The Lubrizol Corporation v Exxon Chemical Company

[1996] APO 55

official notice

decision of a delegate of the commissioner of patents

Application  :          No. 661038 in the name of THE LUBRIZOL CORPORATION.

Title:          OIL COMPOSITIONS.

Action:          Request to amend the statement of grounds and particulars under Regulation 5.9 by EXXON CHEMICAL COMPANY; and objection to the request by THE LUBRIZOL CORPORATION.

Decision:          Issued  .

Abstract:          On the available material there is nothing to suggest that the opponent has undertaken active pursuit of further particulars.  There is no protraction in the preparation of the case and the opponent sought amendment at the earliest reasonable opportunity.  There is also no substantial change of case for the applicant to answer.

Consequently the amendment request does not cause undue prejudice.

The request to amend the statement of grounds and particulars was allowed.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Patent Application No. 661038 by THE LUBRIZOL CORPORATION, and opposition thereto by EXXON CHEMICAL COMPANY, and objection to amendment under Regulation 5.9 of the opponent’s statement of grounds and particulars.

background

Patent application 661038 was advertised accepted on 13th July 1995.  Exxon Chemical Company (Exxon) filed a notice of opposition on 13th October 1995.  The company subsequently filed a statement of grounds and particulars on 15th January 1996.  Exxon attained two extensions of time to serve evidence-in-support and completed serving this evidence on 2nd September.  On 5th September Exxon filed a request to amend the statement of grounds and particulars. 

The amendment seeks to add three particulars under the ground alleging lack of novelty.  Under the ground of lack of inventive step the amendment also seeks to mention an example of a chemistry textbook reference to support contentions of what was well known.  Exxon also proposes consequential amendments, in the light of the above amendments, to several particulars under the grounds of lack of defining a manner of new manufacture and defining a patentable invention. 

The Lubrizol Corporation (Lubrizol) objected to the amendment and a hearing took place on 14th October.  Both parties appeared via telephone.  Mr M. Houlihan, patent attorney of Callinan Lawrie, represented Lubrizol.  Mr R. Baddeley, patent attorney of Watermark, represented Exxon.

DECISION

Applicable law

Regulation 5.9 provides for amendment of a statement of grounds and particulars.  The pertinent point is Regulation 5.9(2)(e).  Under this regulation I cannot allow amendment of the statement if I reasonably believe a person would be unduly prejudiced by the amendment.  At the hearing both parties relied on the Diamond Scientific Company v CSL Limited decision ((1992) AIPC 90-927) in discussing whether the proposed amendment would cause undue prejudice. According to that decision and the parties’ submissions I need to determine whether Exxon undertook active pursuit of further particulars in the opposition, or whether the extra particulars arose incidentally to the preparation of Exxon’s case. If I find there has been no active pursuit of further particulars I will then consider whether:-

• the extra particulars would result in any protraction in the preparation of the case;

• the amendment was sought at the earliest reasonable opportunity; and

• the extra particulars would substantially change the case the applicant has to answer.

Mr Houlihan made the point that the Manual of Practice and Procedure, in Vol. 3 at Part 11.3.4, makes it clear that the onus is on the opponent to demonstrate that its actions are not detrimental to the applicant on all three issues.  He stated that if the opponent fails on just one count then I must find that there is undue prejudice to the applicant.

Nature of the discovery of the extra particulars

The only evidence before me is a statutory declaration by Mr. Richard Hiram Baddeley which was faxed to the Patent Office on 9 October 1996.  Regarding where the extra particulars were found, the declaration in essence states; that the first extra particular (n), US 3444170, was made known to Mr. Baddeley in a telephone discussion with the applicant’s US patent counsel in the week preceding service of evidence; that the second extra particular (o), US 4293432, is referred to in the opposed specification in the admitted prior art; that the third extra particular (p), US 3172892, was one of a number of patents incorporated by reference within US 3541012 and referred to in ground 1 particular (i) of the original statement of grounds and particulars; and that the chemistry text by a W.H. Reusch is referred to in the opposed specification.

At the hearing Mr Baddeley submitted that the opponent’s desire to include particulars previously mentioned, either in the opposed specification or in the original statement of grounds and particulars, showed that the opponent has not actively pursued further particulars.  He stated that these particulars arose from a re-assessment of the significance of material known to both the applicant and the opponent.

Mr. Houlihan stated at the hearing that there was no evidence that the extra US specifications arose incidental to preparing the case and no evidence from the US patent counsel, or from Exxon’s declarant, a Dr R.F. Watts, of how, why and when they became aware of the new specifications.  Mr Houlihan also mentioned that the opponent has taken eight months, since filing the statement of grounds and particulars, to file the amendment and has received two extensions of time to serve evidence-in-support.  He also said the opponent has taken a further month to file a declaration to support the amendment.  In these circumstances Mr Houlihan suggested that one can only assume that the extra particulars arose as part of an active search to find new art.

I agree there is no clear evidence of how these extra particulars were found.  Mr Baddeley explained that the latter two particulars (o) and (p), whilst known to Exxon earlier, were not realised to be as significant, at the time of filing the original statement of grounds and particulars, as they in fact are.  In respect to particular (n) it is not at all clear how or when Exxon’s US patent counsel came across the document prior to discussions by phone with Mr Baddeley.

I cannot agree with Mr. Houlihan that we must therefore accept that the extra particulars arose as part of an active search.  While the chain of causation leading to the discovery of US 3444170 by Exxon’s US patent counsel or by Dr Watts is a mystery, the other two US patents and the Reusch reference were either referred to in Lubrizol’s specification or were referred to in the original statement of grounds and particulars.  I would expect that opponents would ordinarily investigate these documents further as part of the preparation of their case.  I also do not agree that the eight months between filing the statement of grounds and particulars and filing the amendment, nor the extensions of time the opponent has gained, signify active pursuit of extra particulars.  The issue is really a question of when the extra particulars were found to be relevant.  On balance I have no reason to believe that any of the extra particulars arose as part of an active search for new material.  I must accordingly consider whether the amendment to include these particulars falls under the three categories of the test in Diamond Scientific v. CSL (supra).

Whether there is a protraction in the preparation of the case

I firstly note the timing of the request to amend the statement of grounds and particulars.  Exxon made the request on 5th September.  This was just three days after they completed the serving of evidence-in-support on 2nd September.  Mr Baddeley submitted that the amendment was served on the applicant within the time for serving evidence-in-support and hence there would not be any unreasonable delay to the applicant.  Mr Houlihan noted that protraction had already happened through the need for the applicant to have further time to serve evidence-in-answer once the outcome of this hearing is finalised. 

I turn back to the timing of the request to amend and the serving of evidence-in-support.  Essentially, Lubrizol’s time to begin preparing evidence-in-answer had only just begun at the time that Exxon made the request.  On the other hand the statement of grounds and particulars is intended to give applicants early notice of the case they will have to answer in oppositions.  This allows applicants to potentially begin preparing some aspects of evidence-in-answer before the serving of evidence-in-support is completed.  Whether applicants do this in practice is open to question.  In any case Lubrizol still have almost the normal three months, after serving of evidence-in-support, to consider and prepare evidence-in-answer against the extra particulars.  In fact the extra particulars can be considered together with the original particulars when preparing evidence-in-answer.  The Abundant Lawn Grass Industries Pty Ltd v Crancove Pty Ltd decision ((1993) AIPC 90-973) supports this position. In this decision the hearing officer formed the view that details of an additional patent could be considered by the applicant at the same time as details in the evidence-in-support, and hence would not, in itself, result in any protraction of the preparation of the case.

There is a delay in proceedings now as both parties await the outcome of the request to amend.  Lubrizol was due to serve evidence-in-answer by 2nd December.  This deadline will need extending when the outcome is finalised.  However this delay is not the same as a protraction in preparing either party’s case, as is required from the Diamond Scientific (supra) case.  The delay is a protraction of proceedings as distinct from a protraction in preparing the cases.  In this case I do not think there is any protraction in the preparation of the case resulting from the inclusion of the extra particulars themselves.

Whether the amendment was sought at the earliest reasonable opportunity

It is clear from Mr. Baddeley’s declaration that the request to amend the statement of grounds and particulars was made about a week after the extra particular (n), US 3444170, was made known to Mr. Baddeley.  As mentioned earlier there is no disclosure before me as to when or how Exxon’s US patent counsel, or their declarant, Dr R.F. Watts, became aware of the document.  It is also unclear when the significance of the other, extra particulars was realised by Exxon.

At the hearing Mr Baddeley mentioned that he had telephone discussions with Exxon’s US patent counsel during the last week of August.  The relevance of the extra particulars was raised for the first time with Mr Baddeley during those discussions.  Mr Baddeley submitted that the subsequent filing of the request to amend within a week showed due diligence and the seeking of the amendment at the earliest reasonable opportunity.

Mr Houlihan noted that the third extra particular (p), US 3172892, was included in the evidence-in-support served in mid July 1996.  This means there has been nearly two months between serving of this evidence and the requesting of the amendment.  However Mr Baddeley’s declaration pointed out the need to attain further comment for this reference for inclusion in the amended statement of grounds and particulars.  In addition the Caterpillar Inc. v Kozo Miyake decision (on application 651768, issued 14th December 1995) stated that the making of requests to amend within a month of discovering extra particulars is not an unreasonable delay.

Given this case, the need to obtain further comment prior to filing the amendment, and the fact that the proposed amendment is more complex than the insertion of a single particular, I am prepared to accept that Exxon moved diligently to request amendment.  I also note that the inclusion of a document as evidence-in-support does not mean it will be relied upon to the same extent as other documents.  It may be that Exxon did not appreciate the real significance of US 3172892 when they filed it as evidence-in-support. 

Mr Houlihan further noted the lack of evidence to show a chain of causation leading to the discovery of the extra particulars.  He was critical of the lack of information as to how or when the opponent’s US attorney became aware of the documents and submitted that I had insufficient information to conclude that the amendment was sought at the earliest reasonable opportunity.

Mr Baddeley noted that Exxon knew of the particulars for some time but did not realise their significance to this case until recently.  He submitted that once Exxon had established the significance of the documents they moved promptly to request amendment.

Mr Houlihan noted that one of the applications for extension of time to serve evidence-in-support gave the non-realisation of the significance of documents as a reason for the extension.  He suggested that the opponent has not shown due diligence as some of the extra material was in their knowledge and in the patent specification, yet it still took eight months for the opponent to file a request to amend.

I think it is important to distinguish between knowledge of documents and knowledge of the relevance of documents to a particular case.  The Porter v Arbortech Investments Pty. Ltd. decision (31 IPR 169) supports this view. In that case the determination of whether there was undue delay in filing the request to amend was reckoned from the time of realising the significance of a document.

While we may speculate on Exxon’s prior knowledge (through the admitted prior art in Lubrizol’s specification, or otherwise) of various documents, the only material regarding the realisation of the significance of the documents is the declaration concerning the telephone discussions with US patent counsel in the week prior to making the request to amend.  On balance I am prepared to accept there has not been unreasonable delay in filing the request to amend.

Mr Houlihan noted the timing of the request to amend and the completion of serving evidence-in-support.  These two events are within three days of each other.  Mr Houlihan cited the Ball Corp. v American National Can Company decision (on application 644856, issued 9th January 1995) to point out that, where a request is filed at or near the time of completing the service of evidence-in-support, there is a strong presumption that the amendment was not sought at the earliest reasonable opportunity.  This may be the case in some instances although the issue was not argued by the parties in that case.  I think the over-riding consideration is the comparison of the time when the opponent became aware of the relevance of extra documents and the time of actually requesting amendment (following the Porter (supra) decision), rather than making presumptions based on the coincidence of requesting amendment and serving complete evidence-in-support.

I conclude that the amendment was proposed at the earliest reasonable opportunity.

Whether there is a substantial change of case for the applicant to answer

I have reviewed the available material mentioned in both versions of the statement of grounds and particulars to the extent necessary.  All documents relate to friction-reducing, corrosion-inhibiting, detergent or dispersal additives in lubricating compositions.  The documents also infer the possible excess of amine to amide in these compositions.  Mr Baddeley noted the consistency of all documents in this respect and that they all require a similar response by the applicant.  I am satisfied the extra particulars relate to the same field of technology as the documents mentioned in the original statement of grounds and particulars.  The technology of all documents, on its own, does not cause a change in the case for Lubrizol to answer.

The extra particulars increase the total number of particulars from thirteen to sixteen.  There is an additional reference, made in another particular, to the Reusch organic chemistry text which is used as an example of evidence of the knowledge in the art.

I must firstly comment on the nature of the extra particulars.  Mr Houlihan referred to particular (p), US 3172892.  In the original statement this document was mentioned in particular (i) as one of many examples of additives included in oil compositions.  Mr Houlihan described the amendment in this case as one where there was originally a casual reference to a document which was now being identified in a different context.  He said applicants should not be placed in positions of needing to guess which examples cited by opponents may subsequently be used by opponents as particulars in their own right.  Mr Houlihan also took issue with the opponent’s suggestion that there was no detriment to the applicant in seeking to bring particulars, that were mentioned as admitted prior art in the applicant’s patent specification (e.g. particular (o)), into the statement of grounds and particulars.  He likewise stated that this would require the applicant to guess which of many examples of admitted prior art any opponent may or may not ultimately rely on in an opposition.  Mr Houlihan stated these actions by the opponent resulted in a substantial change of case, were unduly prejudicial and were unjustified.

Mr Baddeley stated that the admission of some of these particulars as admitted prior art in the opposed specification is significant as the applicant cannot resile from that admission.  He also said the fact that Exxon sought to include extra documents (including Reusch) that were mentioned in the specification showed that Exxon was not seeking to change the opposition case, merely to put more relevant detail to the case.  Mr Baddeley further stated that these points meant there was no undue prejudice to the applicant.

The above argument raises questions of whether there is undue prejudice if Lubrizol was previously aware of the particulars sought to be included by the amendment.  My view is that applicants should be able to treat statements of grounds and particulars at face value.  Applicants would be expected to prepare their main responses only to those documents that are particularised in their own right.  I also accept that if a significant number of the examples in particular (i), or elsewhere, had now become particulars in their own right, then I would find a substantial change of case.  There is much case law to support the refusal of amendments where significant numbers of extra particulars are added over the original number.  See for example The Boots Company PLC v Hamilton Laboratories Pty Ltd (on application 614998, issued 21st December 1992), Caterpillar (supra) and Imperial Chemical Industries PLC v E I Du Pont De Nemours and Company (on application 654176, issued 9th January 1996).   From these cases the important consideration is the number of extra particulars, for any ground of opposition, compared with the original number.  I think that consideration of numbers of extra particulars carries more weight than previous awareness by Lubrizol of the issues sought to be included by Exxon’s amendment.

If previous awareness does carry more weight I am not convinced Lubrizol would have been sufficiently aware of the issues to alter the potential for a substantial change of the case.  Two of the extra documents are assigned to Lubrizol.  The hearing officer in Sumitomo Electric Industries Ltd. v BICC PLC and Corning Limited (26 IPR 613) noted there may be convincing argument to allow a request if the applicant is aware of a specific reference as relevant to the validity of a subsequent patent.

Mr Houlihan pointed out that some of the admitted prior art and the earlier Lubrizol applications are up to 30 years old, though the material that Exxon relies on is significantly more recent than that.  Mr Houlihan also stated that Lubrizol have filed many thousands of applications worldwide and could not be expected to know the relevance of all of its applications to particular cases.  He stated that the fact that extra particulars were in respect to applications made by the applicant had no bearing in determining whether there would be a substantial change of the case to answer. 

The Sumitomo case sought to add an extra reference by the same authors as an earlier reference.  The two references were clearly related but the later one had more detail.  I am not convinced that we have such a connection in the present case.  Firstly, the Sumitomo case refers to awareness of something affecting the validity of a patent.  Irrespective of whether the extra particulars are earlier Lubrizol applications and/or other documents mentioned in their specification, there is nothing to show that Lubrizol considered this material to affect the validity of the present specification. On the face of it, applicants normally draft specifications to describe or define material that differs from admitted prior art and thereby avoid challenges against validity.  Secondly I am not aware of any two documents that are as closely related as in the Sumitomo case.  Accordingly I do not think that Lubrizol has sufficient previous awareness of the issues, sought to be included by Exxon’s amendment, to play a relevant part in altering the potential for a substantial change of case.

The inclusion of the Reusch reference is similar to the inclusion of the Mark’s Standard Handbook reference also dealt with in Sumitomo (supra).  Mr Houlihan mentioned this similarity.  In this case the handbook reference was presented as an example of evidence of common general knowledge and not as a particular in its own right.  The hearing officer found there was no substantial change of case.  On the other hand he took issue with the term, “attention is drawn to” the handbook.  This suggested the opponent was not restricted to the handbook as evidence of common general knowledge, and may or may not choose to rely on the handbook.  This would detract from the real case to be answered.  Accordingly the hearing officer found this would be prejudicial. 

The Reusch reference is similar.  It is included, not as a particular, but as an example of evidence of the knowledge in the art.  The relevant particular states that the amide formation reaction is well known and the subject of classic organic chemistry texts such as the Reusch reference.  The reference is placed in parentheses.  I cannot see that the inclusion of the reference in this way materially adds to nor detracts from Exxon’s case.  Similarly I do not think the real case for Lubrizol to answer is materially affected by the reference’s inclusion.  Lubrizol may choose to answer the reference directly or choose to ignore it and present their own example of the state of knowledge in the art.  Either way, I do not think Lubrizol is unduly prejudiced by the inclusion of the reference in the proposed way.

The outstanding consideration remains the number of extra particulars that Exxon seeks to include in the statement of grounds and particulars.  The Caterpillar (supra) decision allowed one request to add an extra technical paper to the statement of grounds and particulars but refused a second request to add three others.  There were six documents in the original statement of grounds and particulars.  The hearing officer decided these latter additions over the six original documents would substantially change the case to be answered.  The ARX Pty. Ltd. v Lockwood Australia Pty. Ltd. decision (33 IPR 308) allowed two requests to add a total of three extra documents. In terms of volume of extra particulars I do not think the inclusion of three extra particulars over the original thirteen substantially changes the present case.

Finally Mr Houlihan stated that the request to amend was not simply to include three extra particulars and one example of evidence of the art.  He described the amendment as a “snowballing” effect because the consequential amendments under other grounds meant the extra documents were being brought to bear under the grounds of lack of inventive step, manner of manufacture, patentable invention and fair basis as well.  He submitted this substantially changed the case the applicant, Lubrizol, had to answer.  I however turn back to considerations of technology.  I noted earlier that the extra particulars were all in respect to the same technology as the original particulars.  I think that the preparation of evidence-in-answer would therefore be similar under the grounds of inventive step, manner of manufacture, etc., irrespective of whether the extra particulars are included or not.  It follows that I do not think there is a substantial change of case for Lubrizol to answer.

In the light of the Diamond Scientific (supra) decision I conclude that the amendment request is not unduly prejudicial to Lubrizol.

CONCLUSION

I have not found anything to suggest that Exxon has undertaken active pursuit of extra particulars.  Additionally there is no protraction in the preparation of the case and I am satisfied that Exxon sought amendment at the earliest reasonable opportunity.  There is also no substantial change of case for Lubrizol to answer.  Accordingly I find there is no undue prejudice evident in this case.  I allow the request to amend the statement of grounds and particulars.

In accordance with normal practice involving hearings on statements of grounds and particulars and evidence, I direct that the time for serving evidence-in-answer expires three (3) months from the date of this decision.

COSTS

Mr Houlihan submitted that costs should go to Lubrizol even if Lubrizol is unsuccessful, due to the lack of evidence and reasons from Exxon to support the request to amend the statement of grounds and particulars.  Mr Baddeley submitted that costs should go to Exxon.

While there are instances where there is no clear evidence to show a chain of causation leading to the need to amend, I have not been convinced that this means there has been active pursuit of further particulars, or that there is undue prejudice.

On balance I think that costs should follow the event.  I award costs against Lubrizol.

M.G. Kraefft
Delegate of the Commissioner of Patents

Patent attorneys for the applicant   :  Callinan Lawrie, Melbourne

Patent attorneys for the opponent   :  Watermark, Perth