Re Acushnet Company v Spalding Australia Proprietary Limited [1989] FCA 509; 17 IPR 136 23 FCR 201/(1990) Aipc Para 90-719 (14 December 1989)

FEDERAL COURT OF AUSTRALIA

Re: ACUSHNET COMPANY
And: SPALDING AUSTRALIA PROPRIETARY LIMITED
No. V G 298 of 1989
FED No. 768
Practice and Procedure
[1989] FCA 509; 17 IPR 136
23 FCR 201/(1990) AIPC para 90-719

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)

CATCHWORDS

Practice and Procedure - Intellectual Property - appeal to Federal Court from decision of Commissioner of Patents - Federal Court exercising original jurisdiction - Applicant, applicant in opposition proceedings before Commissioner - Respondent, opponent - evidence at hearing to be by way of affidavit - question as to which party should file its affidavits first.

Patents Act 1952 sections 34, 59, 60, 99, 100, 103, 105, 150

Federal Court Rules O.54B

HEARING

MELBOURNE
14:12:1989

Counsel for Applicant : Dr J. Emmerson, Q.C. with Mr Clarke

Solicitors for Applicant : Davies Ryan De Boos

Counsel for Respondent : Mr J. Middleton

Solicitors for Respondent : Arthur Robinson & Hedderwicks

DECISION

On 28 November 1989, at the first directions hearing in this proceeding, a short but important issue of practice and procedure arose with respect to the order in which affidavits should be filed. After hearing submissions the Court made the necessary directions and announced it would publish its reasons at a later date. Those reasons are now published.

2. By application issued on 3 October 1989, the applicant appealed from the whole of the decision of the Commissioner of Patents (by his delegate the Acting Commissioner of Patents, Mr J.L. Rovita); ("the Commissioner") given in Opposition on 13 September 1989 whereby it was decided that the claims of the applicant's Australian Patent Application No. 533145 entitled "Golf Ball With Fluorescent Cover" were not novel or were obvious and did not involve an inventive step. The effect of this decision was that the applicant's application for a patent was refused. By the same decision, the Commissioner ordered that the applicant be allowed 30 days to propose amendments to its claim. The respondent had opposed the application for a patent.

3. By notice of cross-appeal filed 24 October 1989 the respondent is seeking a discharge of that part of the decision of the Commissioner allowing amendments to the applicant's claim.

4. The appeal and the cross appeal were brought in the Federal Court pursuant to s.60 of the Patents Act 1952. Although the proceeding is called an appeal, it is within the original jurisdiction of the Federal Court. Under O.54B r.4 of the Federal Court Rules, the appeal was instituted by the filing of an application and was not accompanied by a statement of claim or affidavit. Order 54B r.4(g) requires the application to be served upon the Commissioner and upon persons directly affected by the appeal. Thus the application was served upon the respondent. Under O.54B r.2 the provisions of the other Orders of the Federal Court Rules "apply, so far as practicable" to this proceeding. Under O.54B r.6, the application must specify a date for a directions hearing. Rule 7 is set out in full:-
"7.(1) At the directions hearing referred to in

subrule 6(2), the Court may give directions as to
the giving of further evidence at the hearing
pursuant to s.150(b) of the Patents Act.
(2) Evidence in proceedings before the
Commissioner shall, with the leave of the Court,
and saving all just exceptions, be admissible in
evidence on the hearing by the Court of an appeal
to which this Division applies."

5. Section 150 of the Patents Act confers powers on the Federal Court when hearing an appeal from a decision of the Commissioner. Among the powers so conferred are the powers to:-

"(b) admit further evidence, either orally or upon
affidavit or otherwise;
(c) ...
(e) affirm, reverse or modify the decision or
direction appealed from;
(f) give such judgment, or make such order, as in
all the circumstances it thinks fit, or
refuse to make an order; and
(g) ...".

6. It should be noted that under O.54B r.5(3) the Commissioner is required to forward to the appropriate Registry of the Court" any documents in the Commissioner's possession (or certified copies thereof) which are necessary for the hearing of the proceedings in the Court, together with a list of the documents". Rule 7(2) must be read in conjunction with that requirement.

7. In the present proceeding, the parties were in agreement that evidence at the hearing should be by way of affidavit, but disputed the order in which the affidavits should be filed. Counsel for the applicant contended that the respondent should file all its affidavits first and thereafter the applicant should file its affidavits.

8. In order to resolve this issue, it is necessary to make a brief reference to a number of the provisions of the Patents Act.

9. Under s.34, a person coming within one of the specified groups, may make an application for a patent. The method of making the application is prescribed by the Patents Act the Patents Regulations. The application is examined by a patent officer who reports to the Commissioner as to whether or not the application is allowable. If it is allowable, the application is advertised in the Official Journal as having been accepted. Under s.59, the Minister or a person interested may, within a specified time, "by notice in writing lodged at the Patent Office, oppose the grant of the patent on one or more of" specified grounds "but on no other ground". Among the specified grounds are the following:-

"(g) that the invention, so far as claimed in any
claim, was obvious and did not involve an
inventive step, having regard to what was
known or used in Australia on or before the
priority date of that claim;
(h) that the invention, so far as claimed in any
claim, was, before the priority date of that
claim, otherwise not novel in Australia; and
(i) ...".

10. A reference to the notice of appeal in this proceeding illustrates why these two grounds are relevant for present purposes.

11. Section 60 prescribes what is to happen when a notice of opposition is given. The relevant parts of that section are set out:-

"60(1) Where a notice of opposition is given under
section 59, the opponent shall serve a copy of the
notice on the applicant, and the Commissioner
shall, after hearing the applicant and the
opponent, if desirous of being heard, decide the
case.
(2) In so deciding the case the Commissioner
may take into account a ground of opposition
specified in section 59 whether relied upon by the
opponent or not.
(3) ...
(5) The applicant, and an opponent who, in the
opinion of the Federal Court is entitled to be
heard in opposition to the grant, may appeal to the
Federal Court from a decision of the Commissioner
under this section."

12. In order to complete this overview, it should be noted that the initial grant of a patent is not final and conclusive. Under Part XI of the Patents Act a prescribed court has jurisdiction to revoke a patent, see s.103. A patent may be revoked on one or more of the grounds specified in sub-section 100(1) "but no other ground". The specified grounds include a number of the grounds specified in sub-section 59(1) but in addition a number of additional grounds are specified. The claim for revocation may be initiated by any person, see s.99, or may be raised by way of defence in an action for infringement of a patent, see s.105.

13. From this very brief reference to some aspects of the scheme of the Patents Act, it is apparent that the grant of a patent pursuant to the procedures specified under s.60, whether pursuant to a decision by the Commissioner or the Federal Court, is not finally definitive. In either case, a patent so granted may be revoked in proceedings under Part XI.

14. Having regard to the matters discussed, two related conclusions can be drawn, neither of which was disputed by the parties. First, an appeal to the Federal Court under sub-section 60(5), although called an appeal, is within the original jurisdiction of the Court. The proceeding is to be heard and determined by the Federal Court on material properly before it being evidence led by the parties to the proceeding. The proceeding is to proceed as a hearing de novo. Second, in exercising its jurisdiction the Court is required to exercise the judicial power of the Commonwealth but in so doing exercise the powers conferred by s.150 of the Patents Act. Under sub-section 60(1), the Commission is required to "decide the case" in the opposition proceedings but under sub-section 60(2) may take into account a ground of opposition in s.59 whether relied upon by the opponent or not. The powers of the Court are specified in s.150. It is not necessary to determine at this stage whether the Court has a power similar to that conferred upon the Commissioner of sub-section 60(2).

15. Counsel for the applicant contended that where in opposition proceedings under s.60, the Commissioner refused a patent and the applicant appealed to the Federal Court, the opponent in the proceedings before the Commissioner if, being a respondent to the appeal, opposed the appeal, carried the onus of proving any ground of opposition specified in s.59 which was relied upon in the appeal before the Federal Court. Counsel for the respondent disputed this contention.

16. Counsel for the applicant referred to a number of authorities of the High Court involving the issue of onus of proof in proceedings under the earlier Patents Act the provisions of which were, for present purposes, similar to sections 59, 60 and 150 of the Patents Act with the exception that appeals from the Commissioner were to be heard and determined by the High Court. In McGlashan v Rabett [1977] FCA 14; (1909) 9 CLR 223, the headnote states the substance of the judgment as follows:-

"Where an application for a patent is opposed on
the ground of want of novelty under sec.56 of the
Patents Act 1903, the onus is on the opponent to
establish that the patent, if granted, would be
clearly bad on that ground."

17. The principle was expressed by Griffith C.J. at p 228:-

"For these reasons I think that this Court, acting
upon the principle that it should not refuse to
allow the grant of a patent unless it is quite
clear that it cannot stand upon the ground of want
of novelty, should allow it. It by no means
follows that the patent will be valid when granted.
Upon all the materials before us it is impossible
to say that it has been proved affirmatively that
substantially the same combination has ever been in
use in the Commonwealth before, and upon that
ground I think that the patent should be granted,
without expressing any opinion as to the validity
of the patent when granted."

18. This paragraph expresses also the view that the decision on appeal is not final.

19. In the same case, Isaacs J. was even more explicit. At pp 229-30 he said:-

"I agree with the judgments delivered by my learned
brothers, and I do so upon this ground, that upon
this summary proceeding the onus lying upon the
objector is greater than it would be if the
validity of the patent were at issue in an ordinary
action for infringement."

20. In Stamp v. W.J. Powell Pty. Ltd. [1918] HCA 14; (1918) 24 CLR 339, the High Court expressed similar opinions. At p 343, in a judgment agreed in by Gavan Duffy and Rich JJ., Barton J. in speaking of the equivalent of an appeal under s.60 of the Patents Act by an applicant for a patent, said:-

In such a case it lies on the opponent to show the
patent if granted would be clearly bad on the
ground alleged. ...".

21. Henry Berry & Co. Pty. Ltd. v. Potter [1924] HCA 43; (1924) 35 CLR 132 was a similar case where an unsuccessful applicant for a patent appealed to the High Court under the equivalent of s.60 of the Patents Act. At p 138, Isaacs A.C.J. and Gavan Duffy J. said:-

"In our opinion, when the nature of the present
proceedings is considered, the respondents should
succeed, without anything amounting to a final
pronouncement by the Court as to the eventual
validity of the patent. The opposition under
sec.56 is a proceeding intended only to intercept a
patent which would be clearly invalid on one of the
grounds specified in the section (McGlashan v.
Rabett [1977] FCA 14; (1909) 9 CLR 223 and W.J. Powell Pty.
Ltd. [1918] HCA 14; (1918) 24 CLR 339. It has some resemblance
in principle to the summary proceedings under Order
XIV of the Supreme Court Rules. The issue for the
Court - as for the Commissioner - is whether for
the reasons specified the matter is so plain that
the application ought to be at once ended and not
left to the fuller consideration of more deliberate
examination. The law limits, not only the issue
and the grounds of objection, but also the persons
who are qualified at this stage to object (R.v.
Comptroller-General of Patents; Ex parte Tomlinson
(1899) 1 QB 909. A member of the public would
not have a locus standi merely because he was using
something which it is said would infringe the
patent for which application is made (In re New
Things Ltd. (1913) 31 RPC 45 at p 46, per Sir
Stanley Buckmaster S.-G."

22. Counsel referred also to Kaiser Aluminium & Chemical Corp. v. The Reynolds Metal Company [1969] HCA 7; (1969) 120 CLR 136. This was an appeal by an opponent to the grant of a patent and to that extent, is different from the earlier authorities. An issue was whether the opponent had standing to oppose and to appeal. At p 142 Kitto J. said:-

"The appeal is, of course, only an appeal in name.
In truth it is an original proceeding, being the
first judicial proceeding in the matter of the
opposition. The right of appeal is given to an
opponent who, in the opinion of the Appeal
Tribunal, "is entitled to be heard in opposition to
the grant", and a person who proves before the
Tribunal, as the appellant has proved in this case,
that he had an interest which entitled him to
oppose the grant of the patent and still has that
interest answers that description. The appeal is
therefore competent. It must be decided upon the
evidence adduced before this Court, even though
that evidence presents on the question of interest
a case completely different from the case which was
suggested before the Deputy Commissioner. This
appears to me to follow from the nature of the
jurisdiction under s.76(ii) of the Constitution as
to which see Federal Commissioner of Taxation v.
Lewis Berger & Sons (Australia) Ltd. [1927] HCA 11; (1927) 39
CLR 468, at p 469; Commissioner of Taxation v.
Finn [1960] HCA 69; (1960) 103 CLR 165, at pp 167, 168; and
indeed it appears from the general provision in
s.149 that upon the hearing of an appeal the Appeal
Tribunal may (inter alia) admit further evidence
and give such judgment or make such order as it
thinks fit in all the circumstances: cf. Jafferjee
v. Scarlett [1937] HCA 36; (1937) 57 CLR 115, at pp 119, 126.
For the reason above stated I am satisfied that the
appellant has a locus standi to oppose the grant of
a patent."

23. At p 143 Kitto J. said that the appeal be allowed, but the order as set out at p 144 says "Appeal Dismissed". This appears to be in error since other parts of the order appear to be inconsistent with a dismissal.

24. The other authorities referred to by counsel are consistent with the views expressed. Those authorities are named only; Broken Hill Pty. Co. Ltd. v. American Can Co. (1979) 29 ALR 424, an appeal by an opponent; Montecatini Edison S.p.A v. Eastman Kodak Co. 45 ALJR 593 an appeal by an opponent and Universal Oil Products Co. v. Monsanto Co. (1972) 46 ALJR 658; an appeal by an applicant for a patent.

25. Reference was made to R.D. Werner Co. Inc. v. Bailey Aluminium Products Pty. Ltd. (1987) 8 IPR 339. This was an appeal by an opponent and insofar as there is any inconsistency with the views expressed above, see p 361, that arises from different considerations that arise where an opponent appeals.

26. Counsel for the respondent contended that the normal procedures should be followed namely that the applicant, having the general burden of proof, should be required, as the first step, to file all the affidavits to be relied upon including affidavits directed to the grounds of opposition relied upon by the opponent at the hearing before the Commissioner. He referred to the grounds of appeal which are set out in the notice of appeal and which are directed to all the grounds of opposition relied upon by the opponent in the opposition proceeding before the Commissioner. The notice of appeal is in conformity with the form to the Federal Court Rules. However, at the hearing of the appeal it is for the respondent, who was an opponent before the Commissioner, to raise whichever grounds of opposition sought to be relied upon. I put to one side the case where on appeal the opponent does not seek to oppose the appeal or does not appear at the hearing of the appeal.

27. Having regard to the nature of the appeal, consideration should be given to an amendment of the rules to provide that where an applicant for a patent appeals to the Court from a decision by the Commissioner in favour of an opponent, the opponent, being a respondent to the appeal, should file and serve on the applicant a notice specifying which of the grounds specified in s.59 of the Patents Act are being raised by the respondent to the appeal. Such a procedure would make it clear that in such a case the opponent should then be required to file and serve any affidavits to be relied upon to support those grounds.

28. Counsel for the respondent referred to the practice in tax appeals where normally the taxpayer who appeals to the Court presents his case first. The directions given in this case are not meant to decide who presents his case first when the appeal comes on for hearing. The directions are made with respect to interlocutory matters pending hearing. Likewise, nothing said in these reasons is to be taken as expressing an opinion on who carries the burden of proof at the hearing of the appeal whether the overall burden on the shifting onus.

29. For these reasons, the directions given were designed to clarify the issues raised on the appeal. There are no pleadings. If a statement of claim was given, it could be expected that it would contain allegations of fact to support the conclusion that the application was in order and the patent should proceed to grant. Any defence could raise any of the grounds of opposition specified in s.59 of the Patents Act and no other ground. The applicant could reply thereto. There is no requirement that the parties file and serve contentions of fact and of law. The directions were designed to serve the purposes of identifying issues and providing evidence to support those issues.

30. The directions given herein are consistent with the practice and procedure prescribed by the Patents Regulations for proceedings in opposition cases under s.60 of the Patents Act. Regs. 55, 56 and 57 require the opponent to serve and lodge a copy of the declarations to be relied upon to support the opposition, the applicant to serve and lodge answering declarations and finally the opponent to file and serve declarations in reply.

31. The cross appeal is designed to arise if the applicant's appeal fails. The opponent is making the cross appeal. To some extent it is a contingent claim. In all the circumstances it is fair that the respondent should file its affidavits in support of the cross-claim before the applicant is required to file its answering affidavits.

32. The directions given relevant to the issues raised were:-

"1. The Applicant file and serve any affidavits
upon which it proposes to rely in support of
its application for the grant of the Patent,
excluding material directed to grounds of
opposition specified in Section 59 of the
Patents Act 1952, within 21 days.
2. The Respondent file and serve any affidavits
upon which it proposes to rely in opposition
to the grant of the Patent, including
material directed to grounds of opposition
specified in Section 59 of the Patents Act
1952 and material in support of its
Cross-Appeal dated 24th October 1989, by
20th March 1990.
3. The applicant file and serve any affidavits
in reply by 20th June, 1990.
4. If so desired the Respondent file any
affidavits in reply by 20th July, 1990."