official notice

decision of the commissioner of patents

Patent	:	No. 600312 in the name of Tivadar Foldi, Garbor Biro, Tamas Barna, Imre Nagy, Laszlo Vincze and Oszkar Rihmer

Title	:	Lighting Apparatus

Action	:	Application for extension of time under section 223 to pay renewal fee

Decision	:	Issued             .

Abstract

Patentees postponed the payment of the renewal fee - instructed agent to pay fee before the grace period expired - error in agents computer system lead to it not appearing on the renewal list resulting in fee not being paid in the “grace period”.

Act of paying the renewal fee within the grace period under regulation 13.6(1) not a relevant act under section 223 - relevant act was to pay the renewal fee before the anniversary date - section 223 not available to extend the period of time.

Regulations amended in July 1995 - previous regulation 22.11(3) did not define the act of paying the renewal fee within the grace period as a prescribed act - as events of this case occurred before these amendments, patentee has accrued rights - extension of time granted - patent restored.

patents act 1990

decision of the commissioner of patents

Re:	Patent No. 600312  by Tivadar Foldi, Garbor Biro, Tamas Barna, Imre Nagy, Laszlo Vincze and Oszkar Rihmer
background
Tivadar Foldi, Garbor Biro, Tamas Barna, Imre Nagy, Laszlo Vincze and Oszkar Rihmer filed patent application No. 79583/87 on 13 October 1987.  This application was advertised accepted on 9 August 1990 and sealed as Patent No. 600312 on 15 January 1991.  The 7th year renewal fee which was due on 13 October 1994 was not paid by that date or within the extended period that regulation 13.6(3) provides (ie. by 13 April 1995, the “grace period) and the patent was subsequently advertised as ceased on 18 May 1995.

The patentees filed on 1 May 1995 an application for an extension of time under section 223 from 13 October 1994 to 2 May 1995 within which to pay the 7th year renewal fee.  The renewal fee was paid at the same time.  A statutory declaration by Nicholas Hedley was filed on 28 September 1995 in support of the extension of time application.

A delegate of the Commissioner considered the application and decided that the extension of time could not be granted.  The basis for this decision is that under section 223(11) and regulation 22.11(3) payment of the renewal fee within the grace period is not a “relevant act” under section 223(2) and therefore the “grace period” cannot be extended.  The delegate supported this decision  with the decision in Paracel Holdings Pty Ltd v Commissioner of Patents (1994) AIPC ¶91-053.   After a number of submissions put to the delegate, the patentees asked for a hearing which was held in Canberra on 17 December 1996.  Dr John McCann of Spruson & Ferguson appeared for the patentees.

Application for Extension

The statutory declaration by Nicholas Hedley, a Chartered Patent Agent and European Patent Attorney of Stephenson Harwood, London, filed in support of the application sets out the facts relating to this case.  From this it appears that Stephenson Harwood were responsible for payment of the renewals and sought instruction from Mr Gabor Biro (one of the patentees).  On 1 September 1994, Mr Biro informed Mr Hedley that he had insufficient funds to pay the fee but would contact him when funds were available.  Mr Hedley received no instructions from Mr Biro before the due date and so did not instruct the Australian agents responsible for this case, Spruson & Ferguson, to pay the renewal fee.

Spruson & Ferguson informed Stephenson Harwood in a letter dated 14 December 1994 “that the patent was no longer current”.  Mr Hedley then states that:

“It appears that a member of our staff misunderstood the contents of the 14 December letter and amended our computer records to show that the Patent was “dead”, that is no longer in force.”

In a letter of 14 February 1995, Mr Hedley received instruction from Gallic Shipping Limited, a licensee of the patentees, to pay the renewal fees on all the patents in the patentees’ portfolio except for a Japanese application.  However at the time of this letter, the parties had not signed a licence agreement, so Mr. Hedley decided to delay instructing payment of the renewal fees till then.  He received no news on the licence by 31 March 1995 and so decided to instruct payment of the renewal fees for the patentees' portfolio.  Mr Hedley got a print-out of this portfolio from Stephenson Harwood’s computer and sent out instructions based on this.  But:

“Because the Patent had been incorrectly marked as “Dead”, the computer did not include it in the print-out .......and so no instructions were sent to renew it.”

He became aware on 27 April 1995 that this patent had not been renewed and immediately gave instructions to restore the application.

Submissions

Dr McCann’s main submissions were as follows:

.	The provisions of section 223(11) and regulations 22.11(3) and 13.6(3) do not prevent the application of section 223(2) to the facts of the present case.

The Patents Act 1990 was written in plain English and so its meaning should be reasonably clear and not complex.  Therefore the provisions of the Act should be given a clear meaning and not a complex or convoluted one like that given by the delegate.  Consequently regulation 22.11(3) clearly means that if a renewal fee is not paid within the grace period, the prescribed period is not extended, and therefore regulation 22.11(3) cannot apply to make the act required to be done by the end of the grace period a prescribed one.  If it was the intention of the legislation to make it excluded from section 223 then it would have been explicitly stated.

Also the definition of what constitutes a “prescribed action” should be narrowly construed and any doubt should be resolved in favour of the patentee especially since it results in the taking away of the patentees’ rights.

.	The remaining conditions of section 223(2) have been satisfied

.	Nothing in the Act or Regulations can be interpreted to state that the “error or omission” must occur prior to the due renewal date for the provisions of section 223(2) to be available.

The terms “certain time” and “prescribed period” should be read as referring to different time periods and as such “certain time” includes the six month grace period.  And therefore section 223(2) is available as long as the relevant conditions are satisfied.

.	Extensions of time after the six month grace period are now permitted under the Patents Act 1990

.	The reasoning in Paracel supra relies on the wording of the Patents Act 1952 and is not good authority for cases under the 1990 Act

.	The Commissioner acted with undue haste in advertising that the patent had ceased

DECISION

The provisions of section 223 relevant to the present request for an extension of time are as follows: 

"(2) Where, because of: 
(a) an error or omission by the person concerned or by his or her agent or attorney; or 
(b) circumstances beyond the control of the person concerned; 
a relevant act that is required to be done within a certain time is not, or cannot be, done within that time, the Commissioner may, on application made by the person concerned in accordance with the regulations, extend the time for doing the act. 

(3) The time allowed for doing a relevant act may be extended, whether before or after that time has expired. 

(7) Where: 
(a) ... a patent ceases, because of a failure to do one or more relevant acts within the time allowed; and 
(b) the time for doing that act or those acts is extended; the ... patent must be treated as having been restored. 

(11) In this section: 
"relevant act" means an action (other than a prescribed action) in relation to a patent, a patent application, or any proceedings under this Act (other than court proceedings) ... ."

What is a “prescribed action” in section 223(11) is set out in regulation 22.11 of which the relevant provisions are:

"(3) For the purposes of the definition of “relevant act” in section 223(11) of the Act, each of the following actions is prescribed:

(b) paying a fee in a period that is extended because of ...... subregulation 13.6(3) (“time for payment of renewal fee for standard patents”)"

Regulation 13.6 sets out when renewal fees are to be paid:

"(1)  For the purposes of paragraph 143 (a) of the Act ("ceasing of patents"), ........ the period of 12 months ending at the end of an anniversary of the date of the patent (being an anniversary specified in column 2 of item 7 or 8 of Part 2 in Schedule 7) is prescribed for the payment of renewal fee. 
(3) Subject to subregulation (4), if a renewal fee is not paid in the period referred to in subregulation (1), but is paid within 6 months after the anniversary concerned, the prescribed period is extended to the day on which the fee is paid." 

When a renewal fee has not been paid and the patent ceases, Section 223(2) can be used to extend the period and under section 223(7) the patent would be treated as restored.  This is provided that an error or omission occurred or there were circumstances beyond the control of the patentee which caused the fee not to be paid.  Obviously, section 223 would not be needed to extend the time period if the fee was paid within the grace period.  It would however be needed if the grace period has already expired.  That is the situation in this particular case.  

Dr McCann has submitted that in this case an error or omission occurred, which lead to the fee not being paid in time.  It was not circumstances beyond the control of the patentees.  That error was the incorrect entry in Stephenson Harwood’s computer and that led to the renewal fee not being paid before the grace period expired on 13 April 1995.  I would agree with this.

However in considering whether an extension can be granted I have to consider whether, in the terms of section 223(2), this error or omission led to “a relevant act that is required to be done within a certain time” not being “done within that time ....”.  The question thus arises, is paying the renewal fee in the grace period a relevant act or is it a prescribed act which is excluded under section 223(11)?  To decide this I need to refer to regulations 22.11(3) and 13.6(3).  

Regulation 22.11(3)(b) states that the act of paying a fee within the time period extended under regulation 13.6(3) is a prescribed act.  Dr McCann submitted that this provision should be given its plain meaning and on this plain meaning:

“the period is only extended when the fee has been paid in the “grace” period.  The use of is extended in reg 22.11(3)(b) can therefore only mean that the definition of “relevant act” was only intended to apply retrospectively to the actual payment of the renewal fee within the prescribed period and the subsequent extension of the prescribed period for paying the renewal up to the date on which the renewal fee was paid and not to the requirement to pay the renewal period before the end of the grace period.”

Therefore, as I understand this argument, until a fee is paid in the grace period, the time period for paying the renewal fee has not been extended under regulation 13.6.(3) and so cannot be considered to be a prescribed period under regulation 22.11(3).  

I must say that I find this argument rather difficult to accept as I believe it leads to an absurd result.  Carried to its logical conclusion, this would mean that once the fee has been paid in the grace period, that act becomes a prescribed act which means that section 223 cannot apply.  But why would section 223 be needed anyway as there would be nothing to extend as the time period would have already been extended by regulation 13.6(3).  Giving regulation 22.11(3)(b) the interpretation that Dr McCann gives it would mean that this provision has no practical purpose.  Consequently I cannot accept this interpretation.  I consider that that the effect of section 223(11) and regulation 22.11(3)(b) is to make it clear that if a renewal fee is paid within 6 months after the period specified in regulation 13.6(1), regulation 13.6(3) immediately operates to extend the time period for payment to the exclusion of section 223 extension of time provisions.  That is that section 223 has no operation to the act or action of paying a renewal fee in the “grace period” since regulation 13.6(3) provides the necessary extension of the prescribed time.  (Section 223 is available once the “grace period” has expired, but any extension would have to be for extending the prescribed time and not for extending the “grace period”.)  Therefore in terms of  section 223, paying a renewal fee in the “grace period” is a prescribed act and thus not a relevant act to which section 223 (2) applies.

Dr McCann referred me to two articles of the Paris Convention; these being Articles 5bis(1):

 “A period of grace of not less than six months shall be allowed for the payment of the fees prescribed for the maintenance of industrial property rights .....”

and 5bis(2):

The countries of the Union shall have the right to provide for the restoration of patents which have lapsed by reason of non-payment of fees.”

He stated that extension of the grace period beyond six months would not be inconsistent with these articles.  Also the delegate’s decision is not consistent with these articles as it is not providing for a patent which has lapsed because the fee was not paid.  

I do not think that the Paris Convention really supports these arguments.  The Convention really only says that there is to be a grace period of at least six months and that countries have a right to provide for patents to be restored (ie. they can, but do not have to).  But it does not necessarily follow that a patent must be able to be restored simply on the basis that the fee was not paid in the grace period. Indeed the purpose of the period of grace was to provide an extension of time to pay the maintenance fee if this was somehow overlooked or missed.  This is particularly important given that failure to pay a fee on time means that rights are lost, possibly forever.  While it is an extension which requires no justification, it is not for the purpose of postponing the payment of the fees.  Consequently, the view that a patent could only be restored if the failure to pay the fee occurred because of some error before the due date and not some time within the grace period would be consistent with the intentions of the Paris Convention.

In relation to the meaning of the term “certain time”, Dr McCann submitted that there was no definition of this term anywhere in the legislation.  He also submitted that it must have a different meaning to “prescribed time”.  I do not think that much hangs off this issue considering that I have decided that paying a renewal fee within the grace period is not a “relevant act”.  However I feel it warrants some comment.  While I agree that there is no definition for “certain time”, I consider that its meaning has to relate to what the relevant act is to which section 223 is being applied.  So whatever the relevant act is, “certain time” means the time specified under the legislation for doing that “relevant act”.  So for this case, as the “relevant act” was the payment of the renewal fee, the “certain time” for doing this has to be the prescribed time set out in regulation 13.6(1).

Considering the interpretation that I have given to regulation 22.11(3) and to the term “certain time”, I consider that the decision of Paracel supra is still relevant.  Despite the difference in wording between the Patents Act 1952 and the Patents Act 1990, I consider that the overall effect of the respective provisions in relation to the grace period to be the same.  While I agree to some extent with Dr McCann that the decision of the Paracel supra has not been followed in any decisions under section 223, this is because the situation at issue here has not arisen in any of these decisions.

Dr McCann referred me to two decisions, Reilly v Commissioner of Patents (1996) AIPC ¶91-217  36 IPR 314 and Sanyo Electric Co Ltd v Commissioner of Patents (1996) AIPC ¶91-283, 36IPR 470, to support this application.  I do not believe that either case gives much assistance here.  in Reilly supra, the question of about whether paying a renewal fee was a relevant act or a prescribed act was not a major issue of the case and was not really decided upon.  In Sanyo supra, the main issue was the question of undue delay mainly in regard to why it took so long for the patentee to become aware of the patent ceasing and in finding out why it had ceased.  Again the issue of whether paying the renewal fee was a prescribed act or not was not decided upon.  

Dr McCann also submitted that nothing in the Act or Regulations can be interpreted to state that the “error or omission” must occur prior to the due renewal date for the provisions of section 223(2) to be available and the extensions of time after the six month grace period are now permitted under the Patents Act 1990.  In response to this I have to say that on a plain construction of the phrase in section 223(2) “......is not, or cannot be, done within that time......”, the error or omission must have occurred prior to the “certain time” for doing the relevant act.  In a case like this, before the due date for paying the renewal fee.  Furthermore while I agree that the extensions of time for more than six months are possible under the legislation, it does not necessarily follow that an extension of the “grace period” is possible.

Before summing up, I consider that I should make some comment on Dr McCann’s submission that the Patent Office acted with great haste in advertising the ceasing of the patent even though an application for restoration had been filed.  He argued that this left the delegate with no option but to reject the extension.  I should firstly state that regulation 13.6(5) requires the Commissioner to publish a notice in the Official Journal when a patent ceases.  So what happened here was normal office practice and there was nothing peculiar to this case.  The office normally waits until the grace period has expired, and if the renewal fee has not been paid, it then advertises the fact that the patent has ceased.  It should be noted that this patent ceased on 13 October 1994, not 13 April 1995.  Furthermore, the fact remains that the patent had ceased regardless of whether an application for restoration has been filed, and remains so until restoration has been granted.  The office was merely fulfilling its obligation of keeping the public informed about the current status of patents and patent applications.  Consequently, I reject the contention that the Office acted with undue haste in this matter.  I also disagree that the delegate was locked into a position on the basis that the patent had been advertised as ceased.  I find no basis for this argument as the delegate appears to me to have considered the application on its merits.

So to sum up, I consider that the act of paying a renewal fee in the grace period is a prescribed act, not a relevant act.  The relevant act that had to be done was to pay the renewal fee before the expiry of the prescribed period ie. 13 October 1994.  An error or omission did occur, but this happened after this date and so did not cause the renewal payment not to be made by the prescribed date.  Consequently, section 223 cannot apply.

Having decided that, I should state that I have reached this conclusion based on the legislation as it is now.  However at the hearing I raised the issue of accrued rights that the patentees may have.  I mentioned that when the 1991 Regulations were introduced, regulation 22.11(3) referred to regulation 13.6(4).  It made no reference to regulation 13.6(3).  Regulation 22.11(3) was amended in July 1995 in accordance with the Patents Regulations (Amendment) Statutory Rules 1995 No 82 and the overall effect was to insert the reference to regulation 13.6(3) and delete regulation 13.6(4).  (Regulation 13.6(4) was deleted due to the introduction of the 20 year patent term introduced by the Patents (World Trade Organization Amendments) Act 1994).  And so, as regulation 22.11(3) did not refer to regulation 13.6(3), the act of paying the renewal fee within the grace period can be consider to be a “relevant act”, rather than a “prescribed act”.

The events that occurred in relation to this patent, happened before these amendments were made.  Even the application for an extension was made before these amendments came into effect.  As a consequence of this arrangement, at the time the error was made, the act of paying the renewal fee in the “grace period” was not a prescribed act.  Referring to section 8(c) of the Act Interpretation Act 1901, it states that 

“Where an Act repeals in the whole or in part a former Act, then unless the contrary intention appears the repeal shall not:

	(c)	affect any right, privilege, obligation or liability acquired, accrued or incurred 	under any Act so repealed”

Consequently, when there is a change in legislation, a person retains the rights which they accrued from the previously existing legislation.  I consider that to be the case here. 

Therefore, I consider that as at the time these events occurred, paying the renewal fee within the “grace period” was a relevant act, then section 223(2) can be applied.  The “certain time” for making this payment was by 13 April 1995 ie. 6 months after the anniversary date.  I agree with Dr McCann that the error in the computer record resulted in the fee not being paid by this due date and it is clear that the patentee (or more specifically the licensee) wanted the fee paid by that date.  Consequently, I consider that an extension of time from the end of the “grace period” can be granted.

Summary

Under the current legislation, the act of paying a renewal fee with in the grace period is a prescribed act and one that is excluded from section 223(3).  Therefore an extension could not be granted.  But at the time of the circumstances of this case, such an act was not a prescribed act and so section 223(3) would have been available to extend the time period.  And so the relevant act that had to be done by a certain time was the paying of the renewal fee before 13 April 1995.  An error occurred which lead to the wrong data being put into the computer system and it was this error which prevented the fee being paid by the due date.  I therefore grant an extension of time from 13 April 1995 to 2 May 1995, and as a consequence, under section 223(7) the patent is restored.

Leo J. O’Keeffe
Acting Commissioner of Patents

Patent attorneys for the patentees  : Spruson & Ferguson, Sydney