FEDERAL COURT OF AUSTRALIA

E I DU PONT DE NEMOURS AND COMPANY v ICI CHEMICALS & POLYMERS LIMITED [2003] FCA 291

PATENTS – appeal from decision of Commissioner of Patents – whether appeal limited to grounds pressed before Commissioner – jurisdiction of Federal Court in respect of “matter” of opposition to grant of patent – discretion to admit further evidence – nature of opposition proceedings – consideration of public interest in grant of patent

Patents Act 1990 (Cth) ss 18, 49, 51, 59, 60, 61, 154, 160

Patents Regulations 1991 (Cth) regs 5.8, 5.9, 5.10

Federal Court Rules O 58 r 8

E I DU PONT DE NEMOURS AND COMPANY v ICI CHEMICALS & POLYMERS LIMITED & ANOR

V407 OF 2002

ATOFINA SA v E I DU PONT DE NEMOURS AND COMPANY

N613 OF 2002

ICI CHEMICALS & POLYMERS LIMITED v E I DU PONT DE NEMOURS AND COMPANY

N614 OF 2002

E I DU PONT DE NEMOURS AND COMPANY v ICI CHEMICALS & POLYMERS LIMITED

N825 OF 2002

EMMETT J

11 MARCH 2003

SYDNEY

THE COURT ORDERS THAT:

1.                  the proceeding be stood over for directions on 2 May 2003.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.                  the proceeding be stood over for directions on 2 May 2003.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.                  the proceeding be stood over for directions on 2 May 2003.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.                  the proceeding be stood over for directions on 2 May 2003.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

V407 OF 2002

N613 OF 2002

N614 OF 2002

N825 OF 2002

REASONS FOR DECISION

1                     E I Du Pont de Nemours and Company (“Du Pont”), ICI Chemicals & Polymers Limited (“ICI”) and Atofina SA (“Atofina”) have brought appeals from decisions of the Commissioner of Patents made in opposition proceedings under the Patents Act 1990 (Cth) (“the Act”).  A question has arisen as to whether ICI and Atofina are entitled, or should be permitted, to rely on grounds or particulars of invalidity that were abandoned before a delegate of the Commissioner or never raised before the delegate. 

2                     Du Pont was the applicant in respect of Australian Patent Applications Nos. 686434 and 686433.  Each claims an invention in respect of a blend of refrigerants.  The first is an application for a patent for “binary” refrigerants, being a blend of two refrigerants.  The second is an application for a patent for “ternary” refrigerants, being a blend of three refrigerants.

3                     In relation to the binary application, there was an opposition by ICI and an opposition by Atofina.  In relation to the ternary application, there was an opposition by ICI. 

4                     After a hearing, the Commissioner’s delegate upheld the oppositions on the sole ground that each of the applications lacked novelty in the light of Australian Patent Application No. 641740 (“the Daikin Application”).  In particular, the delegate rejected all arguments that the two applications lacked novelty in the light of disclosures other than the Daikin Application.  The Commissioner also rejected arguments that the invention claimed in the binary application lacked an inventive step.

5                     The Statement of Grounds and Particulars filed with the Commissioner on behalf of ICI in relation to the binary application raised grounds other than lack of novelty and lack of an inventive step.  Atofina’s Statement of Grounds and Particulars filed with the Commissioner also included grounds other than lack of novelty and lack of inventive step.  However, at the hearing, neither ICI nor Atofina pressed any grounds other than lack of novelty and lack of inventive step.

6                     While ICI’s Statements of Grounds and Particulars in relation to the ternary application raised a number of grounds within s 59 of the Act, at the hearing before the delegate, the only ground pressed was lack of novelty. 

7                     Du Pont has appealed under s 60(4) of the Act in respect of the decision of the Commissioner’s delegate to uphold the oppositions to both applications.  ICI and Atofina have also appealed from the decision of the Commissioner’s delegate in relation to the binary application not to uphold the opposition on the ground of lack of inventive step.

8                     In its Particulars of Invalidity filed in this Court in relation to each of the applications, ICI has raised grounds that were not pressed before the Commissioner’s delegate.  ICI has also included particulars of grounds different from those that were relied on in the Statement of Grounds and Particulars filed with the Commissioner.  Atofina’s Particulars of Invalidity filed in this Court are in the same terms as the Particulars of Invalidity filed on behalf of ICI. 

9                     On 3 September 2002, I ordered that ICI and Atofina:

• serve lists of any declarations, affidavits, exhibits and transcripts of cross-examination relied upon in the proceedings before the delegate upon which they proposed to rely in the current proceedings;

·        file and serve any further affidavits upon which they propose to rely in support of the oppositions.

10                  I reserved for determination, after compliance with those orders, questions raised by Du Pont as to whether ICI and Atofina are entitled or should be permitted to rely on:

• grounds or particulars of invalidity that were abandoned before the delegate or never raised before the delegate;

·        any or all of the affidavits filed pursuant to those orders.

I have now had the benefit of detailed written submissions from all parties together with oral argument in relation to the questions so reserved.

11                  Du Pont contends primarily that the only matter before the Court, on an appeal under s 60(4), is the decision of the Commissioner’s delegate on the grounds that were pressed on hearing of the opposition by the Commissioner’s delegate.  Du Pont contends that the Court simply does not have power to entertain an “appeal” under s 60(4) on grounds that were not the subject of decision by the Commissioner’s delegate.  Du Pont further contends that the Court has no power to consider grounds that were either abandoned or not raised in the hearing before the Commission.  Du Pont therefore seeks orders that certain paragraphs of the Particulars of Invalidity filed on behalf of ICI and Atofina be disallowed. 

12                  In the alternative, Du Pont says that, if there is power to permit reliance on grounds not raised or not pressed before the delegate, the Court should not, as a matter of discretion, permit matters to be raised that were not fully ventilated before the delegate.  Specifically, Du Pont contends that the Court should not permit new matters to be raised unless it is satisfied that the new matters have some prospects of success.  They therefore ask the Court to refuse leave to ICI and Atofina to rely on certain of the evidence relied on before the Commissioner’s delegate and certain fresh evidence on which they now wish to rely. 

13                  Section 49(1) of the Act relevantly provides that the Commissioner must accept a patent request and complete specification relating to an application for a standard patent if:

• the Commissioner is satisfied that the invention, so far as claimed, satisfies the criteria mentioned in s 18(1)(b); and

·        the Commissioner considers that there is no lawful ground of objection, other than a ground in respect of s 18(1)(b), or any such ground of objection has been removed.

Section 51 provides that an appeal lies to the Federal Court against a decision of the Commissioner made under s 49. 

14                  Section 18(1)(b) relevantly provides that an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim, when compared with the prior art base as it existed before the priority date of that claim:

• is novel; and
• involves an inventive step.

15                  Under s 59, any person may, in accordance with the Patents Regulations 1991 (Cth) (“the Regulations”), oppose the grant of a standard patent on one or more of the grounds set out in s 59 but on no other grounds.  Section 60(1) provides that, where the grant of a standard patent is opposed, the Commissioner must decide the case in accordance with the Regulations.  Under s 60(2), the Commissioner must give the applicant and the opponent a reasonable opportunity to be heard before deciding a case.  Section 60(3) provides that the Commissioner may, in deciding a case, take into account any ground on which the grant of a standard patent may be opposed, whether relied upon by the opponent or not.  Section 60(4) then provides that the applicant, and any opponent, may appeal to the Federal Court against a decision of the Commissioner under s 60.  Section 154(1) of the Act gives the Federal Court jurisdiction “with respect to matters arising under this Act”. 

16                  The hearing of an appeal under s 60(4) is a hearing de novo.  That is to say, the Court is not limited to the evidence before the Commissioner’s delegate on the hearing of the opposition proceeding.  Section 160 provides that, on hearing an appeal against a decision or direction of the Commissioner, the Federal Court may do any one or more of the things set out in that section.  Section 160(a) and s 160(b) expressly provide that the Court may admit further evidence, orally or on affidavit or otherwise, and may permit the examination and cross-examination of witnesses, including witnesses who gave evidence before the Commissioner.  Section 160(c) authorises the Court to order an issue of facts to be tried as it directs.  Under s 160 the Court may then affirm, reverse or vary the Commissioner’s decision or give any judgment or make any order that, in all the circumstances, it thinks fit. 

17                  Du Pont’s contention is that the scheme of the Act demonstrates that the “matter” that arises under s 60(4) is an appeal against the decision of the case by the Commissioner under s 60(1), being the decision of the case on the grounds pressed before the Commissioner, and on no other ground. 

18                  As I have indicated, s 60(3) authorises the Commissioner to take into account any ground on which the grant of a standard patent may be opposed, whether relied upon by the opponent or not.  That authority, of course, must be subject to the requirement of s 60(2) that the Commissioner give both the applicant and the opponent a reasonable opportunity to be heard before deciding a case.  Nevertheless, it is clear that the Commissioner could decide a case on a ground that was not pressed by the opponent, so long as the applicant was given a reasonable opportunity to be heard on that question.

19                  A factor that must be taken into account, in considering the scheme of the Act, is the nature of an opposition proceeding.  The purpose of the opposition procedure is to provide a swift and economical means for preventing the grant of patents that clearly ought not to be granted.  The Commissioner, and the Court on the hearing of an appeal under s 60(4), should uphold an opposition only if it is clear that a patent, if granted, would be invalid on one of the grounds set out in s 59. 

20                  Consistently with the notion that the purpose of opposition proceedings is to provide a swift and economical means of settling disputes that would otherwise need to be dealt with in post-grant litigation, reg 5.9 of the Regulations provides that the Commissioner may only permit an opponent to amend grounds of opposition, as distinct from the particulars of opposition, if the Commissioner reasonably believes that the amendment corrects an error or omission by the opponent.  Regulation 5.8 provides strict timetables for the filing of evidence and the power to extend time to permit further evidence under reg 5.10 invokes considerations somewhat analogous to adducing fresh evidence on appeal. 

21                  The fact that s 60(3) permits the Commissioner, subject to complying with s 60(2), to take into account any ground on which the grant of a standard patent may be opposed, suggests that the Court, on hearing an appeal under s 60(4), may also take into account any ground on which the grant of a standard patent may be opposed.  Clearly, the Court, on the hearing of an appeal, must also afford procedural fairness to both the applicant and the opponent.  Nevertheless, the public interest in ensuring that there should be no grant of a patent where the patent would clearly be invalid, requires that, on the hearing de novo of the case as to whether the opposition succeeds, the Court may consider any ground that could, under s 59, be raised in opposition to the grant of the patent.

22                  I consider that the scheme of the Act indicates that the matter in respect of which the Court is given jurisdiction under s 154(1) is the matter of the opposition to the grant of a standard patent.  Under s 61(1)(b), the Commissioner is required to grant a standard patent, if in spite of opposition, the Commissioner’s decision, or the decision on appeal, is that a standard patent should be granted.  Of course, if the Commissioner’s decision, or the decision on appeal, is that the opposition be upheld, no question of grant arises under s 61.  The question, however, is whether or not a standard patent should be granted.  That is the matter that arises under s 60 in respect of which the Court is given jurisdiction.

23                  Notwithstanding that the Court has power to take into account any ground on which the grant might be opposed, there is a discretion that arises under s 160, quite apart from any inherent power of the Court.  That is to say, the Court must decide whether to admit further evidence beyond the evidence that was before the Commissioner’s delegate.

24                  The fact that a ground was not pressed before the Commissioner’s delegate may be a relevant consideration to be taken into account by the Court in the exercise of the discretion expressly conferred by s 160.  However, where evidence was, in fact, adduced before the delegate in relation to grounds that were subsequently not pressed before the delegate, there would be no reason why, in the ordinary course, additional evidence in relation to the same questions would not be permitted. 

25                  In opposition proceedings, the opponent must establish that it is practically certain that the patent that would be granted on the application would be invalid.  Thus, opposition should be confined to those grounds that have a fair potential to establish clearly that the prospective patent would be invalid.  To permit an opponent, without some justification, to rely on new grounds of invalidity on an appeal from a decision of the Commissioner, or grounds abandoned below, may tend to be inconsistent with the object of opposition proceedings.  

26                  While an appeal is to be treated as a hearing de novo, the evidence from the hearing before the Commissioner is, according to O 58 r 8 of the Federal Court Rules, admissible in evidence on a hearing of the appeal with the leave of the Court, subject to all appropriate exceptions.  As I have said, s 160(a) also contemplates that the evidence before the Commissioner is the starting point for the evidence on the appeal.  Those considerations, however, go to the exercise of discretion by the Court rather than to the Court’s power to permit grounds to be relied upon that were either not relied upon or were not pressed before the Commissioner’s delegate. 

27                  The nature of opposition proceedings, coupled with the fact that the appeal to this Court is a hearing de novo, means that no question of waiver or estoppel would arise, particularly having regard to the true nature of a proceeding relating to the validity of a patent.  Assuming there is power for the Court to entertain grounds that were not relied upon or were abandoned before the Commissioner, the public interest in a proceeding relating to the validity of a prospective patent in opposition proceedings means that the Court would normally disregard a waiver by an opponent that the particular ground had no prospect of success as a ground of opposition, because the ground did not clearly demonstrate that the patent applied for would be invalid, except to the extent that the waiver itself could be regarded as an acceptance by the opponent.

28                  Where the grounds of invalidity intended to be relied upon on the hearing of an appeal under s 60(4) have not been fully ventilated before the Commissioner, the Court would be at a disadvantage, to the extent that it does not have the benefit of findings by the Commissioner or her delegate.  Such findings will normally be given significant weight by the Court because of the considerable experience and expertise that would have been brought to bear in making the decision.  Of course, that weight will be limited where the Court, in the exercise of its discretion, permits evidence to be adduced beyond that the evidence that was before the Commissioner’s delegate.

29                  On the other hand, there would be no prejudice to an applicant for a patent simply because the case of the opponent might be reformulated in the light of the decision of the Commissioner’s delegate.  The fact that the case is reformulated may, in fact, tell against the opponent because of the difficulty that would arise in concluding that, in such circumstances, it was clear that any prospective patent would be valid.  Further, even if the opposition ultimately failed, any person could bring a revocation proceeding, with the advantage of being able to reformulate a case in such manner as was considered appropriate, having regard to the case formulated by that person, or another opponent, in opposition proceedings.

30                  Du Pont contends that the Court should require ICI and Atofina to explain why the matters on which they now seek to rely were not raised or not pressed before the Commissioner’s delegate and to explain the importance or significance of the matters in the appeal together with the prospect of the matters altering the outcome of the appeals.  Du Pont says that the particular constraints applicable to opposition proceedings require that, before permitting an opponent to raise matters that were not raised or not pressed before the Commissioner and before permitting additional evidence to be relied upon, the Court should be satisfied that the failure to raise or press such matters before the Commissioner is not an indication that there is no substance in the new matters.

31                  The fact that matters were not raised or not pressed before the delegate might indicate that they were not regarded as having sufficient weight to satisfy the test for success of an opposition.  However, unless the additional material sought to be relied on by ICI and Atofina is likely to extend the hearing of the appeal by a significant period, I do not consider that it is appropriate to examine, at a preliminary stage, the prospects of success of the appeal based on the new matters. 

32                  On the other hand, I consider that it is appropriate to require some indication from the parties as to the extent to which additional evidence proposed to be relied upon by ICI and Atofina will lengthen the hearing of the appeal.  I do not consider it appropriate to require an explanation as to why matters now sought to be raised were not raised or not pressed before the delegate, although that question could become material if it became apparent that the new matter sought to be raised by ICI and Atofina will significantly extend the hearing.

33                  In the circumstances, I do not propose to disallow any of the paragraphs of the Particulars of Invalidity filed on behalf of ICI and Atofina.  I propose to give ICI and Atofina the opportunity to make such submissions as they wish before deciding what further evidence should be permitted on the hearing of the appeals. 

Associate:

Dated:              2 April 2003