State Electricity Commission of Victoria v D.U.T. Pty Ltd
[1998] FCA 1397
•4 NOVEMBER 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - intellectual property – patents– application by respondent pursuant to Order 54 r 8 (3) Federal Court Rules for extension of time in which to file a “cross‑appeal” from decision of Commissioner of Patents that parties had joint entitlement to a patent for invention for combustion of coal for the generation of electricity - whether “special circumstances” existed to enliven Court’s jurisdiction
Federal Court Rules: O 58 r4(2), (3), (4)
Jess v Scott (1986) 12 FCR 187 - considered
Hannpost Pty Ltd v MITA Copiers Australia Pty Ltd (1996) 67 FCR 416 - cited
Jackamarra v Krakouer (1998) 153 ALR 276 - considered
Kabushiki Kaisha Universal v Aristocrat Leisure Industries Pty Ltd (1998) AIPC §91‑396 – considered & applied
STATE ELECTRICITY COMMISSION OF VICTORIA v D.U.T. PTY LTD
VG 394 of 1998
GOLDBERG J
MELBOURNE
4 NOVEMBER 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 394 of 1998
BETWEEN:
STATE ELECTRICITY COMMISSION OF VICTORIA
ApplicantAND:
D.U.T. PTY LTD
(ACN 000 879 229)
RespondentJUDGE:
GOLDBERG J
DATE OF ORDER:
4 NOVEMBER 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The time for service of the respondent’s motion filed 26 October 1998 be abridged to 27 October 1998.
The time for filing and service of the respondent’s notice of cross‑appeal dated 7 September 1998 be extended to and including 7 September 1998.
The notice of cross‑appeal filed by the respondent on 7 September 1998 and served on the applicant on that date stand as the respondent’s notice of cross‑appeal filed and served in accordance with the Federal Court Rules in this proceeding.
The applicant’s notice of motion filed 23 September 1998 is dismissed.
The respondent pay the applicant’s costs of the applicant’s motion and the respondent’s motion.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 394 of 1998
BETWEEN:
STATE ELECTRICITY COMMISSION OF VICTORIA
ApplicantAND:
D.U.T. PTY LTD
(ACN 000 879 229)
Respondent
JUDGE:
GOLDBERG J
DATE:
4 NOVEMBER 1998
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
On 5 August 1998 the Commissioner of Patents, by his delegate, in an opposition under s 59 of the Patents Act 1990 (Cth) (“the Act”) decided that Donald Ray Cummings is a co‑inventor of the invention the subject of Australian Patent Application No 661176 together with the named inventors and that the applicant and the respondent have joint entitlement to a patent for the invention.
The patent application was filed by the applicant on 4 May 1993 and on 13 October 1995 a notice of opposition was lodged by the respondent on the ground, relying on s 59(a) of the Act, that the nominated person was not entitled to a grant of a patent for the invention. On 18 March 1998 the respondent filed a request pursuant to s 32 of the Act seeking a determination from the Commissioner to enable the application to proceed. The parties agreed that the s 32 and s 59 issues could be dealt with at the same hearing.
I take the following facts from the decision of the delegate. The context of the invention is the combustion of Victorian brown coal for the generation of electricity. The accepted specification states:
“This invention relates to a process and apparatus for converting a particulate solid carbonaceous fuel with a high moisture content into gas for combustion. More specifically the invention provides an improved process and apparatus for the gasification of moist particulate solid carbonaceous fuel which does not involve the addition of water prior to the drying stage and in which the drying of the fuel is integrated with the cooling of the product gas. The present invention is especially suitable for converting moist coal in to coal gas …”
The specification explains that the storage of dried coal is hazardous and that the use of steam (which has to be generated) to dry the coal, and the need to cool the gas before it can be used, increases capital costs and/or reduces generating efficiency.
The delegate said that the only issue to be decided was whether or not the applicant had obtained the invention from the respondent. The delegate then set out relevant events in relation to this issue which included communications between the applicant and the respondent for a modified integrated gasification combined cycle system.
The delegate identified the inventive concept at the core of the invention as being the idea of using hot product gas, generated in the gasification process, to dry moist incoming feedstock in a separate dryer and thereby also cool the gas. The delegate concluded that the respondent disclosed the core concept of the invention to the applicant on 13 November 1991 in confidence and that prima facie Donald Ray Cummings was an inventor and that the respondent was entitled to the invention. He then asked the question whether the applicant was independently considering this concept. He looked at evidence which showed that the concept was under active consideration by the applicant not before but after 13 November 1991 and concluded that the applicant’s recognition of certain problems constituted an original and significant contribution to the final concept of the invention. He concluded that the applicant and the respondent had joint entitlement to the invention. The delegate noted that what would naturally follow from his decision would be a direction under s 32 of the Act that the application proceed to grant jointly in the names of both parties and preferably with associated amendments to the patent request and notice of entitlement. He gave the parties 28 days from the date of the decision to file written submissions as to how the matter should be disposed of and said that otherwise he would make a direction under s 32.
By notice of appeal filed 13 August 1998 the applicant appealed from the whole of that decision, sought orders reversing the decision and dismissing the opposition in its entirety and sought an order that Application No 661176 proceed to grant. In short, the applicant is seeking an order that it have sole entitlement to the patent.
On 7 September 1998 the respondent filed in the Court a document entitled “Notice of Cross‑Appeal” whereby it appealed from that part of the decision whereby it was decided that:
(a)the named inventors are co‑inventors of the invention the subject of Australian Patent Application No 661176 together with Donald Ray Cummings; and
(b)the respondent has a joint entitlement with the applicant to a patent for the invention.
In short, the respondent was seeking an order that it have sole entitlement to the patent.
The first directions hearing was held on 18 September 1998. At that hearing counsel for the applicant raised the issue that the respondent’s notice of cross‑appeal was filed out of time and that the respondent should be ordered to make any application to extend the time for filing of the notice of cross‑appeal or otherwise run the risk at trial that the cross‑appeal would be held to be incompetent. On that occasion the solicitor for the respondent did not wish such procedure to be adopted and directions were given in relation to the continuation of the applicant’s appeal.
On 23 September 1998 the applicant filed a notice of motion seeking an order that the notice of cross‑appeal be struck out on the ground that it had been filed out of time. The affidavit in support was sworn by the applicant’s solicitor who stated, inter alia:
“I am instructed by Mr Graeme Brooke of SECV and verily believe that significant prejudice will be suffered by my client if the time for service of the Cross Appeal is extended and the Cross Appeal is allowed to be part of this proceeding. Without the Cross Appeal, the only possible outcomes are sole ownership of the patent by SECV or joint ownership. If the Cross Appeal is permitted to proceed a further possible outcome is added, namely sole ownership by D.U.T. The difference which this adds is significant, both because of the possible outcomes and also the likely evidence to be called. If the Cross Appeal is not litigated, neither side will need to address evidence at all as to whether D.U.T. and Mr Cummings is entitled to sole ownership. Rather, the proceeding would be confined to whether there should be joint ownership or sole ownership in the SECV.”
On 26 October 1998 the respondent filed a notice of motion seeking an order that the time for filing and service of the notice of cross appeal dated 7 September 1998 be extended to that date. An affidavit in support of the motion has been sworn by the solicitor for the respondent who sets out the sequence of events which occurred after the applicant’s notice of appeal was served.
The notice of appeal was served by the applicant’s solicitors on 13 August 1998 on the respondent’s patent attorneys who had acted in the patent office proceeding. That firm is associated with the respondent’s solicitors. A partner in the patent attorneys’ firm told the applicant’s solicitor on 17 August 1998 that he was not certain whether his firm had instructions to act in the appeal. As a result the applicant’s solicitor served the notice of appeal directly upon the respondent on 17 August 1998.
On 18 August 1998 the respondent’s solicitor’s firm was instructed on behalf of the respondent to prepare a cross‑appeal and the initial instructions were given to a senior employee who believed that on the basis of O 52 r22 of the Federal Court Rules the relevant period for filing the cross‑appeal was 21 days after the service of the notice of appeal on the respondent. The solicitor for the respondent formed the same view and although he was aware of O 58 r4 of the Federal Court Rules he did not believe that it applied to the cross‑appeal for two reasons.
The first reason was that the respondent was “cross‑appealing” as that term is used in O 52 r22 of the Federal Court Rules rather than appealing the entirety of the delegate’s decision. The respondent was content with the decision insofar as it was held that Mr Cummings is the inventor of the key inventive concept and that therefore the respondent had entitlement to the invention. The respondent only wished to dispute the finding that the applicant’s contribution was such that it as well was entitled to an interest in the invention.
The second reason he gave was that O 58 r4 of the Federal Court Rules did not seem to be apt to cover the cross‑appeal because in his experience most appeals from decisions of the Commissioner of Patents are filed on or very close to the 21st day of the appeal period and the notice of appeal need not be served until after the 21 day period has expired by virtue of the provisions of O 58 r4(2A) which provides for the notice of appeal to be served up to five days after the day on which it is filed. The solicitor observes that in circumstances where a partially successful party does not wish to contest any part of the decision unless the other party does so (for example, because of the costs involved) the first party would be out of time if an appeal had to be filed within that 21 day period. The solicitor said that it seemed to him that that was not an intended consequence of the Rules. He also noted that O 58 r4 is expressed in terms of “an appeal” and that there is no mention in O 58, unlike O 52, of a “cross‑appeal”.
It was for those reasons that the solicitor formed the view that the only rule which might conceivably be relevant was O 52 r22. He was aware of O 58 r2(2) which provides that:
“Subject to this Order and to any other law of the Commonwealth, the other Orders of these Rules apply to intellectual property cases”,
and whilst O 52 r22 refers to a “judgment” it seemed to him that the procedure specified by that rule for a cross‑appeal was the most closely analogous rule so that that rule should be applied in circumstances where there was no specific rule in O 58 relating to the filing of a cross‑appeal.
Having regard to the fact that the notice of appeal was served directly on the respondent on 17 August 1998 the respondent’s solicitor calculated the expiry of the time for filing and serving of the notice of cross‑appeal to be 7 September 1998 on which date it was filed and served by facsimile on the applicant’s solicitor. The hard copy was served on the following day.
On 15 September 1998 the applicant’s solicitor expressed the view to the respondent’s solicitor that the cross‑appeal was out of time. The respondent’s solicitor did not agree with that view. On the following day, 16 September 1998, the applicant’s solicitor sent the respondent’s solicitor minutes of proposed orders which included an order that time be extended for filing the cross‑appeal. After the minutes were sent the applicant’s solicitor told the respondent’s solicitor that they had received advice from counsel that the notice was filed out of time because it was an appeal from the whole of the decision, not only part. The respondent’s solicitor pointed out that that was not what the notice said and he drew the applicant’s solicitor’s attention to O 52.
The respondent’s solicitor disagrees with the applicant’s solicitor’s assertion that the applicant will suffer significant prejudice if the time for service of the cross‑appeal is extended and his assertion that without the cross‑appeal the only possible outcomes are the sole ownership of the patent by the applicant or joint ownership. He points out that the hearing of the applicant’s appeal (brought pursuant to s 60 of the Act) is not “an appeal” in the strict sense but rather is a hearing de novo of the opposition. The respondent’s solicitor says that it would follow that one possible outcome is that the applicant will not be entitled to ownership of the invention at all. It is pointed out that in a hearing de novo each party is free to file evidence which goes beyond what was filed, and what was relied upon, before the delegate and to argue all issues raised before the delegate.
The respondent contends that the issues in the proceeding are whether the key inventive concept of the invention was obtained by the applicant from Mr Cummings and the nature of the applicant’s subsequent contribution (if any) to the final concept of the invention. It is said that the issues go to the nature and extent of each party’s contribution to the invention as finally claimed and that it will not be possible properly to determine that issue without full evidence being led by both parties as to their involvement in the key inventive concept and the other issues relevant to the invention as finally claimed. The respondent says that it wishes to have the opportunity to argue that the applicant’s contribution (if any) to the invention as finally claimed is not such as to entitle it to joint, or the entire, entitlement of the patent.
The respondent did not contend at the hearing that the notice of cross‑appeal was filed within time nor did it contend that it was entitled to rely on the provisions of O 52 r22. The respondent accepted that the filing of the notice of cross‑appeal was governed by the provisions of O 58 r4 and that it was required to show “special circumstances” in order to obtain an extension of time for filing the notice of cross‑appeal. Order 58 r4 is in the following terms:
“(1) An appeal from a decision of the Commissioner or Secretary is instituted by filing in an appropriate Registry a notice of appeal in accordance with Form 58A.
(2) An appeal must be instituted within 21 days after the date of the decision appealed from or within such further time as the Court, on application, fixes, unless a law of the Commonwealth provides otherwise.
(2A) The notice of appeal must be served on the Commissioner or Secretary, as the case requires, and all other parties to the appeal within 5 days of day on which the notice of appeal is filed.
(3) Application may be made to the Court to extend the time for filing, by notice of motion:
(a)made at any time – unless a law of the Commonwealth provides otherwise; and
(b)supported by affidavit showing special circumstances.
(4) If application is made under subrule (3), a copy of the notice of motion and supporting affidavit must be served on the Commissioner or Secretary, as appropriate, and on the persons directly affected by the appeal, not later than 14 days before the day appointed for the directions hearing.
(5)In this rule, ‘appropriate registry’ means:
(a)the Registry at the place where the applicant prefers the appeal to be heard; or
(b)the Registry determined at any time by order of the Court or a Judge to be an appropriate Registry.”
It can be seen that this is the rule which specifically applies to the appeal in this proceeding. It makes no provision for the filing of what is called a “cross‑appeal” but it does by virtue of subrule (3) allow the time for the filing of a notice of appeal to be extended. That subrule is rather curious in form because it does not specifically refer to extending the time for filing a notice of appeal. However, on its proper construction, it could not apply to any other notice.
I consider that the content and the interpretation of the expression “special circumstances” in O 58 r4(3)(b) is similar to that in relation to the expression “special reasons” found in O 52 r15(2) which enables a court or a judge “for special reasons” to extend the time for filing and serving a notice of appeal. In Jess v Scott (1986) 12 FCR 187 a Full Court of the Federal Court (Lockhart Sheppard & Burchett JJ) said at 195:
“What is needed to justify an extension of time is indicated in r 15(2) by the words ‘for special reasons’. It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty‑one days. In that context, the expression ‘special reasons’ is intended to distinguish the case from the usual course according to which the time is twenty‑one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression ‘for special reasons’ implies something narrower than this.
The proposition cannot be accepted that r 15(2) was intended to constrict the broad measure of justice for the individual case which the Court could award upon the principle of Gatti v Shoosmith.”
This passage was adopted and followed by a Full Court of the Federal Court (Sheppard, Spender & Branson JJ) more recently in Hannpost Pty Ltd v MITA Copiers Australia Pty Ltd (1996) 67 FCR 416 at 427. It was also cited by Kirby J in Jackamarra v Krakouer (1998) 153 ALR 276 in considering the applicable principles for procedural time defaults at 294:
“1. The first rule is that there are no rigid rules. Procedural discretions, such as those in question here, are typically expressed in very wide language. In the exercise of such discretions, courts should not be trammelled by a rigid set of rules, whether called guidelines or principles, which would impede the application of rules of court with the flexibility needed to do justice in the particular case. This is why it is impossible to lay down fixed and binding rules for the exercise of discretions to enlarge time. Of necessity, each case must depend upon its own particular circumstances.
2. Nevertheless, it is useful to keep in mind a number of considerations which have commonly been taken into account. The starting point for the exercise of any power granted under legislation is the ascertainment of the terms of the grant and a consideration of the purposes for which the power has been afforded. Thus, if a rule requires that ‘special reasons’ or ‘special circumstances’ be shown as a pre‑condition to a procedural indulgence, this will indicate a need to demonstrate circumstances out of the ordinary. But where, as is usually the case (and is the case here), the discretion is conferred in unlimited terms, the question for the decision‑maker is whether it would be just in all the circumstances to grant or refuse the application. Necessarily, the indulgence is not granted as of course. It is for the party seeking to persuade the decision‑maker to show that it should be granted. Such persuasion will usually depend upon the provision of an acceptable explanation of how the time default occurred. Neither a party nor its legal advisers may simply assume that a request for an extension of time will always be acceded to. Inherent in the grant of a discretionary power is the assumption that it will sometimes be refused.
…”
In Kabushiki Kaisha Universal v Aristocrat Leisure Industries Pty Ltd (1998) AIPC §91‑396, Branson J refused an application for an extension of time to file a notice of appeal from a decision of the Commissioner of Patents. The delegate of the Commissioner made his decision on 6 June 1997 on which date a copy of the decision was provided to the applicant’s patent attorneys. The applicant did not give instructions to the patent attorneys to file an appeal until 16 September 1997. Branson J found that there were special circumstances which took the case out of the ordinary but refused the application because of the extent of the delay for which there was no adequate explanation. Her Honour construed “special circumstances” as being circumstances:
“which take the case out of the ordinary so as to justify departure from the general rule that an appeal is to be instituted within twenty‑one days from the date of the decision” (37,127).
Her Honour then noted that the power given by O 58 r4 was a flexible discretionary power which “is not otherwise confined except by the dictates of the justice of the case” (37‑127). Her Honour then noted that factors appropriate to be taken into account in the exercise of the discretion included the length of the delay, the explanation for the delay and, in particular, whether the plaintiff was personally blameless for the delay, any prejudice to the respondent or to other persons arising out of the delay, actions taken by the applicant to alert the respondent to the fact that the decision might be contested, the merits of the proposed appeal, alternative avenues of relief, if any, available to the applicant and questions of public interest.
Mr McGowan, who appeared for the applicant, submitted that the respondent had not shown any special circumstances sufficient to enliven the Court’s jurisdiction under O 58 r4(3). He submitted that the cross‑appeal was reactive only and he pointed to the fact that the respondent had declined to issue a motion when invited to do so at the directions hearing and had only done so when the applicant issued its motion to strike out the cross‑appeal. However, I do not consider that this submission negates the existence of special circumstances, nor do I consider it such as to influence me to exercise my discretion against the respondent. Even if the respondent should have filed its motion sooner than it did, it does not follow that it is not genuine in its desire to mount the cross‑appeal. At the directions hearing on 18 September 1998 the issue was raised formally by the applicant for the first time and the respondent’s solicitor said it was the first time he had heard the applicant’s views on the issue and it appears that he needed time to consider the matter.
Mr McGowan submitted that the respondent’s solicitors had notice of the appeal well before the expiry of the 21 days and had not complied with the relevant period. That of itself does not disentitle the respondent to the relief it seeks. It is necessary to ask and answer the question – why did the respondent not comply with the relevant period?
The respondent’s solicitor has given an explanation as to why he took the view, erroneously, that he could rely upon the provisions of O 52 r22. In my opinion, what occurred does take the matter out of the ordinary. It was not the usual type of appeal from a delegate. It was an appeal which was based on two conclusions, one that Mr Cummings was a co‑inventor (which the respondent did not want to disturb), the other as to joint entitlement (which the respondent wanted to set aside). Mr McGowan said that the solicitor (whose firm is a specialist in the patent area) took a wrong view of the rules which view was not fairly open to him. That may be (although I express no concluded view on the matter) but the fact is that the solicitor was presented with a matter somewhat out of the ordinary. He was faced with what he saw as a cross‑appeal situation, but Mr McGowan did not suggest that the solicitor did not honestly hold the view which he held. Instructions to appeal against the Commissioner’s decision were received within the 21 day period allowed by O 58 r2 and although the solicitor’s view of the Rules was erroneous, it was a view honestly held where the issue was not a common everyday issue but rather one which was not explicit or made expressly clear by the Rules. I say this because there is no reference to a cross‑appeal in O 58 r4 as there is in O 52 r22 and there is no reference to appealing from a part (rather than the whole) of a decision. In my opinion, special circumstances are made out.
Mr McGowan reiterated the prejudice referred to in the solicitor’s affidavit but in my opinion that prejudice does not exist. The parties agreed that the appeal before the Court was a hearing de novo and it seems to me, therefore, that it is open to the Court, for example, to make a finding on the facts led before it that the respondent alone is entitled to the invention. From a practical point of view, if such a decision was made on the appeal and there was no cross‑appeal in place, it is not clear what would happen. The appeal would be dismissed and presumably the Commissioner would rely on the decision and the Court’s finding of fact in making a determination pursuant to s 32 of the Act.
Mr McGowan submitted that in the absence of pleadings the notice of appeal defines the issues before the Court so that evidence which goes to the sole ownership by the respondent is inadmissible. However the applicant’s appeal will require consideration of the contribution of both applicant and respondent in order to determine the issues whether the applicant is solely or jointly entitled to the invention. The issue of joint entitlement will require the respondent to lead evidence as to its contribution and the contribution by Mr Cummings and it is that evidence which will be relevant to its claim to be entitled solely to the invention.
It seems to me that if, as occurs on a hearing de novo, the Court is going to consider the whole of the evidence before the delegate as to the relative contributions of parties, then it is desirable that there be an application before the Court to deal with the disposition of the matter on whatever basis the Court ultimately decides the matter. The alternative might be that the matter could be dealt with by the Commissioner pursuant to s 32 of the Act but it is in the interests of justice and efficiency and it is appropriate that all issues be before the Court, that is to say it is desirable that an initiating process provide a proper basis for an order consistent with any finding that the respondent is solely entitled to the invention.
I do not consider therefore that the prejudice referred to by the applicant exists. If the cross‑appeal were not to proceed the contribution of the respondent and Mr Cummings remain an issue for the purpose of the joint entitlement issue so that if the Court was to decide that the respondent had sole entitlement the appeal would have to be dismissed and consistently with the Court’s conclusion the Commissioner’s determination under s 32 would have to proceed on that basis.
I do not regard it as critical that on 16 September 1998 the applicant’s solicitors were prepared to consent to the extension of time. They obviously changed their view after receiving Counsel’s advice.
I turn to other matters relevant to the exercise of my discretion.
I do not consider the length of the respondent’s delay to be excessive. It was not such as to lull the applicant into a false sense of security and the applicant was on notice of the cross‑appeal 21 days after service of its notice of appeal and 33 days after the date of the decision.
I am in no position to consider the merits of the appeal having regard to the material presently before me and I adopt the same approach as Branson J in Kabushiki (supra), namely that I am prepared to assume that the cross‑appeal has merits. No submission was made by the applicant to the contrary. Similarly, it is not suggested by the applicant that there are alternative avenues of relief available to the respondent for a Court determination of the issue or that there is any question of public interest involved.
Accordingly, no order should be made in favour of the applicant on the applicant’s motion which should now be dismissed. The applicant should have its costs of that motion. I will order on the respondent’s motion that time be abridged to enable the motion to be heard notwithstanding short service and I will also make an order extending the time for filing and serving the notice of cross‑appeal up to and including 7 September 1998 and an order that the notice of cross‑appeal which was filed and served on that day stand as the notice of cross‑appeal in the proceeding.
Mr Macaw QC submitted that there was no substance in the opposition to the extension of time application, that it was based on technical grounds and should have been dealt with in accordance with the proposed minutes submitted on 16 September 1998. However, the respondent was in error and is seeking an indulgence from the Court. Having regard to the sequence of events which occurred I do not consider that the applicant should be denied its costs of the respondent’s motion. In all the circumstances I consider that the respondent should pay the applicant’s costs of the respondent’s motion and I so order.
I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg
Associate:
Dated: 4 November 1998
Counsel for the Applicant: Mr G McGowan Solicitor for the Applicant: Phillips Ormonde & Fitzpatrick Counsel for the Respondent: Mr R Macaw QC Solicitor for the Respondent: Davies Collison Cave Solicitors Date of Hearing: 29 October 1998 Date of Judgment: 4 November 1998
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