Subsea Intervention Ltd v The Comptroller General of Patents

I have before me an appeal under section 97 of the Patents Act 1977, which I will call “the Act”. The Appellant was formerly called AGR Seabed Intervention Limited (”AGR”), but has recently changed its name to Subsea Intervention Limited. The appeal is against the decision of the Comptroller, acting by a hearing officer called Mrs. S. Eaves, and concerns an application by the Appellant for the restoration of its patent under section 28 of the Act.

I can take the facts relatively briefly. The patent concerns balanced thrust underwater excavation apparatus. The application for the patent was filed on 12^th February 2000. The patent was granted on 11^th December 2001 and published on 9^th January 2002.

Under section 25(1) of the Act, a patent lasts, prima facie, for a period of 20 years, beginning with the date of filing the application for the patent. However, that is subject to (3):

The effect of that was that the patent lapsed. Section 25(4) provides for a mandatory reinstatement of the patent in these terms:

“If during the period ending with the sixth month after the month in which the prescribed period ends the renewal fee and any prescribed additional fee are paid, the patent shall be treated for the purposes of this Act as if it had never expired, and accordingly -

(a)

anything done under or in relation to it during that further period shall be valid;

(b)

an act which would constitute an infringement of it if it had not expired shall constitute such an infringement; and

(c)

an act which would constitute the use of the patented invention for the services of the Crown if the patent had not expired shall constitute that use.”

As it was put in argument before me, section 25 provides for a perfect restoration of the patent, as if it had never expired. That provides a six month period, running from the end of the prescribed period. For reasons that I need not set out in any detail, the six month period in this case ended on 31^st August 2012 and no application under that provision was made.

I am told, although it is not before me in evidence, that at that stage the registered proprietor of the patent was a company called Seavation Limited. The registered address for service was John Sands at AGR Subsea Limited, Union Plaza, and then an address was given in Aberdeen.

As well as section 25, there is provision for restoration of patents under section 28 of the Act, which provides:

“(1)

Where a patent has ceased to have effect by reason of a failure to pay any renewal fee, an application for the restoration of the patent may be made to the comptroller within the prescribed period.”

I need not read (1A).

“(2)

An application under this section may be made by the person who was the proprietor of the patent or by any other person who would have been entitled to the patent if it had not ceased to have effect; and where the patent was held by two or more persons jointly, the application may, with the leave of the comptroller, be made by one or more of them without joining the others.”

I need not read (2A).

“(3)

If the comptroller is satisfied that the failure of the proprietor of the patent –

(a)

to pay the renewal fee within the prescribed period; or

(b)

to pay that fee and any prescribed additional fee within the period ending with the sixth month after the month in which the prescribed period ended,

was unintentional, the comptroller shall by order restore the patent on payment of any unpaid renewal fee and any prescribed additional fee.

(4)

An order under this section may be made subject to such conditions as the comptroller thinks fit (including a condition requiring compliance with any provisions of the rules relating to registration which have not been complied with), and if the proprietor of the patent does not comply with any condition of such an order the comptroller may revoke the order and give such directions consequential on the revocation as he thinks fit.”

In the present case, an application was made to restore the above patent under section 28. It is apparent that that had been done by 22^nd November 2012, when the Intellectual Property Office (IPO) wrote to AGR at the Union Plaza address in Aberdeen, indicating that it had received an application to restore the above patent.

There then followed various communications between the Appellant and the IPO, which I need not detail, concerning the correct proprietor of the patent. That led to the IPO writing to AGR at the Union Plaza address on 29^th August 2013. In that letter, the IPO said that they were satisfied that the ownership of Seavation Limited, which had been the registered proprietor, and the associated IP rights, had been transferred to AGR in November 2006.

That letter also enclosed a Form 21, which was required to be completed in order to change the ownership of the Patent on the Patent Register. It asked for a copy of the certificate, showing a change of name from what had been its previous name, AGR Subsea Limited, to its then name of AGR Seabed Intervention Limited. It added:

“Please confirm that the address for service for these three patents is now the company address as shown above.”

It is apparent that by October, the Form 21 had been received. At that point, the documentation stops until October 2014.

In the meantime, on 11^th December 2013, there had been a change of ownership of AGR. Its entire issued share capital was transferred to a company called Marin Subsea Limited (“Marin”). The registered office of AGR at Companies House, that being in Scotland as AGR is a Scottish company, was changed to a Marin address also in Aberdeenshire. That change in the registered office was received by Companies House on 24^th December 2013. However, no steps were taken to change the registered address for service with the IPO.

On 9^th October 2014, the IPO wrote to AGR, still at the address for service which was registered, namely Union Plaza in Aberdeen. That letter contains a decision, as is common ground, under section 28(3). That section, as appears from its terms, requires the Comptroller to be satisfied that the failure of the proprietor of the patent to pay the fees in time was unintentional. If satisfied that that failure was unintentional, the section contains a mandatory requirement for the restoration of the patent:

“… the comptroller shall by order restore the patent on payment of any unpaid renewal fee and any prescribed additional fee.”

It is apparent that the comptroller took the view that the relevant failures were unintentional, because the letter of 9^th October 2014 reads:

“Your application for restoration of the above patent has been allowed subject to payment of the outstanding renewal fees for the 13^th, 14^th and 15^th years.”

It then gives the fees, which total £890.

“You should pay the fee(s) by 9 December 2014.”

There is then an explanation of the effect of section 28A, which I am not going to go into in any detail. It is common ground that, unlike the perfect or seamless restoration under section 25, the restoration under section 28A is not perfect, because it allows third parties, who have done certain things in good faith in the meantime, to retain certain rights. The details of that I need not set out.

That letter, being sent to the Union Plaza address, appears not to have come to the attention of anybody at AGR in its new ownership by Marin. On 18^th December 2014, the IPO sent a second letter, also addressed to AGR at the Union Plaza address. The second letter said this:

“My letter dated 9 October 2014 informed you that your application for the restoration of patent number [and it gives the number] had been allowed subject to payment of the outstanding fees of £890.00.

You were asked to pay this fee by 9 December 2014; however it would appear that you have not done so.

If you still intend to pay the outstanding renewal fee, it is possible for us to grant you an extension of a further two months in which to do so. If you would like us to do this, you need to put your request in writing and send it to us as a matter of urgency.

The consequences of failing to request an extension of time and paying the outstanding fee are set out below.

Failure to request [an] extension and pay the renewal fee

If you do not request an extension of time and do not pay the outstanding fee, your application for restoration will be refused by an official decision. This means that we will be unable to accept any subsequent payment of the renewal fee.

Should you still wish to pay the fee, you will need to file an appeal at the Patents Court. An appeal may cost you a lot of money and take up a great deal of your time. Costs, which may be large, are also normally awarded against the unsuccessful party.

You should note that no further reminder will be issued by the office.”

The reference to it being possible to grant an extension of a further two months is a reference to a statutory power contained in section 117B of the Act, which I will refer to in more detail below.

That letter also appears not to have come to the attention of AGR. Therefore, by 25^th February 2015, the period of a further two months, following the initial period which expired on 9^th December 2014, had itself expired. Consequently, the decision which is under appeal was made. This decision, set out as a formal decision by Mrs. Eaves, reads as follows:

“APPLICANT: AGR Seabed Intervention Ltd

ISSUE: Whether patent number [and it gives a number] should be restored under section 28(4)

DECISION

1.

The renewal fee in respect of the 13^th year of the patent fell due on 12 February 2012. The renewal fee was not paid by that date or during the six months allowed under section 25(4) of the Patents Act 1977 upon payment of the prescribed additional fees. The patent therefore lapsed on 12 February 2012.

2.

An application for restoration was filed by AGR Seabed Intervention Ltd on 21 November 2012, within the thirteen months prescribed under rule 40(1) of the Patents Rules 2007 for applying for restoration.”

I interpose to say that rule 40 of the Patents Rules gives a maximum period of 13 months for applying under section 28. That is 13 months running from the end of the six months period, which is the extended period. In this case, the 13 month period would have expired at the end of September 2013.

“3.

In an official letter dated 9 October 2014, the Office informed AGR Seabed Intervention Ltd, that their application for restoration of patent number [and it gives a number] had been allowed subject to the payment of the outstanding renewal fees for the 13^th, 14^th and 15^th years. The applicant was given until 9 December 2014.

4.

No response was received from the applicant within the deadline set so the Office issued a reminder letter on 18 December 2014 giving the applicant a further time to pay the outstanding fees. The letter advised the applicant for restoration that failure to pay the fees would result in the application for restoration being refused. No response has been received.

5.

Consequently I now refuse the application for restoration as I consider that the requirements laid down in section 28(4) of the Patents Act 1977 have not been met.”

That decision was also sent under the cover of a letter to AGR at the Union Plaza address, that being the registered address for service.

That letter appears to have come to the attention of AGR on 25^th March 2015, which was exactly 28 days after the date of the decision and, therefore, the last day for appealing to the Patents Court. The CFO of Marin, Kathleen Lawson, sent an urgent email on the morning of 25^th March to the IPO, although admittedly to “sales@ipo”. In that email she said:

“I have explained to all the difficulties in relation to us only receiving the mail today ... when the SPA [Share Purchase Agreement] was signed to purchase the Company it was assured that all Patents, IP etc were up to date and in order. We have had some difficulties in trying to unfurl the paper trail and gain access to all the relevant information as there were very few and no relevant documents transferred as part of the sale of AGR to Marin in 18 December 2013.”

She then said:

“This is extremely urgent and any assistance will be appreciated in assisting with an attempt, prior to close of business today, not to miss the opportunity to own the patents which should be held by this Company legally, as per the SPA which acquired AGR Seabed Intervention.”

That was followed by a more formal email on 9^th June from the solicitors acting for AGR, in which it was said:

“As is set out in more detail in paragraphs 20 to 22 of our skeleton argument (attached to the letter of 20 May), s28 of the Patents Act 1977 gives the Comptroller wide discretion in relation to the decision and directions consequential on the revocation of the patent. With this in mind, we would invite the IPO to exercise its power of disctretion and to make [such] decision that the patent may be restored subject to payment of the outstanding fees. For the avoidance of doubt, our client does not dispute that fees are owed and would be willing and able to pay these in early course.”

In the meantime, an appeal had been filed albeit without any grounds of appeal; that led in due course to an application for an extension of time, which was granted by Birss J.

Those facts are not in dispute. The Comptroller, represented by Mr. Nicholson, is in no position to contradict the assertion by AGR that none of the letters sent to the Union Plaza address reached AGR until 25^th March 2015, however unsatisfactory that may seem.

Two grounds of appeal have been pursued before me by Mr. Malynicz, who appears on behalf of AGR. The first is set out at ground 14B of the Amended Grounds of Appeal:

“The IPO took the view that, if the conditions of payment were not complied with within the period given, it was a necessary consequence that the application for restoration would be refused. This was wrong in that the IPO was required to exercise a discretion before taking the decision yet it failed to do so.”

The second ground is set out at paragraph 14C:

“Once it was informed of the Appellant’s predicament on 25 March 2015, the IPO ought to have exercised its discretion to rescind the decision based on its discretion and in the light of submissions and evidence by the Appellant.”

I will take the latter first, which seems to be the simpler of the two. I was referred by Mr. Malynicz to a recent decision in the High Court of Northern Ireland called Magee’s Application [2013] NIQB 59. In that case, Mr. Magee applied for judicial review. His challenge was to a decision taken by the Department of Justice in Northern Ireland not to reopen or reconsider a decision of the Secretary of State, taken in 2002, to refuse him compensation under a particular statutory provision for people who spent time in custody following a wrongful conviction.

The Department of Justice in 2012 had declined to reopen the application for compensation on the grounds that, since the application had already been decided in 2002, the Department had no powers to entertain the reopening of an old application on his behalf. The applicant contended that the Department of Justice not only had the power to reconsider the 2002 decision, but also a duty to do so.

The relevant principle is set out at paragraph 32 of the judgment of Stephens J, as follows:

“The respondent also contends that section 12 of the Interpretation Act 1978 is not to be seen as meaning that the power to decide questions affecting legal rights remains an open ended one.  Instead it should be considered in the light of the principle of certainty and finality in administrative decision-making.”

Section 12 of the Interpretation Act 1978 provides as follows:

“Where an Act confers a power or imposes a duty it is implied, unless the contrary intention appears, that the power may be exercised, or the duty is to be performed, from time to time as occasion requires.”

Returning to paragraph 32 of the judgment of Stephens J:

Mr. Malynicz suggested that the discretionary power under section 28(4), which the Comptroller had, is not one which could only be exercised once. He submits that it is a continuing power within the meaning of that citation.

I can see that the provision in 28(4), which provides that if the proprietor of the patent does not comply with any condition of an order made under section 28(3) then the Comptroller may revoke the order, is a power that, until it has been exercised, can be kept under review. Until that power has been exercised, no doubt the Comptroller can, from time to time, decide whether to exercise it or not.

That was what was done in this case, upon the expiry of the original two month period on 9^th December 2014, when the IPO, instead of immediately revoking the order for restoration, wrote on 18^th December 2014 to the Applicant. That letter pointed out that the required fees had not been paid and that the Comptroller was able to grant a further two month extension if asked for.

In my judgment, that is a good example of the Comptroller, although becoming aware that the proprietor of the patent had not complied with the conditions of the order made on 9^th October, choosing not, at that stage, to revoke the order, but to keep the matter alive.

However, once the power in 28(4) to revoke the order made under 28(3) has been exercised, it does seem to me that Mr. Nicholson is right that, at that stage, there is no longer any relevant power left in the Comptroller.

If one analyses 28(3) and 28(4) together, there are three provisions. Firstly, there is a mandatory requirement, under 28(3), on the Comptroller being satisfied of the relevant preconditions, to make an order restoring the patent. That was done on 9^th October in this case.

Secondly, there is then a discretionary power under 28(4) to make that order subject to such conditions as the Comptroller thinks fit. That was also done on 9^th October 2014.

Thirdly, there is a discretionary power, upon the proprietor not complying with the conditions of such an order, to revoke the order and give consequential directions on the revocation. That is in the final words of 28(4) and was done on 25^th February. Once the order was made on that date, it does not seem to me that either 28(3) or 28(4) gives the Comptroller any continuing duty or power at all. His powers under those subsections are spent or, to use the classic Latin phrase, at that stage he becomes functus officio.

In my judgment, that falls precisely within the citation from Wade, Administrative Law, which was cited with approval in Magee. I was also shown a citation in Mr. Nicholson’s skeleton argument from a similar case in England and Wales called R (on the application of Demetrio) v Independent Police Complaints Commission[2015] EWHC 593 (Admin) 38, which referred to the same passage.

In my judgment, the relevant power under section 28(4) was no longer available to the Comptroller, or his hearing officer, by 25^th March 2015. Mr. Nicholson is right that, by that stage, the only remaining route available to the Appellant was an appeal. Therefore, I dismiss that ground of appeal.

I now come to what I regard as not quite so straightforward, namely ground 14B. It is accepted by Mr. Malynicz that, on the material before her, the decision of the hearing officer cannot be faulted. Although the power to revoke is a discretionary one, under section 28(4), it is difficult to see what else she could properly have done.

Section 28(3) requires the Comptroller to make an order restoring the patent on payment of any unpaid renewal fee and any prescribed additional fee. Section 28(4) enables the Comptroller to make that order subject to conditions. Those conditions were imposed and it is not suggested that they were not properly imposed by the decision encapsulated in the letter of 9^th October 2014.

Those conditions on 25^th February 2015 had not been complied with. The Applicant had been invited to apply for an extension, but no application had been made. It seems to me that it would have been very difficult for the hearing officer to do anything other than conclude, the conditions for the restoration not having been complied with, that the order for restoration should be revoked in accordance with the power to that end in 28(4).

The real thrust of this ground of appeal is that, if the hearing officer had known the true position, she should and would have exercised her discretion differently. Mr. Nicholson gives two answers to that. The first answer is that since there was nothing wrong with the decision on the material before the hearing officer, there is no basis for the appellate court to intervene.

This is a statutory appeal, governed by CPR 52. Therefore, it attracts the provisions of CPR 52.11, which read as follows:

“(1)

Every appeal will be limited to a review of the decision of the lower court unless –

(a)

a practice direction makes different provision for a particular category of appeal;”

I interpose to say it has not been suggested that there is any relevant practice direction in this case.

“Or

(b)

The court considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing …

(3)

The appeal court will allow an appeal where the decision of the lower court was –

(a)

wrong; or

(b)

unjust because of a serious procedural or other irregularity in the proceedings in the lower court.”

Mr. Nicholson said that the decision of the hearing officer was neither wrong, nor had there been any serious procedural or other irregularity. The procedural requirements, including the requirement for the IPO to communicate with the Applicant at the registered address for service, had been complied with. Mr. Nicholson also said that the practice was for statutory appeals under section 97 of the Act to take place by way of review, rather than rehearing, and, on review of the hearing officer’s decision, there was no flaw in it.

I turn now to Mr. Nicholson’s second answer to this ground of appeal, which I think can be fairly summarised as follows. It is his case that, even if matters had been brought to the attention of the hearing officer by 25^th February 2015, perhaps on the previous day, that would not have put the Applicant in any better position, because it would not have been open to the hearing officer, on behalf of the Comptroller, to give the Applicant any more time to comply with the conditions, subject to which the order for restoration had been made.

With some reluctance, I find myself driven to accept this latter submission. The power of the Comptroller to extend time is found in section 117B of the Act, which provides:

“(1)

Subsection (2) below applies in relation to a period if it is specified by the comptroller in connection with an application for a patent, or a patent.

(2)

Subject to subsections (4) and (5) below, the comptroller shall extend a period to which this subsection applies if –

(a)

the applicant or the proprietor of the patent requests him to do so; and

(b)

the request complies with the relevant requirements of rules.

(3)

An extension of a period under subsection (2) above expires –

(a)

at the end of the period prescribed for the purposes of this subsection, or

(b)

if sooner, at the end of the period prescribed for the purposes of section 20 above.”

I interpose to say that I was told that section 20 is irrelevant to the current case.

“(4)

If a period has already been extended under subsection (2) above –

(a)

that subsection does not apply in relation to it again;

(b)

the comptroller may further extend the period subject to such conditions as he thinks fit.

(5)

Subsection (2) above does not apply to a period specified in relation to proceedings before the comptroller.”

It is common ground that the application for restoration under section 28 did not constitute proceedings before the Comptroller within subsection (5). Therefore, it is also common ground that the reference in subsection (1) to a period specified by the Comptroller in connection with an application for a patent, applied to the period specified in the letter of 9^th October 2014, which set out the period for payment of the required fees, namely by 9^th December 2014.

The reference in section 117B(3) to the period prescribed for the purposes of this subsection, is a reference to a period prescribed by rule 109 of the Patents Rules, which provides:

“(2)

The period prescribed for the purposes of section 117B(3) is two months beginning immediately after the expiry of the period to which section 117B(2) applies.”

Rule 109(1) says:

“(1)

A request under section 117B(2) must be –

(a)

made in writing; and

(b)

made before the end of the period prescribed by paragraph (2).”

In the present case, that means that in order to obtain the mandatory extension under section 117B(2), there had to be a request in writing made before 9^th February 2015 and that that extension would come to an end on 9^th February 2015.

If that had been done, if a period has been extended under (2), the Comptroller is given power, under section 117B(4)(b), to further extend the period. I was told by Mr. Nicholson, and Mr. Malynicz did not suggest that he was wrong, that there is no general power for the Comptroller to extend time. Mr. Nicholson’s submission was that, if there has been no application in accordance with rule 109 to request an extension under section 117B(2), then section 117B(4) does not apply and the Comptroller has no power to extend time.

On the material that I have been shown, that seems to be correct, since, by the time the hearing officer had come to look at it on 25^th February 2015, the two month period expiring on 9^th February 2015 had already expired. Even if she had been told on that day, or the previous day, that none of the letters had reached AGR, she would not have been able, it seems to me, to exercise any power to extend time for the fulfilment of the conditions, subject to which the restoration of the patent had been ordered under section 28(3).

Mr. Malynicz submitted that the Comptroller had a power to retake the decision under section 28(3), or, as he put it, to reset the conditions attaching to that order. However, in my view, this is another example where the Comptroller only has power to make the decision once. Section 28(3) requires the Comptroller, on being satisfied that the failings were unintentional, to restore the patent by order. It does not seem to me to be consistent with the statutory scheme that the Comptroller should, having made an order under section 28(3), retain any power to take that decision again.

In any event, there was nothing wrong with the order made in October. It is not suggested that there was anything flawed about it. That means that there is, in any event, no basis for taking it again. Therefore, in my judgment, if this matter had come before the hearing officer on 25^th February 2015 and she had then been told that the 9^th October letter had not reached AGR, she would have had no power to extend the time for the payment of the outstanding fees and the Applicant would, inevitably, have been in the position of an applicant who had failed to comply with the conditions.

It is true that section 28(4) confers a discretion to revoke, but where the Applicant has failed to comply with a condition that was quite properly imposed under the earlier part of section 28(4), at the time when the section 28(3) order was made, and no further time either has been given or, by then, can be given, it is very difficult to see how the hearing officer could nevertheless allow the restoration of the patent.

That conclusion makes it unnecessary to decide if the court, on hearing this appeal, was bound to deal with it as a review or could rehear it and, if it could rehear it, whether it could take into account the true facts as known to the court, as opposed to the facts that were before the hearing officer. Further, it makes it unnecessary to determine whether the court could conclude either that the hearing officer’s decision can now be seen to be wrong, even though there was nothing wrong with it at the time it was taken, or that it can now be seen that there was a procedural or other irregularity, in that the correspondence did not come to the attention of the Applicant. No criticism is made of the IPO in sending the correspondence, as indeed it was obliged to do, to the registered address for service.

In those circumstances, I prefer not to express any concluded view on these matters. I am aware that there are a number of authorities which explore the question of when it is appropriate for an appellate court to conduct a rehearing, rather than a review. However, I was not referred to any of that jurisprudence. Since it is unnecessary to decide the points in order to dispose of the appeal, I prefer not to do so.

For the reasons I have given, I find myself obliged to dismiss this appeal. This may seem very unfortunate for the Appellant. It is possible that the Appellant may have other remedies, although I naturally am not in a position to say whether that is so or not. It does, in the end, illustrate the importance of keeping the address for service up to date and the possibly drastic consequences of failing to do so.

I was referred by Mr. Nicholson in his skeleton argument to various statutory provisions, all of which make it clear that the address for service, which has to be an address either in this country or in another EEA state or the Channel Islands, must be provided. Rule 104 sets out the consequences of an address not being properly furnished.

I add two footnotes. Firstly, I had some submissions from both parties on the possible effect, one way or the other, on third parties. I have left that entirely out of account. I have agreed with Mr. Malynicz that section 28A contains a well-considered balance between the rights of third parties and the rights of patentees. However, ultimately, if one fails to bring oneself within the statutory scheme permitting restoration under section 28, it seems to me inevitable that one may lose rights that one might otherwise have been in a position to preserve, to one’s detriment and the benefit of third parties.

Secondly, I was addressed by reference to the possibility that, if this appeal were allowed, there would be a possible floodgates objection. Again, I have not taken that into account. I am unable to tell, from the material before me, how significant or serious a problem there would be, in practice, if I had come to the other view. I can see, as a matter of theory, that if the Appellant is right in this case then there is no time limit to make an application of the type that the Appellant has sought to do in this case. However, I cannot evaluate the likelihood, in practice, of there being a multitude of applications if I had come to the other view.

As it is, for the reasons I have given, I dismiss this appeal.