Zenon Environment Inc. v Memcor Australia Pty Ltd - [2006] APO 24

ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 2003271311 in the name of ZENON ENVIRONMENTAL INC.

Title: Cyclic Aeration System For Submerged Membrane Modules.

Action: Opposition under Section 59 of the Patents Act by MEMCOR AUSTRALIA PTY LTD and an application for an extension of time under Regulation 5.10 to serve evidence in support.

Decision: Issued 30 June 2006 .
Abstract

The opponent was found to have provided unsatisfactory explanations for the delay in completing the service of evidence in support. On the other hand the balance of the interests of the parties, and the public interest, indicated an extension of time was appropriate.
The requested extension of time until 20 July 2006 was granted for Memcor to complete the service of evidence in support.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent application 2003271311 by ZENON ENVIRONMENTAL INC, and opposition thereto, under Section 59, by MEMCOR AUSTRALIA PTY LTD, and an application for an extension of time under Regulation 5.10 to serve evidence in support.

BACKGROUND

Zenon Environmental Inc. (“Zenon”) filed patent application 2003271311 on 19 December 2003. The application was advertised accepted on 28 April 2005.
Memcor Australia Pty Ltd (“Memcor”) filed a notice of opposition on 20 July 2005 to the grant of a patent on application 2003271311. A statement of grounds and particulars in support of the opposition followed on 21 October 2005.
On 19 January 2006 Memcor filed an application for an extension of time to 20 April 2006 to serve evidence in support of the opposition. That extension of time was subsequently allowed.
On 20 April 2006 Memcor filed a second application for an extension of time to 20 July 2006 to serve evidence in support. Zenon has objected to the grant of this extension. On 24 April 2006 Memcor served partial evidence in support on Zenon. Memcor has served this evidence out of time. This evidence would only be part of the opposition if I allow the second application for an extension of time.
The objection to the extension of time to 20 July 2006 to serve evidence in support was set for a hearing. The hearing was held in Canberra on 19 June 2006. Mr Barry Hess of counsel, instructed by Mr John McCormack, patent attorney of Griffith Hack, represented Zenon. Mr Jack Redfern and Mr Matt Ward, patent attorneys of Shelston IP, represented Memcor. Both parties appeared by phone.
RELEVANT LAW
The requirements for granting an extension of time to serve evidence are set out in regulation 5.10(2) which states:
(2)The Commissioner may 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 5.3AA, paragraph 5.4(a) or subparagraph 5.8(1)(a)(i)):
(a) on the application of a party in the approved form; and
(b) on such reasonable terms (if any) as the Commissioner specifies; and
(c) after the party has served a copy of the application on the other party.
This provision must be read in conjunction with regulation 5.10(5):
(5)The Commissioner must not give a direction under subregulation (1) or grant an application under subregulation (2) or (4) unless the Commissioner:
(a) …
(b) …
(c) in either case:
(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 law on extension of time provisions, and more specifically the law on regulation 5.10 has been considered by the Federal Court 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. It is clear from these judgments that regulation 5.10 confers a broad discretion, which cannot be reduced to an imperative compliance with particular requirements. On the contrary, it is necessary to give proper, genuine and realistic consideration to all relevant aspects of the case.
Relevant aspects include the reasons for the delay, the interests of the parties in the opposition, and the public interest. I will address each of these factors in my decision.
Explanation of the delay
In the second application for an extension of time Memcor provides the following explanation for the delay in serving evidence in support.
“An Australian expert consultant has been selected. Relevant material used in proceedings elsewhere has been reviewed and will be provided to the expert in order to obtain his opinion of the state of the common general knowledge in the relevant art at the priority date. Further time is required to allow this expert to complete his review of the relevant material and the prior art and to formulate his opinion. Following determination of the state of the common general knowledge, further time will be required for the expert to review the opposed application in detail and provide his opinion on various issues and within which to prepare Evidence-in-Support based on his opinion in a form suitable for service.”
Memcor’s partial evidence served so far merely amounts to copies of prior art to be argued in the opposition. From the above statement and at the hearing it was clear that Memcor wanted to also serve supporting evidence from an expert in the field.
Mr Hess cited the Austal Ships Pty Ltd v Stena Rederi AB decision, (2006) 66 IPR 420 [at 6 to 12], to submit the extension of time should be refused as there is nothing to establish that the proposed evidence from Memcor would make it practically certain that the patent application if granted would be invalid.
At the hearing Mr Hess confirmed the Austal decision was an appeal from a substantive opposition rather than an extension of time matter. Nonetheless he insisted there was a threshold requirement for Memcor to provide sworn evidence to support the reasons for the delay and that the burden of proof then lay with Memcor to establish that the nature of its anticipated evidence would make it practically certain a valid patent could not be granted.
Mr Ward referred to the Institut National De La Recherche Agronomique (INRA) v Zenco (No. 4) Ltd decision, (2001) 52 IPR 171, to state that Regulation 5.10 confers a broad discretion that cannot be reduced to imperative compliance with particular requirements. Additionally, from the INRA decision, the exercise of the discretion is not conditional on a party making a full and frank disclosure of the need for an extension.
The Federal Court in the Austal decision took the view that to overturn a decision of the commissioner’s delegate to dismiss an opposition, a court must be clearly satisfied that it is practically certain that a patent, if granted, would be invalid. This context is quite different from the context in the present case where Mr Hess insisted an extension of time should be refused as Memcor has not provided evidence to support the reasons for the delay nor provided any indication that its anticipated evidence would make it practically certain that a patent, if granted to Zenon, would be invalid. I find no support for such submissions from the Austal case. Additionally at least the latter point would appear to be clearly a matter for the substantive hearing.
The INRA case appears to be significantly more pertinent. The discretion to allow an extension of time cannot be reduced to insistence on imperative compliance with particular requirements. Further a full and frank disclosure is not mandatory. In this context it seems apparent that an expectation that Memcor provide sworn evidence to support reasons for the delay and that Memcor provide evidence that its substantive evidence would make it practically certain that a valid patent could not be granted is an excessive demand at this stage of the proceedings.
Mr Hess referred to the Lockwood Security Products Pty Ltd v Australian Lock Co Pty Ltd decision, (2005) 65 IPR 146, to state that corresponding proceedings elsewhere cannot be relevant to the present opposition. He stated that proof of common general knowledge in Australia made proceedings elsewhere irrelevant and that this aspect of Memcor’s reasons are also consequently without merit and lacking a full and frank disclosure of the need for the extension.
The Lockwood decision principally related to an extension of time request in an opposition to the allowance of amendments to a specification. In that decision it was held that the issues were generally all matters of specification construction, that is, matters of law rather than questions of fact which may require expert evidence. Further it was found that the anticipated evidence would not go beyond agreeing with the points made in the statement of grounds and particulars, and could appropriately be tendered as submissions at the hearing. In that context the serving of the anticipated expert evidence was found to be unnecessary and it was found there was no public interest in granting an extension for that evidence. I find little relevance of the Lockwood case to the present case.
The reasons provided by Memcor in the second application for an extension appear somewhat vague. For example, the statement does not indicate when the expert had been selected and thereby the need for the extension. Additionally the statement does not indicate the relevance of the proceedings elsewhere in respect to the common general knowledge. It may be that the common general knowledge is generic in many countries in this art in which case proceedings elsewhere may have some relevance. Memcor however has not indicated whether this is the case. Further there is no explanation of what the “various issues” are that require the expert’s opinion.
I regard the above as an inadequate explanation of the delay in completing the service of evidence in support.
At the hearing Mr Ward elaborated on the reasons for Memcor’s delay in serving expert evidence. He indicated the selected expert has been involved in teaching at an Australian university over the past autumn semester and hence has been unable to focus additional time and effort on the present opposition. Mr Ward confirmed the expert’s availability at this point as he was having a break from teaching commitments in July and would be able to work on finalising the evidence.
I appreciate there are occasionally difficulties in securing an expert. I also appreciate the availability of personnel to give evidence once secured may be an issue. On the other hand I would expect Memcor to have taken this issue into account when choosing and briefing experts. Memcor’s reliance on just one expert, who appears to have been largely unavailable to date, may suggest Memcor has not been diligent in attempting to locate other experts who were more available to deal with the opposition more expeditiously. To serve partial evidence in support after six months that merely amounts to copies of prior art mentioned in the statement of grounds and particulars, on the face of it, amounts to slow progress.
It may be that the expert was only secured just prior to Memcor filing its second application for an extension of time. Further I appreciate the need that an expert is appropriately briefed and that the procedures for gathering evidence from the expert are undertaken in a methodical and considered manner to gain evidence that is as objective as possible. See Minnesota Mining & Manufacturing Co v Tyco Electronics Pty Ltd, (2002) 56 IPR 248 at [43]-[46], for criticism about the manner in which evidence was gathered from experts in that particular case.
In the present case I appreciate it may take another three months for Memcor to serve the remaining evidence in support. At the hearing Mr Ward indicated the expert had now been secured and, with the break in that person’s teaching responsibilities, would be in a position to complete the evidence by the requested deadline. Mr Ward also indicated Memcor will serve evidence only from this expert. In this case Memcor would appear to be in a strong position to complete their evidence by the requested deadline.
Mr Ward further stated the principal attorney handling the case is absent for a period of about two months. Mr Ward indicated his office’s strong preference to refrain from finalising evidence until that attorney’s return as he has been closely involved in this opposition and previous oppositions involving the parties. In the meantime other attorneys have had to be briefed on the case in order to progress the opposition.
In the main I expect the need to hand case work on to other patent attorneys due to absences of attorneys originally assigned the case work is not an unusual circumstance. I note also that, in this case, the absence of the principal attorney is for a time within the presently requested extension period and was irrelevant at the time of the second application for an extension. The absence of the principal attorney has only arisen as an issue because Memcor failed to complete evidence in support by the due time. In any case I expect the attorney firm to work diligently with whatever resources are available to serve evidence in support in a timely fashion.
Mr Hess submitted the requested extension from Memcor was principally to suit the convenience of Memcor’s expert and the attorney firm. He was critical that Memcor was citing the teaching commitments of the expert and the absence of the principal attorney as reasons for an extension.
Experts in most oppositions have principal work commitments to attend to. Such commitments, in the main, are not considered exceptional in an opposition. Similarly the absence of one attorney in a firm should not significantly delay the opposition.
The difficulties in securing an expert, the teaching commitments of the secured expert and the prolonged absence of the principal attorney may all be a little difficult to manage. On the other hand, on the material presented to me in this case, I find these issues not so extraordinary as to explain the amount of delay that has transpired to date nor the need for a further extension until 20 July 2006. Memcor appears to have been somewhat less diligent than desirable in presenting evidence in a timely fashion.
There is now some indication from Memcor that evidence in support is being pursued with some diligence. In the absence of exceptional circumstances, I would expect the evidence in support to be served by the requested deadline.
Overall I find there has been an unsatisfactory explanation of the delay in completing the service of evidence in support.
Interests of the parties
The statement of grounds and particulars cites lack of novelty and lack of inventive step as particulars in this opposition. The evidence presented so far by Memcor amounts to copies of prior art to be argued in the opposition. There is no evidence yet available from experts in the field on the state of the common general knowledge at the priority date of the application. Furthermore there is no evidence yet available of opinions from experts on the relevance of the documents of prior art, nor opinions on what would have been obvious to a person skilled in the field at that date. All of the above would appear to address the points in the statement of grounds and particulars. Evidence of common general knowledge and opinions on obviousness would also appear to be crucial in assessing the relative strength of the documents against the claimed invention. Mr Ward indicated that Memcor would be significantly disadvantaged if expert evidence was not adduced in this opposition.
Zenon’s interest is clearly in achieving the grant of a patent for the invention. An expeditious disposal of this opposition would appear to be one of the factors to achieve this aim. Mr Hess stressed there is clearly a disadvantage to Zenon caused by the delay in having this opposition dealt with. He also accepted though that it is in Zenon’s interest that any patent granted for the invention stands up to scrutiny against information available in the prior art.
I conclude the disadvantage to Zenon caused by the delay in Memcor serving evidence in support is not as great as the disadvantage to Memcor if Memcor were disallowed from serving any expert evidence at all by refusal of the extension of time.
Public interest
The public interest calls for a balance between the requirements that oppositions be dealt with expeditiously and economically, and that a serious opposition be dealt with on its merits (Ferocem (supra) and Goninan (supra)).
Mr Ward pointed out the need to consider the application for extension on its merits and that the case law is particularly critical of reducing considerations to mere imperative compliance with particular requirements, INRA (supra). He also mentioned it is in the public interest that good evidence against the patent application be allowed to be presented.
Mr Hess submitted that Memcor has put forward no substantive evidence to demonstrate potential invalidity of the patent claims and, therefore, there is no public interest in further delaying the opposition.
One could suggest Memcor has not been diligent or serious in pursuing its opposition. On the other hand this does not necessarily mean the opposition is not a serious one. While there is little evidence in support so far to properly assess the seriousness of the opposition there is prior art supplied in evidence that, on the face of it, has relevance to the claimed invention.
I accept oppositions should also be dealt with expeditiously and economically. On the other hand there is a serious detriment to the public interest if the opponent is shut out from serving any expert evidence against the patent application at all. This could potentially result in invalid claims being granted.
I find it is in the public interest to allow the extension of time.
DECISION
I have found Memcor has provided unsatisfactory explanations for the delay. On the other hand the balance of the interests of the parties, and the public interest, indicates an extension of time is appropriate.
I allow the requested extension of time until 20 July 2006 for Memcor to complete the service of evidence in support.
COSTS
Mr Ward submitted that generally costs should follow the event. Mr Hess submitted that, irrespective of the outcome, the party seeking an indulgence, in this case Memcor seeking an extension of time, should pay the other party’s costs unless the other party’s objection to the extension is unreasonable.
In this case Memcor provided inadequate reasons, with their application for the second extension, in respect to the delay in engaging an expert and in preparing evidence from the expert. I think Zenon was justified in challenging the legitimacy of an extension being granted.
Memcor elaborated on these reasons at the hearing. Additionally Memcor revealed at the hearing that the principal attorney handling the case was absent during part of the sought after extension period. I still found these additional reasons to be inadequate. Nonetheless Memcor was successful on private and public interest grounds.
While Memcor has been successful in gaining the extension of time I find Zenon had a good case to test the appropriateness of the extension of time. I award costs against Memcor.
M. G. Kraefft
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Griffith Hack, Melbourne
Patent attorneys for the opponent : Shelston IP, Sydney