W.R. Grace & Co. v Betz International Inc

[1988] APO 32

In the Matter of Patents Act 1952 - and - In the Matter of Patent Application No. 571685 by W.R. GRACE & CO. - and - In the Matter of an Application by BETZ INTERNATIONAL INC. for an Extension of Time under Section 59(1) to lodge Notice of Opposition.

 

DECISION OF A SUPERVISING EXAMINER OF PATENTS:

Background

Application No. 42005/85 was lodged on 6 May 1985 by Dearborn Chemical Company; subsequently the Commissioner directed that the application should proceed in the name of W.R. Grace & Co. pursuant to a request under sub-section 34(4). The application was advertised as accepted on 21 April 1988 and was given the Serial No. 571685. On 21 July 1988, the last day of the initial three month period provided by sub-section 59(1), Betz International Inc. applied for an extension of time of one month in which to lodge notice of opposition. Betz is a corporation based in the United States. The circumstances in which the application was made are as follows:

"Since October 1987 we have maintained a watch for acceptance of application 42005/85. The application first came to our notice during June 1987 in a report on the results of a subject matter search of applications and patents carried out by our Australian patent attorneys.

During May 1988 we were advised that the application had been advertised as accepted and we were provided with details of the accepted patent specification.

Since May 1988 we have been diligently reviewing the situation and in particular assessing the prospects of successfully opposing patent grant. In this regard, we are aware of prior art which we believe is relevant to the validity of at least claim 1 of the application. In this regard, claim 1 of the corresponding U.S. patent 4,551,261 is more limited in scope than the Australian claim 1, and we have instructed our Australian patent attorneys to consider the extent to which the Australian claim 1 and the dependent claims are invalid in the light of the prior art cited during examination of the U.S. patent.

Further time is required to finalise consideration of the position".

On 10 August 1988 W.R. Grace objected to the application for an extension of time; the notice of objection states that:

"The application by Betz clearly demonstrates:

1. A lack of the diligence required to support an application for an extension of time; and 2. A lack of any genuine intention to launch a serious opposition; and 3. Lack of any actual intention to launch opposition proceedings.

The tests set out in Vangedal-Nielson et al v. Smith et al 33 ALR 144 are not met".

A notice of opposition was lodged on 22 August 1988. The matter of the extension of time came to hearing in Canberra on 6 September 1988 at which Mr G. Noonan, patent attorney, appeared for W.R. Grace and Mr G. Munt, patent attorney, appeared for Betz.

Extension of Time

The case Vangedal-Nielson referred to by Betz, supra was a decision of the Federal Court of Australia before N. Bowen C.J. The "tests" have been derived from the following parts of that decision:

"...... 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 [section 59(1)) requires the conclusion that the applicant for extension of time before the Commissioner is entitled to the extension unless some cases showing perhaps "rather exceptional circumstances" is raised against him .......

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 ........

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 desirabliltiy of operating the system efficiently and without unreasonable delays and also the interests of the applicant for a patent which are also clearly involved".

Submissions

Mr Noonan submitted that in the circumstances of this case there are no "exceptional circumstances which prevented lodging the notice of opposition by the due date". He referred to three decisions of the Patent Office in this matter, viz:

(i) Dow Chemical Co. V. Ishihara Sangyo Kaisha Ltd (1983) 1 IPR 298; in this case an extension of time to lodge notice of opposition was allowed because the prospective opponent needed further time to complete experimental work in relation to the process disclosed in the subject specification.

(ii) Poltrock v Ennor (1987) AIPC 90-361, 8 IPR 217; in this case a similar extension of time was allowed because the prospective opponent was in the process of ascertaining whether any prior publications or use of the invention in question had occurred, and he was waiting advice from the Commissioner of Patents as to whether any such prior exposure was protected by section 158(2) of the Patents Act, (Section 158(2) relates to the applicant giving notice of his intention to exhibit the invention).

(iii) Albright & Wilson Ltd. v Colgate - Palmolive Co. (1987) AIPC 90-444; an extension of time was granted in this case because the specification was especially complex, the prospective opponent had only recently obtained copies of the accepted form of the specification and because the patent applicant was already facing opposition from a third party.

In these three cases Mr Noonan proposed that there were "outstanding matters" or "exceptional circumstances" which were taken to be good reasons why the opposition had not been mounted in the initial three-month period.

Mr Noonan emphasised that the applicant for the extension of time "carries the burden of establishing an appropriate case to justify that allowance" (see Vangedal-Nielsen, supra and he suggested that in this case the prospective opponent has not carried that burden. He viewed the present case as involving straightforward circumstances which could have been dealt with by the patent applicant's attorneys within the three-month period. He suggested that the technology of the case is not complex, that there is only 14 claims in the specification (c.f. 139 in the Albright & Wilson case), that there is no complex patent family with inter-woven prior art, that the claims of the specification are substantially the same as those of an equivalent granted US patent (the "not particularly meaningful" difference being that the broadest claim of the US patent contains the feature of claim 9 of the Australian specification), that the prospective opponent had been watching the case for about 7 months, and that "simple delay in carrying out the fundamental enquires" is not a good reason for being unable to mount the opposition.

Mr Noonan was critical of the prospective opponent's statement of circumstances on the application for extension of time. No supporting documents were lodged. Mr Noonan submitted that Betz's statement that "we have been diligently reviewing the situation" is in itself inadequate proof of that diligence. He said: "We're not in a world of gentlemen where if one party says they've been diligent then the hearing officer and the objector to the extension-of-time are required to take that at face value, we really need to know, that they have been diligent". He suggested that "we don't know what they were doing for 2 months", that in the pre-acceptance period the prospective opponent should at least "be prepared" and that "even if [the prospective opponent] wasn't prepared, 3 months is quite a substantial amount of time in these days of database communication, faxes and international direct line connection to patent offices to obtain information".

Mr Munt submitted that the "good reason" why the opposition was not mounted in the initial three month period, is that "Betz asked us to provide advice on the extent to which the Australian claim 1 and the dependent claims are invalid in view of the prior art cited in the US". He explained that this is not a simple matter, some factors which should be considered are:

(i) Mail delays between Australia and the U.S.

(ii) Differences in Australian and US law, the US case file wrapper indicated that an obviousness objection had been taken against the US application.

(iii) The accepted Australian claim 1 is broad in scope and therefore "needs an extensive amount of consideration"

(iv) The Australian attorneys had also been asked by the applicant to advise on possible infringement, this involved the feature of Australian claim 9 which is the difference between the broadest Australian and US claims.

Mr Munt submitted that a "serious opposition is foreshadowed" and that such was evident from the factors referred to above, and from the evidence that there is a prima facie case for opposition since the accepted Australian claim I is broader than the broadest US claim, the latter being narrowed during prosecution of the US application. When questioned on the matter of the amount of prior art considered in the prosecution of the US application, Mr Munt disclosed that "there is not a great deal of prior art in the US .... but there is admitted prior art in the patent specification ..... and we've had consultations with skilled people in the art" to determine the state of common general knowledge.

Mr Munt submitted that the period of the extension of time applied for by the prospective opponent, namely one month, "demonstrates an extremely responsible approach by Betz" since it is more usual to apply for the full three month extension allowed by sub-section 59(1) and that this period should not be considered as undue delay. Also he pointed out that once Betz had received the appropriate advice from their attorneys, they lodged the notice of opposition without delay. Mr Munt also argued that it was not significant that Betz knew of the existence of W.R. Grace's application prior to acceptance; he referred to the decision in Playground Supplies Pty. Ltd v. Joachim Grabosch (1986) AIPC 90-266. It was held in that decision, relating to a trade mark application that:

"The possibility that the opponent may have known of the existence of the applicant's trade mark application at any time in the many years before acceptance was of no significance in deciding the issue of the opponent's entitlement to an extension of time. There is no requirement upon an applicant for an extension of time to decide to oppose or to determine its final grounds of opposition before he knows either that the trade mark application has been accepted or under what conditions it has been accepted".

Mr Munt suggested "the fact that [Betz] ordered a watch shows an interest in that area of technology", and that this places no onus on the prospective opponent insofar as the consideration of delay is concerned.

Mr Munt referred to the decision in Firmaframe Nominees Pty Ltd. v. Automatic Roller Doors Australia Pty Ltd (1984) 4 IPR 137, and even though that case was related to an application for an extension of time under sub-section 160(2) the Deputy Commissioner of Patents, Mr Friemann, did refer to the Vangedel-Nielson case, because "the same considerations of public interest are involved"; thus on pages 142 and 143 the Firmaframe decision reads:

"Bowen CJ thus identified two specific and independent considerations of public interest in the grant of an extension of time. Firstly the interest of a prospective opponent who, for some good reason, was not able to mount his opposition within the initial period of three months. Secondly, where a serious opposition is foreshadowed by a prospective opponent, the interest of the public in ensuring that worthless patents are not granted because insufficient time has been afforded in raising the grounds of opposition specified in sub-s.59(l). In the first case, favourable exercise of the discretion to extend the time for lodging a notice of opposition is subject to the applicant for the extension establishing a good reason for the failure to lodge the notice in the prescribed time. In the second case, favourable exercise of the discretion is subject to the applicant establishing that a serious opposition is involved.

Turning to the consideration of whether the failure of Automatic Roller Doors to lodge a notice of opposition within the time prescribed involves a "good reason". In my view this question resolves into the issue of whether the failure to lodge the notice of opposition within the period prescribed (three months) involves undue delay. As I understand it, this issue is distinct from the question of whether there was undue delay in the lodgement of the application under sub-sl6O(2) ...... "

Thus Mr Munt argued that the issue of whether there is a "good reason" why the opposition has not been mounted in the initial 3-month period is the same issue as that of "undue delay", that in the present circumstances there is no undue delay, and that in effect a good reason is thereby established.

Decision

On the Vangedal-Nielsen decision and the attorneys' interpretations thereof I comment as follows:

Firstly I cannot agree with Mr Noonan's view that the prospective opponent needs to show that there are "exceptional circumstances" which prevented lodging the notice of opposition. Bowen C.J.'s reference to "exceptional circumstances" in the Vangedal-Nielson case is in a different context, i.e. he is saying that sub section 59(1) should not be interpreted such that an extension is automatically allowed unless the patent applicant refers to some exceptional circumstances as to why the extension should not be allowed. This does not mean that the prospective opponent must show exceptional circumstances in order to justify an extension of time; as Bowen C.J. proposes elsewhere in the part of the decision cited above, the prospective opponent does "carry the burden of establishing an appropriate case", but this is not as stringent a requirement as having to prove "exceptional circumstances".

Secondly, even though it is clear from the Vangedal-Nielsen decision that the burden is on the prospective opponent to establish a case to justify the allowance, the current proceedings have developed because of the patent applicant's objection, so some responsibility lies with that party to establish a case as to why the extension should not be allowed.

Thirdly with regard to the Firmaframe decision, I cannot agree with that interpretation of the Pangeakl-A7elsen decision which equates the criteria of "good reason" and "unreasonable delay". I consider "unreasonable delay" to be a broad issue, which affects the interests of the public as well as the patent applicant, and which includes more specific issues such as whether the prospective opponent has a good reason why the opposition has not been mounted in the initial 3-month period. "Unreasonable delay" I believe also includes the issue of the period of extension for which the application has been made.

On the circumstances of this case I comment as follows. Firstly I conclude that a serious opposition is foreshadowed; this is apparent from Mr Munt's submissions. Also on this matter Mr Noonan stated: "I'm not proposing to raise any argument on the matter of serious opposition to reduce the issues". Secondly I agree with Mr Noonan that the matters concerning Betz's Australian attorneys were fairly straightforward and could have been dealt with in the three months provided by sub section 59(1): thus I cannot say that Betz has a good reason for not mounting its opposition in the initial 3-month period. Some delay has therefore occurred, but under the circumstances I do not think it can be said to be an unreasonable delay. Thirdly on the matter of the period of the extension, I think that one month extension also cannot be seen as causing unreasonably delay.

Thus I am confronted with a problem where prima facie not all of the criteria for an extension, derived from the Vangedal-Nielson decision, have been met. However, I doubt that Bowen C.J. implies in his decision that all the criteria are essential and must be met in order to allow the extension. Furthermore, in order to resolve the problem I will now consider the more basic criteria of the respective interests of the prospective opponent, the patent applicant and the public. Firstly, I consider that there would be a substantial disadvantage to the public and to the prospective opponent if the extension is not allowed; a serious opposition is foreshadowed, and the importance of this matter was dealt with in Kaiser Aluminium and Chemical Corp. v. The Reynolds Metals Co. (1969) 120 CLR 136:

"...... 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 failure in procedure, lamentable though that failure may be."

Secondly insofar as the patent applicant is concerned the prospective opponent's lack of a good reason why the opposition was not mounted in the initial 3-month period has no adverse effect per se; and, since I have decided that there have been no unreasonable delays, there is no real disadvantage to the patent applicant or to the public in allowing the extension of time.

I conclude that Betz have established an appropriate case to justify allowance of the extension of time, and accordingly I allow the extension of time to 21 August 1988 in order to validate the notice of opposition lodged on 22 August 1988 (a Monday).

Regarding costs I take the following matters into consideration. The statement of circumstances on the application for extension is insufficient proof of a serious opposition being foreshadowed; usually such applications are accompanied by supporting evidence. Details of the manner in which the opponent was "diligently reviewing the situation" were not disclosed to the patent applicant until the hearing, therefore the patent applicant had some justification in its objection based on the application for extension pax-se. The patent applicant's objection was also justified somewhat by the nature of the opponent's reasons for not mounting the opposition in the initial 3-month period. on the other hand though, W.R. Grace was aware before the hearing that Betz's application was only for one month, and the former offered no reason why it would be disadvantaged because of the extension of time. Thus I conclude that even though my decision on the extension of time is in Betz's favour, I make no award of costs because W.R. Grace had some justification for its objection as discussed above.

(J I Welsh)

Supervising Examiner of Patents

10 OCT 1988

Patent attorneys for the patent applicant: Davies & Collison, Melbourne

Patent attorneys for the opponent: Griffith Hack & Co. Melbourne