Patent re-examination re-examined
VIP Plastic Packaging Pty Ltd v BMW Plastics Pty Ltd  FCA 593
On 2 June 2009, Justice Kenny of the Federal Court ruled on an application made by BMW Plastics Pty Ltd (“BMW”) seeking an order under Section 97(3) of the Patents Act that the Commissioner of Patents be directed to re-examine the specification of Australian Standard Patent No. 2001235262 owned by VIP Plastic Packaging Pty Ltd (“VIP”) (“the VIP Patent”). Justice Kenny refused to make the order sought by BMW.
Facts of the case
VIP had in August 2008 commenced proceedings against BMW for infringement of the VIP Patent. BMW, by way of its defence, denied infringement of the VIP Patent and cross-claimed, alleging that the VIP Patent was invalid, and sought orders that it be revoked.
Sub-section 98(1) of the Patents Act makes it clear that re-examination under section 97 is limited to the issues of novelty and obviousness. Sub-section 98(1) also makes it clear that, on a re-examination, the Commissioner must ”ascertain and report on … to the best of his or her knowledge”. Further, by virtue of sub-section 98(2), the Commissioner is limited to considering the prior art base as disclosed in documents.
Following an adverse report on a complete specification by the Commissioner, the patent applicant or patentee may, within two months of the adverse report, file a statement disputing the whole or any part of the report. Where the re-examination is directed under section 97(3), a copy of the Commissioner’s report and any statement filed by the patent applicant/patentee must be given to the Court that gave the direction.
The re-examination provisions were introduced into the Patents Act following the IPAC Report of 1984 which recommended the availability of reexamination ”so as to utilise the expertise in the Patent Office to decide appropriate questions in the hope that this may reduce the costs of, or in some cases avoid the need for, Court proceedings”.
The focus of BMW’s re-examination request was a single piece of prior art, a US Patent. VIP, for whom Davies Collison Cave acted, opposed BMW’s application which was filed in May 2009.
In support of its application, BMW submitted that the Court should order reexamination because the matters in issue were appropriate to be determined by the expertise of the Patent Office and the determination of these issues was likely to avoid significant expense.
To assist its application, BMW offered, at the hearing before Justice Kenny, an undertaking to the Court that it would not, in effect, challenge the Commissioner’s report if the report was not favourable to it. It sought an undertaking in similar terms from VIP, which VIP, for obvious reasons, declined to give.
In opposing BMW’s application, VIP submitted that a significant issue was that BMW, in its grounds of invalidity, had alleged that the VIP Patent was invalid not only on the grounds of lack of novelty and lack of inventive step but also various other grounds. This was significant because even if BMW did not challenge the Commissioner’s report, the other grounds of alleged invalidity would, in any event, have to be determined by the Court.
Further, VIP argued that when proceedings in relation to the patent in issue are pending, the Commissioner can only provide a report which may be of assistance to the parties, but ultimately ”it is up to the Court to determine the validity issue on the evidence before it and the Commissioner’s report does not in any way bind the Court” – see Besanko J’s comments in Termite Tite (NZ) No. 2 Ltd v Term-Seal (Aust) Pty Ltd (2007) 74 IPR 16. In effect, the Commissioner’s report could be no more than an advisory opinion of limited forensic value and, even if relied upon by the Court, would not preclude or obviate the need for evidence on the issues of novelty or inventiveness. The Court would still have to decide these questions assisted by expert evidence tested in the usual way. In the circumstances, VIP submitted that the Commissioner’s report would not result in any reduction of expense or avoidance of litigation.
Justice Kenny agreed with VIP that the Commissioner’s report after re-examination would not reduce the cost of the proceeding and expedite its determination. Firstly, in the Judge’s opinion, the Commissioner’s report is not binding on the Court and the Court would still have the task of deciding the issues of novelty and lack of inventive step by reference to admissible evidence. Further, regardless of the lack of novelty and inventive step grounds, there will be a need for evidence, including expert evidence, to be put before the Court on various other issues, particularly the other invalidity grounds of attack relied upon by BMW.
There was commentary after the Capral Aluminium Federal Court decision in 2004 (where a re-examination under section 97(3) of the Patents Act was directed), that reexamination could be used as a significant tactical weapon by respondents to patent infringement claims.
In light of Justice Kenny’s decision, one wonders whether a re-examination directed pursuant to section 97(3) of the Patents Act would ever be ordered by the Court, when an application for such a re-examination is opposed by the patentee. Significant costs will be incurred by the parties in the reexamination process and any adverse report will be disputed by the patentee. Further, the re-examination process will, in effect, stay the substantive proceeding. The parties’ costs will no doubt be duplicated when they prepare and file their evidence in the Court process. In these circumstances, and particularly when the Courts are promoting the cheaper and quicker disposition of patent disputes, as is made clear in the recent Federal Court Patent Procedures, it would be an anomalous decision if a Court directed a reexamination when such a course is opposed by the patentee.
A further issue arises if a re-examination is sought on the basis that a claim of a patent does not involve an inventive step. As was pointed out in The Commissioner of Patents v Emperor Sports Pty Ltd (2006) 225 ALR 407, evidence will generally be necessary to determine the issue and the Patent Office, in the absence of relevant evidence, will not be able to properly make an assessment whether a claimed invention lacks an inventive step, let alone determine what was the common general knowledge at the relevant priority date. In such circumstances, it would be unlikely that the Patent Office would ever report on a reexamination that a patent was invalid for lacking inventive step.
Accordingly, seeking a Court directed reexamination seems to offer little advantage to a respondent to a patent infringement proceeding, especially where the patentee opposes such a course, and particularly where the Court will probably make a costs order against the unsuccessful respondent.