Warner-Lambert Company v Cardinal Health, Inc - [2005] APO 26

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 762692 in the name of WARNER-LAMBERT COMPANY

Title: Modified Starch Film Compositions

Action: Application for an extension of time by CARDINAL HEALTH, INC to serve evidence in support, and an objection thereto by WARNER-LAMBERT COMPANY

Decision: Issued 20 May 2005.
Abstract

Request for extension of time granted.
The explanation justified an extension of time. While more detail was given at the hearing, nothing new was added. The main points set out in the request did not change.
While lack of utility was a ground of opposition which was distinct from the other grounds available (as per the comments of Gummow J in Lockwood Security Products Pty Ltd v. Doric Products Pty Ltd [2004] HCA 58 at 46 and 48), and gathering evidence for one should not necessarily delay the gathering and filing of evidence for the other, it is also plausible that there may be overlap between them that necessitates waiting for one to be completed before it can be served. Without knowing exactly what the evidence will be, it is not always possible to reach a conclusion one way or the other.
Despite submissions to the contrary, it seems clear from the explanations that a serious opposition is in train. In addition, the opponent’s decision to perform commercial-scale experiments only after finding something worth investigating from laboratory experiments is reasonable. Naturally, if the opponent had not proceeded expeditiously in setting up commercial-scale experiments following their laboratory experiments, there might be some justification in refusing an extension. However, there was no evidence of this.
On balance the parties’ interests supported an extension, as did the public interest in having a serious opposition decided on its merits.
Costs awarded against Warner-Lambert Company.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 762692 by Warner-Lambert Company;
Application for an extension of time by Cardinal Health, Inc to serve evidence in support, and an objection thereto by Warner-Lambert Company

BACKGROUND

Patent application 762692 in the name of Warner-Lambert Company (“Warner”) was filed on 11 August 1999 as PCT/US99/18139 for an invention titled “Modified Starch Film Compositions”. The application was advertised accepted on 3 July 2003. On 2 October 2003, Cardinal Health, Inc (“Cardinal”) filed a notice of opposition. A Statement of Grounds and Particulars followed on 24 December 2003. Therefore, evidence in support was due 24 March 2004. Cardinal requested, and was granted, several extensions up to 24 December 2004 to serve evidence in support.
On 16 November 2004, following the amendment of the Patents Act by the US Free Trade Agreement Implementation Act 2004, Cardinal filed an amended Statement of Grounds and Particulars adding the ground of lack of utility (as found in s.18(1)(c)), including particulars in support, as permitted by the Commissioner in her Official Notice in the AOJP of 26 August 2004. The amendment was accompanied by a request to file further evidence relating to the new ground, as required by the Official Notice. Following some correspondence between the Commissioner and Cardinal, the request to file further evidence was granted on 11 January 2005 with the indulgence that the further evidence could be served at the same time as the evidence in support. The Commissioner indicated to Cardinal that she:
“does not expect the new ground of opposition to cause significant delays in the preparation of evidence in support. As a result, any extension request to serve evidence in support will need to show that there has been significant progress in the preparation of their evidence to justify the extension.”
Cardinal requested an extension to 24 March 2005. This was granted. The reasons in support of this extension were as follows:
“The Opponent is actively pursuing the preparation of its evidence in support of the Opposition.
Pursuant to recent amendments to s.59 of the Patents Act 1990 made further to the US Free Trade Agreement Implementation Act 2004, the Opponent now has pleaded the new ground of lack of utility [s.18(1)(c)] in the amended Statement of Grounds and Particulars filed on 16 November 2004.
The Opponent has commissioned experiments in support of the new ground. Two series of experiments have been performed, and several more series are contemplated.
Further time is needed for the expert and attorneys to perform the experiments and to evaluate the results, and for the Declaration presently in draft form to be finalised as evidence in support”
On 24 March 2005, Cardinal requested another 3 month extension in which to file evidence in support. Warner objected to this extension.
The request for the extension of time to file evidence in support, and the objection thereto, was heard in Canberra on 21 April 2005. Both parties appeared by telephone. Ms Julie Harkins, patent attorney of Callinan Lawrie, Kew represented Warner. Ms Marita Gill, patent attorney, assisted by Mr Greg Chambers, both of Phillips Ormonde & Fitzpatrick, Melbourne appeared for Cardinal.
As at the hearing date, no evidence in support had been filed.
THE APPLICATION FOR AN EXTENSION OF TIME
The circumstances in which, and the grounds upon which, the application for extension of time was made were given as follows:
“In the preceding 3 months, further experiments have been performed. The first set of these, like the earlier experiments, was scaled down from commercial dimensions. In light of the results, however, it was decided to perform commercial-scale experiments in addition.
It was initially intended to perform these in Australia, but they were delayed by factory closure and staff absence over Christmas and through January; the need to import reagent; and other demands on the necessary machinery. It was then decided to perform the experiments in the US. Three experiments have now been performed, with information regarding the latest two studies being received by the Australian attorneys today (24 March 2005).
Work has commenced on two further draft Declarations in relation to the experiments.
The draft Declaration of the primary expert is now in an advanced form. It has been reviewed several times by the primary expert and his further comments have been incorporated. It is currently being reviewed by the Opponent’s attorneys in the US and the UK. Once the expert has commented on any issues the attorneys raise and on the experiments performed, the Declaration will be in substantially final form. It will then be served following a final review by the US and UK attorneys.
It is anticipated that the finalization of the Declarations will be completed such that the Evidence-in-Support will be served within the time now sought.”
THE LAW ON EXTENSIONS OF TIME
The requirements for granting an extension of time to serve evidence-in- support are set out in regulation 5.10(2) which states:
(2) The Commissioner may:
(a)on the application of a party in the approved form; and
(b)on such reasonable terms (if any) as the Commissioner specifies;
extend the time within which the party may take a step prescribed in this chapter, not being a step that is taken under regulation 5.3 or paragraph 5.4(1)(a).
This provision must be read in conjunction with regulation 5.10(5):
(5)The Commissioner must not grant an application under subregulation ( 2) ... unless the Commissioner:
...
(c) ...
(i)gives the parties a reasonable opportunity to make representations concerning the application or proposed action; and
(ii)is reasonably satisfied that a direction, an extension of time or the serving of further evidence is appropriate in all the circumstances.
The Federal Court has considered the requirements of regulation 5.10 in Ferocem Pty Limited v. Commissioner of Patents (1994) 28 IPR 243, A Goninan and Co Ltd v Commissioner of Patents and Another (1997) 38 IPR 213, and National Starch & Chemical Company v Commissioner of Patents (2001) 50 IPR 398. The relevant considerations arising from these decisions have been set out and followed in numerous patent office decisions relating to regulation 5. 10, and may be summarised as follows:
(a)The broad discretion afforded by Regulation 5.10 cannot be reduced to insistence on imperative compliance with particular requirements;
(bThe exercise of this discretionary power requires proper, genuine and realistic consideration of all the relevant aspects that pertain to the application;
(c)The provision of a satisfactory explanation of the delay is a relevant consideration, but is not mandatory;
(d)The public interest in determining a serious opposition on its merits is a relevant consideration and must be balanced with the requirement that matters before the patent office should be dealt with in an efficient, orderly manner and not be unduly prolonged;
(e)The interests of the opponent, the applicant and any other parties are a relevant consideration.
In summary, it is clear from these decisions that the Commissioner, having given both parties the opportunity to make representations, may grant an extension only if reasonably satisfied that it is appropriate in all of the circumstances.
RELEVANT CONSIDERATIONS
Explanation of the Delay
Warner submitted that the explanation did not justify an extension of time. They submitted that there were inconsistencies between the reasons given for the various extensions of time, particularly with regard to the number of experts. Originally only “an expert” had been retained, but this became “experts” in the next extension request. The next two set of reasons mentioned “the expert”, while the current reason mentions a “primary expert”. It was also unclear what the grounds the evidence would address. Given that, in a letter dated 18 April 2005, the opponent had said that they “had not yet settled how we will present our case”, it was not clear how “advanced” the preparation of evidence really was. Furthermore, there was no undertaking in this letter by Cardinal to complete the evidence in support within the time limit being sought. Warner indicated at the hearing that this “would have been a strong enough reason to not go to today’s hearing”. They also stated that it was only at the date of the hearing that they were given a firm idea of who the experts were and what they might be doing.
I asked Cardinal why the information given in the latter of 18 April 2005 and at the hearing could not have been included in the explanation. In response, Cardinal noted that they had provided further information at the hearing about the progress of the work of the experts to date and provided names of the experts who were expected to provide declarations. Cardinal also said that, while they could have named their expert, there was no previous indication from the applicant that there was problem with the amount of information they had supplied in previous requests for extensions of time. If there had been an indication then they would have included even more extensive reasons.
Warner then indicated that the onus was not on them to give any indication to Cardinal that the reasons were not sufficient. Cardinal had to supply a proper explanation. If Cardinal had provided all the reasons that had been advanced at the hearing giving more of the story, it was possible that the applicant might not have objected.
Cardinal answered saying that while they had expanded on the explanation given in their request for an extension by naming the experts, etc, but they had not introduced anything new. The main points made at the hearing were present in the explanation.
Warner also submitted that an earlier extension (dated 24 June 2004) mentioned “additional information” that was being collated, but no amendment to the Statement of Grounds and Particulars had occurred as yet. As such, it was unclear what had become of the additional information.
The additional information referred to in earlier requests for extensions, Cardinal submitted that this related to common general knowledge.
Warner further submitted that the delay in preparing the evidence caused by factory closures and staff absence over Christmas was “hardly unpredictable”. In addition, the reagents needed for the experiments would have been apparent from the specification and they were not impossible to get. Ms Harkins had rung around several suppliers in Australia and had found stocks of the reagents that apparently had to be imported. Furthermore, the need to perform the experiments on a commercial scale should have been planned from the outset given that the application related to an industrial process.
In regard to the recent delays, Cardinal submitted that while factory closures, etc were not unpredictable, they were not controllable by Cardinal. With regard to the need to import reagents, the reagent being sought was pharmaceutical-grade kappa-carrageenan which had to come in from France. In addition, while experiments were being performed by a company which was part of the Cardinal group of companies, it was separate from the opponent and Cardinal had no control over it.
With regard to Warner’s submissions on the matter, Cardinal submitted that it was reasonable to start with laboratory experiments before progressing to commercial scale experiments, This, they submitted, was a prudent course to see if there was anything worth investigating further. This was why they had not started with the commercial-scale experiments. It was found that in the laboratory experiments it was very difficult to replicate the real-world conditions under which the invention would be practiced. Therefore, it was decided to do the commercial-scale experiments. This then led to the problems with lack of staff and resources over Christmas. Cardinal had received a report of some commercial-scale experiments. While Cardinal may wish to do further experiments, they did not anticipate that there would be the delays that occurred earlier.
Continuing on, Warner submitted that there was no explanation as to why the delay in preparation of evidence for the ground of lack of utility would delay the progress on evidence of novelty, obviousness and fair basis, for example. These grounds are distinct from lack of utility and are not dependent on any experiments. The comments of Gummow J in Lockwood Security Products Pty Ltd v. Doric Products Pty Ltd [2004] HCA 58 at 46 and 48 supported this distinction. Also, given that a “draft declaration” had been prepared by 24 September 2004, being before the addition of the ground of lack of utility, presumably it related to grounds other than lack of utility. It was unclear why the evidence relating to other grounds has not been finalised and served.
During the hearing I pointed out to Warner that, in a letter from IP Australia dated 11 January 2005, it was said:
“I agree that it would be appropriate to have [the evidence relating to lack of utility] served at the same time as the substantive evidence in support as requested by the opponent in their letter of 23 November 2004”
I asked whether that suggested that the evidence could be served altogether. Warner responded that it was a question of time. The opponent still hadn’t given a commitment that the evidence would be finalised and it would be preferable to have the evidence on the other grounds of opposition so that the applicant has some idea of the case being put against it, without the action dragging on.
In response, Cardinal submitted that while they agreed that the grounds of lack of utility, novelty, obviousness, etc were distinct, the grounds were not unrelated. Cardinal indicated that they thought it was important they complete all their investigations and consider all the relevant material in evidence before finally formulating their case. They indicated that many grounds of invalidity overlap and relate to each other. There were some issues in utility that went “hand in hand” with issues such as sufficiency. As a result of the overlap, the proper interpretation of the claims in light of all information was important and this was relevant to novelty and inventive step. This was the reason why Cardinal was proposing to serve all their evidence together.
While I am somewhat concerned about Cardinal’s statements that, at least at 18 April 2005 they were still “not yet settled how we will present our case”, I believe that the explanation justifies an extension of time. Cardinal’s point that the main points made at the hearing were present in the explanation, albeit with more flesh hanging on them, is valid in my opinion. On Warner’s submissions, while there were certainly some inconsistencies in the number of experts in the previous explanations, I do not believe that this means the explanation does not justify as extension. Warner’s other submissions that they had doubts about whether a serious opposition was being mounted because of the inconsistency of the number of experts and the “additional information” foreshadowed in an earlier extension not having appeared, do not persuade me. To me it seems clear from the explanations that a serious opposition is in train. Furthermore, while Warner’s comments about the predictability of Christmas closures and need to perform commercial-scale experiments in any case are noted, Cardinal’s submissions regarding having no control over closures, as well as only deciding to perform commercial-scale experiments after finding something worth investigating from laboratory experiments are equally as valid. To me it seems a reasonable course to take. Naturally, if Cardinal had not proceeded expeditiously in setting up commercial-scale experiments following their laboratory experiments, there might be some justification in refusing an extension. However, I see no evidence of this here.
In a similar vein, while Warner noted that the reagents that apparently had to be imported were readily available in Australia, Cardinal has indicated that the necessary reagent had to come from France. It was unclear whether, in her phone calls to Australian suppliers, Ms Harkins indicated that she was looking for the specific the reagent that Cardinal indicated was needed. Indeed she said that in her conversation with the supplier she was told that kappa-carrageenan was “available over Christmas, depending on the grade necessary” (my emphasis). To me it seems obvious that if the film produced from the starch compositions was to be used in the areas that are exemplified in the specification, pharmaceutical-grade reagents would be required. Cardinal submitted that this had to come from France, while there is no evidence if this is what Ms Harkins requested of the Australian suppliers.
While I agree to a certain extent with Warner’s point that the grounds of a opposition are distinct and a delay in collecting evidence for utility does not create a delay in collecting a serving evidence in novelty, it is also plausible, as submitted by Cardinal, that there may be overlap between them that necessitates waiting for one to be completed before it can be served. Without knowing exactly what the evidence will be, it is not always possible to reach a conclusion one way or the other.
While I also brought up the possibility that the Commissioner’s letter of 11 January 2005 may have created an expectation in Cardinal’s mind that all evidence had to be served together, I note that the letter also states:
“Please be advised however, that the Commissioner does not expect the new ground of opposition to cause significant delays in the preparation of evidence in support. As a result, any extension request to serve evidence I support will need to show that there has been significant progress in the preparation of their evidence to justify the extension.”

To me this clearly indicates that Cardinal was expected to progress their gathering of evidence. In my opinion, the explanation clearly shows that they have.
I believe that the explanation justifies an extension.
Parties Interest
As far as the parties interests went, Warner submitted that there had been no definite indication that a serious opposition was in train. While Cardinal’s submissions at the hearing gave more detail, there was still no evidence relating to novelty and obviousness on file and Warner was not sure what evidence was in at least those two grounds. As such, they were being prevented from starting to form a reply to that evidence at least. In addition, granting the extensions delayed the grant of the patent.
Cardinal submitted that the reasons given for the extension of time were consistent with the progress outlined in the letter of 18 April 2005 to Warner and their submissions at the hearing. In addition, there was no apparent prejudice to Warner in allowing the extension, apart from some impatience on Warner’s side to see the evidence.
Clearly the interests of the opponent are in obtaining the extension in order to serve its evidence in support. While it is true that the interests of Warner are clearly in not having the present proceedings delay the substantive opposition, and that Warner may be disadvantaged, I am not aware of any special reasons (beyond impatience), and Warner did not provide any evidence to suggest the contrary, which would specifically disadvantage them if the present extension were granted.
On balance, the parties’ interests support an extension being granted.
Public Interest
The public interest consists of the balancing act between two competing considerations. On the one hand, it is in the public interest that oppositions should be dealt with expeditiously before the Patent Office. On the other hand, it is in the public interest that valid patents are granted, and that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on its merits.
Cardinal submitted that the experiments they had performed to date cast serious doubts on the utility of the invention. To refuse the extension would be fatal to Cardinal’s case. Given the doubts about the validity of the application, it would not be in the public interest to prevent the opposition being dealt with on its merits, as per Kitto J.’s comments in Kaiser Aluminium & Chemical Corporation v The Reynolds Metal Co. 120 CLR 136:
“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 the merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though the failure may be.”
Furthermore, Cardinal confirmed that they were significantly advanced in the preparation of the evidence, and wanted to submit it all as one. They were of the opinion that there was a “high likelihood” it would be finalised by the deadline sought in this extension.
Warner’s submissions on this point were not voluminous, and were primarily along the lines of those principles set down in the decisions of the Commissioner as well as the courts, as set out at the start of this section.
In my view, Cardinal’s submissions are persuasive. It is clear to me that a serious opposition is contemplated. To refuse the extension would be fatal to Cardinal’s case. No evidence in support would be filed, and they would be shut out. While granting an extension may offend against the need for expeditious disposal of matters before the Patent Office, it is also important for the public interest that an opposition be determined on its merits so that clearly invalid patents are not granted. This is the overriding consideration in this case.
The public interest supports granting the extension.
DECISION
The explanation given justifies granting the extension. In addition, it is, on balance, in the parties’ interest to grant the extension. Furthermore, it is in the public interest to have the opposition determined on its merits. Not granting the extension would prevent this. Therefore, the public interest supports the extension being granted.
I allow the extension. The time for filing evidence in support is extended to 24 June 2005.
However, I also note again the comments made by the Commissioner in the letter of 11 January 2005, regarding the need for significant progress being made to justify extensions of time.
COSTS
Both Warner and Cardinal made submissions on costs. Warner submitted that, even if an extension was granted, the explanation did not justify one and they should be awarded costs. Cardinal’s submission was that costs should follow the event.
In the present case, the explanation supplied was found to justify an extension. In such circumstances costs follow the event. I see no reason to depart from the usual practice of the Commissioner in these matters.
I award costs against Warner.
GREG POWELL
Delegate of the Commissioner of Patents
20 May 2005
Patent attorneys for the applicant : Callinan Lawrie, Kew
Patent attorneys for the opponent : Phillips Ormonde & Fitzpatrick, Melbourne