Miles v Commissioner of Patents

Federal Court of Australia (Full Court)|2014-08-26|Before: Mr P, Middleton JJ

INTRODUCTION 1 This is an appeal from the judgment of the primary judge in Miles v Commissioner of Patents [2013] FCA 1017. For the reasons that follow, the appeal is dismissed. 2 The factual background is set out in [36] - [54] of the primary judge's reasons, is not in contest, and needs no repeating. The key elements of the chronology for the purposes of the appeal are that: On 12 December 2011 the appellant requested examination of the Patent Application. On 7 May 2012 the Patent Application was examined and grounds of objection raised. The Examiner's letter advised the appellant that if a response overcoming the objections was not filed within two months, the Commissioner would consider whether to direct amendment of the application under s 107 of the Patents Act 1990 (Cth) ('the Act'), or proceed to refuse the application under s 49(2). Furthermore, if the objections were not overcome, the Patent Application would lapse after 21 months. The appellant did not respond. On 6-7 September 2012 the Commissioner sent a letter to the appellant stating that as no response had been received, the matter would be set down for hearing allowing one month for submissions, after which the matter would proceed to a hearing, whether or not submissions were received. The Commissioner stated that the appellant should note that it was possible for the Commissioner to refuse the Patent Application or to direct amendment. The appellant was invited, as an alternative, to propose amendments within the same time period. The appellant did not file the required continuation fee for the Patent Application by the relevant anniversary of the filing of the application, being 22 October 2012. The appellant did not respond to the September invitation and the Commissioner on 1 November 2012 refused the application on the basis that the objections were appropriately raised and the appellant had chosen not to defend the Patent Application. After that refusal, that is, after the anniversary date for the required continuation fee but within the six month grace period provided for in the Act for the payment of that fee, on 28 March 2013 the appellant applied for amendment and tendered the outstanding continuation fee. 3 The Notice of Appeal discloses a number of grounds of appeal. However, at the hearing, the appellant distilled these down to three grounds: (a) the Commissioner could not refuse the patent application because it had already lapsed ('Ground One'); (b) in any event, the Commissioner's refusal was unlawful ('Ground Two'); and (c) the Court's discretion miscarried in otherwise denying relief to the appellant ('Ground Three'). 4 After hearing the appeal, the Court, at the request of the appellant, granted leave to the parties to file further written submissions on the proper construction of paragraph 142(2)(d) of the Act and reg 13.3 of the Patents Regulations 1991 (Cth) ('the Regulations'), particularly on the question of when the patent application would lapse.

GROUND ONE - THE PATENT APPLICATION HAD LAPSED 5 The appellant submitted that on 1 November 2012, when the patent application was refused, it had already lapsed pursuant to paragraph 142(2)(d) of the Act and reg 13.3 of the Regulations - ipso facto, there was nothing to refuse. Central to this submission is the appellant's construction of regs 13.3(1) and (1A) - that is, reg 13.3(1) only deals with when the application lapses, and reg 13.3(1A) provides that the application may be restored or revived within six months of the last moment of the relevant anniversary, upon the payment of a continuation fee. 6 The primary judge rejected this ground at [109]-[116] as being fundamentally misconceived and held that regs 13.3(1) and (1A) should be read together. We agree. 7 Paragraph 142(2)(d) of the Act states: A complete application for a standard patent lapses if:.. (d) the applicant does not pay a continuation fee for the application within the period prescribed for the purposes of this paragraph… 8 Regulation 13.3 states: (1) For paragraph 142(2)(d) of the Act: (a) a continuation fee for an application for a standard patent is payable for a relevant anniversary at the last moment of the anniversary; and (b) the period in which the fee must be paid is the period ending at the last moment of the anniversary. (1A) However, if the continuation fee is paid within 6 months after the end of the relevant anniversary (6 month period): (a) the period mentioned in paragraph (1)(b) is taken to be extended until the fee is paid; and (b) the continuation fee includes the additional fee stated in item 211 of Schedule 7; and (c) the additional fee is payable from the first day of the 6 month period. 9 The "relevant anniversary" is the fifth anniversary: see reg 13.3(3) and Sch 7 item 211 of the Regulations. 10 In our view, the appellant's submission mischaracterises the relationship between regs 13.3(1) and (1A), artificially bifurcating the operation of these regulations, when they should be read in combination. 11 Paragraph 142(2)(d) states that an application will lapse if the continuation fee is not paid within the period prescribed. The period prescribed, for this event to occur, namely payment of the continuation fee, is set out in both regs 13.3(1) and (1A). Regulation 13.3(1A) commences with the word "However", which is conjunctive, and operates to extend the period mentioned in reg 13.3(1)(b) until the fee is paid. 12 Regulation 13.3(1A) provides nothing more than a grace period for the applicant to pay the continuation fee. It is still part of the period prescribed. Upon payment of the continuation fee, the period is set and determined provided it is paid within the six month period. In this case, the patent application did not lapse at the end of the six month grace period, or at all. It was refused at a time when it was still on foot. It was on foot on 1 November 2012 because on that date the period prescribed for the purposes of paragraph 142(2)(d) of the Act, within which the appellant was to pay a continuation fee, had not yet expired. To reiterate, that period was prescribed by regs 13.3(1) and (1A) in combination. 13 It is important to recall that in this case, payment of the continuation fee was made on 28 March 2013, within the six month grace period. The period prescribed is taken to be extended only until the continuation fee is paid (see reg 13.3(1A)(a)). 14 If the application had not been refused, and if the period of grace were to have come to an end and the (higher prescribed) continuation fee had still not been paid, then the application would have lapsed on the anniversary date, not on the expiry of the grace period of six months. 15 To the extent the primary judge focussed on the expiry of the grace period (in this case 22 April 2013) as being the set period prescribed by the combination of regs 13.3(1) and 13.3(1A), the primary judge would have been in error - see [112]-[113] of the primary judge's reasons. However, the primary judge's observation in this regard had no impact upon her conclusion. As we have indicated, if the continuation fee is paid during the six month grace period, the period prescribed is effectively deemed to be extended to the date the fee is paid. If no continuation fee is paid at all within the relevant anniversary, or within the six month grace period, the prescribed period is simply the fifth anniversary of the Patent Application, in this case 22 October 2012. 16 The appellant raised the spectre of administrative difficulties that may arise in the period after the five year anniversary and the actual payment during the grace period, to contend that the application must be treated as lapsing upon the five year anniversary. 17 We consider these administrative difficulties can be overcome, and, in any event, do not provide a basis not to follow the text of the legislation. 18 If, for instance, a request for examination was made during the period of grace but before payment of the (higher prescribed) continuation fee, the Commissioner would need to consider the requirement to examine before receipt of the continuation fee, and then act accordingly in view of the grace period that could be granted if a payment of the (higher prescribed) continuation fee was made by the applicant. 19 Undoubtedly, the Commissioner can adopt administrative practices whereby resources are not spent on an application where there has been a breach of the requirement in reg 13.3(1) to pay the (normal prescribed) continuation fee within the five year anniversary and no (higher prescribed) continuation fee has yet been received within the grace period. 20 We do not consider that the administrative difficulties raised by the appellant indicate that the ordinary meaning to be given to the operation of regs 13.3(1) and (1A), when read together, should not be adopted. This is not a case where the text of the legislation should give way to avoid an unintended or absurd result. The text and context of the provisions, on the interpretation we have adopted, is consistent with the operation of the Act as a whole. In our opinion, no anomalies or incongruities result from our interpretation of paragraph 142(2)(d) and regs 13.3(1) and (1A). However, even if this was the case, we would not conclude in light of the text of the relevant provisions, that the construction we have placed upon them does not conform to the legislative purpose: see the comments of Black CJ and Sundberg J in Esso Australia Resources Ltd v Federal Commissioner of Taxation (1998) 83 FCR 511, at 518-19. 21 The appellant also contended that his preferred construction, that a patent application would lapse if the continuation fee was not paid by the last moment of the anniversary date, was clear from a comparison of the language of paragraph 142(2)(d) read with reg 13.3 (which deal with the lapsing of complete patent applications) and s 223(7); and, s 142(1) and s 38 read with reg 3.10 (which deal with the lapsing of provisional applications), and s 223(8). 22 We do not agree. As the Commissioner contended, paragraph 142(2)(d), regs 13.3(1) and (1A) on the one hand, and s 142(1), s 38, reg 3.10 on the other hand, deal with different subject matter to that of s 223(7) and s 223(8) respectively, and are compatible in their operation. 23 As to the first set of provisions, regs 13.3(1) and (1A) in combination prescribe the period referred to in paragraph 142(2)(d) of the Act, and prescribe a differential rate depending on when payment is made. If payment is not made within the grace period, the application lapses. Then, there is scope for extension under s 223, subject to the criteria in s 223(1), or (2), or (2A) and (2B), the special third-party protective provisions in s 223(4)(b), (6) and (9)(b) (as to which see reg 22.11(3)), and lastly the third-party protection afforded by s 223(10). If such an extension is so granted, the application is restored but not taken never to have lapsed: s 223(7). That is, s 223 deals with extensions of time where the time requirements of the Act are not complied with, not with actions taken within extended time allowed for in the Act. 24 As to the second set of provisions, the Act and Regulations enable provisional applications to be made for patents (or for applications initially made as complete applications to be treated as provisional - s 37). One or more complete applications associated with the provisional application may then be made (s 38), but only within the period prescribed for the purposes of s 38 (12 months - reg 3.10), or within that period as extended under the Act, namely under s 223. There is no automatic right to such an extension. The extension will only occur if the criteria of s 223 are satisfied by the applicant. Where such an extension does occur, there is a special consequence, as set out in the operative part of s 223(8) (in contrast to the operative part of s 223(7)): the application is taken not to have lapsed. The outcome contemplated in s 223(8) is thus consistent with the words used in s 142(1). The extension occurs by virtue of the operation of the Act, not the Regulations. This is clearly what is covered by the words of s 142(1), "or, if that period is extended, at the end of the period as so extended", and that is a reason why those words do not appear in paragraph 142(2)(d). 25 For these reasons, there is no implication to be drawn from the difference between s 142(1) and (2) of the Act that reg 13.3(1A) is anything other than a provision that contributes together with reg 13.3(1) to the identification of the period prescribed for the purposes of paragraph 142(2)(d). 26 For the foregoing reasons, Ground One is rejected.

GROUND TWO - THE COMMISSIONER'S REFUSAL WAS UNLAWFUL 27 The appellant submitted that the Commissioner's refusal of the application was unlawful because: (a) the Commissioner did not have the power to refuse to accept the patent application (pursuant to s 49(2) of the Act) in circumstances where she cannot have been satisfied that s 49(1) of the Act applied; (b) the Commissioner had not undertaken a proper and complete examination in accordance with s 45 and reg 3.19, and had no power to impose a two-month time limit to respond to objections, and no power to conduct unilaterally a hearing to refuse the application; and (c) the Commissioner had a mandatory obligation to consider making a direction under s 107. 28 This ground, though put to the primary judge in slightly different form, was dismissed, with her Honour essentially finding that the appellant was attempting to graft on to s 49(2) preconditions to which it was not subject to: see [55]-[93] of the primary judge's reasons. 29 For convenience, we set out the relevant legislative and regulatory provisions. 30 Section 49 entitled 'Acceptance of patent request: standard patent' provides: (1) Subject to section 50, the Commissioner must accept a patent request and complete specification relating to an application for a standard patent, if: (a) the Commissioner is satisfied that the invention, so far as claimed, satisfies the criteria mentioned in paragraph 18(1)(b); and (b) the Commissioner considers that: (i) there is no lawful ground of objection (other than a ground in respect of paragraph 18(1)(b)) to the request and specification; or (ii) any such ground of objection has been removed. (2) If subsection (1) does not apply, the Commissioner may refuse to accept the request and specification. … 31 Section 45 entitled 'Examination' provides: (1) Where an applicant asks for an examination of a patent request and complete specification relating to an application for a standard patent, the Commissioner must examine the request and specification and report on: (a) whether the specification complies with section 40; and (b) whether, to the best of his or her knowledge, the invention, so far as claimed, satisfies the criterion mentioned in paragraph 18(1)(a); and (c) whether, to the best of his or her knowledge, the invention, so far as claimed in any claim and when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and (d) such other matters (if any) as are prescribed. … 32 Section 107 entitled 'Amendments directed by the Commissioner: applications for the standard patents' provides: (1) Where: (a) a complete application for a standard patent has been made; and (b) the Commissioner is satisfied, on the balance of probabilities, that there are lawful grounds of objection to the patent request or complete specification, but that those grounds of objection could be removed by appropriate amendments of the request or specification; and (c) the applicant has not taken action to amend the request or specification so as to remove those grounds of objection; the Commissioner may, in accordance with the regulations, direct the applicant to file, within such time as the Commissioner allows, a statement of proposed amendments of the request or specification for the purpose of removing those grounds of objection. (2) The Commissioner must not give a direction without first giving the applicant a reasonable opportunity to be heard … 33 Regulation 3.19 entitled 'Conduct of examination: standard patents' provides: (1) If the Commissioner reasonably believes that there are lawful grounds of objection to the patent request or complete specification, he or she must state the grounds of objection in reporting on an examination. (2) The applicant may contest the objection in writing or ask for leave to amend the patent request or complete specification in accordance with Chapter 10. (3) If the applicant asks for leave to amend a patent request or complete specification in response to, or in anticipation of, a report under section 45 of the Act, the Commissioner must examine the request and specification and report as if each proposed amendment had been made. (4) If the applicant contests the objection, the Commissioner must examine the request and specification and take note of the matters raised by the applicant. 34 Paragraph 142(2)(e) provides: (2) A complete application for a standard patent lapses if: (e) the patent request and complete specification are not accepted within the period prescribed for the purposes of this paragraph … 35 Regulation 13.4(1)(a) provides: (1) Subject to this regulation, the period prescribed for the purposes of paragraph 142(2)(e) of the Act in relation to an application is: (a) if examination of the patent request and complete specification is requested before 15 April 2013 - 21 months from the date of the first report (if any) under section 45 of the Act; 36 Section 207(2) provides: (2) The Commissioner has such powers and functions as are conferred on him or her under this Act or any other Act. 37 Regulation 22.22 provides: (1) The Commissioner must, before exercising a discretionary power under the Act or these Regulations adversely to a person, give the person at least 10 days notice of the time when, and the place where, that person may be heard in relation to the exercise of the power. 38 And finally, reg 22.24 relevantly provides: Subject to these Regulations (a) If the Act or these Regulations authorise the Commissioner to hear and decide an application or matter that is not an opposition… the practice and procedure to be followed for the purposes of enabling the application or matter to be decided is to be determined by him or her 39 Section 49(2) empowers the Commissioner to refuse a patent request and specification relating to a patent application only if subsection (1) does not apply. Essentially, the Commissioner must be satisfied that that the conditions in s 49(1) are not satisfied before the power to refuse under s 49(2) can be exercised. 40 The refusal letter of 1 November 2012, which adopted the examination report of 7 May 2012, indicated that the Commissioner was satisfied that the invention, as claimed, did not satisfy the criteria in paragraph 18(1)(b), there were lawful grounds of objection, and finally those grounds had not been met. Section 49(1)(a), (b)(i) and (b)(ii) did not apply and accordingly, s 49(2) was engaged. 41 There was no error alleged in the identification of lawful grounds of objection. To the extent that the appellant asserts that s 49(1)(b)(ii) implies an opportunity for the applicant to address the grounds of objection before the exercise of the power to refuse, this opportunity was afforded to the appellant on the facts. 42 The appellant submitted that the Commissioner's refusal pursuant to s 49(2) was invalid because she did not conduct a complete examination under s 45. Specifically, that the Commissioner acted unlawfully in imposing a two-month time limit. Further, it was contended that the Commissioner acted unlawfully in 'automatically listing the matter for refusal' and thereby conducting a hearing without having been requested to conduct a hearing under s 216. 43 We agree with the primary judge's reasons on the issue at [55] to [93]. 44 Nothing in the arguments of the appellant disturbs the primary judge's analysis. Section 49(2) was enlivened, and its scope is uninhibited by the words of the provision itself and its context. 45 To the extent that reliance was placed upon s 216 by the appellant, it does not dictate that the Commissioner can only conduct a hearing at the request of a relevant party. 46 The appellant had an opportunity to be heard by the Commissioner after the issue of the Examiner's Report on which the Commissioner based her decision. The appellant did not respond to that opportunity. 47 The result of the appellant's submission seems to be as follows: The Commissioner cannot refuse an application without giving the applicant an opportunity to be heard. The Commissioner has no power to initiate that opportunity. If the appellant declines to request a hearing, the Commissioner has no power to refuse the application. Therefore, despite an examination having taken place, objections identified and an offer of a hearing afforded, the Commissioner must wait until the Patent Application lapses. 48 This cannot be within the proper contemplation of the Act, and is not consistent with the purposive construction pressed by the appellant. 49 An opportunity to be heard (in whatever form is necessary or appropriate in the circumstances) may be accorded by the Commissioner where there is not a request for an exercise of a discretionary power. The power being exercised here is the power under s 49(2) - there is no need to introduce the predicate of s 216 into a requirement that can be implied as a precondition to s 49(2). 50 It goes without saying that the rules of procedural fairness would apply in respect of a potential adverse exercise of power, even where s 216 does not apply. 51 We should add that we see no basis for the submission that the Commissioner could not set a time limit for the receipt of submissions to overcome objections. There is no suggestion that the 2 month time limit was unreasonable. The Regulations, such as reg 22.24(1)(a), provide that the practice and procedure to be followed in the determination of an application is a matter for the Commissioner. 52 The appellant then submitted that the Commissioner cannot refuse an application pursuant to s 49(2) unless she has considered whether a direction under s 107 should be exercised. 53 The primary judge dealt with this submission at [60] - [79] and concluded that consideration of s 107 was not a precondition of the exercise of the power in s 49(2). 54 We agree with the approach of the primary judge. 55 Undoubtedly, if the Commissioner believes that an amendment can rectify an application, she may direct the applicant to file proposed amendments under s 107(1), or allow the applicant further time to amend under s 104. However, this does not mean the Commissioner is mandated to act under s 107. 56 Her Honour, in any event, found that the Commissioner's delegate turned his mind to the possibility of a direction under s 107 at the time of making the refusal and concluded that it would be futile. 57 At [77] to [79] her Honour concluded: [77] In any event, even if, contrary to the view formed, the Applicant's contention about this so-called discretionary power is correct, then the application fails on the facts. It fails on the facts because the delegate's reasons for decisions record that the delegate turned his mind to the possibility of a direction under s 107 at the time of the making of the Second Decision and concluded that a direction under s 107 would be futile. That report stated: I have reviewed the examiner's report, and I agree that there are appropriately raised objections. The applicant has chosen not to defend the application. They have provided no submissions disputing the objections, and have not proposed any amendment to attempt to overcome the objections. In these circumstances there are no reasonable prospects of the applicant overcoming the objections. The application should be refused. (Emphasis added.) [78] The Applicant submitted that the phrase "I have reviewed the examiner's report, and I agree that there are appropriately raised objections" does not record that the Commissioner or her delegate had considered whether lawful objections were taken and that view is further supported by the fact that the Policy (Annexure B) introduced short timelines for assessment of divisional applications. The passage must be read in context and fairly: see [49] above. The objection was set out. The fact that the Applicant had been given an opportunity to respond to the objection was stated. The failure of the Applicant to respond to the objection was set out. The Commissioner's delegate then reviewed the examiner's report and considered the objections were "appropriately raised". The Commissioner's delegate then concluded that in those circumstances there were "no reasonable prospects of the applicant overcoming the objections". [79] Do the timelines set out in the Policy alter that conclusion? The answer is no. The fact that there were timelines imposed by the Commissioner and that they were in fact imposed is not in dispute. What was not explained by the Applicant was how those timelines support the conclusion that the Commissioner or her delegate did not consider whether lawful objections were taken. If the Applicant's submission is no more than the timelines were too short a period for the Commissioner to undertake that review, then that submission fails at the first hurdle. There is no factual basis for that assertion. Indeed, as has been stated, the record in fact establishes that the objections were reviewed and were reviewed within the timelines imposed by the Commissioner. 58 No ground of appeal contests the findings of fact made by the primary judge at [77] to [79]. 59 In light of the above, Ground Two is rejected.

GROUND THREE - EXERCISE OF DISCRETIONARY POWER 60 The appellant submitted that the primary judge erred in finding that even if the Commissioner's decision to refuse the patent application was held to be vitiated by jurisdictional error, relief would be refused on discretionary grounds. 61 We do not have to decide this ground, as we have decided that the Commissioner's refusal of the patent application was not affected by jurisdictional error. If the Commissioner's refusal was affected by jurisdictional error, then the approach to take would involve a variety of considerations. 62 Justices Gaudron and Gummow in Re Refugee Review Tribunal & Anor; Ex Parte Aala (2000) 204 CLR 82 in considering the writ of prohibition (and by logical extension the other constitutional prerogative writs) made the following comments on denying relief on discretionary grounds: 53. The recognition of an element of discretion attending the exercise of the jurisdiction conferred by s 75(v) with respect to prohibition involves "two separate questions". The first is whether the officers of the Commonwealth in question acted in want of or in excess of jurisdiction. The second is whether prohibition should not issue, having regard to the delay, waiver, acquiescence or other conduct of the prosecutor, in the course of the administrative proceeding or in other relevant circumstances… 54. The text and structure of Ch III do not suggest that prohibition should occupy any special position among the constitutional remedies provided in s 75(v). The other two remedies specified there are attended by discretion. This is "well settled" with respect to mandamus. It is a remedy which does not go either as of right or as of course… 55. No doubt the discretion with respect to all remedies in s 75(v) is not to be exercised lightly against the grant of a final remedy, particularly where the officers of the Commonwealth in question do not constitute a federal court and there is no avenue of appeal to this Court under s 73 of the Constitution. The discretion is to be exercised against the background of the animating principle described by Gaudron J in Enfield City Corporation v Development Assessment Commission. Her Honour said: "Those exercising executive and administrative powers are as much subject to the law as those who are or may be affected by the exercise of those powers. It follows that, within the limits of their jurisdiction and consistent with their obligation to act judicially, the courts should provide whatever remedies are available and appropriate to ensure that those possessed of executive and administrative powers exercise them only in accordance with the laws which govern their exercise. The rule of law requires no less." (Footnote omitted) 56. Some guidance, though it cannot be exhaustive, as to the circumstances which may attract an exercise of discretion adverse to an applicant is indicated in the following passage from the judgment of Latham CJ, Rich, Dixon, McTiernan and Webb JJ in a mandamus case, R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd. Their Honours said: For example the writ may not be granted if a more convenient and satisfactory remedy exists, if no useful result could ensue, if the party has been guilty of unwarrantable delay or if there has been bad faith on the part of the applicant, either in the transaction out of which the duty to be enforced arises or towards the court to which the application is made. The court's discretion is judicial and if the refusal of a definite public duty is established, the writ issues unless circumstances appear making it just that the remedy should be withheld. (Footnote omitted) 63 If jurisdictional error had been found, the discretion against granting the remedy sought by the appellant would not have been exercised lightly. 64 However, it is unnecessary to go any further into this issue.

CONCLUSION 65 None of the grounds of appeal have been made out and accordingly the appeal is dismissed with costs. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Bennett, Greenwood and Middleton.

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