of a patented device. Somnomed initially sought review under s 5 of the ADJR Act challenging a decision of the Deputy Commissioner. At the hearing, an issue arose whether the Deputy Commissioner's determination was a reviewable "decision" for the purposes of s 5. A later amended application alleged the Deputy Commissioner's determination concerning the evidence constituted "conduct for the purpose of making a decision": s 6 of the ADJR Act.
In these proceedings, Mr Mehta, who was the second respondent, did not oppose Somnomed’s application for review but submitted there be no costs order against him. The Commissioner opposed Somnomed's application. This was appropriate as the application concerned a matter of procedure: R v The Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 36.
The first issue is whether the Deputy Commissioner's determination is a reviewable decision. If so, did he make an error of law or engage in an improper exercise of power. If not and the determination was only conduct relating to the making of a decision, did the conduct involve a denial of procedural fairness or an error of law. Briefly described, the issues are:
Whether the determination was a "decision"
The Commissioner contended there was no decision for the purposes of s 5. If this is correct, the determination may be "conduct" for the purposes of s 6. If it is, the available grounds of review are different.
Improper exercise of power and error of law in a decision of the Deputy Commissioner (s 5)
These issues arise if the Deputy Commissioner made a decision. Somnomed contended that by taking into account irrelevant considerations, the Deputy Commissioner improperly exercised his power under s 36 and reg 22.24 of the Patents Regulations 1991 (Cth) ("the Regulations") when he made the determination: see s 5(1)(e) and 5(2) of the ADJR Act. Somnomed also contended the determination involved an error of law under s 5(1)(f) of the ADJR Act. The issue was whether Mr Mehta bore an onus of proof in his application and whether the decision requiring concurrent filing of evidence shifted the onus of proof from Mr Mehta and created a joint onus.
(iii) Breach of the rules of natural justice and error of law in relation to conduct of the Deputy Commissioner (s 6)
These issues arise if the Deputy Commissioner did not make a "decision" but the determination was "conduct for the purpose of making a decision". Somnomed contended that the Deputy Commissioner breached the rules of natural justice and/or that an error of law was committed in the course of the conduct: see ss 6(1)(a) and (f). The particular grounds raised were that the conduct breached the rules of natural justice and/or that an error of law was committed in the course of the conduct: see ss 6(1)(a) and (f) of the ADJR Act. This involves a consideration of whether the Deputy Commissioner should have required Mr Mehta to give Somnomed more information about the basis of his claim before it was put to the expense and effort of establishing its entitlement. It also involves consideration of whether Somnomed lost the benefit of a presumption in its favour. The shifting onus issue referred to in the preceding paragraph ((ii)) was also raised under s 6.
The background in more detail
Mr Mehta's application was made under s 36(1)(c)(ii) of the Patents Act. He sought a declaration that he and Somnomed were “eligible persons” in relation to the invention. Eligible persons are those to whom a patent for the invention may be granted under s 15. Regulation 22.24 of the Regulations provides that the practice and procedure to be adopted in deciding an application, such as one made under s 36, is to be determined by the Commissioner.
On 3 June 2005, a delegate of the Commissioner wrote to Somnomed indicating that its evidence should be filed at the same time as the evidence of Mr Mehta:
“If Somnomed intends to defend their entitlement to the invention, the Commissioner will set a time limit of two (2) months for both parties to file evidence in support of their entitlement, and then one (1) month for any corresponding evidence in response.”
In a letter to the Commissioner of Patents dated 15 June 2005, Somnomed's solicitors requested the evidence be filed and served sequentially, in accordance with the former provisions of the Australian Patents Office Manual of Practice and Procedure to provide procedural fairness. It said that the evidentiary procedure determined by the delegate was not “in accordance with stated policy”. A second letter from Somnomed's solicitors dated 30 June 2005 requested reconsideration of the order of presentation of evidence, that the decision of the delegate be “formalised in correspondence” explaining the inconsistency with Volume 3, Part 30.7 of the Manual and an extension of time be granted for filing evidence in support. A further letter dated 30 June 2005 requested a written decision and reconsideration of the order of presentation of evidence.
On 6 July 2005, the Deputy Commissioner issued his decision confirming the direction of the delegate (but varied some of the dates). Each party was directed to prepare its evidence concurrently and Somnomed's request that Mr Mehta be required to file his evidence first was rejected. The Deputy Commissioner found that Mr Mehta's claim to entitlement was "prima facie plausible" and that he had "met the threshold" in setting out the grounds of his application. He concluded that it was "reasonable to expect Somnomed to know the full factual basis on which they claim entitlement to the invention"and to requireSomnomed to set out the basis on which it asserted that Mr Palmisano alone was the inventor.
First issue - whether there was a decision for the purposes of s 5
Section 5 of the ADJR Act provides that a person who is aggrieved by a decision to which the ADJR Act applies may apply for an order of review. Section 3 defines "decision to which the Act applies" as one “of an administrative character made, proposed to be made, or required to be made" including one made "under an enactment" or "by a Commonwealth authority or an officer of the Commonwealth under an enactment". “Enactment” is defined to include Commonwealth Acts or Ordinance, rules, regulations or by-laws.
There is a settled line of authority that s 5 only concerns a decision which is final and determinative. Somnomed referred to the decision of the High Court in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337 ("Bond") to demonstrate the decision of the Deputy Commissioner met the criteria. That case involved an intermediate determination about whether an applicant for a broadcasting licence was a fit and proper person. The High Court held that this was an essential preliminary decision to the ultimate decision as the whether a broadcasting licence should be revoked or suspended or have conditions imposed. It was a decision which had the characteristics required by s 5. It was submitted it was analogous to the present case.
Somnomed submitted that unless it could now challenge the "decision" concerning the concurrent filing of evidence before the final determination of Mr Mehta's application, it would lose the right to appeal. It referred to Iluka Midwest Ltd v Technological Resources Pty Ltd (2002) AIPC 91-782 (“Iluka”). That case concerned an interim decision by a delegate of the Commissioner granting leave to amend the specification to cure some deficiencies. An appeal against that interim decision was sought to be made after the final decision to grant the patent. Merkel J decided the appeal was made too late. His Honour observed (at [50]) that in the context of the statutory scheme in respect of an opposition, the interim decision is to be taken as dealing with and generally deciding the grounds of novelty and fair basis under ss 18 and 40 which were to be the opponent's stated grounds of opposition.
Somnomed also referred to the decision of Burchett J in Ferocem v Commissioner of Patents (1994) 28 IPR 243 (“Ferocem”) as an example of the Court concerning itself with procedural determinations by a delegate of the Commissioner. The case related to a decision of the delegate refusing an extension of time for filing evidence in opposition proceedings. The Court found that the delegate had erred in law by interpreting a broad discretion to extend time as a narrow “‘imperative’ compliance with particular requirements.” (at 244). Burchett J indicated the demands of public interest were such that a serious opposition should be dealt with on its merits rather than “being shut out due to failure of procedure”.
The seminal authority on what is “a decision of an administrative character” is Bond. Mason CJ gave the leading judgment. His Honour explained (at 337) that “another essential quality of a reviewable decision is that it be a substantive determination.” He indicated this would not include procedural decisions such as the refusal by a decision-maker to allow an application for an adjournment in an administrative hearing because this would lack “the quality of finality”. The High Court has recently affirmed that “a decision under an enactment” is a decision expressly required or authorised by the enactment and is also a decision conferring, altering or otherwise affecting existing or new legal rights: Griffith University v Tang (2005) 213 ALR 724.
A comparatively recent judgment concerning whether a procedural ruling is a decision is that of the Full Court in Geographical Indications Committee v O’Connor (2000) 64 ALD 325. The Full Court held that directions given pursuant to s 33 of the Administrative Appeals Tribunal Act 1975 (Cth) which concerned the role of one of the parties in the substantive hearing did not constitute the making of a decision within the meaning of s 3 of the ADJR Act. The Full Court cited with approval a judgment of Spender J in Commissioner of Taxation v Beddoe (1996) 68 FCR 446 rejecting an argument that a direction by the Administrative Appeals Tribunal that parties file and exchange answers to questions was a decision for the purposes of s 5.
The two authorities on which Somnomed relied do not really assist its case. The real point in Iluka was that such rights as an opponent might have to appeal against a decision determining the opposition (or aspects of it) crystallise when the decision is made. That result flowed from the particular statutory regime and earlier authority. Ferocem involved a refusal of a delegate to extend time to file evidence. No question was raised in those proceedings about whether the refusal to extend time was a "decision". Indeed it is not clear whether the jurisdiction the Court was being invited to exercise was under the ADJR Act.
In the present case, the determination of the Deputy Commissioner was no more than a procedural ruling. It did not affect the rights of any party including Somnomed. The determination of the Deputy Commissioner on 6 July 2005 is not a decision made under an enactment within the meaning of s 3 of the ADJR Act. No review is possible under s 5 of the ADJR Act because there is no reviewable decision.
Third issue - Whether there was a breach of the rules of natural justice or error of law for the purpose of s 6
The Commissioner did not put in issue that the determination concerning the filing of evidence constituted conduct for the purposes of s 6. I proceed on the assumption that it did. In the amended application of 21 March 2006, Somnomed Identified two grounds in relation to s 6. The first was that the conduct breached the rules of natural justice, because the Deputy Commissioner failed to require Mr Mehta to provide details of the matters alleged as the foundation of his application before requiring Somnomed to do so. The second ground was that an error of law was committed in the course of the conduct because the determination had the effect that Somnomed bore the onus of proof.
Somnomed referred to a number of decisions of delegates of the Commissioner arising in various contexts to demonstrate that Mr Mehta bore an onus and that Somnomed did not: Andrews v Erten Products Aust Pty Ltd (2000) 50 IPR 498, Stack v Davies Shephard (1996) 34 IPR 117 at 126, Aluminium Pechiney Society Anonyme v Reel SA (2004) 64 IPR 563; Brown v Noekler (1998) 43 IPR 385 and Impact Post Anchors Pty Ltd v Cedarbourne Pty Ltd (1998) 43 IPR 649.
Somnomed also referred to what were said to be analogous provisions in the Trade Marks Act 1995 (Cth). Section 33 provides that the Registrar is obliged to accept an application for registration of a mark unless the Registrar is satisfied that the application has not been made in accordance with the Act or there are grounds for rejecting it. Reference was made to Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365; Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd (2003) 59 IPR 318 and Kowa Company Ltd v NV Organon (2005) 223 ALR 27
In my opinion, there was no breach of the rules of natural justice nor did the Deputy Commissioner commit an error of law. The procedure adopted by the Deputy Commissioner requires Somnomed to provide and therefore reveal the material it relies on in resisting Mr Mehta's application at the time his material is furnished. However, Somnomed would subsequently have the opportunity to provide further material to contest or contradict Mr Mehta's material. It will have the opportunity both to advance its case and to meet the case of Mr Mehta. On its face, this is an unexceptionable procedure and cannot, in my opinion, be said to constitute a denial of procedural fairness.
A possible qualification of this observation might have arisen if Somnomed had a right recognised by the Patents Act and the procedure proposed by the Deputy Commissioner itself derogated from or denied that right. But that is not the case. The Patents Act permits an application under s 36. It confers a right on a person to make the application. In any such application, the Commissioner must be satisfied that specified circumstances exist before exercising the power conferred by that section. Plainly, the person who seeks the exercise of the power must persuade the Commissioner that circumstances exist authorising its exercise. I do not think it is helpful, in this context, to speak of an onus of proof. The burden of proof in relation to an administrative decision of the type presently under consideration is the burden to persuade the decision maker so that the requisite level of satisfaction is reached. It is not a legal burden in the sense used in the context of adversarial litigation. There is an accepted and uncontroversial line of authority that it is inappropriate to draw too close a parallel between the adversarial process in judicial proceedings and decision making authorised by legislation.
Conclusion
The decision of the Deputy Commissioner of 6 July 2005 is not a reviewable decision under s 5. There was no breach of the rules of natural justice by the Deputy Commissioner's conduct and no legal error attended his determination about the filing of evidence. The application should be dismissed with costs.
I certify that the preceding twenty- five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.
Associate:
Dated: 23 June 2006
Counsel for the Applicant: S J Goddard Solicitor for the Applicant: Spruson & Ferguson Counsel for the First Respondent: S Lloyd Solicitor for the First Respondent: Australian Government Solicitors Counsel for the Second Respondent: C Dimitriadis Solicitor for the Second Respondent: Davies Collison Cave Date of last submissions: 21 March 2006 Date of Hearing: 16 March 2006 Date of Judgment: 23 June 2006
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