Vangedal-Nielsen, Erling v Smith, Francis John

[1980] FCA 190

Re: ERLING VANGEDAL-NIELSEN; LINDSAY JOHN DOUGLAS PEDERSEN; ROBERT JOHN
BUTLER; STANLEY THOMAS MURPHY; STEPHEN CONRAD MURPHY
And: FRANCIS JOHN SMITH, COMMISSIONER OF PATENTS; GELPHEN NOMINEES PTY.
LIMITED, TRADING AS GELPACK ENTERPRISES (1980) 49 FLR 44
No. G122 of 1980
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.(1)

CATCHWORDS

Administrative Law - Application for review of decision of Commissioner of Patents allowing extension of time for lodgment of opposition to grant of patent - Locus standi - Irrelevant considerations - Relevance of fresh evidence after the decision made.

Administrative Decisions (Judicial Review) Act 1977, ss, 5, 16(1).

Patents Act 1952, s.59(1).

Administrative Law - Patents - Decision to extend time for lodgment of notice of opposition to grant patent - Whether decision can be reviewed - Locus standi - Considerations - Relevance of fresh evidence after decision made - Administrative Decisions (Judicial Review) Act 1977 (Cth), ss. 5, 16 (1) - Patents Act 1952 (Cth), s. 59 (1).

HEADNOTE

Held: (1) A decision by the Commissioner of Patents, acting through a supervising examiner of patents, pursuant to the Patents Act 1952, s. 59 (1), allowing an extension of time to an application to lodge a notice of opposition to an application for a patent, was a decision of an administrative character and was a decision which may be reviewed by the court pursuant to the Administrative Decisions (Judicial Review) Act 1977.

(2) Persons who were licensed to manufacture the subject matter of a patent must present evidence of their licence either before the supervising examiner of patents or the court, to have standing to make an application to the court.

(3) In an application pursuant to the Patents Act 1952, s. 59 (1), which sought an extension of time to lodge a notice of opposition to an application for a patent: (a) it was wrong to grant an extension of time because no one had raised exceptional circumstances why it should not be granted; (b) an extension of time should only be granted where the party seeking the extension of time: (i) had shown a good reason why opposition was not mounted within the prescribed time; (ii) had discharged the burden of establishing an appropriate case to justify the extension. Water Conservation and Irrigation Commission (N.S.W.) v. Browning (1947), 74 CLR 492, applied.

(4) The fact that the applicant for an extension of time had written to the applicant for the patent requesting a licence, and the applicant for the patent had failed to reply to that request, was an irrelevant consideration and should not have been taken into account by the examiner.

(5) Transcript of proceedings before the examiner was admissible in proceedings before the court.

(6) It was permissible for the court hearing the matter pursuant to the Administrative Decisions (Judicial Review) Act 1977, to allow fresh evidence that was not put before the examiner.

HEARING

Sydney, 1980, December 4, 19. #DATE 19:12:1980

APPLICATION.

Application for judicial review of a decision made by the Commissioner of Patents acting through a supervising examiner of patents.

J. D. Heydon, for the applicants.

J. Emmerson, for the second respondent.

The first respondent did not appear.

Cur. adv. vult.

Solicitors for the applicants: Hunt & Hunt.

Solicitors for the second respondent: Moule, Hamilton & Derham.

R.W.DAVIS

ORDER

1. The decision of the Commissioner of Patents dated 3 November 1980 allowing an extension of time for lodging notice of opposition to 510460 until 26 December 1980 be quashed with effect from 3 November 1980.

2. The applicants file and serve written submissions on costs on or before 2 February 1981.

3. The second respondent file and serve replies in writing on or before 16 February 1981.

4. The proceeding be stood over to 27 February 1981.

5. Liberty to apply on 7 days notice.

JUDGE1

This is an application for an order of review under the Administrative Decisions (Judicial Review) Act 1977. That Act which was amended by Act No. 111 of 1980 was proclaimed to come into operation on 1 October 1980. It enables a person who is aggrieved by a decision to which the Act applies that is made after the commencement of the Act to apply to this Court for an order of review upon various grounds which are specified (s.5). A decision to which the Act applies means a decision of an administrative character made under an enactment other than a decision by the Governor-General or a decision in any of the classes of decision set out in Schedule 1 (see s.3(1)). The Court has jurisdiction to hear and determine such applications (s.8). It may, in its discretion, make all or any of certain orders which are specified, including an order quashing the decision, an order referring the matter back for further consideration, a declaration or an injunction (s.16).

The decision here in question is a decision made on 3 November 1980 under s.59(1) of the Patents Act 1952 by the Commissioner of Patents acting by his Supervising Examiner of Patents. The decision was to allow an extension of time until 26 December for lodging notice of opposition to an application for a patent advertised as accepted on 26 June 1980, number 510460. It is a decision of an administrative character made under an enactment after the commencement of the Administrative Decisions (Judicial Review) Act 1977. It is not within the excluded classes of decisions.

The application for an order of review was made by Erling Vangedal-Nielsen, Lindsay John Douglas Pedersen, Robert John Butler, Stanley Thomas Murphy and Stephen Conrad Murphy, applicants, and Francis John Smith, Commissioner of Patents, and Gelphen Nominees Pty. Limited trading as Gelpack Enterprises were joined as respondents. The applicants claim to be aggrieved by the decision and various grounds were set out based upon s.5 of the Administrative Decisions (Judicial Review) Act 1977. The relief sought was as follows:

"1. An order quashing the decision with effect from the date of the decision.

2. An order declaring that the second respondent's application for extension of time is void and of no effect and ought to be rejected.

3. An order directing the second respondent by itself its servants or agents to refrain until further order from manufacturing, distributing, marketing, selling or advertising the sale of plastic bags in such a manner that if a patent for the invention the subject of patent application no. 510460 were sealed, the patent would be infringed.

4. Such further or other orders as to this Honourable Court may seem fit.

5. Costs."

Mr. Erling Vangedal-Nielsen is the holder of Danish Patent No. 139595 issued 27 August 1979 for a freezing mould bag. The convention priority of the patent is 25 January 1977. On 23 January 1978 Mr. Vangedal-Nielsen applied to the Commissioner for Patents in Australia under the terms of the International Convention for the grant of an Australian patent (application number 32671/78). On 9 August 1979 Mr. Vangedal-Nielsen lodged with the Commissioner of Patents an application to amend the complete specification. The Examiner reported the amendment was allowable and particulars were advertised in the Official Journal on 31 January 1980.

On 11 February 1980 a licence agreement was entered into between Vangedal Plast ApS (Licensor) and the second, third, fourth and fifth applicants (Licensee). This licence agreement recited that the Licensor, Vangedal Plast ApS, had invented and developed a plastic bag for the purpose of making ice cubes and other frozen objects and that the Licensor had applied for a patent in Australia (application number 32671/78, dated 24 January 1978 (sic)). By the licence agreement the Licensor granted to the Licensee the exclusive right to utilise and exploit the invention described in the Licensor's patent application by production and sale of the product in a territory which was defined and which included Australia, as well as New Zealand and certain other Pacific countries. It was provided in the agreement that the licence granted only covered production and sale of ice cube bags for the supply of the consumer's market in the territory and the Licensor expressly reserved all rights to utilise and exploit the invention by other means and in other ways.

On 21 May 1980 the application 32671/78 and amended specification were accepted and on 26 June 1980 acceptance was advertised in the Official Journal with the serial number 510460. The effect of this was that any person interested might at any time within three months after that date, that is up to 26 September 1980, or within such further period, not exceeding three months, as the Commissioner on application made to him within the first mentioned period allowed, by notice in writing lodged at the Patent Office, oppose the grant of the patent on one or more of the grounds set forth in s.59(1) of the Patents Act 1952.

In the mean time, on 16 May 1980, Gelphen Nominees Pty. Limited, without disclosing its identity, sought through its patent attorneys a licence of the patent when granted. This request was made to the patent attorneys in Australia of Mr. Vangedal-Nielsen and they conveyed the request to him in Denmark. No further correspondence or communication passed between any of the parties until 30 September 1980 when the solicitors for the second, third, fourth and fifth applicants sent a telex to "Gelpack Enterprises" apparently a related company to Gelphen Nominees Pty. Limited, claiming that an exclusive licence had been granted by Mr. Vangedal-Nielsen to them and that any licence for the patent to Gelpack Enterprises was therefore out of the question. Prior to the arrival of this telex, Gelphen Nominees Pty. Limited had, on 26 September 1980, applied for an extension of time to oppose the grant of the patent to Mr. Vangedal-Nielsen under s.59(1). This application for extension came on for hearing before a Supervising Examiner acting as the Commissioner's delegate. The Examiner gave his decision and his reasons on 3 November 1980. He allowed Gelphen Nominees Pty. Limited a further three months in which to lodge opposition to the grant of the patent to Mr. Vangedal-Nielsen. It is from that decision that the application for an order of review is brought to this Court.

Locus Standi

Before me all of the applicants and also the second respondent were represented by Counsel. There was no appearance for the first respondent whose decision was under challenge. The first question raised was whether the second, third, fourth and fifth applicants had standing. They based their claim to have standing upon the licence agreement with Vangedal Plast ApS. There was no reference in this licence agreement to Mr. Vangedal-Nielsen. No evidence was before the Examiner or before me of any relationship between Vangedal Plast ApS and Mr. Vangedal-Nielsen. One might speculate about the relationship, but in the absence of any evidence it was not shown before the Examiner and has not been shown before me that the second, third, fourth and fifth applicants have been granted any rights by Mr. Vangedal-Nielsen, in other words, they are not shown to be persons aggrieved by the Examiner's decision.

A further challenge to the standing of those applicants was made upon the basis that they were not exclusive licensees within the meaning of s.6 of the Patents Act 1952. There is, I think, a serious question whether, in view of the express retention of certain rights by the Licensor in that agreement, the grant to the Licensee could be regarded as an exclusive licence under the Patents Act 1952 so that the Licensee would have the rights, for example, conferred by s.114. In view of what I have already said it is unnecessary to express an opinion on whether the licence is an exclusive licence or not. This is a matter which may become the subject of dispute in later proceedings. Furthermore, it may be argued that even if the licence be not exclusive so that the Licensee does not get, for example, the right to sue for infringement under s.114, such a Licensee may nevertheless be a person aggrieved within the meaning of s.5 of the Administrative Decisions (Judicial Review) Act 1977.

Commissioner's Decision

The decision of the Commissioner, arrived at by the Examiner who was his delegate on 3 November 1980 sets out the facts and the contentions of the parties before him. He notes that the grounds stated in the application for extension are:

"An approach has been made on our behalf to the applicant herein for the grant of a licence in relation to the product which forms the subject of the application but as yet no reply has been received."

For Gelphen Nominees Pty. Limited it was argued that the failure of Mr. Vangedal-Nielsen to respond to the request for a licence in May 1980 so delayed matters that an extension of time for lodging opposition pursuant to s.59(1) should be granted. For Mr. Vangedal-Nielsen it was argued that such a ground was inappropriate to a determination under s.59(1). The Examiner then indicated what he thought was the purpose of s.59(1). He stated:

"In my opinion the extension of time to lodge notice of opposition provided in s.59(1) is provided for the purpose of an active consideration of an actual potential opposition. It is not provided to delay the sealing of an application while a party proceeds with some other business, not directly related to opposition but depending on the outcome of which a notice of opposition may or may not be lodged.

"In this case no evidence has emerged to suggest that Gelphen has any grounds for or has given any consideration to an actual opposition."

Although the Examiner was of the view that the purpose of a s.59(1) application for extension of time was to facilitate the active consideration of an actual potential opposition and although he found that Gelphen Nominees Pty. Limited had not shown any real ground for opposition at all, he went on to decide that the extension of time should be granted. The Examiner arrived at this decision by balancing against the fact that Gelphen Nominees Pty. Limited had not as yet shown any evidence for an actual opposition, the fact that Gelphen Nominees Pty. Limited had received no reply to its approach for a licence some four months earlier. He stated:

"Had Erling been less tardy and more informative, Gelphen would have known before 26th September 1980 that no license was available.

"In my view it is arguable that Erling's failure to reply before 26th September 1980, and advising that an exclusive license had already been granted was material in the lodging of this application for an extension of time, and in the specification of an inappropriate ground.

"Now Gelphen finds itself in the position where it apparently cannot obtain a license, and if this extension is not granted cannot oppose either, while however being threatened with infringement."

The Examiner then noted that the power to be exercised in deciding the application for extension was a discretionary one and referred to the cases for guidance, in particular, Cooper Mechanical Joints Application (1958) R.P.C. 295; Owens-Corning Fibreglas Corporation's Patent (1972) R.P.C. 684; and Kaiser Aluminium and Chemical Corporation v. The Reynolds Metals Company (1969) 120 C.L.R. 136. He appeared to place some reliance upon the following statement of Kitto J. at p.143 in the last-mentioned case:

"In my opinion, however, it is in the public interest that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on its merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though that failure may be."

While acknowledging there was here no failure of procedure to be cured and noting that he had expressed some doubts that Gelphen Nominees Pty. Limited was in possession of the serious opposition and about the correctness of the ground for extension given he expressed the view that the action of Mr. Vangedal-Nielsen may in part have contributed to these difficulties.

Finally, the Examiner stated:

"I also consider that an extension of time under Section 59(1) should only be refused under rather exceptional circumstances, having regard to the public interest in the issuance of a valid patent, the difficulties then faced by the potential opposer, and the rather short delay involved."

He decided that the time for lodging notice of opposition should be extended until 26 December 1980. As he considered both parties had been at fault he made no orders as to costs.

Section 59(1)

The material part of s.59(1) is in the following terms:

"59.(1) The Attorney-General or a person interested may, at any time within three months after the date of the advertisement of the acceptance of an application and complete specification, or within such further period, not exceeding three months, as the Commissioner, on an application made to him within the first-mentioned period, allows, by notice in writing lodged at the Patent Office, oppose the grant of the patent on one or more of the following grounds, but on no other ground:"

These words are followed by nine paragraphs stating various grounds of opposition.

Two comments may be made on this provision. First, it may be said that it is not a provision conferring a discretion on the Commissioner to grant an extension of time standing as a separate and positive power conferred upon him but, rather, it is a section conferring a right upon a potential opponent to the grant of a patent, an absolute right to lodge his opposition within three months and a right to a further period of three months conditional on obtaining the approval of the Commissioner on written application. However, I am of opinion that no significant distinction arises from this form of the section and that an applicant before the Commissioner seeking the allowance of an extension carries the burden of establishing an appropriate case to justify that allowance. It does not appear to me that the form of the section requires the conclusion that the applicant for extension of time before the Commissioner is entitled to the extension unless some case showing perhaps "rather exceptional circumstances" is raised against him.

Secondly, it will be noted that no express guidance is afforded by s.59(1) of the basis on which the extension of time is to be allowed or disallowed. Where this is so, one has to consider the purpose and scope of the provision in order to determine what are relevant or irrelevant considerations in dealing with an application for an extension (Water Conservation and Irrigation Commission (New South Wales) v. Browning (1947) 74 C.L.R. 492 at pp.496 and 504; Administrative Decisions (Judicial Review) Act 1977, s.5).

The right to lodge a notice of opposition within three months is clearly given mainly in the interests of the person wishing to oppose a patent on any one or more of the grounds stated in s.59(1). No doubt there is also a public interest involved in ensuring that worthless patents are not granted because insufficient opportunity has been afforded of raising those grounds (Kaiser Aluminium and Chemical Corporation v. Reynolds Metal Company (1969) 120 C.L.R. 136). Three months has been considered by Parliament to be an appropriate period to allow for this. But it has been recognised that cases may occur where for one reason or another three months may prove insufficient. Accordingly, it has been provided that further time may be allowed not exceeding a further three months. The Commissioner is interposed as the arbiter whether such an extension should be allowed and how long it should be. 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 which has been mentioned, 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 a patent which are also clearly involved.

The applicant for an extension and in turn the Examiner in the present case gave considerable weight to the fact that an approach for a licence had been made to Mr. Vangedal-Nielsen in May 1980 and that no reply had been received. This was apparently regarded as lulling Gelphen Nominees Pty. Limited so that their failure to lodge an opposition within the time was in some way the fault of Mr. Vangedal-Nielsen. I have difficulty in following this reasoning. Had Mr. Vangedal-Nielsen replied saying he was considering the question of granting a licence to the inquirer followed by silence, I could have understood a conclusion that Mr. Vangedal-Nielsen was a contributor to delay. But Mr. Vangedal-Nielsen did nothing. In May 1980, of course, acceptance had not been advertised. The advertisement of acceptance took place on 26 June 1980. From then on Gelphen Nominees Pty. Limited, as it seems to me, were alerted to the need to lodge an opposition if they wished to do so and if they had any ground for doing so. The lack of a reply from Mr. Vangedal-Nielsen might, after the advertisement of the acceptance, have been regarded as an added spur to action either to communicate to obtain an answer or to lodge a notice of opposition rather than a cause for doing nothing. But Gelphen Nominees Pty. Limited did nothing until the initial three months period for lodging opposition was expiring and then on 26 September 1980 filed the application for extension.

Accordingly, I am of opinion that the omission to reply to the enquiry was, in the circumstances of the case before the Examiner, an irrelevant consideration.

Even if the omission to reply to the enquiry about a licence should be regarded as a cause of the delay by Gelphen Nominees Pty. Limited, nevertheless, in this case where there was no evidence that there was a potentially serious opposition, it appears to me that no weight could be given to that cause of delay. There was nothing relevant upon which it was shown to operate.

Section 59(1) is concerned to give adequate time for the lodging of a serious opposition. Such evidence as was before the Examiner, far from suggesting that there was potentially such an opposition, suggested that there was not.

I am concerned in these proceedings with the validity not the wisdom or unwisdom of the exercise of discretion by the Commissioner. I am of opinion that because of the consideration given to Mr. Vangedal-Nielsen's omission to reply to the inquiry of 16 May 1980 and the application by the Examiner of the view that an extension of time under s.59(1) should only be refused under rather exceptional circumstances, the Examiner was in error within the grounds set forth in s.5 of the Administrative Decisions (Judicial Review) Act 1977.

Transcript of Proceedings before the Examiner

A transcript of proceedings before the Examiner was tendered and objected to. I admitted it subject to objection. I now rule it to be admissible, but I should add that I have not in any way relied upon it.

Fresh Evidence

Fresh evidence in the form of affidavits was tendered before me and some brief oral examination of witnesses took place. Section 16(1) of the Administrative Decisions (Judicial Review) Act 1977 sets out various orders in respect of a decision which the Court "may in its discretion make". Matters occurring after the decision which is the subject of an application for an order of review may well be relevant to the exercise of this discretion. For example, in the present case if fresh evidence before me had shown that a serious opposition had in fact been lodged following the Examiner's decision, I would have felt obliged to give consideration to that fact, in deciding whether to exercise the discretion to quash the decision. However, the fresh evidence tendered still showed no potentially serious opposition was in prospect.

Relief Sought

Turning to the relief sought, it appears to me that I should make the first order which is asked for, namely, an order quashing the decision with effect from the date of decision (Administrative Decisions (Judicial Review) Act 1977, s.16(1); and see Commissioner for Railways (N.S.W.) v. Cavanough (1935) 53 C.L.R. 220 at pp.225 and 228; Grady v. Commissioner for Railways (N.S.W.) (1935) 53 C.L.R. 229; The Broken Hill Proprietary Company Limited v. The Trade Practices Tribunal, Federal Court, 14 August 1980, unreported).

As to the second order sought, namely, an order declaring the application by Gelphen Nominees Pty. Limited for an extension of time to be void and of no effect, I am of opinion that this would not be an appropriate order. It may be held on an application for an order of review that a decision is void but where a section like s.59(1) of the Patents Act 1952 provides for an application for an extension of time to be made and an application is made, even though it states grounds which are regarded as likely to prove unsuccessful, the application itself is not void.

As to the third order, which seeks an injunction against Gelphen Nominees Pty. Limited based in effect on infringement, it should be noted that jurisdiction to hear and determine proceedings under the Patents Act 1952 has since Act No. 162 of 1976 been vested in State and certain Territory Supreme Courts and not in the Federal Court of Australia. Whether such an order could ever be made as an incidental order in terms of s.16(1)(d) of the Administrative Decisions (Judicial Review) Act 1977 is another question. It is sufficient to say that no case was made out before me which would justify my making such an order.

As to costs, I propose to give the parties an opportunity of addressing me on the order which should be made.