FALOON v THE COMMISSIONER OF PATENTS, TRADE MARKS, AND DESIGNS [2015] NZHC 853 [28 April 2015]

FALOON v THE COMMISSIONER OF PATENTS, TRADE MARKS, AND DESIGNS [2015] NZHC 853 [28 April 2015]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2015-485-1[2015] NZHC 853BETWEEN CLARENCE JOHN FALOONAppellantAND THE COMMISSIONER OF PATENTS,TRADE MARKS, AND DESIGNSRespondentHearing: 24 April 2015Counsel: Appellant in PersonT G H Smith for RespondentJudgment: 28 April 2015JUDGMENT OF BROWN J[1] On 28 August 2014 the appellant filed Patent Application 631428 in the Intellectual Property Office of New Zealand. A first examination report was provided on 20 October 2014 to which the appellant responded on 14 November 2014. A second examination report was provided on 2 December 2014.[2] On 6 January 2015 the appellant filed a notice of appeal under s 12(6) of the Patents Act 1953 (the Act) in which he purported to appeal from "all the decisions of the Commissioner of Patents" contained in that second examination report.[3] The respondent applies for an order that the appeal be struck out as disclosing no reasonably arguable grounds in that the jurisdiction of the High Court is not engaged because:1.1 The Commissioner has not made any "decision" in terms of s 12(6) of the Patents Act 1953 because there has been no decision to refuseto proceed with the appellant's patent application (Application), or to require the application or any specification to be amended.1.2 Nor has there been a "finding, order or judgment" in terms of the definition of "decision" in r 20.2 of the High Court Rules.Alternatively an order is sought that progression of the appeal be stayed.[4] In addition to the several points made in the Notice of Appeal with reference to Patent Application 631428, the third item of relief sought was an order declaring that the Commissioner had made an error of law under s 76(1) of the Act in a letter dated 7 January 1987 with reference to New Zealand Letters Patent No 170390 which was granted to the appellant on 17 April 1974.[5] In accordance with the timetable in my Minute of 26 February 2015, the appellant filed an application under HCR 22.27(3) for leave of the Court to bring an appeal out of time insofar as it relates to Patent No 170390. However the application filed by the appellant on 17 March 2015 not only contained an application for leave to bring an appeal out of time but also sought directions that the following persons be joined as parties to the appeal:(a) the Commissioner of Inland Revenue;(b) the Minister of Customs;(c) P J Zweegers En Zonen, of N V Geldrop, Holland;(d) the Ministry of Business, Innovation and Employment as the successor to the Secretary of Trade and Industry.Both applications are opposed by the respondent.[6] Accordingly there are three matters to be addressed in this judgment:(a) the respondent's application to strike out the appeal;(b) the appellant's application for leave to bring an appeal out of time inrespect of Letters Patent 170390;(c) the appellant's application for joinder of parties in the appeal the subject of the application for leave to proceed out of time.The respondent's strike out application[7] Section 12 of the Act relevantly states:12 Examination of application(1) [Subject to section 26G of this Act,] when the complete specification has been filed in respect of an application for a patent, the application and specification or specifications shall be referred by the Commissioner to an examiner.(2) If the examiner reports that the application or any specification filed in pursuance thereof does not comply with the requirements of this Act or of any regulations made thereunder, or that there is lawful ground of objection to the grant of a patent in pursuance of the application, the Commissioner may either—(a) Refuse to proceed with the application; or(b) Require the application or any such specification as aforesaid to be amended before he proceeds with the application.(4) Where an application or specification filed under this Act is amended before acceptance of the complete specification, the Commissioner may direct that the application or specification shall be post-dated to the date on which the amendment is first filed.(6) An appeal to the Court shall lie from any decision of the Commissioner under subsection (2) or subsection (4) of this section.[8] The nature of the examiner's inquiry was described in Beecham Group Ltd v Bristol-Myers Company (No 2):1 the examination under s 12 cannot be compared with the more thorough screening process undergone in opposition proceedings. The examiner'sinquiry is a preliminary one, to determine whether the application appears to be in order so that it may be accepted and published. He does not have available to him the evidence that is tendered in opposition proceedings; the fact that a patent application has survived this preliminary internal examination has never been held to be a factor to be taken into account on behalf of the applicant at an opposition hearing.[9] The second examination report dated 2 December 2014 raised a number ofmatters for the appellant's attention including that the proposed specificationappeared to be three provisional specifications simply joined together into a single document and it failed to comply with s 10(4) in that it did not appear to be for a single invention.[10] After explaining the various issues which needed to be addressed, the report stated:5. Responding to the Examination ReportIf you do not agree with the above issues or if you are aware of any circumstances that the Office is unaware of that may help overcome the issues raised, you are encouraged to respond to this Examination Report as soon as possible, within the prescribed period.If you do decide to respond you will need to write to us addressing all the issues that have been raised in this report.The Office will consider any response you make and the end result may be that your application will be accepted and a patent granted. Ifyour response does not overcome the Office's concerns we will writeto you again and you will be given another opportunity to respond.Where required, you may submit a complete copy of your amended complete specification to overcome the abovementioned objections.The Applicant should note that care must be taken during the process of amending a complete specification, in that no new materials should be added, and all amendments should fall within the scope of the complete specification dated 12 July 2012.1 Beecham Group Ltd v Bristol-Myers Company (No 2) [1980] 1 NZLR 192 (SC) at 212.[11] The report concluded in this way:Please note that prosecuting a patent application through to the grant of a New Zealand patent, in some cases, may not be a straightforward task, and as such, difficulties may arise. The Applicant is reminded that where there is any doubt as to how best protect their intention, or how best to proceed with prosecution of their application, consultation of a registered New Zealand Patent Attorney is advised. It is thus theApplicant's responsibility to take the necessary actions to protect theirinvention.The time for completion of all matters expires on 20 January 2016. An extension of time of up to three months may be requested under section 19(2).[12] Mr Smith for the respondent argues that, while the second examination report makes various comments concerning the compliance of the application, crucially the Commissioner does not purport to make a decision either to refuse to proceed with the application or require it to be amended. While acknowledging that if the matter proceeded to that point the appellant would be entitled to appeal, he argues that theapplication has simply not progressed to that stage. The Commissioner's positionwas, and remains, that it is still open to Mr Faloon to provide an explanation that will satisfy the Commissioner that no amendments are required.[13] Mr Faloon placed reliance on the reference in s 12(6) to "any decision of the Commissioner". He contended that the respondent's argument amounted to the proposition that there was a right of appeal from any "final" decision under s 12(2) whereas Mr Faloon said that "any" decision is applicable, whether final or otherwise. It was his contention that the Commissioner had made a "decision" when he sent thesecond examination report to Mr Faloon.[14] I am unable to accept Mr Faloon's argument. I consider that "decision" in theseveral sections in the Patents Act 1953 means not merely the formation of a point of view but rather an irrevocable taking of a position by the Commissioner, that is, a position which is final on the point. In the case of s 12(2) that final position would manifest itself in either of the steps (a) or (b). At that juncture the process of dialogue facilitated by the provision of examination reports and responses thereto would be at an end.[15] To allow appeals from initial expressions of view would undermine the finality which is implicit in the process of appeals to the High Court2 and, with leave, to the Court of Appeal.3 It would also undermine the utility of the examinationprocess. As the respondent's submissions said:Characterising every comment by the Commissioner as a 'decision' capableof appeal would mean that the Commissioner could have no meaningful input into the process of readying an application for acceptance. In effect, the first examination report would take the place of the Commissioner'sultimate decision whether or not to accept the application for publication under s 20 of the Patents Act 1953. Matters that could have been resolved through discussion and correspondence would therefore take up the resources of the Court.[16] Consequently I accept the respondent's contention that the second examination report does not amount to a "decision" under s 12(2) but that an appealable decision will only occur when the Commissioner elects one of the alternatives (a) or (b). It follows that the notice of appeal is premature and must be struck out.The appellant's application for leave to appeal out of time[17] The appeal in respect of which Mr Faloon seeks leave to proceed out of time is in relation to: "a decision or decisions of the Commissioner of Patents dated 7 January 1987 insofar as the appeal relates to New Zealand Letters Patent 170390 granted to the appellant on 17 April 1974".[18] The application for leave proceeds to refer to the decision or decisions having been made in a letter from the Commissioner to Mr Faloon dated 7 January 1987 which is set out in full below:I refer to your further letter of 27 December 1986, with enclosures.I am uncertain as to most of the facts in the dispute (?) between yourself, Centrac and I.R.D., and in any case, it is none of my concern. It would seem to me that I.R.D. do speak of matters clearly outside their competence, if I interpret their remarks on the subject of patents correctly. I am not sure that your response (22.12.86) is the correct one in the circumstances, but again it is none of my concern. Whatever arrangement you have with Centrac, I2 Section 97(4)(a) of the Act.3 Section 98(c) of the Act.again suggest that you seek advice from a registered patent attorney as to future activity or action.With regard to s.76(1)(a), it would not be appropriate for the Attorney-General to take any interest in this matter since activities relating to your patent do not have any public interest component, in the broadest sense of that term.With regard to the validity or otherwise of your patent, as I understand the matter, if not challenged by Centrac, it is certainly no concern of I.R.D.[19] Mr Faloon focussed on the penultimate paragraph of that letter and he attributed a decision to the Commissioner in that paragraph in two ways. First, he submitted that the Commissioner had made an error of law in making the statement. Secondly, he argued that the Commissioner, a servant of the Crown, had made a decision on behalf of a Minister of the Crown, namely the Attorney-General.[20] Section 76(1) states:(1) The Attorney-General, if in his opinion the public interest is or may be involved, may do all or any of the following things:(a) institute proceedings to test the validity of any patent:(b) join the plaintiff in an action brought under section 74:(c) apply for the revocation of a patent:(d) appear and be heard in any proceedings before the court or the Commissioner for the grant, extension, amendment, or revocation of a patent, or where the validity of a patent is in question, or for a licence under a patent, or for theendorsement of a patent with the words "licences of right",or for a declaration of non-infringement, and take any steps which he considers desirable as if he were a party to the proceedings:(e) intervene in and take over the control and conduct of any proceedings in which he may appear and be heard as aforesaid on behalf and with the consent of a party thereto.[21] I asked Mr Faloon what it was that he wanted the Attorney-General to do. He explained that he would wish the Attorney-General to institute proceedings to test the validity of his Patent No 170390. When I asked him why he would want his own patent to be challenged, he explained that in a letter dated 24 May 1984 the Commissioner of Inland Revenue had called the patent into question. When Iinquired where it was that the Commissioner of Inland Revenue had done so, Mr Faloon pointed to the following paragraph in that letter:The Company has been manufacturing the machines in question since 1972. Why has Mr Falloon waited until now to exercise his right of entitlement? It would seem unlikely that his solicitors would not have advised him of the necessity to assign the patents to the Company if it was originally intended that the Company produce the machines.[22] It is apparent that Mr Faloon considers that the Commissioner of InlandRevenue's reference to "machines in question" amounted to questioning the validityof his patent. As he put it in a letter to the Commissioner of Patents dated 27 December 1986 (to which the letter of 7 January 1987 above was the response):As the Commissioner of Inland Revenue has questioned the validity of New Zealand Letters Patent No 170390 granted to me in correspondence dated 24 May, 1984, addressed to the Manager of Centrac Equipment Ltd, I have written to the Commissioner of Inland Revenue and now enclose my letter dated 22 November, 1986 for your consideration.If patents are "in question" should not the Attorney-General institute proceedings to test the validity of any patent in terms of section 76(1)(a) ofthe "Patents Act, 1953". It does not seem that either the Manager of Centrac Equipment Co. Ltd as the user of the Patent, nor myself as patentee, have jurisdiction to answer privately the numerous questions repeatedly raised by the Commissioner of Inland Revenue. I enclose a Specification Sheet of the CENTRA INVADER MARK V in which my invention claimed by N.Z. Letters Patent 170390 is put to use.[23] There are two impediments to Mr Faloon's application for leave to appeal inrespect of the letter of 7 January 1987. First, any power of decision which is implicit in s 76 is a power to be exercised by the Attorney-General. There is no basis for directing a complaint at the Commissioner of Patents. Secondly, in contrast with s 12(6) and other provisions, s 76 does not provide for a right of appeal.[24] Consequently it is not possible to entertain an application for leave to appeal out of time against a decision of the Commissioner of Patents where the section confers no right of appeal and the person who may exercise the power described in the section is not the Commissioner of Patents but the Attorney-General. Accordingly the application for leave to appeal out of time is declined.[25] In view of that conclusion it is not necessary for me to address the further grounds of opposition advanced by the Commissioner including the proposition that leave is not available in any event under r 22.27(3) of the High Court Rules and the fact of the delay in seeking leave which is some 28 years.[26] On the latter point, in fairness to Mr Faloon, I should record that he claimed that he only became aware that there might be an appealable decision in the course of the case management conference conducted by telephone on 26 February 2015. In light of that contention I asked him why he had included the point about Patent No 170390 in his notice of appeal. His answer was that that patent was referred to in his recent application (the subject of the first issue above) as prior art.The application for leave to join parties in the proposed appeal[27] Mr Faloon explained that his reason for applying to join the four parties named in the application was in order "to be fair to everybody". In view of my decision to decline leave to bring the appeal out of time, the request for joinder of the four entities in the application is otiose and must also be declined.Costs[28] The Commissioner is entitled to costs on these applications. Although noting that the leave application could be viewed as an attempt to relitigate historic matters, the Commissioner elected not to seek increased or indemnity costs but only costs on a 2B basis. Consequently I direct that the Commissioner shall have costs on a 2B basis.___________________________Brown JSolicitors:Luke Cunningham & Clere, Crown Solicitors, Wellington