FEDERAL COURT OF AUSTRALIA

H Bion Inc v Commissioner of Patents [2010] FCA 539

THE COURT ORDERS THAT:

1.                  The motion notice of which was filed on 21 May 2009 be dismissed.

2.                  The applicant pay the respondent’s costs of the motion.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION

1                     On 7 April 2009 the applicant filed an application for an order of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) of the decision of the respondent (the Commissioner) made on or about 10 March 2009 to:

(a)           withdraw the acceptance of the application for patent and complete specification (the acceptance) made on 28 May 2008 in respect of patent application No 2004309300 made in the name of Seoul National University Industry Foundation and conclude that the acceptance was a nullity … and

(b)           to refuse to process proposed amendments to the patent application and specification on the basis that the application had lapsed under s 142(2) of the [Patents Act 1990 (Cth)].

The application also prayed in aid s 39B of the Judiciary Act 1903 (Cth). The relief claimed is a declaration that the patent application was validly accepted on 28 May 2008, an order compelling the Commissioner to process the patent application in accordance with law, and an order setting aside the Commissioner’s decision.

2                     On 21 May 2009 the applicant filed a notice of motion seeking an extension of time within which to appeal from the Commissioner’s decision of 10 March 2009 and leave to amend its application in the form attached to the notice of motion. By this document the applicant adds to the current application an appeal from the Commissioner’s decision under s 51 of the Patents Act 1990 (Cth) (the Act) based on essentially the same grounds as some of those propounded in the existing application. The main overlapping grounds are that the decision was beyond power and not authorised by the Act.

BACKGROUND

3                     On 30 December 2004 Seoul University Industry Foundation (SUIF) filed an international patent application designating Australia, entitled “Embryonic Stem Cell Line and Method of Preparing the Same”. The application was examined and an examiner’s first report issued on 28 February 2007 disclosing three lawful grounds of objection to the application. As a consequence of the issue of the report and pursuant to s 142(2)(e) of the Act and reg 13.4 of the Patent Regulations 1991, the application would lapse if not accepted by 28 November 2008.

4                     Following the applicant’s provision of material in answer to the examiner’s report, the application was accepted on 28 May 2008 and notice of acceptance issued. The acceptance of the application was advertised and no opposition was lodged by the prescribed deadline, which expired on 12 September 2008.

5                     Between September 2008 and March 2009 exchanges took place between the Patents Office and the applicant’s patent attorneys relating to whether the patent specification contained false or fraudulent material. Those exchanges culminated in the decision of 10 March 2009 by which the Commissioner announced that the decision to accept the patent application on 28 May 2008 “was infected by fraud, with the result that it is a nullity”. The Commissioner said that the consequence of her decision was that the time for acceptance of the application prescribed by reg 13.4 had passed and that the application had lapsed under s 142(2) of the Act.

LEGISLATION

6                     Division 1 of Part 3 of the Act – Acceptance of standard patents – consists of ss 49 to 51. Section 49(1) provides in part:

… 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.

Section 51 provides that an appeal lies to the Federal Court against a decision of the Commissioner under Division 1.

7                     An appeal under s 51 is an appeal de novo: Imperial Chemical Industries Pty Ltd v Commissioner of Patents [2004] FCA 1658 at [49].

EXTENSION OF TIME

8                     The applicant’s appeal should have been filed by 31 March 2009: O 58 r 4(2). An extension of time pursuant to r 4(3) is only granted where special circumstances are shown. Special circumstances are circumstances which take the case out of the ordinary so as to justify departure from the general 21 day rule. Factors to be taken into account in the exercise of the discretion conferred by the rule include:

·                    the length of the delay;

·                    the explanation for the delay, and in particular whether the applicant is personally blameless for the delay;

·                    any prejudice to the respondent or to other persons arising out of the delay;

·                    actions taken by the applicant to alert the respondent to the fact that the decision is, or may be, contested;

·                    the merits of the proposed appeal;

·                    alternative avenues of relief, if any, available to the applicant, and

·                    questions of public policy, if any, in the subject matter of the appeal.

See Kabushiki Kaisha Universal v Aristocrat Leisure Industries Pty Ltd [1998] AIPC 91‑396.

THE APPLICANT’S SUBMISSIONS

9                     The applicant’s central contention in its dispute with the Commissioner is that she has no power to overturn, withdraw or treat as a nullity an acceptance made under s 49 of the Act. It points out that in her reasons for decision the Commissioner does not expressly rely on any provision of the Act as the source of power. The applicant says it is common ground that s 49 is not the source of power. The applicant continues:

However, against the possibility that the Commissioner will later contend, or that the Court will find, that the decision is made under the Act, the applicant will contend that s 49 is the only possible source of power and that the decision purports to be a decision made under Division 1 of Pt 3 of Ch 3. That is because s 51 is broad enough to cover any decision or purported decision that overturns or withdraws an acceptance made under s 49. Any action that goes to or purports to affect a decision made under s 49 is arguably a decision under that section.

10                  The applicant relies on Clements v Independent Indigenous Advisory Committee (2003) 131 FCR 28 for the proposition that validity, in the sense of absence of jurisdictional error, is not essential to the existence of a “decision” for the purposes of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). That section confers on a party to a proceeding a right of appeal, on a question of law, from any “decision of the Tribunal” in that proceeding.

11                  The applicant relied on Griffith University v Tang (2005) 221 CLR 99 as authority that whether a decision is “made under an enactment” involves two criteria: first, the decision must be expressly or impliedly required or authorised by the enactment, and secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense must derive from the enactment. The applicant submitted that the practical operation of the Commissioner’s decision owed its effect to the Act and not to the general law.

12                  The applicant then relies on five considerations that are said to favour an extension of time:

(a)           there is an adequate explanation for the delay, in that that source of the power to make the decision is unclear “and it is understandable that the source of power is both open to debate and uncertain, making the failure to appeal promptly understandable”;

(b)          at all times the Commissioner has known that the decision is under challenge;

(c)           given that proceedings are already regularly issued, reliance on an additional source of jurisdiction, which makes available a hearing de novo, will cause no prejudice to the Commissioner;

(d)          the nature of the appeal is broader than the scope of the existing proceeding, and it is therefore in the interests of justice that the applicant have the full jurisdiction of the Court available to it;

(e)           the ability of the Commissioner to treat an acceptance as a nullity or the effect of fraud on an acceptance raises novel matters of general importance on which there is no authority.

COMMISSIONER’S SUBMISSIONS

13                  The Commissioner submits that her action “in recognising that the acceptance decision was invalid and a nullity did not constitute a decision, let alone a decision under the Act”. In reliance on Leung v Minister for Immigration and Multicultural Affairs (1997) 79 FCR 400 she contends that to ignore an invalid decision or to take action to reverse the consequences of a nullity is not to make a new decision but rather to recognise the true character of the purported decision. The Commissioner also relied on Plaintiff S157/2000 v The Commonwealth (2003) 211 CLR 476 at [76], Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [51] and SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189 at [52], which are to a similar effect.

14                  The Commissioner also submits that the structure of the Act indicates that Parliament intended that an applicant would be entitled to a de novo appeal to the Federal Court in limited circumstances. A number of decisions are reviewable on the merits by the Administrative Appeals Tribunal. Others are “reviewable” de novo by the Court. Judicial review of the lawfulness of decisions is also available under the Judiciary Act. The de novo appeals are said to be “precisely identified” and include those provided for by ss 35, 36, 42, 49, 50, 60, 81, 82, 101, 104, 106 and 107 of the Act.

15                  The decisions made pursuant to ss 49 and 50 are:

·                    a decision to accept a patent request and complete specification relating to an application for a standard patent (s 49(1));

·                    a decision to refuse to accept a patent request and complete specification relating to an application for a standard patent (s 49(2));

·                    a decision to refuse to accept a patent request and specification relating to an application for a standard patent, or to grant a standard patent for one of the reasons permitted by s 50(1) or (2).

The Commissioner submits that the recognition of the invalidity of the purported acceptance cannot be characterised as a decision overturning, withdrawing or revoking the acceptance, but was merely a recognition of the true nature of the purported acceptance. Accordingly she says it is not a “decision” that Parliament intended to be the subject of an appeal under s 51.

16                  The Commissioner does not dispute that the Court has jurisdiction to review her decision pursuant to s 39B of the Judiciary Act.

17                  The first basis upon which the Commissioner contends that leave to appeal out of time should not be granted, based on what is set out at [13]‑[15], is that for want of a jurisdictional basis for an appeal under s 51, an appeal would not enjoy a real prospect of success: cf Gallo v Dawson (1990) 93 ALR 479 at 480‑482.

18                  While claiming that because there is no jurisdictional basis for an appeal based on s 51 it was unnecessary to consider the principles governing the exercise of the discretion to grant an extension of time, the Commissioner nevertheless relied on the observations of McHugh J in Gallo 93 ALR at 480 that the discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties. She contends that an extension of time is not necessary to enable the Court to do that. The applicant’s case is that the impugned decision was not made under the Act, the Commissioner accepts that position, and the Court has jurisdiction to review the decision under the Judiciary Act. The application for extension is, she says, just a “belated and precautionary afterthought which serves no worthwhile purpose”. No prejudice will arise from a refusal of an extension.

ADJUDICATION

19                  In his affidavit in support of the application, the applicant’s solicitor, Malcolm Bell, says:

The Applicant has sought judicial review of the [Commissioner’s] decision. Against the possibility that the Commissioner contends that the decision is authorised by s 49 of the Act or otherwise made under Division 1 of Part 3 of Chapter 3 of the Act then the Applicant seeks to avail itself of an appeal under s 51.

20                  The applicant’s written submissions repeat this and add:

The Applicant does not contend, and specifically denies, that such a decision would be authorised by s 49 but it is arguable that it purports to be so authorised.

…

The current application is purely defensive in nature.

21                  Mr Howe QC, who appeared with Mr Fitzpatrick for the Commissioner made the following submission:

Now, if there were some remedy or right to relief that depended upon the applicant’s recourse to section 51 the court might be reluctant on this application to deprive the applicant of the opportunity to agitate it but, with respect, when one has regard to the terms of section 39B(1) of the Judiciary Act there can really be no doubt at all that my friend rightly pointed out to your Honour:

The applicant is necessarily, as a matter of substance, seeking a writ by way of mandamus directing the Commissioner to process the patent application.

This is order sought number 7 in the proposed amended application, an order compelling the respondent to process the patent in accordance with law. And necessarily, certiorari, an order quashing the decision would be available to facilitate the order by way of mandamus which he sought, and unarguably, the commissioner is an officer of the Commonwealth, and so whatever might be the amplitude of the expression “Arising under any law made by the parliament” in paragraph 39B(1A), sub‑paragraph (c), the Commissioner … accepts, as it were, on the record, that the court is properly seised of jurisdiction to adjudicate the real issue between the parties, under section 39B(1). So the apprehended fear that there might be some point taken by the respondent which would preclude the applicant from contesting, as it were, whether or not there was a fraud, and whether it was material, in our submission, is simply misplaced…

22                  Given the Commissioner’s agreement that the impugned decision was not made under the Act, and that the decision is amenable to review under s 39B(1) of the Judiciary Act in the manner described by Mr Howe, it is my opinion that an extension of time is not necessary to do justice between the parties. In Gallo 93 ALR at 480 McHugh J said:

The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties… This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time.

The stated foundation of the application for extension of time lies in the “possibility” that the Commissioner may contend that the decision was authorised by s 49 or some other section of the Act entitling it to appeal under s 51. The Commissioner’s position means that the foundation for the application has evaporated.

23                  Having regard to the foregoing, I do not need to deal with the interesting issues summarised at [9] to [11] and [13] to [15] and [17]. If I had upheld the applicant’s contention that what the Commissioner did on 10 March 2009 was “arguably a decision under s 49 of the Act”, I would have refused relief for the reasons I have given.

CONCLUSION

24                  The application for an extension of time in which to file a notice of appeal is dismissed.

Associate:

Dated:         1 June 2010