Federal Court confirms the ‘protective and remedial’ operation of extension of time provisions

Nufarm Australia Ltd v Advanta Seeds Pty Ltd [2023] FCA 109

20 February 2023

Downes J

Highlight

In Nufarm’s appeal from the Administrative Appeals Tribunal (in turn on an application to have a decision of the Patent Office set aside) the Federal Court confirmed that the extension of time provisions for an error or omission (s223(2) of the Patents Act 1990 (Cth)) are “broadly protective and remedial” in operation, and granted Advanta an extension of time to renew its patent, despite multiple internal and external errors and oversights.

Background

Under its brand “Pacific Seeds”, Advanta Seeds Pty Ltd supplies seeds for crops including corn, forage, canola, sorghum and wheat.  The company holds more than 2300 patents relating to agricultural chemicals, seeds and seed technology.  The dispute relates to the late renewal of Advanta’s patent 2009304572 (the Patent), which was opposed by competitor Nufarm Australia Pty Ltd.

The Patent relates to a hybrid cell plant, and is of considerable commercial value to Advanta.  It was granted in January 2016, and renewed without issue until 2017, when the patent was not renewed by the due date, or within the six month grace period.  A number of issues contributed to the non-renewal, and in many ways, this was a perfect storm:

1. there were IP in-house personnel changes at Advanta in 2016, and while Spruson & Ferguson (the attorneys on the record appointed by Advanta in 2013) was informed of the new contact person within Advanta for renewals, it is unclear whether CPA (the third party agent appointed by Advanta’s previous attorneys to manage renewals) was also informed;
    
2. CPA sent hard copy notices (only) to former Advanta employees, but it did not (initially) follow up with Spruson & Ferguson, or (electronically) with Advanta; and
    
3. eventually, Spruson & Ferguson was contacted by CPA and reached out to Advanta, but directed its emails to a marketing email group and to the email addresses of 2 former employees, one closed and one not ‘manned’.

Within one week of realising the patent had not been renewed, Advanta applied for an extension of time under s 223(2) of the Patents Act 1990 (Cth) (Act) to pay the renewal fee.   The EOT application was opposed by Nufarm Australia Ltd both before the Patent Office and in Advanta’s application to the Administrative Appeals Tribunal (AAT) to have the decision set aside and for an extension of time to pay the 2017 renewal fee.  Here, on appeal from the AAT, Justice Downes affirmed the AAT’s decision to grant the extension of time.  Nufarm did not appeal further.

Key issues

Extensions of time

Section 223(2) of the Act grants the Commissioner of Patents discretion to grant an extension of time to pay a renewal fee where the failure to pay is due to either (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.

In its unsuccessful EOT application before the Patent Office, Advanta pointed to its failure to enter the details of the Patent into a new patent portfolio management system it implemented in 2017-2018 as the cause of the non-payment of the 2017 renewal fee.  While the Patent Office accepted an error occurred, it found Advanta had not established this was the cause of the non-payment.  Advanta did not seek to rely on this error before the AAT, which found that the causative error was Advanta’s failure to instruct CPA to pay the fee, granting Advanta an extension of 28 days from the date of the AAT decision to make the payment.  Nufarm appealed to the Federal Court.

Questions of law on appeal from AAT

Appeals from the AAT must be limited to questions of law, and the precision of the question of law is important to the efficient resolution of the dispute.

Nufarm’s Notice of Appeal raised the following questions of law:

1. Can Advanta’s failure to authorise CPA to pay the 2017 renewal fee be the error/omission under s223(2) or is part of the relevant act for which the EOT is sought?
    
2. Did the AAT consider irrelevant matter and therefore err in identifying that as the relevant error? 
    
3. Is the disclosure of the processes by which the error came to be committed provided in the Patent Office relevant to the exercise of the discretion in a de novo hearing before the AAT?
    
4. If the answer to (3) is yes, is it only relevant if the original evidence was ‘deliberately misleading’ or ‘deliberately confined’?
    
5. Is the broadly protective and remedial operation of s223 relevant to whether the discretion under s223(2)(a) is enlivened, or only relevant to the exercise of that discretion once enlivened?
    

Outcome

The Court affirmed the ruling of AAT to set aside the initial decision of the Commissioner and grant an extension of time for payment of the renewal fee due in 2017.

Downes J criticised Nufarm for ‘straying outside the bounds’ of the Notice of Appeal when recasting these questions in its written and oral submissions at hearing, raising new issues which lacked the required precision.  Her Honour ignored the ‘recast’ and addressed the questions of law as set out in the Notice of Appeal.

Relevant to question 1, Nufarm submitted that the failure to authorise CPA was not an error causing failure, but the failure itself.  The Court rejected this, confirming that the AAT had not erred in finding that the failure was the non-payment of the renewal fee, with the relevant causative error being Advanta’s failure to authorise CPA to pay it.  This error itself had contributing errors, including Advanta’s failure to check communications sent to departed employees, its failure to notify the renewal agent of the departures, and deficiencies in handover at Advanta, all contributing to Advanta’s failure to authorise CPA.  The Court rejected Nufarm’s submissions that Advanta needed to demonstrate that it had an effective renewals system in place in order to establish that an error occurred, as this approach (i) raised factual rather than legal questions, and (ii) was an inappropriate limitation of the circumstances in which an error can arise under s223(2).

As to question 2, the Court rejected Nufarm’s position as it had not identified the extraneous material it asserted the AAT had taken into account.

Regarding questions 3 and 4 above, Justice Downes found that Nufarm mischaracterised the AAT’s decision – the AAT considered these deficiencies were relevant to the exercise of the discretion, but they did not weigh against exercising the discretion.

In relation to question 5, the Court rejected Nufarm’s submissions that the AAT incorrectly found that the broadly remedial nature of s223 was relevant to whether the discretion was enlivened, rather than to the exercise of the discretion once enlivened.  This reflected the High Court’s position in Alpharpharm Pty Ltd v H Lundbeck A/S [2014] HCA 42 that s223 is a general remedial provision and should be given a wide operation.   As it should not be read down, there was no error on the part of the AAT in this regard.

Implications

It is noteworthy that Advanta’s failure to renew created an opportunity for Nufarm to immediately take steps to exploit and seek a licence under s223(9) of the Act (with reg 22.21).  It is unclear whether it did so.  This strategy would have saved Nufarm the costs (and resources) of pursuing the opposition (and two appeals) to the Advanta s223 application.  We assume there are good reasons why this strategy was not implemented.

This, together with the cost to Advanta and time required to pursue the extension of time to pay the 2017 renewal fee through three levels of proceedings highlights the importance of rigorous administrative practices with in-built redundancy to avoid inadvertent lapsing of patent properties.

Following the AAT decision, Advanta filed a further request for an extension of time to pay the next renewal fee (ie the 2018 renewal fee) and a decision was handed down in October 2023 allowing the extension.  We report on that Patent Office decision (Nufarm Australia Limited v Advanta Seeds Pty Ltd [2023] APO 51) here.

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