Spiral Tube Makers Pty Ltd v PIHA Pty Ltd

[2010] APO 16

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

PIHA Pty Ltd v Spiral Tube Makers Pty Ltd [2010] APO 16

Patent Applications                  785507

Title:Encased Piping System

Patent Applicant:  Spiral Tube Makers Pty Ltd

Opponent:  PIHA Pty Ltd

Delegate:  Karen Ayers

Decision Date:  27 August 2010

Hearing Date:  Heard by written submissions

Catchwords:  PATENTS – objection to an extension of time under section 223 to serve a Statement of Grounds and Particulars – service of a document is completed when the document comes to the attention of the applicant –section 14(4) of the Electronic Transactions Act – causative error in not realising that service after business hours was not effected until the following day - extension of time under section 223(2)(a) granted.

Representation:  Patent applicant:  self-represented

Opponent:Wrays, Perth, Western Australia

IP AUSTRALIA

AUSTRALIAN PATENT OFFICE

Patent Application:                   785507

Title:Encased Piping System

Patent Applicant:  Spiral Tube Makers Pty Ltd

Date of Decision:  27 August 2010

DECISION

Request for an extension of time under section 223(2)(a) granted up to 22 April 2010 to serve a SGP.

Mr Rushton’s had erroneously believed that service of the SGP could be effected anytime up until midnight (EST) on the last day of the prescribed period. Because of this, he instructed his attorneys to serve the SGP by facsimile after close of business at the applicant’s address for service on 21 April 2010. Because of section 14(3) of the Electronic Transactions Act 1999, service was actually not effected until the following day and was therefore 1 day late. 


The opponent showed the existence of an error or omission that caused the failure to serve the SGP in time. The evidence established that Mr Rushton genuinely believed that settlement was imminent and had delayed serving the SGP while waiting for the applicant to return the executed deed of settlement.

The balance of interests of the parties strongly favoured granting the extension. 

REASONS FOR DECISION

BACKGROUND

1.   Patent Application 785507 was filed by Spiral Tube Makers Pty Ltd (STM) on 5 November 1998 under the provisions of the PCT claiming priority from an Australian provisional application (PP 0236) filed on 7 November 1997.

2.   The complete application was advertised accepted on 22 October 2009 meaning the prescribed period for filing a notice of opposition to the grant of a patent under regulation 5.3(1) was 22 January 2010.  On 21 January 2010, the opponent (PIHA Pty Ltd) filed a notice of opposition setting 21 April 2010 as the deadline for serving the Statement of Grounds in Particulars (SGP) under regulation 5.4.

3.   The opponent served their SGP by facsimile at 17:24 (5:24 pm) Perth time (WST) on 21 April 2010.  This means that the earliest time the applicant (in Melbourne) could have received the transmission was 19:24 (7:24 pm) Melbourne time (EST).  In a letter dated 6 May 2010, the applicant advised the Commissioner that they did not receive the SGP until 22 April 2010.  They argued that as this was 1 day after the statutory deadline, the opponent had failed to comply with the provisions of the Patent Regulations and formally requested the Commissioner to dismiss the opposition.

4.   In a letter of 27 May 2010, a delegate of the Commissioner agreed with the applicant referring to the decision in Aristocrat Technologies, Inc v IGT [2008]APO 33. That decision found that under section 14(4) of the Electronic Transactions Act 1999 (“ETA”), the time of receipt of an electronic communication was when the communication came to the attention of the addressee unless an information system had been designated for the purposes of section 14(3). As there was no suggestion that section 14(3) applied in the current case, it was reasonable to conclude that the SGP was not served until the next working day (ie: 22 April 2010).

5.   On 10 June 2010, the opponent filed a section 223 request to extend the time to serve their SGP by one day.  On 30 June 2010, the opponent provided statutory declarations in support of that request. There was no requirement for advertisement of the section 223 request because the period requested under section 223 was less than 3 months and the request did not relate to a prescribed relevant act in circumstances prescribed in sections 223(4).  However the patent applicant was given the opportunity to be heard on the section 223 matter in accordance with sub-regulation 22.22(1), because they could be adversely affected by a decision under section 223. 

6.   On 7 July 2010, the patent applicant advised that they objected to the section 223 extension of time.  A delegate of the Commissioner advised the parties that the matter could be best dealt with by a hearing on the written record. Both parties provided written submissions for the Commissioner to consider. This decision is based on these submissions together with the material already on file in relation to the section 223 request and SGP.

DATE OF SERVICE

7. There is no dispute that the SGP entered the applicant’s electronic information systems sometime shortly after 7:24pm (EST) on 21 April 2010. The question is whether service occurred on 21 April 2010 when the document entered the applicant’s electronic systems [under section 14(3) of the ETA] or whether it occurred on 22 April 2010 when the document came to the attention of the applicant [under section 14(4) of the ETA]. In the former case, the SGP would have been served within the statutory deadline and a section 223 extension would not be required.

8. The opponent argued that there had been a “designation” of a particular information system to enliven the provisions of section 14(3). In this regard, the opponent relied on an email sent by Mr Martin[1] at 2:08 pm on 7 April 2010[2]. These email consents to a draft deed of settlement being sent to STM’s facsimile machine. However, Mr Martin’s email only specifically consented to the draft deed of settlement being sent by facsimile. In my view, this does not extend to the SGP nor is it a general designation for all electronic communications to trigger the provisions of section 14(3).

[1] Manager Director of Spiral Tube Mills (Aust) Pty Ltd.  This company wholly owns the patent applicant company Spiral Tube Makers Pty Ltd trading as Duraduct.

[2] Simon Rushton Statutory Declaration dated 21 July 2010 exhibit SR2-001

9. The opponent noted that most companies only have one facsimile. They argued that where there is implied consent to receive documents via facsimile it would be clear that the Company’s facsimile machine would be the designated information system. I disagree. “Consent” and “designation” are two separate parts of the ETA. “Consent” simply allows documents to be served electronically. “Designation” relates to when these documents would be deemed received. By default, documents are all received when they come to the attention of the addressee [section 14(4)]. An exception is where an addressee specifically designates a system under section 14(3). However, section 14(3) requires explicit designation. The fact that there is only one electronic system is not sufficient because there is no obligation on a party to designate any information system for the purposes of section 14(3).

10. As a result, section 14(4) still applies in the current case and the date of service of the SGP is 22 April 2010. As this is one day after the statutory deadline of regulation 5.4, the opponent will need to be granted an extension of time under section 223 to have the service ratified.

RELEVANT LAW

11.  Section 223(2) reads as follows:

Where, because of:

an error or omission by the person concerned or by his or her agent or attorney; or
circumstances beyond the control of the person concerned;

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.

12.  Section 223(11) defines a "relevant act" for the purposes of section 223 as:

an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings), and includes the making of a Convention application within the time allowed for making such applications.

13.  The definition of an error or omission was expressed by Jenkinson J in Kimberly-Clark Ltd v Commissioner of Patents(No 3) 13 IPR 569-584 where the Federal Court upheld a decision by the Commissioner's Delegate to refuse an extension of time to lodge a notice of opposition. Jenkinson J defined an error or omission in the following terms in the context of section 160 of the Patents Act 1952. Section 223 is the equivalent of the previous section 160.

"It is in my opinion difficult to suppose that only the inadvertence and accidental steps, and not errors resulting from faulty reflection, of the former class of persons were intended by the draftsman to be within s 160(1). Further, the word 'error' is not easily assigned a clear meaning restricted by reference to one or several particular categories of flawed mental function. The attempt is likely to lead to the drawing of fine and often unrealistic distinctions. And some errors of judgement by agents and attorneys may be as bizarre and as little to be anticipated as lapses of memory and accidental slips."

14. Jenkinson J rejected the argument that section 160(2)(a) excluded errors or omissions that were the products of deliberation. Consequently, the concept of what constitutes an error should be interpreted broadly and includes an error of judgement. However, Jenkinson J also made the following comments at page 580:

"By no means every judgement by the "person concerned" or by "his agent or attorney" which can be shown to have been mistaken will answer the description "error or omission" in the ordinary meaning of those words, which in their context carry, in my opinion, a connotation of obviousness in error."

15.  In addition, at page 583 Jenkinson J found that, in order to make out a proper case justifying an extension:

"………an applicant would in my opinion have to go beyond a disclosure of the processes by which an agent's errors came to be committed, and would have to expose frankly, inter alia, all the conduct, knowledge, beliefs and mental processes (or, in the case of corporation aggregate, of the relevant officers and other agents) 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."

16.  In Lazer Safe  Pty Ltd v. Commissioner of Patents [2001] AATA 967 at [11], the AAT summarised some basic principles about the application of section 223. These included:

(a) 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) 36 IPR 470 at 480)
(b) 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 supra at 479)
(c) for an extension to be granted, there must have been ‘an obvious error or omission’ and 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. In addition, the applicants for an extension must demonstrate that they had an intention to do the relevant required act, and than an error or omission on their, or their agent's behalf, reasonably could be said to have caused the failure to complete the relevant act in the time prescribed; (see Kimberly-Clark, supra at 579)

17.  The AAT noted that there is no clear or complete meaning for the words "error or omission", (as per Kimberley-Clark v Commissioner of Patents  & Anor (No.3) 13 IPR 56 (Federal Court of Australia) at 583-4). However it observed that a distinction should be drawn between:

(a) errors or omissions affecting the carrying out of the parties' intentions; and
(b) the consequences of deliberate decision; (Total Peripherals Pty Ltd v IBM & Commissioner of Patents, AAT No. 13336 (1998) AATA 784  (30 September 1998)

18.  The AAT then characterised a number of different types of errors:

(i)an error or omission involves some type of flawed mental function in the carrying out of the parties' intentions and does not have to be "accidental or due to an inadvertent source"; [Outokumpu Harjavalta Metals Oy v WMC Resources Ltd [1996] APO 61; (1996) 37 IPR 55 (at 58)];

(ii)errors or omissions resulting from faulty reflection, deliberation or mistake in judgment fall within the scope of section 223; (Outokumpu; supra at 58); and

(iii)error or omission may include a breakdown in procedure or a failure to exercise due diligence; (Oz Technology v Boral Energy Ltd (1999) APO 18 (2 March 1999)

19.  Finally the AAT noted that the balance of the relevant factors must favour the exercise of the discretion in favour of the applicant for an extension. The Commissioner, in balancing these factors, is entitled to proceed on the basis that 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; (Re Sanyo, supra, at 479)

20.   These relevant factors include:

(a) whether there has been a frank, comprehensive and clear disclosure of all the circumstances relevant to weighing the discretionary consideration;
(b) whether a serious opposition has been foreshadowed;
(c) whether there has been undue delay in seeking an extension of time;
(d) the interests of the parties in refusing or granting an extension;
(e) the public interest in refusing or granting an extension.

SECTION 223 REQUEST

21.  The opponent provided a statutory declaration dated 30 June 2010 by Simon Rushton, the Commercial Group Manager at Mineral Resources Ltd, a company that wholly owns the opponent company (PIHA).  Mr Rushton noted that PIHA began negotiations with the applicant to settle the opposition subsequent to their filing their Notice of Opposition.  He stated that principles of a settlement were reached on 9 April 2010 following several discussions between Mr David Martin (Managing Director of STM) and himself. 

22.  Following these discussions, a draft deed of settlement and release was prepared and sent to the applicant for execution on 12 April 2010.  By 16 April 2010, when the opponent had not received a response from the applicant, Mr Rushton contacted his patent attorneys (Wrays in Perth) to instruct them to start preparing the SGP in order to preserve their position given the upcoming deadline for serving the SGP.  

23.  At approximately 5pm (EST) on the evening of 20 April 2010, Mr Rushton spoke to Mr Martin and advised him that if PIHA did not receive the executed deed, the company would serve the SGP on the morning of 21 April 2010.  Mr Martin apparently advised Mr Rushton that he expected the applicant to sign the agreement the next day and requested Mr Rushton ring him the following day. 

24.  On 21 April 2010, Mr Rushton was apparently advised at approximately 9 am by Mr Martin that the deed would be signed “within an hour”.  Mr Rushton told Mr Martin that he would be uncontactable from 9am – 4 pm (EST) but if there was any problem, Mr Martin could contact Mr Peter Wade (Managing Director of PIHA).  At 4:30 pm (EST), Mr Rushton found that the executed deed had still not been received.  He made numerous attempts to contact Mr Martin by phone.  When these all failed, Mr Rushton immediately instructed Wrays to serve SGP on his (then) understanding that this could be served at any time up until midnight EST on the last day for serving the document.  Mr Rushton understood that the document was served by both email and facsimile at 5:24pm WST (7:24 pm EST).

25.  Mr Rushton concluded that the opponent would have served their SGP on time had Mr Martin informed him earlier on 21 April 2010 that the applicant was not intending to execute the settlement document.  

DECISION

Was there a causative error?

26.  To enliven section 223, there has to be a causative link between the error and the relevant act as well as an intention to do a relevant act within the prescribed time (as per GS Technology Pty Ltd  v Commissioner of Patents (2004) 63 IPR 9).

27.  In the current case, the opponent believed that settlement was imminent and were intending to withdraw their opposition once the deed of settlement had been executed by the applicant.  Mr Rushton expected that the deed would be signed in the morning of 21 April 2010.[3]  According to Mr Rushton, if he had known that the applicant was not intending to sign the document at 9 am, he would immediately have instructed Wrays to file and serve the SGP.  When Mr Rushton realised in the afternoon that the document had not been signed, he tried to contact Mr Martin numerous times but received no response.  At the end of the day, Mr Rushton then instructed Wrays to serve their pre-prepared SGP based on his understanding that the document could be served at any time up to midnight EST on the last date for serving the document. 

[3] statutory declaration by Simon Rushton dated 30 June 2010 at [22]

28.  In this scenario, there are two potential errors which could have led to the late service.  The primary error was the opponent’s mistaken belief that settlement was imminent.  The applicant claimed that they did nothing between 12 and 21 April to lead PIHA to believe that STM would execute the Deed and Settlement[4].  This is in sharp contrast to the opponent’s evidence which suggests that Mr Rushton had been advised by Mr Martin on both 20 and 21 April 2010 that the deed would be executed shortly.[5]  

[4] Their letter of 7 July 2010-page 1, final paragraph.

[5] See statutory declaration by Simon Rushton dated 21 July 2010 at [39], [46]

29.  The applicant agreed that settlement discussions had occurred and a draft deed of settlement had been received by them on 9 April 2010.  According to his declaration, Mr Martin started having reservations about the settlement some time after 13 April 2010[6].  He also stated in his statutory declaration that he could state “unequivocally” that at no time had his Company agreed to execute the deed and further that he had advised Mr Rushton on the morning of 21 April 2010 that PIHA should serve its SGP[7]. 

[6] See statutory declaration by David Martin dated 7 July 2010 at [11]

[7] See statutory declaration by David Martin dated 7 July 2010 at paragraph [10]

30.  Mr Martin’s evidence is in sharp contrast to Mr Rushton’s claim that Mr Martin had told him that the settlement deed would be executed “within the hour”.  I find Mr Rushton’s version of events of 21 April 2010 to be more credible. If Mr Rushton had been told that PIHA should serve its SGP in the morning of 21 April 2010 as the applicant has alleged, then he would not have tried to contact the applicant several times in the afternoon to check about the executed deed as the evidence suggests.[8]  

[8]See statutory declaration by Simon Rushton dated 30 June 2010 at [13]–[17]

31.  In addition, Mr Rushton had nothing to gain by asserting that the applicant had said the document would be signed “within the hour”.  Their SGP is a well-drafted document and largely been prepared by the morning of 20 April 2010.[9]   It was ready to be served by the morning of 21 April 2010.  Mr Rushton was keenly aware of the statutory deadline and it would make no sense that he would delay serving the SGP if the applicant had told him to serve it. 

[9] See statutory declaration by Simon Rushton dated 21 July 2010 at annex SR2-002

32.  I therefore accept Mr Rushton’s evidence in regard to the events leading up to 21 April 2010.  In my view, he genuinely believed that settlement was imminent and he had delayed serving the SGP while waiting for the applicant to return the executed deed. 

33.  The secondary error which contributed to the delay in service was Mr Rushton’s understanding that service could be effected anytime up until midnight (EST) of the final deadline.  This issue was recently considered in Aristocrat Technologies, Inc v IGT [2009] APO 11 (12 June 2009). An earlier decision [Aristocrat Technologies, Inc v IGT [2008] APO 33 (15 December 2008)] had reviewed the requirements for electronic service under the Electronic Transactions Act 1999 (ETA) and found the time of service of an electronic document was when the document came to the attention of the addressee not the time it reached the addressee’s electronic information system. This effectively changed a long standing practice where “good will” would often prevail to accept after hours service between the parties (see paragraph 20 of Aristocrat Technologies, Inc v IGT [2009] APO 11).

34.  The decision in Aristocrat Technologies, Inc v IGT [2009] APO 11 was only issued 10 months before the current deadline for service. As a commercial Group Manager, Mr Rushton may not have been aware of the change in practice especially if he was not regularly involved in oppositions before the Commissioner. I therefore accept that he did not know that the SGP needed to be served prior to the close of business at the applicant’s address for service. I believe this error contributed to the opponent’s failure to serve the SGP on 21 April 2010 and provides an additional causative error to enliven the provisions of section 223.

Should the discretion be exercised?

35.  The considerations involved with the exercise of the discretion to extend time were discussed by Bowen CJ in Vangedal-Nielsen v Smith (Commissioner of Patents) (1980) ALR 144 (at 150) as follows:

"Clearly, the Commissioner will have to consider the interests of the prospective opponent who, for some good reason, has not been able to mount his opposition within the initial period of three months. The Commissioner will further have to have in mind, where a serious opposition is foreshadowed, the public interest [in ensuring worthless patentsare not granted], but he will have to require to be satisfied by an applicant for an extension that a proper case has been made out justifying an extension. It would be wrong if he granted an extension simply because no one had raised rather exceptional circumstances why it should not be granted. Reasons why this is so include the desirability of operating the system efficiently and without unreasonable delays and also the interests of the applicant for apatent which are also clearly involved."

36.  The balance of interests of the parties strongly favours granting the extension. The consequence of refusing to grant the extension is dismissal of the substantive opposition. On the other hand, granting the extension will mean that the opposition to the grant of thepatent  will proceed, protecting the public interest that invalidpatents are not granted. A serious opposition is clearly in train. The applicant has acknowledged the closeness in the opponent’s commercial product in their letter threatening infringement proceedings.[10]

[10] Applicant’s letter of 20 March 2009 (exhibited as SR-008 to the Simon Rushton declaration of 21 July 2010)

37.  The delay in requesting the extension (once its requirement was determined) was not undue. The extension is for one day, not a significant period by any standard.  These factors all justify the grant of the section 223 request. 

CONCLUSION

38.  The opponent has shown the existence of an error or omission that caused the failure to serve the SGP in time. I am satisfied that an extension of time under section 223 (2)(a) is appropriate. I therefore grant the opponent an extension of time under section 223(2)(a) until 22 April 2010 to serve their SGP. 

COSTS

39.  The power to award costs is based on section 210 and regulation 22.8.  The normal practice is that costs should follow the event.  As the opponent was successful in their request, I award costs against the applicant.

Karen Ayers
Delegate of the Commissioner of Patents