NXT Building System Pty Ltd
[2024] NZHC 2866
•18 March 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-738
[2024] NZHC 2866
UNDER The Patents Act 2013 IN THE MATTER OF
An appeal against a decision [2023] NZIPOPTA 15 of the Assistant
Commissioner of Patents dated 6 October 2023
BY
NXT BUILDING SYSTEM PTY LTD
a company incorporated in Australia, of 41 Mordaunt Circuit Canning Vale, 6155, Australia
Appellant
Hearing: 5 February 2024 Appearances:
G Arthur for Appellant
S Connolly for Commissioner as possible party
Judgment:
18 March 2024
JUDGMENT OF CULL J
[Interlocutory application: Role of Commissioner]
[1] This proceeding was commenced by way of an appeal from the decision of the Assistant Commissioner of Patents dated 6 October 2023 refusing to correct an error in NXT Building System Pty Ltd’s (NXT) request to postpone acceptance of patent application 726018. Counsel were agreed on the issues arising from the recently amended High Court Rules 2016 (HCR), r 20.9A. Those issues are:
(a)Should the Commissioner of Patents have been named as respondent to the appeal under r 20.9A?
NXT Building System Pty Ltd [2024] NZHC 2866 [18 March 2024]
(b)What directions should the Court give as to the nature and scope of the Commissioner’s participation in the substantive appeal under r 20.9A(3)?
[2] The determination involves a consideration of the previous r 20.9 and its recent successor, r 20.9A, to determine the role of a decision-maker, in this case the Commissioner, in participating in an appeal from the Commissioner’s decision.
Background to the substantive appeal
[3] The decision under the substantive appeal is a decision by the Assistant Commissioner of Patents refusing to correct an error in a document filed by the appellant’s agent in connection with a patent application. NXT’s agent made an error by failing to request that acceptance of patent application 726018 be postponed. The error had adverse consequences for NXT, which the Assistant Commissioner described.1
[4] In summary, NXT filed five “fresh” patent applications on 30 March 2022. They were intended to be filed as divisional applications under the parent application and given the earlier dates of the parent application.2 The Assistant Commissioner held that they could not be made as divisional applications because they were not filed before the acceptance of the complete specification of the parent application on 15 March 2022.3 If they could not be made as divisional applications, then the filing date of each was held to be 30 March 2022 and any invention that could be legitimately claimed in any of the applications must be in the “prior art base having been published
… on 15 October 2015.”
[5] NXT requested a correction of error arising from the agent’s error. NXT asked the Commissioner to post-date the date of acceptance of the parent application 726018, from 15 March 2022 to 28 May 2022, so that the fresh applications were deemed to have been filed before the parent application was accepted. The “fresh” patents applications describe the specifications of several distinct inventions involved in the
1 NXT Building System Lt [2023] NZIPOPAT 15 at [20]–[21].
2 Patents Act 2013, s 34(1), (3) and (4).
3 Patents Act, s 34(2)(a).
building system developed by the inventor, with the parent application containing the description of the complete specification. NXT’s request was declined.
[6] NXT applied for a hearing and filed submissions. The Commissioner refused to correct the error, finding that the parent patent application 726018 was accepted correctly on 15 March 20224 and no notice of the request for postponement5 was received before the application was accepted. The Commissioner noted that if the applications had been able to be treated as divisional applications, he would have granted an extension of time for the applicant to request examination of the divisional applications.
[7] NXT has a right of appeal under s 214 of the Patents Act (the Act), which is subject to Parts 20 and 22 of the HCR and this appeal is NXT’s exercise of that right.
First Issue: should the Commissioner be named as respondent?
[8] This issue involves a consideration and application of r 20.9A, which was introduced in 2022 to amend the law relating to the role and status of decision-makers in respect of their decisions under appeal. The former r 20.9(2) prohibited the name of the decision-maker being named as a respondent, with the exceptions under ss (3) as follows:
(2)The notice of appeal must not name the decision-maker as a respondent.
(3)Subclause (2) does not–
(a) apply to appeals to the court under the Commerce Act 1986:
(b) limit or affect rule 20.17 (which entitles a decision-maker, other than a District Court, to be represented and heard on an appeal).
[9] The r 20.9A amendment was introduced to overcome the consequences and artificial positions that arose under the previous r 20.9 above. One of those consequences was that decision-makers were prevented from being named as respondents to appeals, even where the decision-maker was effectively the only other party to the dispute.
4 Under the Patents Act, s 74.
5 Under the Patents Act, s 75.
[10] The Rules Committee observed that r 20.9 produced appropriate outcomes where the decision-maker was an adjudicator of disputes inter partes, as the Court had the benefit of a contradictor. However, the Committee agreed that the rule acted to deprive the Court of a contradictor and the decision-maker/regulator of an appeal right, where the decision involved one party only. The Rules Committee decided that the public interest would be served by having the decision-maker appear as a party on the appeal and have rights of appeal where they are the true contradictor,6 with such rights being circumscribed by the Court.
[11]The new rule 20.9A was enacted as follows:
20.9A When to name decision-maker as respondent to appeal
(1) The appellant must name the decision-maker as a respondent to the appeal unless the decision-maker exercised a purely adjudicative function (for example, the decision-maker is the District Court or the Environment Court).
(2) If the decision-maker exercised a purely adjudicative function, the appellant–
(a) must name the decision-maker as a respondent if directed to do so by the court or if the decision-maker is required by law to be a respondent; and
(b) otherwise, must not name the decision-maker as a respondent.
(3) The court may direct the extent to which a decision-maker is to participate in the appeal.
[12] The new rule makes a distinction between a decision-maker exercising a purely adjudicative function (such as in the District Court or the Environment Court) and those performing a wider role or function. Thus, if the decision-maker did not exercise a purely adjudicative function, then the appellant must name the decision-maker as a respondent. If, however, the decision-maker exercised a purely adjudicative function, then the appellant must not name the decision-maker as a respondent unless required by law or Court direction.
6 Chair of the Rules Committee Minutes of the Rules Committee Meeting of 29 June 2020 (Judicial Office for Senior Courts, Wellington, 21 September 2020) at [8].
[13] Previously, r 20.9(2) prevented decision-makers from being named as a respondent but they could be represented and heard in an appeal under r 20.17. The new rule provides more flexibility in permitting the Court to determine the role of the decision-maker in an appeal.
[14] In reaching the decision under appeal, the Commissioner exercised his powers under s 202 the Act. Section 202 provides how the Commissioner may correct other persons’ mistakes in patents register and how an application for correction can be made by any persons:
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–
(a)the patents register; or
(b)any patent; or
(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.
[15] NXT submits that the Commissioner exercised a purely adjudicative function and should not be named as a respondent. NXT accepts that the Commissioner can appear to defend his decision but not to challenge any part of his decision, including by any cross-appeal or notice to support on additional grounds. NXT contends that the Commissioner seeks to do so, by the expressed intention in the Commissioner’s submission that a cross-appeal is contemplated.
[16] The Commissioner, however, says that he should be named as a respondent to this appeal because the substantive decision was not purely adjudicative but was a decision not to exercise a discretionary power conferred by statute.
[17] The Rules Committee noted that the phrase ‘purely adjudicative’ distinguishes bodies that act exclusively as adjudicators of adversarial disputes from those that have
some policy or investigatory approach.7 For example, in Re Bay of Plenty Energy, the High Court ordered that the Electricity Authority be joined as a respondent in an appeal proceedings as, rather than merely being an ordinary adjudicative body, it was also a regulator with public interest responsibilities (although this case was heard under the former r 20.9).8
Analysis
[18] The first step is to determine whether the Commissioner’s function was purely adjudicative or whether it was the exercise of a discretionary power. The parties are diametrically opposed. The Commissioner submits that he did not exercise a purely adjudicative function when he made the decision under appeal but rather, decided not to exercise his discretionary power under s 202 of the Act to correct an error or omission. Although the hearing process before the Commissioner involved written submissions and a hearing similar to a judicial or Tribunal hearing, it is a process, the Commissioner says, to be followed before the exercise of a discretionary power.
[19] NXT says that s 202 of the Act is not a discretionary power but is adjudicative. NXT rejects the Commissioner’s submission that adjudication usually involves two parties, because there is nothing in the High Court Rules or the authorities to suggest that a decision-maker is not fulfilling an adjudicative function because he or she is judging an application of a party without opposition.
[20] In reaching his decision, the Commissioner exercised his powers under s 202(1) of the Act in refusing to correct an error in NXT’s patent application. The Commissioner refused NXT’s application to postpone acceptance of patent application 726018. Reg 136 of the Patents Regulations 2014 governs the procedure for making an application, including providing relevant evidence. The Commissioner may require further evidence. The Commissioner determines the application after a hearing if it has been requested under s 208 of the Act.
7 Chair of the Rules Committee Minutes of the Rules Committee Meeting of 28 June 2021 (Judicial Office for Senior Courts, Wellington, 29 June 2021) at [6].
8 Bay of Plenty Energy Ltd v Todd Energy Ltd HC Wellington CIV-2011-485-1371, 22 August 2011 at [28]–[29].
[21] The procedure initially involves the applicant but may involve an opponent. The Commissioner must determine whether he/she is satisfied an error or omission has been made on the evidence filed and the submissions received.
[22] I accept NXT’s submission that the Commissioner, in engaging in a review of the facts and determining the legal requirements of “error or omission”, is fulfilling a purely adjudicative function. Here, the Commissioner determined the application after a hearing was requested by NXT under s 208. The Commissioner received evidence from the applicant together with submissions. There was no opponent, but the Commissioner decided on an assessment of the evidence and the submission received from NXT whether NXT met the statutory test of satisfying the Commissioner that there has been an error or omission. I accept that the function of the Commissioner does not change because an opponent may or may not appear. It is the exercise of the adjudicative function on an application, with or without an opponent, that is relevant.
[23] It is also relevant that under s 202(3), the Commissioner, before making the correction, must publish the nature of the proposed correction if it would materially alter the meaning or scope of the document to be corrected and ought not to be made without notice to persons who have an interest in it. The correction can be opposed by any person and if opposed, the parties file pleadings and evidence, with the Commissioner holding the hearing to decide the matter.9
[24] There is also a right of appeal to the High Court under s 214 of the Act for any person who is aggrieved by a decision of the Commissioner.
[25] The Commissioner concedes that the procedure involving submissions and a hearing bear similarities to the process for a judicial or Tribunal proceeding but does not accept that the form or the substance of the decision was “purely adjudicative”. In submitting that the Commissioner did not exercise the discretionary power under s 202, the Commissioner ironically submits that “it was a decision not to exercise the discretionary power.”
9 Patents Regulations 2014, 137-139; Patents Act 2013, s 208.
[26] In exercising his powers under s 202, the Commissioner must reach a decision. In this case he has done so after receiving NXT’s application and conducting a hearing of its submissions. The Commissioner must be satisfied that correction of error is warranted and ultimately, it amounts to a final decision.
[27] I accept NXT’s submission that its function does not include any of the regulatory-, investigative or policy type steps of a non-adjudicative body, such as the Charities Commission or the Commerce Commission, where an appellant is often challenging a public ruling. I also accept that the Commissioner was not exercising a discretion. The Commissioner made a decision that he was not satisfied that an error should be corrected.
[28] I find that the Commissioner of Patents was exercising a purely adjudicative function in reaching the decision under appeal.
[29] Where r 20.9A applies, as here, where the Commissioner was exercising a purely adjudicative function, the Commissioner should not be named as a respondent, unless this Court directs NXT to do so or the decision-maker is required to be named by law. The Court must then consider whether it would be appropriate to direct the decision-maker to be named as a respondent, despite his/her exercise of a purely adjudicative function.
[30] Under the former rule, there was an ability for decision-makers to appear for the purpose of assisting the court where there was no effective respondent or contradictor. As the authorities have noted, the court can greatly benefit from the decision-maker’s assistance in such cases.10
[31] Here, there is no other party, nor is there a contradictor. I consider the Court would benefit from hearing the Commissioner defend his decision under appeal.
10 Tararua Foundation v Liqour Licensing Authority [1995] 2 NZLR 296 (CA) at 302. See also Meads Brothers v Rotorua District Licensing Agency [2000] NZAR 597 (HC) at [5] and [8]; McGrogan v Scenic Cellars Partnership Ltd [2006] NZAR 170 (HC) at [2].
Conclusion
[32] Although the Commissioner of Patents was exercising a purely adjudicative function in reaching the decision under appeal, I direct that NXT name the Commissioner as a respondent to this appeal.
Issue Two: the nature and scope of the Commissioner’s participation
[33] Rule 20.9A(3) provides that a court may direct the extent to which a decision- maker is to participate in the appeal.
[34] The nub of the issue between the parties is whether the Commissioner should be entitled to participate in full as a contradictor to the appeal without constraint in the scope of his submissions. The Commissioner submits that as there is no other party to the appeal to act as contradictor, the Court would be deprived of the benefit of full argument from the Commissioner if his participation was limited.
[35] NXT agrees that with no opposing party, the Commissioner should appear and be heard to defend his decision. They accept this is consistent with a common function of an adjudicative body on appeal, that in the absence of any other party, the decision- maker may appear to defend the decision.
[36] However, the Commissioner wishes to support the decision on an additional ground. In his written submissions, Counsel for the Commissioner indicated that the Commissioner may file a notice of cross-appeal. During the hearing, Mr Connolly advised that on reconsideration, the Commissioner proposes to file a notice supporting the decision, but on additional grounds.
[37] The Commissioner has not filed an additional notice or defined what he seeks to argue in addition. Mr Connolly helpfully identified that the reference in [28] of the Commissioner’s decision that “the mistake is ‘in’ the patent application form” is a mistake but not in the application form. The Commissioner wishes to address one of the four limbs in s 202 of the Act.
[38] I accept the submission of Mr Arthur for NXT that the Commissioner has no right of appeal and should not be in a position to correct or cross-appeal his own decision. The additional reason was not addressed in the Commissioner’s decision, yet it provides another basis for potential argument on appeal. I consider that it is not appropriate for the decision-maker to raise other reasons why his decision should be upheld on appeal when it was not the basis for the decision at first instance.
[39] It is appropriate that the Commissioner should be able to defend his decision on appeal, as NXT accepts. However, it is inappropriate for the Commissioner to argue an alternative ground for his decision.
[40] I record Mr Arthur’s submission that if there is any issue arising in relation to the mistake being “in” the patent application form, such an issue can be left for resolution in a case where there is an opponent, particularly if the appeal is allowed and the correction is then advertised. If opposed, there will be an opponent.
Conclusion
[41] I conclude that the Commissioner may be heard to defend his decision, but is not permitted to cross-appeal or file a notice in support of the decision on additional grounds or otherwise challenge any part of his decision.
Result
[42]The Court makes the following directions under r 20.9A:
1. NXT is to name the Commissioner as a respondent to this appeal.
2. 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 the decision on additional grounds or otherwise challenge any part of his decision.
Cull J
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