NXT Building System Pty Lt v Commissioner of Patents
[2024] NZHC 2141
•1 August 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-000738 [2024] NZHC 2141
UNDER The Patents Act 2013 IN THE MATTER
Of an appeal against a decision [2023] NZIPOPAT 15 of the Assistant
Commissioner of Patents dated 6 October 2023
BETWEEN
NXT BUILDING SYSTEM PTY LTD
Appellant
AND
THE COMMISSIONER OF PATENTS
Respondent
Hearing: 16 July 2024 Counsel:
G F Arthur KC and I S Scorgie for Appellant S P Connolly for Respondent
Judgment:
1 August 2024
JUDGMENT OF LA HOOD J
Correction of an error in the patent application process
[1] This is an appeal by NXT Building System Pty Ltd of Australia (NXT) against a decision of the Assistant Commissioner of Patents (the Commissioner) to refuse to correct an error in NXT’s request to postpone acceptance of a patent application.
[2] NXT filed a patent application (the parent application) for six inventions that it always intended to divide into six separate applications to ensure all six inventions obtained patent protection. However, due to errors by its attorneys, it failed to file the documentation required to provide patent protection (a divisional application) before
NXT BUILDING SYSTEM PTY LTD v THE COMMISSIONER OF PATENTS [2024] NZHC 2141 [1 August 2024]
the parent application was accepted, resulting in loss of patent protection for five of its inventions. It applied to the Commissioner to have the errors corrected under s 202 of the Patents Act 2013 (the Act), but the Commissioner declined to correct the error.
[3] I allow the appeal on the basis that the Commissioner erred in law or principle, or took into account an irrelevant consideration, by making non-compliance with the regulatory requirement inherent to the error for which correction is sought a decisive factor in declining correction under s 202 of the Act. I consider that the authorities support error correction in this case, and that in deciding whether to correct an error under s 202, the purpose of the Act requires focus on the consequences of correction for the patent holder, the efficient and effective operation of the patent system, and the interests of potential third parties and the wider public.
What happened?
[4] On 6 November 2016 NXT filed a New Zealand national phase patent application 726018 (NZ 726018) incorporating all six inventions, which it intended to divide into six separate applications –– the parent application and five divisional applications.1 NXT requested examination of NZ 726018 on 13 February 2020. The first examination report was issued on 28 May 2021. After several rounds of examination, it was accepted on 15 March 2022, prior to any divisional applications being filed.
[5] This presented a problem for NXT, because s 34(2) of the Act provides that a divisional application may only be made before the acceptance of the parent application. Section 75 allows an applicant to request postponement of acceptance to ensure that, regardless of the length of the examination period, the application will not be formally accepted before the specified postponement date. This allows an applicant to progress matters prior to acceptance, such as filing divisional applications. Regulation 83(1) of the Patent Regulations 2014 requires a request under s 75 for postponement of acceptance to be filed before the complete specification is accepted.
1 On 7 April 2015 in Australia, NXT filed PCT/AU2015/000211, a single patent application incorporating all six inventions, which was published as WO2015154132 on 15 October 2015.
[6] When completing the electronic patent application form on filing NZ 726018 on 6 November 2016, NXT’s then attorney, Patenteur, did not set the postponed acceptance period as 12 months because it did not change the default setting of “0” in the relevant box to “12”. In October 2017, Northern Lights took over as attorney for NXT but did not at any stage during the examination and response process notice that the documentation filed would result in the application being accepted without an opportunity to file the intended divisional applications.
[7] This resulted in the parent application being accepted on 15 March 2022 without an opportunity to file the intended divisional applications.
[8] NXT filed the five intended divisional patent applications on 30 March 2022 along with an application for extension of time to claim divisional status. On 1 April 2022, the application for extension of time was declined.
[9] On 5 April 2022, NXT requested a correction of error under s 202 of the Act, to set the postponed acceptance period to 12 in order to correct the date of acceptance of the parent application and obtain patent protection for its five valuable inventions.
[10]Section 202 of the Act provides:
202 Commissioner may correct other persons’ mistakes in patents register, etc
(1)The Commissioner may (on application by any person or on the Commissioner’s own initiative) correct an error or omission that the Commissioner is satisfied has been made by any person in—
...
(c)any patent application; or
(d)any documents filed in connection with a patent application or filed in proceedings before the Commissioner in connection with a patent or patent application.
(2)Any person (whether or not that person made the error or omission) may apply for a correction under this section in the prescribed manner.
(3)The Commissioner must, before making the correction, publish in the journal the nature of the proposed correction if the Commissioner thinks that—
(a)the correction would materially alter the meaning or scope of the document to be corrected; and
(b)it ought not be made without notice to persons who have an interest in it.
...
The Commissioner’s decision
[11] The Commissioner accepted there was an error or omission in the patent application. Namely that NXT had the intention to advance NZ 726018 through to acceptance and to file divisional applications for the inventions not claimed in the intended parent application, but that its agents mistakenly failed to request postponement of acceptance to secure a date before which the parent application would not be accepted.2 The Commissioner went on to consider whether there was any good reason why he should not allow the correction and publish the nature of the correction in accordance with s 202(3). He found:
31.For this application the Commissioner was never notified of a request for postponement. In the whole period from entry into the national phase to acceptance the default zero “postponement period” was never altered to another number. Nor was a request for postponement notified to the Commissioner in some other way, for example in a letter or in a response to an examination report. At no stage did the application include a notification of a request for postponement or a request for a postponement in any form.
32.A “failure to notify” may clearly be regarded as an omission: the Applicant submits that the attorney omitted to notify the Commissioner of the desired request for postponement. Following the precepts from Magic Leap and Primapak it would appear that the complete failure to notify the Commissioner of a postponement request when a notification should have been given so as to enable the Applicant’s original intentions to be accomplished, may be considered to be an error or omission in the application or in a document filed in connection with the patent application which may be corrected under s202.
33.Nevertheless, the Applicant’s request to correct the error or omission in this case is, in effect, tantamount to filing a notice requesting the Commissioner to postpone acceptance of the complete specification after the complete specification is accepted. This is contrary to the requirement of r83(2) which requires that the Commissioner must be notified of a request to postpone acceptance under s75(1) before the application is accepted. The situation is distinguished from Primapak and Magic Leap where in both instances the Commissioner was
2 NXT Building System Pty Ltd [2023] NZIPOPAT 15 at [33] [Commissioner’s decision].
notified of the request for postponement before the application was accepted.
34.For this reason I decline to correct the error or omission that I have been asked to correct: to effect the correction would be to bypass or nullify the clear requirement under r83(2) that the Commissioner must be notified of a request to postpone acceptance under s75(1) before the application is accepted.
Interlocutory decision
[12] In an interlocutory decision dated 18 March 2024, pursuant to r 20.9A Cull J directed NXT to name the Commissioner as a respondent and that the Commissioner may participate in the appeal to defend his decision but is not permitted to cross-appeal or file a notice in support of his decision on additional grounds. The principal reason for this was that, although the Commissioner was exercising a purely adjudicative function in reaching the decision under appeal, as there was no other party to the proceedings that could act as a contradictor, the Court would benefit from hearing the Commissioner defend his decision under appeal.3
Standard of appellate review
[13] The Commissioner’s position is that this is an appeal against the exercise of a discretion and therefore the more limited appellate approach in May v May applies,4 rather than the Austin, Nichols approach.5 The parties did not address this issue in their written submissions. NXT’s written submissions addressed the appeal as if the May v May approach applied by acknowledging that the Commissioner’s power under s 202 is “arguably discretionary” but he “erred in law in deciding the correction of the error was contrary to reg 83(1)”.6
[14] In oral submissions, Mr Arthur KC also advanced NXT’s case on the basis that the Commissioner’s critical findings were errors of law or principle,7 or took into account irrelevant considerations, or were plainly wrong (thus addressing the May v May rather than Austin, Nichols test). However, Mr Arthur did not concede that the
3 NXT Building System Pty Ltd [2024] NZHC 571 at [31]–[32] [Interlocutory judgment].
4 May v May (1982) 1 NZFLR 165 (CA).
5 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 [Austin, Nichols].
6 Commissioner’s decision, above n 2, at [33].
7 At [33].
decision was discretionary (or that May v May applies). He drew my attention to Cull J’s finding at [27] of the interlocutory decision that the Commissioner “was not exercising a discretion” but rather, “made a decision that he was not satisfied that an error should be corrected”.8 Mr Connolly submitted that Cull J’s finding was made in the context of the issues to be determined in the interlocutory application, which did not include the applicable standard of appellate review, and is therefore of limited assistance given Cull J heard no argument on this issue.
[15] At the hearing, the parties acknowledged that they had not fully addressed the vexed issue of the application of the correct appeal test in their written submissions. It was agreed that the appropriate course was for me to first consider the appeal on the assumption that the May v May approach applied, and if NXT is successful on that basis, there is no need to consider whether the Austin, Nichols approach might apply. Alternatively, if NXT is unsuccessful on the basis of the May v May approach, I should issue an interim judgment to that effect and allow the parties an opportunity to file written submissions addressing the applicability of the Austin, Nichols approach and, if applicable, the appropriate outcome.
[16] As I have decided to allow the appeal applying the May v May approach, there is no need to give this issue any further consideration. However, in these circumstances, my decision should not be taken as an acceptance that the May v May approach applies.
The parties’ positions on appeal
[17] NXT’s initial position was that the Commissioner had erred in law by finding that the correction takes effect from the date of the decision rather than the date of the error. NXT said this was because the Commissioner’s reasoning must have been that reg 83(1) is a statutory prohibition on correction of the error and cannot be circumvented by resort to s 202.
[18] However, Mr Connolly, for the Commissioner, submitted that the Commissioner made no such error and expressly recorded in the decision that
8 Interlocutory judgment, above n 3, at [27].
correction of the mistake would have the effect of “retroactively” requesting postponement of acceptance.9 Mr Connolly submitted that, read in the context of the full decision, the Commissioner’s conclusion was in effect that the degree and timing of the non-compliance in this case is such that the discretion should not be exercised. Mr Connolly submits that, as this was a conclusion that was open to the Commissioner, it should not be disturbed on appeal.
[19] Mr Arthur ultimately submitted that it was an error of law or principle, or took into account an irrelevant consideration, or was plainly wrong, to make non- compliance with statutory requirements a determinative factor in deciding whether to correct an error. He submitted that the correction of errors under s 202 will almost always result in correcting non-compliance with statutory requirements (otherwise correction would not be required). Moreover, all other factors in this case support the correction being made.
[20] Those factors include that one of the primary purposes of the Act is to provide an efficient and effective patent system that promotes innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners and the interests of society as a whole.10 Assessed against that purpose, Mr Arthur submitted that correction was clearly appropriate given:
(a)NXT was not at fault in any way and its intentions were simply not implemented by its attorneys due to a procedural error.
(b)NXT has revealed its inventions to the world and will lose its valuable property rights in those inventions because of a procedural error by its attorneys.
(c)The attorneys and NXT acted swiftly when they discovered the error.
9 At [18].
10 Patents Act 2013, s 3(a).
(d)No third party is affected by the correction, but even if a third party were affected, they would be protected by requiring publication of the correction pursuant to s 202(3).
Analysis of the cases
[21] The two most analogous decisions are Primapak and Magic Leap.11 Those cases were considered by the Commissioner and distinguished on the basis that in both instances the Commissioner was notified of the request for postponement before the application was accepted.12 I accept that this is a distinguishing feature of those cases but do not consider this factual distinction to be important for reasons I return to below.
Other cases cited
[22] I accept Mr Arthur’s submission that the other cases cited by Mr Connolly are not on point. These decisions were not provided to the Commissioner nor discussed in his decision. Fisher & Paykel Ltd’s Application is a 1995 decision under the Patents Act 1953 (the 1953 Act) dealing with the equivalent provision to s 202, namely s 88(3), which provided:13
Where a mistake exists in the registrar of patents, in any patent or application for patent or any document filed in pursuance of such an application, or in proceedings in connection with any patent, by reason of an error or an omission on the part of the patentee or of the applicant for the patent or of any other person concerned, a correction may be made in accordance with the provisions of this section upon a request in writing by any person interested and payment of the prescribed fee. If it appears to the Commissioner that the correction would materially alter the meaning or scope of the document to which the request relates and ought not to be made without notice to persons likely to be affected thereby, he shall require notice of the nature of the proposed correction to be advertised in the prescribed manner.
[23] That case also related to correction of an error that had resulted in a patent application being accepted before an intended divisional application was filed. The agent had mistakenly included pages in a document that were meant to have been removed to prevent the application being accepted before the divisional application
11 Primapak LLC [2019] NZIPOPAT 1, patent application No 707683; and Magic Leap, Inc. [2019] NZIPOPAT 8, patent application Nos 702897 and 730745.
12 Commissioner’s decision, above n 2, at [33].
13 Re Fisher & Paykel Ltd’s Application [1995] NZIPOPAT 6.
was filed. The applicant requested the Commissioner correct the error by amending the date on the notice of acceptance to a date after the divisional applications were filed. The Commissioner held that there was no jurisdiction to make the correction sought because the notice of acceptance was not a document to which s 88(3) of the 1953 Act applied. As the Commissioner was not asked to make a correction to the document containing the pages that should have been removed, for which there may have been jurisdiction under s 88(3), the decision is of no assistance to the issue for determination in this case.
[24] Re American Aerogel Corp and Re Baxter Healthcare SA are cases dealing with essentially the same issue.14 They both involved situations where a purported divisional application was filed after acceptance of the parent application. In Re American Aerogel, the error was a breakdown of communication between the New Zealand and United States attorneys, including correspondence mistakenly being sent by mail instead of by fax or email, resulting in a divisional application being filed after acceptance of the parent application. In Re Baxter Healthcare, the agent’s mistake was sending the divisional application by post and not by fax. In both cases, the Commissioner was asked to correct the error in the filing date of the divisional applications.
[25] The decisions were heard on the same day and the Commissioner’s reasoning is repeated in both decisions. The Commissioner accepted that s 88(3) should be applied broadly,15 noting the High Court decision of Re Watership Pty Ltd,16 where pursuant to s 88(3) the Court allowed amendments to a patent specification after acceptance due to the attorneys’ error in omitting a page from a letter to the Patent Office.17 This was considered an error in a “document filed in pursuance of” a patent application.18 However, as in Re Fisher and Paykel Ltd’s Application, the Commissioner considered there was no jurisdiction to correct the error under s 88(3) because there was no error in any document to which s 88(3) applied. The Commissioner considered this outcome could not be avoided by framing the request
14 Re American Aerogel Corp [2011] NZIPOPAT 3; Re Baxter Healthcare SA [2011] NZIPOPAT 2.
15 Re American Aerogel Corp, above n 14, at [36]; and Re Baxter Healthcare SA, above n 14, at [29].
16 Re American Aerogel Corp, above n 14, at [32]; and Re Baxter Healthcare SA, above n 14, at [25].
17 Re Watership Pty Ltd (1991) 4 TCLR 317.
18 At 321.
as correction of an error in the register of patents (to which s 88(3) would apply) rather than an error in the notice of acceptance. There was no error in the register as the divisional applications were dated correctly but had not been filed prior to acceptance of the parent applications due to errors or omissions by the attorneys. Therefore, Re Fisher & Paykel Ltd’s Application was directly applicable.19 It follows that these decisions are also of no assistance, as the Commissioner’s conclusion was that there were no errors in a document to which s 88(3) applied.
Primapak and Magic Leap
[26] In Primapak the attorney’s personal assistant wrongly withdrew a request for postponement of acceptance by resetting the postponed acceptance period to “0” in the online form. She acted without instructions. The patent application was automatically accepted. A purported divisional patent application was filed some months later. A request for correction of error under s 202 was filed, with accompanying request for consequential correction to the patents register to record the acceptance date of the parent patent as a date after the date of filing the divisional patent application.20
[27] The Commissioner (Assistant Commissioner Glover) held that the online tick- box form that governs postponed acceptance periods is a document filed in connection with the patent application or part of the patent application itself. Either way it fell within the ambit of documents correctable under s 202(1).21 The Commissioner found an identifiable, tangible error in the document filed and held that changing “12” to “0” fell squarely within the type of error that is apt to be corrected under s 202(1). 22 She allowed the correction, subject to advertisement, and the register to be corrected to record the date of acceptance as the date after the filing of the purported divisional application.23
19 Re American Aerogel Corp, above n 14, at [35]–[36]; and Re Baxter Healthcare SA, above n 14, at [28]–[29].
20 Primapak LLC, above n 11, at [10]–[13].
21 At [40]–[42].
22 At [47].
23 At [27], [55] and [56].
[28] In Magic Leap the attorney’s secretary withdrew the postponement of acceptance by resetting the postponed acceptance period to “0”.24 She did so at the express instruction of the attorney, as the attorney had not realised that a divisional application was meant to be filed.25 The application was accepted. A few days later the error was realised. A purported divisional application was filed and a request for correction of error under s 202 lodged.
[29] The Commissioner (Assistant Commissioner Casey KC) considered that s 202 allowed correction of more than mere slips or clerical errors. It covers more deliberate or voluntary errors than simply making an inadvertent mistake in a document, but does not extend to errors of judgement, such as delaying taking a step and missing a deadline or failing to appreciate the consequences of an action or decision. Rather, it extends to true mistakes.26 She held that the resetting of the postponed acceptance period to “0” was a correctable mistake.27
[30] The Commissioner held that the postponed acceptance period be corrected from 0 to 12 and the register be corrected, both subject to publishing the proposed corrections.28 In reaching these conclusions, the Commissioner held:
22.Section 202 provides that the Commissioner may correct an error. There is likely to be a wide range of factors that could be relevant [to] the exercise of this discretion, but in the present case the following appear to be significant. First, the applicant’s attorneys had reasonable systems in place to prevent errors of this kind, and the mistake in the end occurred through what seems likely to have been simple human error in not activating the appropriate protocols, in circumstances that did not alert the principal in charge of prosecuting the application to that possibility.
23.Second, the applicant and its attorneys picked up the error quickly and moved very promptly to attempt to rectify and to preserve the status quo while they did so.
24.Third, the advertising process in s 202(3) allows any disadvantage to third parties to be considered and addressed.
24 Magic Leap, Inc, above n 11.
25 At [8]–[10].
26 At [17]–[21].
27 At [21].
28 At [31].
Assessment of arguments and decision
[31] NXT takes no issue with most of the Commissioner’s findings. It was common ground that the Commissioner was correct to find that there was a mistake capable of correction under s 202,29 because NXT’s clear intention from the outset was to file divisional applications and that its second, Australian based, attorney (Northern Lights) was aware of this intention but made the mistake of not re-setting the postponement period to “12” at the time it took responsibility for the file in October 2017 and on other subsequent occasions (including in response to examination reports in November 2021 and March 2022).
[32] However, the Commissioner did not accept that failure of the first, Australian based, attorney (Patenteur) to set the postponement date at “12” rather than “0” when filing the New Zealand national phase in November 2016 was an error.30 The Commissioner said this was because some attorneys request postponement when the application is submitted and others do so when examination is requested.31 Mr Arthur submitted this conclusion is wrong because there was evidence from the sole practitioner attorney at Northern Lights that she believed this was an error and it is common sense that the attorney would not risk the application going straight to acceptance when divisional applications had to be filed.
[33] I do not need to resolve this issue because the Commissioner accepted that the subsequent mistakes by Northern Lights were errors capable of correction under s 202 and not errors of judgement or the result of poor strategy or misguided advice.32 This meant the Commissioner went on to consider whether there was any good reason not to allow the correction. In respect of that matter, NXT takes issue with the Commissioner’s conclusion that non-compliance with legislative requirements (here non-compliance with reg 83(1)) should be a decisive factor in a decision under s 202.33 NXT submits this conclusion is evident from the following reasoning in the Commissioner’s decision:
29 At [28].
30 At [39].
31 At [36].
32 At [28], [37] and [41].
33 At [33].
33.Nevertheless, the Applicant’s request to correct the error or omission in this case is, in effect, tantamount to filing a notice requesting the Commissioner to postpone acceptance of the complete specification after the complete specification is accepted. This is contrary to the requirement of r83(2) which requires that the Commissioner must be notified of a request to postpone acceptance under s75(1) before the application is accepted. The situation is distinguished from Primapak and Magic Leap where in both instances the Commissioner was notified of the request for postponement before the application was accepted.
[34] NXT accepts that the error of failing to set the acceptance period as “12” rather than “0” was an error that was made earlier in the process, and on more occasions, than the single errors made in Primapak and Magic Leap but submits that is not a principled basis to distinguish the cases.
[35] I accept that the degree and timing of the non-compliance in this case is greater than that in Primapak and Magic Leap. As the Commissioner noted, it is clear that the sole practitioner at Northern Lights had the opportunity to notice and correct matters on several occasions between taking over responsibility for the application in October 2017 and acceptance in March 2022.34 It is apparent from the evidence and the matters referred to by the Commissioner,35 that she did not do so due to failing to implement New Zealand specific reminders on her computer software package, her general unfamiliarity with the New Zealand patent system and extreme personal circumstances. However, the Commissioner concluded:
41.Despite all this and the exasperation: “What on earth … ?[”] I think it is important, when considering whether to allow the correction to be made, for the Commissioner to focus on the actual error or omission in the patent application. The elucidation in the evidence of the root causes of the error need only go to establishing to the satisfaction of the Commissioner that the failure to request postponement was indeed a mistake and not the result of a poor strategy or misguided advice. Any opinion or judgement regarding the adequacy of the conduct of the person or firm who made the mistake should not form part of the Commissioner’s consideration under s202.
[36] Accordingly, the Commissioner decided both that Northern Lights’ actions were mistakes allowing exercise of the s 202 power rather than errors of judgement, and that any assessment of the adequacy of Northern Lights’ conduct should not form
34 At [39]-[41].
35 At [39]-[41].
part of the decision under s 202. It is difficult to know how the Commissioner assessed the relevance of the degree and timing of the non-compliance with statutory requirements other than by reference to his comments at [33] quoted above. Clearly, the Commissioner did not consider that the conduct that led to the non-compliance was relevant, but it is difficult to understand how the degree of non-compliance can be assessed in complete isolation from the conduct that led to it. However, I accept that is what the Commissioner attempted to do.
[37] I consider the degree and timing of non-compliance with the legislative requirement in reg 83(1), considered in isolation from the conduct that caused it, was not a basis to distinguish Primapak and Magic Leap. The effect of correcting the errors in Primapak and Magic Leap, namely reversing withdrawal of the notice to postpone acceptance under reg 83(1), was also “tantamount” to correcting non- compliance with the legislative requirement in reg 83(1). In each case, granting the application under s 202 results in correction of non-compliance with reg 83(1). In each case, there is compliance with the legislation apart from the non-compliance inherent in the error that requires correction. I accept that if correction results in non- compliance with the legislation unrelated to the non-compliance inherent in correction of the error, that would be a relevant factor in determining an application under s 202. But, as a matter of logic, correction of a failure to comply with a legislative requirement should not be refused on the basis that correction will remedy the legislative non-compliance. There would be no need for the correction if there had been compliance with the legislative requirement in the first place.
[38] I suspect that the Commissioner felt constrained in his reasoning at [33] by his findings that these were errors to which s 202 could be applied and the conduct that led to them was irrelevant to the exercise of the s 202 power. This meant he could not factor in that the attorney’s errors were made because of a lack of adequate systems for dealing with, and knowledge of, the New Zealand patent system (albeit this appears to have been due to extreme personal circumstances).
[39] However, as it stands, the Commissioner’s expressed reasoning reveals an error of law or principle, or the taking into account of an irrelevant consideration. Namely, making non-compliance with the legislative requirement inherent in the error to be
corrected, and considered in isolation from the conduct that caused it, a determinative factor in assessing the s 202 application. Given this error, I need to fully consider the merits of NXT’s application.
[40] I note the Commissioner’s earlier conclusion that once an error has been established, the Commissioner may allow correction under s 202, or at least publication of the proposed correction under s 202(3), “unless there is a very good reason not to”.36 The Commissioner then said “[t]hese reasons may be non- compliance with some other part of the Act or regulations, or an unsatisfactory consequence of making the correction”.37 For reasons I will explain, although I accept that the degree of non-compliance with the legislation may be relevant, I consider the focus should be on the consequences of making the correction.
[41] I accept the appellant’s submission that the proper approach to s 202 should have regard to s 3(a) of the Act’s purpose, which states:
3 Purpose
The purposes of this Act are to—
(a)provide an efficient and effective patent system that—
(i)promotes innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners and the interests of society as a whole; and
...
[42] This purpose and the open textured wording of s 202 supports the broad approach that has been taken to the power in cases such as Primapak, Magic Leap and Re Watership Pty Ltd. I agree with the comment in Magic Leap that there is likely to be a wide range of factors that could be relevant to the exercise of the power.38 At a high level, these factors include the effect on the interests of the patent holder, any impact on the interests of third parties, and the potential effect on maintaining an efficient and effective patent system.
36 At [27].
37 At [27].
38 At [22].
[43] I have reached the view that the appeal should be allowed because the balance of competing interests favours correction for the following reasons:
(a)NXT’s clear intentions were not carried out by its attorneys with the result that, if the error is not corrected, they will lose valuable property rights in five of the six inventions in the parent application.
(b)NXT and its attorney acted quickly when they discovered the error.
(c)Mr Connolly did not take issue with Mr Arthur’s submission that third parties (and society at large) will have been aware from the parent application that patent protection was sought with respect to all six inventions since the application entered the national phase in New Zealand in November 2016. There is no suggestion that the integrity of the register will be undermined by the correction because nobody looking at the register after 2016 could have been misled about the application. There is therefore no prejudice to third parties if the correction is made.
(d)In any event, any potential prejudice to third parties can be cured by requiring publication of the proposed correction pursuant to s 202(3), which is not opposed by the appellant.
(e)Although the error occurred on a number of occasions during the process, the non-compliance with legislative requirements was inherent in the errors that require correction. There has been no other non- compliance.
(f)I accept that the degree of the non-compliance with legislative requirements might be a relevant factor, but for the reasons already explained I do not consider it to be a material factor in this case (let alone a decisive one) when considered in isolation from the conduct that led to the errors. I also do not necessarily accept the Commissioner’s finding that the degree to which the applicant or its
agents are at fault is an irrelevant consideration.39 For example, in Magic Leap, the Commissioner took into account that the attorneys had reasonable systems in place, and picked up the error quickly and took prompt action.40 In this case, Northern Lights did not have reasonable systems in place (due to extreme personal circumstances). I consider that too readily correcting errors when attorneys do not have reasonable systems in place, or have otherwise acted incompetently, could undermine the statutory purpose of providing an efficient and effective patent system. Applicants and their attorneys should be incentivised to ensure that they invest in and maintain reasonable systems and instruct and employ competent practitioners. This will be undermined if mistakes are too readily corrected. However, in this case, given the extreme personal circumstances that led to Northern Lights’ conduct, I consider this factor does not outweigh the other matters that favour correction.
Conclusion
[44] For these reasons, I consider that the Commissioner erred in law or principle, or took into account an irrelevant consideration, by making non-compliance with reg 83(1), considered in isolation from the conduct that caused it, a decisive factor in declining the application.
[45] Once an error has been established that will allow the Commissioner to exercise the power of correction in s 202, a range of factors will be relevant to whether correction should be ordered. In the circumstances of this case, correction is appropriate having regard to the Act’s purpose, the impact of the error on NXT’s ability to protect its valuable inventions, and the absence of prejudice to third parties.
39 Mr Arthur submitted that s 231 of the Act provides a clear example of Parliament importing a fault assessment when allowing extension of time limits for meeting certain filing requirements. Section 231 provides that the Commissioner must refuse to grant an extension if the applicant or its agent has not allowed a reasonable margin of time for the delivery of any documents, or failed to act with due diligence and prudence, there has been undue delay in applying for the extension. However, s 202 is open textured and does not contain any mandatory considerations. I do not accept that because Parliament has provided mandatory considerations in a different provision dealing with extensions of time, it must have been intended that these would be irrelevant considerations to the exercise of the broad s 202 power.
40 Magic Leap, Inc, above n 11, at [22].
Any potential undermining of the statutory purpose of maintaining an efficient and effective patent system due to the attorney’s conduct is insufficient to prevent correction in this case.
[46] Given these conclusions, I do not need to consider whether the May v May or Austin, Nichols appellate standard applies in this case. Applying the May v May approach, the appeal should be allowed.
[47] I also do not need to address the appellant’s alternative argument that if the appeal is not allowed in respect of s 202, the Court should use the power in reg 147 to grant an extension of the reg 83(1) deadline to request postponement of acceptance under s 75.
[48] There was no dispute that if the appeal is allowed in respect of s 202, there should be a consequential extension of time to 30 March 2022 to request examination of the divisional applications pursuant to reg 147 (the Commissioner having indicated he would have made such an order had correction under s 202 been appropriate).
[49]I therefore allow the appeal and make the following orders:
(a)I allow the appeal and reverse the decision of the Commissioner.
(b)I direct the Commissioner to publish the nature of the proposed correction under s 202(3). If there is no opposition:
(i)the error is to be corrected by setting the postponed acceptance period in the notice of application form to 12.
(ii)the Patents Register is to be corrected to show the acceptance date of NZ 726018 is 28 May 2022.
(c)I grant an extension of time to 30 March 2022 under reg 147 to request examination of divisional patent applications 786748, 786752, 786753, 786755 and 786756.
[50] My preliminary view is that NXT is entitled to costs on a 2B basis. If costs cannot be agreed, the parties should file memoranda within 10 working days (limited to five pages), and reply memoranda (limited to two pages) five working days thereafter. Costs will be determined on the papers.
La Hood J
Solicitors:
DLA Piper, Auckland for Appellant
Crown Law Office, Wellington for Respondent
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