Kaiser Aluminum & Chemical Corporation v Reynolds Metal Co [1969] HCA 7; (1969) 120 CLR 136 (14 March 1969)

HIGH COURT OF AUSTRALIA

KAISER ALUMINUM & CHEMICAL CORPORATION V. REYNOLDS METAL CO. [1969] HCA 7; (1969) 120 CLR 136

Patents

High Court of Australia
Kitto J.(1)

CATCHWORDS

Patents - Application - Opposition - Locus standi of opponent - Person interested - Financial interest of holding company whose subsidiary is a person interested - Practice - Sufficiency of notice of opposition - Whether notice must state all relevant facts as to interest - Patents Act 1952-1966 (Cth), ss. 59, 60 (5)* - Patents Regulations, reg. 20.

HEARING

Melbourne, 1969, February 27, 28; March 14. 14:3:1969
APPEAL under s. 60 (5) of the Patents Act 1952-1966 (Cth).

DECISION

March 14.
KITTO J. delivered the following written judgment:-
This is an appeal under s. 60 (5) of the Patents Act 1952-1966 (Cth) against application for a patent and directing that the application proceed to grant. The patent applied for was for an invention relating to refractory linings for electrolytic cells used for the reduction of alumina in the production of aluminum. (at p138)

2. The opposition was initiated by a notice dated 2nd November 1966 containing seven grounds of opposition followed by a statement in these terms:-

"Our interest is based upon the following facts:
We are manufacturers of refractories and we believe that the grant
of letters patent in respect of the instant application will be
detrimental to our future interests in the Commonwealth of
Australia." (at p138)

3. No other facts were stated from which it might be concluded that the opponent had an interest entitling it to oppose the application. Each party lodged declarations in support of its case. The opponent notified the Deputy Commissioner that it was not desirous of being heard and the Deputy Commissioner heard the matter of the opposition in the presence only of a representative of the applicant. The material relevant to the question of locus standi consisted only of the statement in the notice of opposition, for the declarations dealt only with the substance of the opponent's case. The applicant's representative took the point that the opponent had not shown a locus standi, there being nothing to show that the opponent was manufacturing refractories in Australia or had exported any of its goods to Australia or had any definite intention of manufacturing or selling them in Australia. (at p138)

4. The Deputy Commissioner upheld the point, and he was plainly right. He quoted the well-known statement of Lord Buckmaster as Solicitor-General, in New Things Ltd.'s Application (1913) 31 RPC 45, at p 46 , that an interest to oppose a patent application "must be a real, definite, and substantial interest, and must not arise from something that the opponent proposes to do". The second half of this passage is only one particular way of stating the converse of the rule expressed in the first half : Clavel's Application (1928) 45 RPC 222, at p 224 As the Comptroller-General in England had laid down earlier, there must be reasonable grounds for apprehending that the grant of patent rights to the applicant would be "immediately or directly prejudicial to the interests of the opponent" at the time when the opposition is heard : Notes of Rulings, 1912 (B) and (C) (1912) 29 RPC, App No 22, pp v to viii See Lufft v. Weiss [1946] HCA 40; (1946) 73 CLR 119 On the material before the Deputy Commissioner in the present case it could not properly have been held that the opponent had any interest in this sense. (at p138)

5. The decision was given on 1st April 1968. On 19th April 1968 the opponent filed a notice of appeal in this Court. On 30th May 1968 it delivered at the Patent Office a written request that the notice of opposition be amended, "to clearly establish our locus standi as opponents in this matter", by striking out the statement originally included as stating the facts upon which its interest was based and substituting the following:

"We are manufacturers of refractories, are the proprietors of
Australian patents 244,198 and 269,790, hold a fifty per cent
interest in Comalco Industries Pty. Limited, aluminium fabricators,
a fifty-two per cent interest in Queensland Alumina Limited,
Aluminium manufacturers, and all the issued shares but one of Kaiser
Refractories Pty. Limited, refractory manufacturers, all being
companies duly registered in Australia, and we believe that the
grant of letters patent in respect of the instant application will
be detrimental to our present and future interests in the
Commonwealth of Australia."

The Patent Office very properly declined to proceed with this application to amend, giving as the reason the pendency of the appeal to this Court. (at p139)

6. The appeal has been brought to a hearing on affidavits which do not show that the appellant, the opponent, is in fact a manufacturer of refractories, even abroad. But they show that the appellant holds substantial numbers of shares in the Australian companies mentioned in the proposed amendment of the notice of opposition. These companies I shall call respectively Comalco, Queensland Alumina and Kaiser Refractories. The affidavits show also that the appellant is the applicant in patent applications bearing the numbers mentioned in the proposed amendment ; but counsel for the appellant concedes that the exploitation of the inventions to which these applications relate will not be prejudicially affected if the respondent's application for a patent be granted, and therefore I need not consider this aspect of the case. All I have to consider is whether the appellant's shareholding interests above referred to are sufficient to give the appellant an interest to oppose the grant, and, if so, whether the appellant is entitled to rely upon them after having omitted to mention them in its original notice of opposition or in any of the material it placed before the Deputy Commissioner. The facts appearing from the affidavits in relation to the shareholdings are as follows. (at p139)

7. Comalco "and its subsidiary companies between them" manufacture and sell aluminium products, from the mining and processing of bauxite to the manufacture and selling of aluminium and aluminium semi-fabrications. On the date of the notice of opposition the appellant held and still holds all the issued B shares, namely 15,000, another company holding all the issued A and C shares, namely 15,000. (at p140)

8. Queensland Alumina Limited processes bauxite to produce alumina. At the date of the notice of opposition its issued share capital was 1,350,025 shares of $2 each, divided into four classes. The appellant then held one share in class A, and a wholly-owned subsidiary of the appellant held the remainder of the issued shares of that class namely 702,012, the appellant thus holding or controlling fifty per cent of the issued capital of Queensland Alumina. (at p140)

9. Kaiser Refractories manufactures, and has manufactured at least since July 1966, refractory products including refractory linings of the kind used in alumina reduction cells and smelting furnaces. On the date of the notice of opposition the appellant held, and still holds, all but one of the 5,000 issued shares in Kaiser Refractories. (at p140)

10. For present purposes it will suffice to consider Kaiser Refractories. That company undoubtedly had, as a manufacturer, an interest which would have entitled it to oppose the respondent's patent application. Any prejudicial effect which the granting of the patent might have upon its business would be financially as significant for the appellant as if that business were the appellant's. In a sense it may be said that that effect would not be "immediately or directly" prejudicial to the appellant, but only derivatively or consequentially. But that, I think, is not the sense in which the words above quoted from the Comptroller-General's Notes of Rulings should be understood. A case which illustrates the proper application of the words arose in Lufft v. Weiss [1946] HCA 40; (1946) 73 CLR 119 , where a majority of this Court held that a firm selling rotary intaglio printing presses in Australia on commission as agent for a foreign manufacturer had no sufficient interest to entitle it to oppose the grant of a patent relating to that type of printing presses. But that was because the firm's interest was not shown by the evidence to consist of more than a not unreasonable hope, based upon two isolated transactions in the preceding thirty years, of earning commission by future sales : see per Latham C.J. (1946) 73 CLR, at p 123 and per Dixon J. (1946) 73 CLR, at p 127 In the earlier case of Australian Radio Manufacturers' Patents Association Ltd. v. Neutrodyne Pty. Ltd. [1937] HCA 86; (1937) 57 CLR 27 the Court held that a company was not a competent opponent merely because its shareholders held patents in the field to which the applicant's invention related and it had been formed to protect their interests on their behalf. (at p141)

11. Neither of these decisions seems to me to touch the present problem. Anything that adversely affects the business prospects of a company necessarily affects the financial interests of the company's shareholders. For that reason the view has been taken in the Patent Office in England that the financial interest of a holding company in its wholly-owned subsidiary suffices to entitle the holding company to oppose the grant of a patent which the subsidiary might have opposed : Badische Anilin & Sodafabrik AG.'s Application (1963) RPC 19 This has been extended to a case where the opponent had a two-thirds interest in a manufacturing company which itself was a competent opponent : Continental Oil Company's Application (1963) RPC 32 Whether a comparatively small shareholding in a large company should likewise be held to give the requisite interest may be a question of degree, but I have not to consider it in this case since Kaiser Refractories is the appellant's wholly-owned subsidiary. The view adopted in the Badische Anilin Case (1963) RPC 19 seems to me to be the common-sense view upon what is, on the authorities as I read them, not a technical legal question but a practical question which it is a mistake to attempt to answer by confining the expression "a person interested" in s. 59 to cases falling within rigid categories. Early attempts to restrict the relevant kind of interest to an interest as a holder of patents or a manufacturing interest had to be departed from in order to admit a trading interest. These classes of interests, however, are but illustrations. Lord Buckmaster's general proposition goes, in my opinion, as far as it is legitimate to go towards defining the interest which the legislature has chosen to leave without express definition. In my opinion the decision in the Badische Anilin Case correctly applies that proposition. (at p141)

12. The respondent, however, contends that even if the appellant has such an interest as makes it a competent opponent, the evidence which establishes the interest is inadmissible because the notice of opposition did not state the relevant facts. An analogy was suggested between a notice of opposition under the Patents Act and a notice of objection to an assessment under the Income Tax Assessment Act 1936 (Cth). In my opinion there is no such analogy, for the former Act contains no provision corresponding with s. 190 (a) of the latter. The argument against admitting the evidence rests upon reg. 20 of the Patents Regulations, which provides that a notice of opposition to the grant of a patent shall be in accordance with form 12. That form contains the words "My interest in this matter is based on the following facts : - " ; but there is nothing in the Act or the Regulations to make a statement of facts sufficient to give a locus standi a condition precedent to the right of objection or the right of appeal. On the contrary, s. 59 gives "a person interested" an unqualified right to oppose the grant of the patent by notice in writing lodged at the Patent Office. Regulation 20 would, I think, be inconsistent with the Act and therefore beyond the regulation-making power in s. 177 if it meant that unless form 12 were complied with to the extent of stating the facts upon which the opponent's interest depends a person in fact interested should not be entitled to oppose the grant by lodging the notice. The terms of s. 59 by which the right of opposition is limited to a right to oppose "by notice in writing lodged at the Patent Office" require no more for a valid opposition than what Evatt J. called "a de facto notice" ; R. v. Commissioner of Patents ; Ex parte Weiss [1939] HCA 7; (1939) 61 CLR 240, at p 261 The provision in form 12 for stating the facts as to interest is to be understood, in my opinion, as directory only, with the result that the absence of the statement does not make the notice something less than a notice of opposition, whatever may be the effect as regards costs. (at p142)

13. 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) 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 reasons above stated I am satisfied that the appellant has a locus standi to oppose the grant of a patent. (at p143)

14. The respondent contended that the power to admit further evidence implies a discretion, and that I should exercise the discretion by refusing to allow the appellant to depart from the notice of opposition and to make here a case which it did not choose to make before the Deputy Commissioner. In my opinion, however, it is in the public interest that a serious opposition by a person entitled in fact to oppose the grant of a patent should be dealt with on the merits, rather than that it should be shut out in consequence of a failure in procedure, lamentable though the failure may be. I was referred to the principles upon which applications for leave to give further evidence are dealt with in England : see Brownie Wireless Co.'s Application (1928) 46 RPC 457, at p 461 ; Toyo Tsushinki Kabushiki Kaisha's Application (1962) RPC 9 Rule 7 of the Patent Appeal Tribunal Rules in England, however, excludes further evidence on appeal, except with the leave of the Appeal Tribunal. In Australia there is not, and constitutionally there could not be, such a rule, and the English principles are, in my opinion, inapplicable. (at p143)

15. This leaves a question of costs. When both parties had closed their cases and the addresses were almost completed, the appellant's counsel found himself under a necessity of applying for leave to adduce further evidence. Very properly he undertook to abide by an order that the appellant pay the respondent's costs of the appeal up to that time. As no further hearing has been necessary there cannot be any significant difference between those costs and the whole costs of the appeal. Even without the undertaking I should have been disposed to order the appellant to pay the costs, for if the notice of opposition and the material before the Deputy Commissioner had been prepared as they should have been the appeal would have been unnecessary. (at p143)

16. Both parties have asked that if I should be in favour of the appellant on the question of locus standi I should remit the case to be decided on the merits in the Patent Office. I agree that that is the right course to adopt, for if this Court is to decide the merits of the opposition it should have the benefit of the opinion of the Commissioner or Deputy Commissioner. (at p143)

17. The order I shall make is that the appeal be allowed ; that the Deputy Commissioner's dismissal of the opposition and his direction that the application proceed to grant be set aside ; that the matter of the opposition be remitted to the Commissioner to be decided ; and that the appellant pay the respondent's costs of the appeal. The Deputy Commissioner's award of costs against the opponent will stand. (at p144)

ORDER

Appeal dismissed. Order that Deputy Commissioner's dismissal of opposition and direction that application proceed to grant be set aside ; that opposition be remitted to Commissioner ; that appellant pay respondent's costs of appeal. Deputy Commissioner's award of costs against opponent to stand.