Friday, 26 July 2013

T 2165/08 – Risky Business

This decision on a revocation appeal contains (among other things) an interesting discussion of apportionment of costs.

[45] A 104(1) provides that:
“Each party to the opposition proceedings shall bear the costs it has incurred, unless the Opposition Division (OD), for reasons of equity, orders, in accordance with the Implementing Regulations, a different apportionment of costs.”
That provision applies equally to opposition appeal proceedings by virtue of A 111(1). In such proceedings, Article 16(1) RPBA also applies and this provides that:
“(1) Subject to A 104(1), the Board may on request order a party to pay some or all of another party’s costs which shall, without limiting the Board’s discretion, include those incurred by any
(a) amendment pursuant to Article 13 to a party’s case as filed pursuant to Article 12(1);
(b) extension of a time limit;
(c) acts or omissions prejudicing the timely and efficient conduct of oral proceedings (OPs);
(d) failure to comply with a direction of the Board;
(e) abuse of procedure.”
To decide on an apportionment of costs therefore, the board must (i) receive a request therefore, (ii) be satisfied that there are reasons of equity to depart from the usual régime that each party bears its own costs, and (iii) be satisfied that the costs in question were incurred in one of the five ways listed in Article 16(1) RPBA although, as the words “without limiting the Board’s discretion” make clear, the list is not exhaustive.

[46] As regards (i), the [opponent] made a request for apportionment of costs in its letter dated 22 February 2013 and maintained it during the OPs. As regards (ii), the board considers that “for reasons of equity” indicates that some circumstances of the case call for an apportionment different from the normal régime and, as indicated by the case-law (see generally “Case Law”, 6th edition 2010, pages 740 to 763), this means costs should be awarded against a party which can be held to have caused another party unnecessary expense that could have been avoided with normal care or by compliance with prescribed or established procedures. As regards (iii), this clearly requires an examination of each apportionment request in the circumstances of the particular case. As a practical matter, (ii) and (iii) will usually need to be considered together.

[47] In the present case the [opponent] seeks an apportionment of costs because the [patent proprietor] filed its auxiliary requests 1 to 3 and document D51 on 6 February 2013 – one month before the OPs – and document D52 on 12 February 2013 – which was even closer to the OPs. The [opponent] says this caused it unnecessary work, and thus consequentially unnecessary additional costs, which would have been avoided if the requests and evidence in question had been filed, as they should have been, with the statement of grounds of appeal. The [patent proprietor] says the new requests and documents were filed as a response to the board’s preliminary opinion of 30 January 2013.

[48] In this respect the facts as shown by the file are against the [patent proprietor]. As regards the requests, in its preliminary opinion the board raised no arguments or issues which were not already dealt with in the opposition proceedings so the requests filed on 6 February 2013 could, and to comply with Article 12(2) RPBA should, have been filed with the statement of grounds of appeal dated 17 December 2008. In fact the [patent proprietor] then filed a main and four auxiliary requests which were all unchanged from requests filed before the opposition division. It seems clear that the [patent proprietor] made a conscious decision, when substantiating its appeal, to pursue the requests which did not succeed at first instance and not to file any additional requests. In doing so it took the double risk that, if it changed its mind later and filed further requests in addition or in substitution, such requests might not only be inadmissible (see Article 13 RPBA) but that, depending on the circumstances, the [opponent] might seek an apportionment of costs. Inevitably, the later in time that such further requests are filed, the greater both those risks become.

[49] In the event, the [patent proprietor] filed the requests one month before the OPs, in an appeal which had then been pending for four years, and both risks materialised. As regards admissibility of the late-filed requests, the [patent proprietor] was relatively fortunate – the [opponent] did not object to the new main request which had been presaged by the previous auxiliary request 4 and the board has found the new auxiliary request 3 admissible; but as regards the other late-filed requests, there is no plausible or adequate explanation for the late filing. It is clear that, if they had been filed with the grounds of appeal, the [opponent’s] representative could have considered them with the other requests filed then, taken its client’s instructions on them then, and dealt with them together with the other requests in the reply. By filing them much later, the [patent proprietor] made the [opponent] repeat that process just for the additional requests which will inevitably have lead to additional and avoidable costs. To have caused that was inequitable behaviour (see point [46] above). The costs in question have been incurred by an amendment to the [patent proprietor’s] case, and thus fall within Article 16(1)(a) RPBA. Although it is unnecessary to decide the point, the board can see it could also be argued that in all the circumstances the late filing just before the OPs of new requests replacing those on file from the outset of the appeal was an abuse of procedure within Article 16(1)(e) RPBA.

[50] Turning to the late-filed documents D51 and D52, the [patent proprietor] argued that these supported its case on inventive step. The [patent proprietor] also suggested […] that document D51 was filed “in view of the board’s preliminary comments regarding inventive step” and […] that document D52 was filed “in view of the [opponent’s] submissions filed with letter of 26 May 2009”. The [opponent] argued that the relevance of the documents had not been established and that no explanation for their late production had been offered.

[51] The [patent proprietor’s] reliance on the board’s preliminary opinion leads to the same observation as in respect of the late-filed requests (see point [48] above): the board’s preliminary opinion raised no arguments or issues not already dealt with in the opposition proceedings so document D51 could, and to comply with Article 12(2) RPBA should, have been filed with the statement of grounds of appeal dated 17 December 2008. As regards the [patent proprietor’s] assertion that D52 was filed in response to the [opponent’s] reply of 26 May 2009, nearly four years earlier, this is in effect an admission of extremely late filing unaccompanied by any explanation why the document was not filed sooner. In the case of both documents there is no explanation why this evidence is so important that it should be admitted at the very last stage of the appeal proceedings. With respect to the [patent proprietor], the mere assertion that the documents support its case is otiose – it is axiomatic that any party considers that any item of evidence it filed supports its case just as it is self-evident that no party would file an item of evidence which did not support its case.

NB: Rare word of the day: otiose (meaning ‘futile’, ‘pointless’ …).

[52] It is clearly necessary for any party filing evidence in appeal proceedings after it has filed its grounds of appeal or reply to explain why it is doing so, if only because of the requirements of Article 13 RPBA and, at the risk of stating the obvious, that necessity is even greater when OPs have been appointed (see Article 13(3) RPBA). Thus, to file new documentary evidence one month before, or less than one month before, appointed OPs with no credible explanation why the evidence was not filed earlier is to run the same double risk of inadmissibility and costs mentioned above in relation to late-filed requests (see point [48]).

In the present case the [patent proprietor] actually underlined the inadequacy of its explanation by stating, in respect of document D51 in its letter of 6 February 2013, “The implications of this post-filed evidence will be explained during the oral hearing”. No such comment was made of document D52 in the [patent proprietor’s] later letter of 12 February 2013 but, equally, no explanation beyond a reference to the [opponent’s] reply of 26 May 2009 was offered.

[53] The board has no hesitation in finding this behaviour inequitable. The last-minute production of new evidence is not only discouraged by the rules of procedure (see Article 13(3) RPBA) but also inevitably causes additional work and cost for the party faced with it. In the present case, the absence of explanation, both of the evidence itself and of its late production, makes matters worse. It would always be unacceptable for a party to produce evidence without any explanation – unless conceivably its relevance is self-evident – why the evidence supports that party’s case. To produce evidence at the virtual end of the proceedings accompanied only by a statement that the explanation will be provided even later was not only discourteous but a clear, and apparently deliberate, attempt to frustrate the [opponent’s] preparation for the OPs. That was both an act prejudicing the efficient conduct of OPs and an abuse of procedure. In the board’s opinion, an apportionment of costs is appropriate under each of the provisions of Article 16(1)(a), (c) and (e) RPBA.

[54] The [patent proprietor’s] remaining argument against any apportionment of costs, that it would create a precedent by limiting the procedural options of parties, is unsustainable. There is no question of this case being a precedent in the sense of being the first of its kind (see again “Case Law”, 6th edition 2010, pages 740 to 763). Further, there is no question of inhibiting the future conduct of parties by limiting their procedural options which will remain exactly the same as before. Equally, in the future as before, parties must exercise their procedural options in such a manner that their conduct is not inequitable, otherwise they may incur orders for apportionment of costs. If the [patent proprietor’s] argument were correct, any party could behave as it wished without fear of any sanction in costs. That cannot be correct. The provisions of the law as to costs, like the provisions as to procedure generally, are designed to ensure fair procedural behaviour and the use of such provisions to sanction improper use of procedure should have no effect on the proper use of procedure by others in future.

[55] Therefore, the board has decided for reasons of equity to order an apportionment of costs so that the [patent proprietor] pays the [opponent’s] costs incurred by auxiliary requests 1 and 2 and document D51 filed with the [patent proprietor’s] letter of 6 February 2013 and document D52 filed with the [patent proprietor’s] faxed letter of 12 February 2013. Such costs will be limited as required by R 88(1) and Rule 16(2) RPBA.

Assessment of Costs

[56] Before the close of the OPs, the board and the parties discussed the procedure for fixing costs once an apportionment has been ordered. In this respect, the following is added for the parties’ information.

R 88 reads:
“(1) The apportionment of costs shall be dealt with in the decision on the opposition. Such apportionment shall only take into consideration the expenses necessary to assure proper protection of the rights involved. The costs shall include the remuneration of the representatives of the parties.
(2) The OD shall, on request, fix the amount of costs to be paid under a final decision apportioning them. A bill of costs, with supporting evidence, shall be attached to the request. Costs may be fixed once their credibility is established.
(3) A request for a decision by the OD may be filed within one month of the communication on the fixing of costs under paragraph 2. The request shall be filed in writing and state the grounds on which it is based. It shall not be deemed to be filed until the prescribed fee has been paid.
(4) The OD shall decide on the request under paragraph 3 without OPs.”
This rule superseded R 63 EPC 1973 and references to the “registry” of the OD no longer appear. In the board’s opinion, references in R 88 to “the OD” must, for the purposes of costs to be assessed following an order in opposition appeal proceedings, be read as references to the board of appeal.

It appears to the board that, since the apportionment has been dealt with in the present decision (see R 88(1)), a request to fix the costs, accompanied by a bill of costs and supporting evidence should be filed with the board, and the prescribed fee paid, by the [opponent] within one month of the deemed date of receipt of the communication notifying this decision. R 88(4) provides that there shall be no OPs. However, the board envisages offering the [patent proprietor] one month to comment on the request, bill of costs and supporting evidence before making a decision on the amount of costs.

This is one more decision where the Board repeatedly cites certain pages of the Case Law Book (“pages 740 to 763”). I am not a big fan of citing “the Book” because the reader willing to check the reasoning of the Board has to read many pages, and filter out the relevant information. (Dare I say that such a citation is often otiose?) I for one would appreciate if the Boards cited the relevant decisions reported in the Book. Anyway, citing the Book by indicating page numbers is even worse because the three language versions of the Book obviously do not have the same information on the same pages. For instance, pages 740 to 763 of the English version correspond to pages 835 to 860 of the French version. Citing the relevant paragraphs is clearly more user-friendly. In the present case, “pages 740 to 763” corresponds to the entire chapter VII.C.7 dealing with apportionment of costs.

Should you wish to download the whole decision, just click here.

The file wrapper can be found here.


Anonymous said...

I find the decision a bit severe.

Either the Board admits the requests or refuses them. The rules of procedure are clear in this respect Art 12(2) or 13(1) , 13(3) are there to that effect. It is well known that Boards clearly dislike late filings, but this going a bit far.

It was certainly not clever for the proprietor's representatîve to say that explanations were forthcoming during OP.

In opposition it is not unfrequent that the proprietor files requests 1 month before Oral Proceedings. Following this reasoning, the opponent could argue that it costs him more to deal with those filings. For the same token, a proprietor could argue that every fact/evidence filed after the opposition period cost him money.

It is to be hoped that such a decision remains a one-off.

On the other hand, in T 990/09 a Board has granted costs to a proprietor for the whole appeal procedure. If the novelty destrying docuemnt would have been filed in opposition, appeal would have been unnecessary........

Anonymous said...

It should not be forgotten that this is not THE position of the Boards of Appeal, but just the individual decision of one board.