Tuesday, 24 July 2012

T 742/11 – Too Many Cooks Spoil The Broth

When between an applicant and its representative there is another agent, A 122 is in the air. Here is another case illustrating this empirical principle. The case is also interesting because the Code of conduct of professional representatives is referred to.

The appellant in the present case is a company situated in Panama City that had filed a European patent application. The patent portfolio of this company was managed by an Australian and New Zealand patent attorney, who acted as a “trusted advisor” to the appellant. Though not a European patent attorney himself, he was experienced in European patent prosecution matters. He acted as an intermediary between the professional representative (PR) and the applicant. It was him who gave instructions to the PR.

The Examining Division (ED) had scheduled OPs (OPs) for June 8, 2010 and set May 7, 2010, as a time limit for submitting new requests or arguments. On May 4, there was an exchange of e-mail messages:
  • 16:21: the advisor reminded the applicant of the time limit 
  • 16:32: the applicant responded and instructed the advisor not to proceed with the application 
  • 16:37: the advisor confirmed these instructions to abandon and forwarded them to the PR 
  • 17:04: the advisor told the applicant that he thought the application should be maintained 
  • 17:23: the advisor told the applicant that the PR could provide an estimate on the chances of success
Later that day the applicant called the advisor and instructed him to continue with the application. However, these instructions were not forwarded to the PR, as a result of “an oversight on the part of [the advisor]”.

During the OPs held on June 8, 2010, the ED announced that the application was refused. The decision was posted on July 2, 2010.

In an e-mail dated August 4, 2010, and sent both to the office address of the advisor and also to his private e-mail address, the PR informed the advisor about the refusal of the application and the time limit for filing an appeal. This e-mail was worded as follows:
“Dear …

We have received from the EPO a decision to refuse this application, together with a write up of a telephone conversation I had with a member of the ED on whether we would attend Oral Proceedings and a copy of the minutes of the Oral Proceedings, which proceeded in our absence. I attach a copy of these documents.

The applicant now has the option of appealing the decision to refuse the application. The period for notifying the EPO that the applicant wishes to appeal ends 10 September 2010. A further two months are allowed for filing grounds of appeal.

In the absence of instructions from you before 10 September 2010 we will take no action to effect an appeal. We will also not issue any reminders in this regard.

I look forward to any instructions you might have.

We will issue our invoice for reporting the decision shortly.

Yours sincerely ...”
The time limit for filing an appeal expired on September 13, 2010 without an appeal having been filed.

The applicant realised that the application was no longer pending when an employee of the legal department called the PR on 19 January 2011 to inquire about the instructions that the latter had received.

On March 18, 2011, the applicant filed a notice of appeal, a statement of grounds of appeal as well as a request for re-establishment.

[1] The admissibility of the appeal turns on the success of the request for re-establishment of rights. If this request is granted, the appeal will be examined on the merits. Otherwise it has to be rejected as inadmissible (A 108, first sentence in conjunction with A 110, first sentence and R 101(1)).

[2] The time limit for filing an appeal in the present case expired on 13 September 2010. The request for re-establishment of rights was filed on 18 March 2011. The Board accepts that in the present case the cause of non-compliance (R 136(1)) was removed when an employee of the appellant realised that no action had been taken in the application (thereby implying that the appeal had not been filed either). According to the appellant, this happened on 19 January 2011, when the PR sent an email to an employee of the appellant following her inquiry by telephone. The Board accepts the given date of the email as the starting date for calculating the time limit pursuant to R 136(1) (at least no other event after 13 September 2010 is evident from the file which potentially could have triggered an earlier time limit). In this manner, the cause of non-compliance with the missed time limit was the erroneous belief of the appellant that the advisor had been instructed and had taken the necessary steps, while for the advisor and the PR it was their erroneous belief that the application was to be abandoned. The omitted acts were completed together with the filing of the request and the necessary fees were paid. The request for re-establishments of rights is admissible.

[3] Pursuant to A 122(1), the request must be allowed if the applicant can show that the time limit was missed in spite of all due care required by the circumstances having been taken. It is settled case law of the Boards of Appeal that due care must be exercised by all persons acting on behalf of the applicant. Thus, in the present case it must be examined whether this requirement has been fulfilled by all the persons involved. In the present case it can be established that the PR, the advisor, the assistant and the managing director of the appellant were all personally involved in the communication between the appellant and the PR.

[4] The Board notes that the explanation of the events as presented in the request and the subsequent two written submissions of the PR on behalf of the appellant contradict each other to some extent, or at least convey this impression on first reading. To the extent that the later submissions give a different cause for the missing of the time limit, they have to be disregarded (or be considered as inadmissible, see J 2/86, T 257/07, T 261/07), given that the later submissions were filed after the expiration of the time limit stipulated by R 136(1) and (2). However, the Board accepts for the benefit of the appellant that the contradictions themselves do not amount to the presentation of a completely new and different factual situation, and that the three submissions essentially all relate to the same set of facts, so that in the end the Board is able to assess the case taking into account all the written and oral submissions of the appellant (see also J 5/94).

Due diligence to be observed by the assistant

[5] Firstly, the Board notes that there is absolutely no evidence on file in respect of the key action of the assistant, namely the alleged phone call to the advisor on 4 May 2010 with the reversal of instructions. There is no witness statement from her. The only factual statement is that she was instructed to make the phone call. Whether she made the phone call or not remains unknown. From the facts on file it cannot be excluded that she did not make the phone call. This would be contrary to the assumption made in the two available witness statements from the managing director and the employee working in the legal department […], but they only express an assumption, and not personal knowledge of this event (i.e. the phone call). This contrasts with the statement of the advisor, who does not remember any phone call. It is noted that the employee working in the legal department does not even name the assistant personally as having made the phone call. The managing director admits himself that he did not follow up the instructions given to his assistant to check if they reached the advisor […]. Though the request for re-establishment is based on an alleged “misunderstanding” between the advisor and the assistant, there is no evidence that there was anything to misunderstand at all. It is even possible that the misunderstanding occurred between the assistant and the managing director. Hence the Board is unable to establish that the assistant did act with the required level of care. The mere statement that she was a reliable employee is not sufficient. For this reason alone the request for re-establishment of rights cannot be allowed. The argument that she probably would not have remembered the details of the phone call does not help because it does not change the fact that there is practically no information available to the Board about the circumstances relating to how the instruction to the advisor was lost.

[6] Assuming, again for the benefit of the appellant, that the assistant understood the instruction and made the phone call as instructed, the Board considers it appropriate to point out that her manner of proceeding by apparently not following up the alleged phone call (e.g. with an e-mail) does not appear particularly diligent under the given circumstances. On that day she had received several e-mails from the advisor, and also sent one herself with the instruction not to continue the application. In such a situation it would have been reasonable to expect that the instructions given by phone would be also confirmed by an e-mail at least, particularly in the light of the fact that the new instructions were meant to reverse completely the previously sent written instructions. In the opinion of the Board, this minimum level of diligence is to be expected from an office assistant even without special knowledge of patent matters. Conversely, if she was regularly expected to carry out instructions without any intellectual involvement on her part, it would have been reasonable to expect her superior to have checked if she had made this particular phone call, or alternatively to instruct her that this phone call was particularly important and needed written follow-up or checking for confirmation of receipt. However, the wording of her e-mails and the fact that e-mails were addressed to her personally (“Dear Patricia”) do not convey the impression that she had no understanding of the matters passing between the advisor and the managing director: “I have spoken to [the managing director] … we are not interested in pursuing this matter” (emphases by the Board) […]).

Examination as to due care during subsequent events

[7] The appellant based his case based on the argument that the time limit in question was missed because the advisor was unaware that the instructions had been reversed and that the application should be pursued further. The Board sees no reason either to doubt the existence of a strong causal relationship between the events and occurrences resulting in the erroneous belief of the advisor on the one hand and the final loss of rights on the other, and therefore these events, in the light of all the facts of the present case, are relevant to the missed time limit. Put differently, the Board has good reason to consider these events as falling under those circumstances in respect of which the due care required by A 122 must be shown. From this it follows that a finding of lack of due care in relation to these events could in itself be sufficient to lead to a refusal of the request for re-establishment of rights. Furthermore, this is not affected by the finding, as set out below, that the loss of rights could still have been avoided if all due care had been observed at a late stage.

[8] On the other hand, the first error (the loss of the instructions from the managing director) did not cause any direct loss of rights at that time, but only meant that no submissions were prepared for the upcoming OPs. The rights were finally lost more than four months later, when the appeal against the refusal of the application was not filed. Furthermore, the appellant stated that the first error was of a type which could not have been discovered under the circumstances […].

[9] The Board also took note of the fact that the assistant was no longer working for the appellant. The causes and circumstances of her departure from the firm were not explained or given any significance. Yet, based on the available evidence, it cannot be excluded that the loss of the order from the managing director reversing his previous instructions did not depend on her or at least cannot be imputed to her. The Board is also aware of case law according to which inexplicable errors may be excusable, depending on the circumstances (see T 580/06 [2.3]).

[10] The Board finds it appropriate also to examine the due care requirement in the time before the expiry of time limit for filing an appeal (see also T 30/90 [3]), if the Board accepts, arguendo, that the first lost communication (or misunderstanding) was excusable. In other words, the Board needs to examine if the appellant could have been realistically expected to discover the first error, given that it is clear that the proper observation of this time limit could have made good the earlier mistake, and also given that there had been ample time to discover the first error.

Due care to be observed by the advisor

[11] The Board holds that even if the lost communication (or misunderstanding) between the assistant and the advisor could be excused, the request could still not be granted because there was a lack of due care in respect of the second missed opportunity of saving the application, namely when the appellant should have become aware of the time limit for filing an appeal following the refusal. The Board holds that, based on the available evidence, either the advisor or the managing director of the appellant (or possibly both) did not show the required care in dealing with a time limit, in the present case the time limit for filing an appeal, the non-observance of which could cause a loss of rights.

[12] The monitoring and observance of time limits is normally expected from a diligent applicant (or patent proprietor as the case may be), or at any rate from a PR representing the applicant. In the present case, the appellant is a company registered in Panama, and as such obliged to act through a PR (A 133(2)). The appellant chose to communicate with the PR through an intermediary, the advisor. The request for re-establishment of rights described the advisor as a “trusted advisor” to the appellant, and from all the evidence it appears that he was not an employee of the appellant. In the opinion of the Board, from a legal point of view he must be considered to have been an agent acting on behalf of the appellant in relation to the PR, since he was not a PR entitled to act before the EPO himself. Nevertheless, the actions of an agent must be imputed to the party he is acting for, and the same level of care is expected from the agent as from a PR, or at least as from the party itself. See also Case Law, 6th edition, Chapter VI.E.7.4.3, page 523 onwards (Due care on the part of a non-authorised representative). Indeed, requiring a certain level of care from a PR and a party using his services would become utterly pointless if an intermediary acting between the party and the PR were not required to show the same level of care.

[13] The appellant submits that even though the advisor himself was not a PR authorised to act directly before the EPO, so that he also had to rely on another representative besides the advisor, this arrangement did not involve an exceptional level of risk. It was also widely used, so that it must be considered as sufficiently diligent practice. The Board agrees that no party is obliged to communicate with his appointed representative before the EPO directly, but is free to choose any intermediary. However, in this case the party resorting to the services of such an intermediary bears the risk of all the consequences arising from this arrangement. The Board also accepts that an applicant may indeed find it convenient and practical to use a further agent between himself and the PR handling his matters before the EPO. Such a middleman may have a better personal knowledge of the patent portfolio and may have been engaged instead of an in-house patent clerk, all the more so as in-house patent staff are very often not fully qualified patent attorneys. Still, adding a middleman introduces another communication interface and increases the risk of error, if only marginally. However, the Board finds that the real risk may be not so much the loss of information, but rather the loss of a well-defined sphere of responsibility with respect to the application, and with that an increased danger that errors remain hidden, as the present case illustrates.

[14] In assessing the situation before it, the Board proceeds from the assumption that the appellant, being a relatively small firm, had neither its own patent department nor any other employee whose main task was the administration of the patent portfolio. The patent portfolio was essentially managed by the advisor, who was acting as an agent of the appellant vis-à-vis the outside world in patent matters, including the PR. The advisor himself had set up his business as a one-man firm. Furthermore, it is important to note that the PR sent his invoices to the firm of the advisor, who issued then his own invoice to the appellant, thereby making it clear that he was indeed an agent and not an employee of the appellant. In such a situation the Board accepts that neither the advisor nor the appellant could be expected to maintain a highly reliable and therefore necessarily sophisticated and expensive system for monitoring time limits. It was sufficient that time limits were monitored by the PR handling the case before the EPO. However, it is clear that the advisor had no powers to decide whether an application was to be maintained or not. This was decided by the managing director of the appellant. On the other hand, the managing director, while retaining the responsibility for deciding on patent matters, did not have time to look after the individual patent applications in the portfolio. Rather, this was the task of the advisor, on the understanding that he would seek timely instructions from the managing director whenever needed. It also appears clear that even though a number of staff at the appellant’s offices occasionally handled patent-related correspondence, at no time did they have any responsibility to monitor time limits or the status of the applications in general. Hence, on the one hand, it should have been clear to the advisor that he must seek instructions from the managing director directly, and on the other hand it should have been clear to the managing director that if the advisor was not taking any action in a file, nobody else would.

[15] The Board holds that under such circumstances it was to be expected from the PR that he reminds the appellant of the time limit for filing the appeal and that failing to file the appeal would result in a loss of rights, even if he had been instructed earlier not to put more work into the application. By implication, it was also to be expected from the advisor to remind the appellant, whether of his own volition or following a reminder from the PR. Proper monitoring of the procedure in order to avoid a loss of rights is one of the very reasons for using the services of a PR, whether directly or through a further agent. However, if the information from the PR concerning the imminent time limit does not get through to the applicant, then the system must be designated as inherently defective. It is true that the last identifiable instructions from the appellant (e-mail of 4 May 2010 at 16:32 hours) clearly state that the appellant was “not interested in pursuing (the application) any further”, but the confirmation of receipt of these instructions (advisor’s e-mail of 4 May 2010 at 16:37 hours) leaves it open whether further possible actions of the advisor could be expected or whether it meant a definite termination of his involvement in the case. In particular, the confirmation e-mail did not warn the appellant that it would not be receiving any more reminders so that it must be prepared for a complete loss of rights.

[16] The Board notes that the Code of Conduct for PRs (Code of Conduct of the Institute of Professional Representatives before the EPO, OJ EPO 2010, Special edition 1, p. 203 onwards) expressly mentions the provision of case status information to clients as a professional obligation: “A member shall keep clients informed of the status of their cases.”, see point 4 (Relations with clients), paragraph (a), second sentence. A diligent applicant using the services of a PR should always be able to rely on this obligation of the PR, which undoubtedly serves the interest of the clients. This is particularly so when the applicant itself does not have proper monitoring systems in place. A diligent PR must make sure that his clients are aware of this service and together they are responsible for ensuring that the status information provided by the PR will not be obstructed by a possible middleman or agent acting between them, such as the advisor in the present case.

[17] The PR asserts that once instructions to abandon the application have been received, no further actions or reminders either from the PR or from any other agent such as the advisor are expected. The Board agrees that there are situations where this is indeed the case, namely if the client has been so informed, either by an explicit statement or a tacit agreement based on pre-existing and long-standing relationship. None of this is proven in the present case.

[18] On the contrary, the PR’s letter of 4 August 2010 sent to the advisor contradicts such an assumption, all the more so as the PR indicated in this reminder that he would issue a further invoice for reporting on the refusal […]. It has to be presumed that the advisor would have issued a corresponding invoice to the appellant. Apparently it was not the understanding of the parties that the representatives would not need to take further action if an application was not pursued any further, otherwise the appellant could not have been expected to accept an invoice “for reporting the decision”. It appears very unlikely to the Board that the PR was expected to report on the outcome of the OPs before the ED, but not expected to report whether and when an appeal against a possibly adverse decision at the OPs could be filed.

[19] Finally, quite apart from the intention to issue the invoice, the wording of the e-mail dated 4 August 2010 also contained a final warning to the appellant, illustrating that such a warning is customary and expected before a representative is indeed discharged from all obligations in a case: “In the absence of instructions from you before 10 September 2010, we will take no action to effect an appeal. We will also not issue any reminders in this regard” […]. Only when such a warning is effectively received by the represented party does the duty of the PR normally end.

[20] The Board recognises that the extent of an obligation to report on the status of abandoned applications may depend on various factors. These are not set out in detail in the Code of Conduct (see point [16]). In this respect some helpful indications can be found in the Guidance passages of the Rules of Conduct for UK Patent Attorneys (Rules of Conduct for Patent Attorneys, Trade Mark Attorneys and Other Regulated Persons, source:
In particular, see Guidance 6.4:
“Even where there is no ongoing client relationship, absent a formal termination including clear and reasonable notice to the former client that communications will not be forwarded [emphasis by the Board], regulated persons should take timely steps to draw a former client’s attention to correspondence or communications received relating to the former client and their rights. …”.
It goes without saying that this obligation applies even more strongly where the relationship with the client is still ongoing, e.g. because of other pending applications in a patent portfolio. The Board adds that this guidance of the UK code of conduct is provided for the purposes of applying Rule 6, the scope of which essentially corresponds to the scope of point 4 of the European Code of Conduct mentioned above (Relations with clients), and that the Board is not aware of any circumstance which would suggest a substantially different professional standard for European and for UK patent attorneys.

Due care to be observed by the appellant

[21] For the sake of argument, if the Board were to accept the submission that the appellant explicitly or tacitly agreed with the advisor that the PR and/or the advisor was indeed discharged from all his obligations, i.e. that no reminders were necessary or expected following instructions not to pursue an application, then the Board would be bound to conclude that it was the appellant, in the present case the managing director acting directly for the appellant company, who did not exercise the expected due care.

[22] Firstly, a normally diligent applicant would not give up the benefits resulting from the professional obligations and qualifications of the PR, for example in order to save costs. Such practice may be common, yet it cannot be considered diligent, in the sense of showing all due care in the light of the circumstances, as required by A 122 EPC. In other words, depriving oneself of the “safety net” of such reminders cannot be considered as diligent behaviour. In practice, cases presumed abandoned may become important again, as the present case itself illustrates. This also means that a normally diligent applicant would not expect of an intermediary to “filter” out the status information or reminders originating from the PR. It follows that in the present case the managing director did not exercise due care if he intentionally dispensed with the possibility to be reminded of the final loss of rights in the event of an abandoned matter. In the opinion of the Board, this manner of assessing this issue also provides a fair result. Either the applicant intended the decision to abandon to be final and irreversible, in which case not granting re-establishment is equitable. Or if the applicant expected the decision to abandon to be reviewed at a later stage, then waiving reminders – in spite of the applicant not having a time limit monitoring system of its own – obviously cannot be diligent.

[23] Secondly, irrespective of the previous finding, if the managing director was conscious of the fact that there would be no reminders, and he also knew that he would not have the time or knowledge to monitor the prosecution of the applications himself, he ought to have followed up the instructions reversing his previous decision to abandon, and ought to have checked in some appropriate manner that they reached his appointed advisor. This was all the more to be expected, as it is clear from the submissions that the managing director must also have been aware that he gave the instructions very late, even though he was in frequent personal contact with the advisor. If he chose not to contact the advisor personally in this instance, at least a check on the confirmation of the receipt of the instructions would have been in order. Even this task could easily have been delegated to the assistant.

In this respect the ratio decidendi of decision T 166/87 does not appear to be applicable, contrary to the submissions of the appellant. The advisor was not working daily and in close personal contact with the other staff in the offices of the appellant, so that maintaining some redundancy in the communication with the advisor would have been in order.

[24] As to the responsibility of the managing director, not realising the mistaken abandonment of the application from the status reports must also be imputed to him (if they existed at all, given that such status reports were not shown to the Board). After all, the primary purpose of status reports is to make sure that the client is made aware of the status of individual applications. If in a small company there is no dedicated staff to do deal with these, this task and the associated responsibility remain in the end with the person having the final say, in the present case the managing director. He cannot decline this responsibility by reference to a large amount of correspondence needing to be reviewed. It is normally to be presumed that correspondence addressed to a company will finally be read by the person responsible. Otherwise, written correspondence would completely lose its legal significance.

[25] Accordingly, the Board holds that the appellant did not prove that the required due care was exercised in the period leading up to the time limit for filing an appeal, by all the persons involved. On the contrary, the Board finds that neither the advisor nor the managing director of the appellant acted with the required care, so that the request for re-establishment must be rejected. […] The appeal is rejected as inadmissible.

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