England and Wales High Court (Patents Court) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
ON APPEAL FROM the Intellectual Property Office

		Royal Courts of Justice Strand, London, WC2A 2LL
		31 March 2010

Mr Justice Kitchin:

Introduction

1. This an appeal by Betson Medical (Ireland) Limited ("Betson Medical") against the decision of Mrs Williams, the Hearing Officer acting for the Comptroller, dated 12 November 2009 whereby she refused the application of Betson Medical to restore European Patent UK No. 0957878 ("the Patent") following non-payment of a renewal fee.
2. The renewal fee in respect of the eighth year of the Patent fell due on 6 December 2003. The fee was not paid by that date or during the six months allowed under section 25(4) of the Patents Act 1977 ("the Act") and the Patent therefore lapsed.
3. An application for restoration was filed on 6 July 2005, within the 19 months prescribed under rule 41(1)(a) of the Patents Rules 1995. After considering the evidence filed in support of the application, Betson Medical was informed that it was the preliminary view of the Intellectual Property Office (the "IPO") that the requirements for restoration had not been met. Betson Medical did not accept this preliminary view and requested a hearing which was fixed for 18 September 2009. Shortly before the hearing date, Betson Medical notified the IPO that it was content for the Hearing Officer to decide the application on the basis of the papers on file. The Hearing Officer duly considered all the papers and issued her written decision.

Background

4. Mr Betson filed the application for the Patent on 6 December 1996. On 20 October 1999, the application was assigned to Betson Medical, a company which he had set up to exploit the invention.
5. On 24 July 2003, Mr Betson authorised the firm of Tomkins & Co. to undertake responsibility for the Patent and to supply him with reminders relating to the payment of any necessary renewal fees. On or shortly before 6 December 2003, Mr Betson duly received a reminder from Tomkins & Co. that the renewal fee for the eighth year of the Patent was due on 6 December 2003. He also received the official reminder letter (PREN 5) sent by the IPO. Mr Betson's evidence was that he was aware of the date for payment of the fee and intended to pay it but was unable to do so because of a shortage of funds. In April 2004, Tomkins & Co. were replaced by Mr Betson as the address for service.
6. On 12 January 2004, Mr Betson met Mr Lamb of the patent attorneys Marks & Clerk and asked him to take over responsibility for his portfolio of patents, including the Patent. He described his invention to Mr Lamb and gave him a list of his various patents. Mr Betson and Mr Lamb discussed the actions necessary to deal with outstanding matters, including payment of renewal fees.
7. Following the meeting, it was not clear to Mr Lamb whether Marks & Clerk had been officially appointed to take responsibility for the patent portfolio or whether Mr Betson wished to retain responsibility for paying renewal fees. Accordingly, Mr Lamb wrote to Mr Betson on 20 January 2004 asking him to clarify his intentions. In that letter, Mr Lamb pointed out that of the 18 patents included in the list given to him by Mr Betson, 17 had been due to be renewed on 6 December 2003. He also explained that these patents could still be renewed upon payment of an additional fee, the final deadline in respect of the Patent being 6 June 2004. Mr Betson received the letter by email that same day and understood that Mr Lamb would not take any action in relation to the payment of any renewal fees unless instructed in writing to do so.
8. On 22 April 2004, Mr Betson spoke to Mr Lamb's assistant, Ms Susannah Caswell. Ms Caswell subsequently sent to Mr Betson a further copy of his letter of 20 January 2004 and requested his written instructions. A further reminder was sent in May 2004. As a result of these communications, Mr Betson well understood that it was necessary to pay the renewal fee and the additional fee in respect of the Patent by 6 June 2004. However, he did not instruct Marks & Clerk to take any action at that time and they did not do so.
9. Throughout the period from December 2003 to June 2004, Mr Betson actively sought funds to pay the renewal fees for all the patents in his portfolio, including the Patent, and to enable him to commercialise the invention. He was looking to raise a total of €150,000 including approximately €10,000 to cover all the renewal fees. He approached the Bank of Scotland, the Bank of Ireland and various private investors.
10. Mr Betson started negotiations with one particular private investor in January 2004. Negotiations proceeded slowly as this investor wanted to wait and see how negotiations with other investors progressed and required a very large amount of information relating to the commercial viability of the project. Eventually, in late June 2004, he made €150,000 available and the first tranche of €9,050 was paid to Marks & Clerk in London on 29 June 2004.
11. In a series of witness statement dated 18 July 2005, 9 December 2005, 2 March 2006, 8 May 2006 and 16 May 2008, Mr Betson explained that at the time the renewal fee for the Patent fell due, he was dependent upon financial support from personal contacts to meet his every day living expenses, including the payment of utility bills. Money was so tight he had to prioritise his payments, paying the most urgent bills first. As a result, he says, up to about the end of April 2004, any financial resources available to him had to be diverted to pay his personal bills and, as of 6 June 2004, no money was available to pay the renewal fee and the prescribed additional fee in respect of the Patent. Overall, he estimates that his outgoings averaged €1,000 per month in the period from September 2003 to June 2004. As for Betson Medical, he says that in the period up to December 2003, the company had no funds and no overdraft facility and so it too was unable to pay any renewal fees.

The law

12. The Patent ceased to have effect before 1 January 2005 and accordingly the Hearing Officer was required to consider the application of section 28(3) of the Act as it then stood:

"If the comptroller is satisfied that-

(a) the proprietor of the patent took reasonable care to see that any renewal fee was paid within the prescribed period or that the fee and any prescribed additional fee were paid within six months immediately following the end of that period,

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

13. In Continental Manufacturing & Sales Incs. Patent [1994] RPC 535, Aldous J considered the meaning of the words "reasonable care" at page 542:

"Counsel for Continental referred me to the House of Lords decision in Textron Inc's Patent, [1989] R.P.C. 441 and counsel for the Comptroller referred me to Tekdata Ltd.'s Application, [1985] R.P.C. 201. Both sought to draw analogies from what was said in those cases. I do not believe that such an approach is helpful. A system or set of circumstances which amounts to reasonable care in one case may, upon slightly different facts, not be reasonable. The words "reasonable care" do not need explanation. The standard is that required of the particular patentee acting reasonably in ensuring that the fee is paid."

14. In Ament's Application [1994] RPC 647, Aldous J was again required to consider this section in the context of a proprietor who claimed he was prohibited from paying the relevant renewal fee by US law. At page 656, Aldous J said:

"… He [counsel for Mr. Ament] submitted that the section required the applicant for restoration to establish that he took reasonable care to see that the fee was paid. The fact that the applicant could not pay was a factor the court should take into account, but was not conclusive. I believe that submission is correct. The section requires proof that the proprietor took reasonable care to see the fee was paid. Each case will depend on its facts. In one case the failure to pay may be due to a lapse of memory and, if so, the patentee must establish that he took reasonable care. In another it may be due to lack of funds. In that case also the patentee must establish reasonable care before there can be restoration."

15. A little later, at 657, Aldous J elaborated upon the requirements of the section in circumstances where a patentee was unable to pay:

"… It is not a requirement of [section 28(3)] that a patentee must at all times keep himself in a financial position to pay. It is sufficient that he takes reasonable care to see the fee is paid. That may require seeking financial assistance and in appropriate cases taking reasonable care to avoid impecuniosity.

I have come to the conclusion that a patentee who merely establishes inability to pay does not establish that he has taken reasonable care to see that the fee is paid. To establish that, he must go further and show that he wanted to pay and that he had taken reasonable care to ensure that he was in a position to pay. I therefore turn to the evidence to see whether Mr. Ament has discharged the onus upon him."

16. Finally, Aldous J concluded at page 659:

"A party who intends to pay a renewal fee but cannot do so, must establish that he has taken reasonable care to pay. That requires him to establish that his inability to pay has not resulted from any lack of reasonable care. Where the circumstances surrounding the impecuniosity of the patentee are complicated, as in this case, it will be a heavy onus to discharge. I do not believe it has been discharged in this case. The evidence sets out the difficulties of why Mr. Ament could not pay. It does not establish that those difficulties did not arise from, in part, his failure to take reasonable care. It follows that the appeal must be dismissed."

17. In Bending Light Limited's Application [2009] EWHC 59 (Pat), I observed that Mr Ament's case was, in some respects a particularly hard one because he was prohibited by law from paying the fee. But Aldous J evidently considered that was not enough. Mr Ament had to go further and show his impecuniosity was not attributable to any lack of care and, the facts being complicated, he had a heavy onus to discharge. I concluded at [18]:

"In my judgment I should apply a similar approach in respect of the claim to impecuniosity in this case. The renewal fee and the additional fee together do not amount to a large sum. I think it necessary to consider with close attention whether the applicant truly had no funds with which to pay them. In so far as the facts are complicated then the burden lies on the applicant to elucidate them."

The Decision of the Hearing Officer

18. The Hearing Officer considered that it was clear from Mr Betson's witness statements that he was solely responsible for the payment of the renewal fee in respect of the Patent. She continued that, during the period the renewal fee and the additional fee could have been paid, Mr Betson found himself in a difficult financial position and she sympathised with the pressures he must have been under. However, she continued from [22] to [26]:

"22. The evidence shows that Mr Betson took steps to ensure a satisfactory reminder system was in place and that he was aware of the due date for payment of the renewal fee for the EP (UK) patent including the final deadline date of 6 June 2004 for payment with penalties as appropriate.

23 . Although supporting evidence has not been provided, I accept that during the period December 2003 to June 2004, Mr Betson made strenuous efforts to secure funding from investors. It is clear from the evidence provided that he focused his efforts on securing funds to pay the renewal fees in respect of the whole European patent portfolio and wished to raise funds to provide for the commercial exploitation of the invention covered by the EP (UK) patent. In his witness statement dated 9 December 2005, he refers to the fact that he was seeking €10,000 to cover the renewal fees for the European patents and also says that he was seeking €150,000 to enable the commercial exploitation of the invention.

24. However, the law is clear. The comptroller needs to be satisfied that the proprietor took reasonable care to see that the patent in suit was renewed on time or within the period of grace allowed. Mr Betson's efforts demonstrate that he was seeking funds, however the mere seeking of funds does not in my view show that reasonable care was taken in relation to ensuring the renewal fee for the EP (UK) patent was paid on time.

25 . In his witness statement dated 18 July 2005, Mr Betson says that he intended to pay the renewal fee in respect of the EP (UK) patent, but was prevented from doing so because of a severe shortage of funds. There is no doubt that Mr Betson was facing financial difficulties and that he had some difficult financial choices to make. I sympathise with the predicament he found himself in. Nevertheless, a patent is a valuable piece of property. Payment of renewal fees is therefore a matter which it is in the interests of the payer to see is paid. It is worth noting that based on the evidence provided by Mr Betson, the renewal fee due at 6 December 2003 for the EP (UK) patent amounted to €359.37, a significantly smaller sum than the funds being sought from potential investors.

26 . The evidence shows that Mr Betson was able to obtain financial support from a number of personal contacts. He used this informal financial support to cover everyday living expenses and to pay urgent bills such as utility bills. In other words, when funds were available, Mr Betson chose not to use these to pay the renewal fee in respect of the EP (UK) patent but to use what funds were available elsewhere. In my view this does not demonstrate that he took reasonable care to see that the renewal fee was paid."

19. The Hearing Officer concluded that she was not satisfied that Mr Betson had exercised reasonable care to see that the renewal fee for the Patent was paid in time or during the 6 month grace period and she therefore refused the application.

The Appeal

20. On the appeal, Mr Norris, who appeared on behalf of Betson Medical, argued that the Hearing Officer fell into error in that she applied too strict a test and that had she applied the proper test to the facts as she found them, she ought to have concluded that Mr Betson and Betson Medical did take reasonable care to see that the renewal fee and the prescribed additional fee in respect of the Patent were paid by the deadline of 6 June 2004. In particular, Mr Norris pointed to the findings of the Hearing Officer that Mr Betson made strenuous efforts to secure funding from investors to pay the renewal fees in respect of the whole patent portfolio and to provide for commercial exploitation of the invention; that he intended to pay the renewal fee in respect of the Patent but was prevented from doing so because of a severe shortage of funds and that he used such informal financial support that he had available to him to cover everyday living expenses and to pay urgent bills such as utility bills. Mr Norris further submitted that the Hearing Officer fell into error in concluding that Mr Betson ought to have diverted these funds to pay the fees due in respect of the Patent and so to deny himself what he needed for day-to-day life. In so doing the Hearing Officer applied too high a test and she ought to have concluded that Mr Betson did everything he reasonably could to ensure that he or Betson Medical were in a position to pay.
21. In assessing the merits of these submissions, it is, in my judgment, important to keep well in mind the key question as to whether Betson Medical as proprietor of the Patent, or Mr Betson on its behalf, took reasonable care to see that the renewal fee and the prescribed additional fee in respect of the Patent were paid by 6 June 2004. The question is not whether Mr Betson took reasonable care or made reasonable efforts to secure sufficient funds to pay the renewal fees in respect of the whole patent portfolio and to commercialise the invention. The former and narrower question requires a careful consideration of the available evidence.
22. In his first witness statement dated 18 July 2005, Mr Betson frankly accepted that he was well aware that the renewal fee for the Patent was due by 6 December 2003 and, this deadline having been missed, it was necessary to pay the renewal fee and the additional fee by 6 June 2004. He was also aware that renewal fees in respect of his whole patent portfolio were due. He continued that he did not have the money to pay the renewal fees at that stage but actively sought funds from the Bank of Scotland, the Bank of Ireland and from private investors, but without success at that time. Further, he was in contact with a private investor who eventually agreed to provide sufficient funds to pay all the renewal fees for the whole portfolio but this investor was unable to make these funds available by 6 June 2004.
23. Upon receipt of this witness statement, the IPO wrote a letter dated 28 July 2005 inviting Betson Medical to supply further evidence of the discussions with the Bank of Scotland, the Bank of Ireland and other investors. They also requested copies of bank statements from the period December 2003 to June 2004 and evidence from the eventual investor stating the sums and terms of the investment.
24. In response to this letter, Mr Betson made a further witness statement dated 9 December 2005. In that statement he set out further details of his approaches to potential investors and explained that he was speaking to about one such investor per week for the entire period. He also explained that he was seeking at least €10,000 to cover renewal fees in respect of the whole portfolio as part of a package of up to €150,000 in order to commercialise his invention. In his third witness statement, also dated 9 December 2005, Mr Betson said that he was unable to supply copies of his own bank statements for the period December 2003 to June 2004. However, he did provide bank statements for Betson Medical in the period up to December 2003, albeit not thereafter. Those bank statements show that the current account of Betson Medical was overdrawn in the sum of about €12,300 on 10 December 2003 but that further sums in excess of €14,000 were withdrawn from the account during the course of the month with the result that, by 31 December 2003, the account was overdrawn by in excess of €27,600. No details were provided as to how those funds were applied.
25. On 21 December 2005, the IPO wrote a further letter inviting Mr Betson to provide information as to the date upon which he commenced negotiations with the eventual investor and why it took until 29 June 2004 to release the funds. They also invited Mr Betson to provide details of his utility bills from September 2003 to June 2004 and to confirm the limit of Betson Medical's bank account.
26. On 2 March 2006, Mr Betson made a further witness statement in response to the letter from the IPO in which he explained that the eventual investor wanted to see how the project relating to the invention progressed commercially and technologically and, similarly, how negotiations with other investors progressed. The investor required a large amount of information relating to the potential commercial viability of the project and, as a result, it was only possible to persuade him to provide a substantial sum at the end of June 2004. It is, I think, significant that Mr Betson did not provide any information as to whether the eventual investor was invited to provide by 6 June 2004 the much more limited sum of €359.37 necessary to secure the renewal of the Patent.
27. As for Betson Medical, Mr Betson stated that the bank account did not have any overdraft facilities. However, as I have explained, this statement was not consistent with the bank statements which Mr Betson had exhibited to his earlier witness statement of 9 December 2005 which revealed substantial withdrawals from the account in the course of December 2003.
28. Finally, Mr Betson stated that copies of utility bills were not available. However, he estimated that his outgoings averaged €1,000 per month in the period from September 2003 to June 2004 and that the money was provided by way of informal financial support from a number of personal contacts. Mr Betson did not, however, state whether he invited those personal contacts to provide the limited further sum required to renew the Patent.
29. Upon receipt of Mr Betson's witness statement dated 2 March 2006, the IPO wrote a yet further letter dated 15 March 2006 enquiring as to these very matters. Specifically they asked why the eventual investor did not pay the limited sum necessary to keep the Patent in force and whether Mr Betson asked his personal contacts for assistance.
30. On 8 May 2006, Mr Betson made a witness statement responding to the questions raised by the IPO. As for the eventual investor, he explained that the project would still be viable even if the Patent lapsed. No doubt that was true, but it did not, in my judgment, provide an answer to the question whether the eventual investor was asked to provide by 6 June 2004 the limited sum necessary to secure the renewal of the Patent. As for personal support, Mr Betson explained that this was limited and sufficient to pay his utility bills with very little to spare. As a result, he continued, up to around the end of April 2004, any financial sources had to be diverted to other payments. In my judgment, this evidence was deficient in two respects. First, it did not address the question whether Mr Betson invited those supporting him to provide the limited further sum necessary to secure the renewal of the Patent. Second, it is directed only to the period ending April 2004. No information was provided in relation to the period from the end of April to 6 June 2004.
31. The final witness statement produced by Mr Betson was dated 16 May 2008. This provided little further information and simply confirmed that, at the time the renewal fee for the Patent fell due, Mr Betson did not have sufficient funds to pay his costs of living and the renewal fee. It is not clear whether Mr Betson was here referring to December 2003 or June 2004. Further, and perhaps more importantly, it provided no substantive response to the earlier questions raised by the IPO; nor was it accompanied by any supporting documentation.
32. I have no doubt that Mr Betson was indeed facing severe financial difficulties in the period up to and including 6 June 2004 and that he did make strenuous efforts to secure funding to secure the commercial exploitation of his invention and to pay the renewal fees in respect of the whole patent portfolio. However, the question which the Hearing Officer was required to consider was, as I have indicated, much more specific. In my judgment the evidence did not establish that Mr Betson took reasonable care to see that the limited sum of €359.37 necessary to secure the renewal of the Patent was paid by 6 June 2004 and the Hearing Officer was right to so hold.
33. It follows that this appeal must be dismissed.