Judge Allows Patent Divisional Deadline Reprieve But Legislative Change Preferable
A recent High Court decision provides some hope to applicant’s who seek to correct an error when their patent application missed a deadline due to no fault of their own.
In NXT Building System Pty Ltd v Commissioner of Patents 2024 NZHC 2141 the High Court Judge allowed NXT’s appeal of an Assistant Commissioner’s decision which had refused NXT’s request to correct their Australian attorneys’ error of not requesting postponement of acceptance of a New Zealand PCT national phase application, which resulted in the inability to file divisional applications.
Background: For a fuller discussion of the background and the Assistant Commissioner’s (AC’s) decision (NXT Building System Pty Ltd 2023 NZIPOPAT 15) please see our earlier article: Divisional Deadlines Still Between a Rock and a Hard Place. For present purposes the following background details provide context for the Judge’s decision.
Section 34 of the Patents Act 2013 requires divisional applications to be made prior to acceptance of the parent application. It is possible to postpone acceptance by up to 12-months from the date of the first examination report, and it is considered good practice to request postponement of acceptance when filing a patent application, in order to prevent the option of filing a divisional application being foreclosed by the issuing of a Notice of Acceptance. A further factor requiring early consideration is regulation 71(a) of the Patents Regulations 2014, which creates a five-year deadline to request examination of both the parent application and any related divisional applications.
On the 7 April 2015 NXT filed a PCT application that claimed priority from six Australian provisional applications filed 12-months earlier. It was always NXT’s intention after entering PCT national phase in its selected jurisdictions to protect all six inventions by filing five divisional applications in each jurisdiction. The application entered national phase in New Zealand as patent application 726018, but a request for postponement of acceptance was not filed. The 5-year deadline for requesting examination of application 726018 and any divisional applications was 7 April 2020. A request for examination of 726018 was filed on 13 February 2020, but no request for postponement of acceptance was filed at that time either. When application 726018 was accepted on 15 March 2022 no divisional applications had been filed and the option for filing any divisional applications was no longer available since a Notice of Acceptance had been issued and no request had previously been made to postpone acceptance.
It was only following acceptance of application 726018 that the responsible attorney realised the issue, and, on 30 March 2022, filed five divisional applications and sought an extension of time for filing the requests for examination, on the basis of exceptional circumstance under regulation 147. IPONZ declined the extension of time request. A correction of error under section 202 was then sought on the basis that there was an error or omission in not requesting a 12-month postponement of acceptance.
AC’s Decision: The AC accepted that the failure to request postponement of acceptance was an error or omission. However, the AC declined to exercise their discretion to allow correction of the error on the basis that doing so would bypass or nullify the regulation 83(2) requirement that the Commissioner must be notified of a request to postpone acceptance under section 75(1) before the application is accepted. The AC distinguished previous section 202 postponement of acceptance decisions where the correction of error requests were allowed from the scenario in question, on the basis that in the prior decisions the correction of error requests were made before acceptance.
Although not required to do so, the AC went on to consider if the extension of time under regulation 147 would have been granted had the application for correction of error been allowed. The AC accepted that the evidence showed the failure to request examination was due to a combination of circumstances that qualify as unusual or exceptional for regulation 147 purposes. While those circumstances involved the attorney failing to act with due diligence and prudence the AC found that such failure did not preclude the discretion to allow an extension of time under regulation 147.
Judge’s Decision: The Judge allowed the appeal, emphasising that the focus should be on the consequences of making the decision having regard to the purposes of the Act, including the effect on the interests of the patent holder, any impact on the interests of third parties, and the potential effect on maintaining an efficient and effective patent system.
The Judge found that the balance of competing interests favoured correction, namely because: NXT’s clear intentions were not carried out by its attorneys with the result that, if the error was not corrected, they would lose valuable property rights; NXT and its attorney acted quickly when they discovered the error; there was no prejudice to third parties if the correction was made, and in any event, any potential prejudice to third parties could be cured by requiring publication of the proposed correction pursuant to s 202(3); there had been no other non-compliance with the legislative requirements; while the degree of the non-compliance with legislative requirements might be a relevant factor, it was not a material or decisive factor in this case when considered in isolation from the conduct that led to the errors.
The Judge did not accept the Commissioner’s finding that the degree to which the applicant or its agents are at fault is an irrelevant consideration, because too readily correcting errors when attorneys do not have reasonable systems in place, or have otherwise acted incompetently, could undermine the statutory purpose of providing an efficient and effective patent system. The Judge stated that applicants and their attorneys should be incentivised to ensure that they invest in and maintain reasonable systems and instruct and employ competent practitioners. However, in this case, there were extreme personal circumstances that led to the attorney’s error, hence this factor did not outweigh the other matters that favoured correction of the error.
Concluding Remarks: The Judge’s findings will be welcomed by patent applicants, and patent practitioners alike. As discussed in our previous article, New Zealand’s legislation regarding the filing of divisional patent applications is out of step with other jurisdictions and presents difficulties for both patent applicants and practitioners, that can have significant impacts on important property rights if things go wrong. While this decision provides a welcome step in the right direction, ultimately, legislative and/or IPONZ policy changes need to be considered in order to more properly safeguard the rights of patent applicants.
Authors: Quinn Miller and Sally Paterson
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