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[2013] ZAGPPHC 547
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Trinamics Incorporated v Registrar of Patents and Others (23902/2010) [2013] ZAGPPHC 547 (3 May 2013)
IN THE
NORTH GAUTENG HIGH COURT, PRETORIA
/ES
(
REPUBLIC
OF SOUTH AFRICA
)
CASE NO:
23902/2010
DATE: 3/5/2013
NOT REPORTABLE
NOF OF INTEREST
TO OTHER JUDGES
IN THE MATTER BETWEEN
TRINAMICS
INCORPORATED
..........................................................................................
APPLICANT
AND
THE RGISTRAR OF
PATENTS
.................................................................................
1
ST
RESPONDENT
JOHN TERRY
PIDGEON
.........................................................................................
2
ND
RESPONDENT
WAFFLERAFT MARKETING SA
(PTY) LTD
t/a WAFFLE RAFT
FOUNDATIONS
........................................................................
3
RD
RESPONDENT
JUDGMENT
PRINSLOO,
J
[1] This is an application
for the review and setting aside in terms of section 6 of the
Promotion of Administrative Justice Act
3 of 2000 ("PAJA"),
read with rule 53 of the Uniform Rules of Court, of certain
administrative actions performed
by the Registrar of Patents or his
or her duly delegated official or officials ("the Registrar")
in relation to South
African patent 88/0864 ("the patent").
[2] More specifically, the
application is directed at the acceptance by the Registrar of certain
renewal payments and the allowance
of a restoration application in
respect of the patent.
[3] Before me, Mr Michau
SC appeared for the applicant and Mr Van Tonder, assisted by
Mr Heystek, appeared for the second
and third respondents.
The first respondent did not take an active part in the proceedings.
Brief introduction and
background notes
[4] The Patent Register
indicates that an application for the patent was filed on 8 February
1988 and the application proceeded
to grant on 22 February 1989.
In terms of the provisions
of section 46(1) of the Patents Act 57 of 1978 ("the Act")
the duration of a patent shall,
unless otherwise provided in the Act,
be 20 years from the date of application therefor, subject to payment
of the prescribed renewal
fees by the patentee concerned or an
agent. Subject to the condition mentioned, the patent would
therefore have endured from
8 February 1988 to 8 February
2008.
[5] The second respondent
is the patentee of the patent and also a director of the third
respondent company, reflected as a licensee
of the patent in the
Patent Register.
[6] The title
of the invention is "Method of Constructing a Foundation for
Buildings".
According to the evidence
offered by the second and third respondents, the method of
construction (which is claimed in the method
claims of the patent
specification) and foundation for a building (which is claimed in the
products claims of the patent specification)
became known in the
trade as a "Waffle Raft". The Waffle Raft became the
industry norm when buildings had to be
constructed on expansive
soil. It became highly successful due to the fact that it
provided a construction method which is
universal and constant and in
general leads to a more cost effective but at the same time a more
effective type of stiffened raft
foundation than was known before the
priority date of the patent. According to the respondents, it
is estimated that not
less than 25 million square metres of
foundations for buildings have been constructed in South Africa
utilizing the Waffle
Raft invention.
[7] The respondents allege
that the applicant would, in its capacity as the appointed structural
engineer for numerous projects,
have been responsible for designing
the foundation structure for buildings. Where expansive soil
conditions were found, the
applicant would have benefited (and indeed
has benefited) from the solution disclosed by the invention. It
is for this reason
that the applicant and the third respondent,
already in April 1996, entered into a sub-licence agreement under the
patent.
In terms of this agreement authority was granted to the
applicant to design Waffle Raft foundations and, in exchange, certain
licence
fees and royalties would become payable to the third
respondent.
[8] In April 2008, the
second and third respondents, as plaintiffs, instituted a damages
action against the applicant, and a number
of the applicant's
directors, as defendants flowing from the alleged breach of the
sub-licence agreement, which the respondents
claimed to have
cancelled in August 2006, and alleged infringements of the patent
after the alleged cancellation of the licence
agreement.
[9] The trial
was enrolled for hearing on 3 – 14 May 2010.
[10] Days before the
scheduled start of the trial, on 26 April 2010, the applicant
launched these review proceedings which, if successful,
will result
in a conclusion that the patent lapsed already in February 1992 (more
than twenty one years ago) for failure by the
respondents to
timeously pay the prescribed annual renewal fees as intended by the
provisions of section 46 of the Act. In
order to achieve this
result, the alleged unlawful or irregular administrative actions of
the Registrar, purporting to restore
the patent to the Register, have
to be set aside by means of this review application. A
successful review, will, as mentioned,
result in the patent being
regarded as having lapsed in February 1992, before the licence
agreement was entered into between the
parties so that the agreement
will, for practical purposes, be unenforceable and the action cannot
succeed. I add that the
"defence" that the patent had
lapsed, is not raised in the plea offered by the applicant and its
directors as defendants
to the particulars of claim in the action.
The defendants in the action also raised a counter-claim seeking an
order revoking
the patent on the ground that it did not involve an
inventive step as contemplated in section 25(10) of the Act.
The defence,
as pleaded, appears to go to the merits of the claims
and there is also an attack on the
locus standi
of the third
respondent (as second plaintiff).
Details of
the main relief sought in the notice of motion and described in the
founding affidavit
[11] Prayer 2
of the notice of motion reads as follows:
"2.
Reviewing and setting aside:
2.1
the acceptance of the 1992 renewal payment in respect of South
African patent 88/0864;
2.2
the acceptance of the 1993 renewal payment in respect of South
African patent 88/0864; and
2.3
the restoration of South African patent 88/0864 pursuant to the
filing of a restoration application on 30 0ctober 2003."
[12] It will be observed
that these alleged unlawful or irregular administrative actions were
performed, broadly speaking, 21, 20
and 10 years ago.
[13] For illustrative
purposes, it is convenient to quote the nature and details of the
three administrative actions under attack
in the review application,
as it is described in the founding affidavit:
"66.1
The irregular acceptance by the Registrar in 1992 of the Second
Respondent's Form P10 with revenue stamps to the value
of R30,00.
In terms of
Government Notice
no R3163 of 27 December
1991, the prescribed renewal fee payable for the expiration of the
fourth year, ie the 1992 renewal
fee in respect of the patent, was
R36,00.
66.2
The irregular acceptance by the Registrar in 1993 of the second
respondent's Form P10 without revenue stamps, payment having
been
made by way of a cheque drawn in favour of the Registrar.
In terms of Regulation 3 of the Patent Regulations which
were in
force at that time, the fees payable in terms of the
Patents Act
shall
be the fees specified in Schedule 1 to the regulations and
shall be payable:
(a)
by affixing revenue stamps to any relevant document, which stamps may
be cancelled by a Receiver of Revenue or the Registrar,
or
(b)
by impressing a stamp on any relevant document by means of a die
approved by the Secretary for Inland Revenue; or
(c)
in such other manner as the Registrar may direct.
66.3
The irregular acceptance by the Registrar of an application for the
restoration of the patent, which restoration application
was filed on
30 0ctober 2003. In terms of Schedule 1 of the regulations
referred to above, the fee payable for the restoration
application
was R286,00 payable as stated in paragraph 66.2 above. It is
not apparent from the Patent 0ffice records that
this fee was paid
and that it was paid in the prescribed manner. The restoration
application was in any event not competent
as it was aimed at
restoring the lapsing of the patent in 2001 for failure to pay the
full prescribed renewal fees for the period
1993 to 2002. As
pointed out in paragraph 66.1 above, the patent had already lapsed in
1992 for the reasons given there.
Notwithstanding these defects
the Registrar irregularly allowed the restoration of the patent."
[14] The applicant then
proceeds to ask for the review and setting aside of these three
administrative actions by employing the
full spectrum of review
grounds codified in
section 6
of PAJA.
Abandonment
of part of the relief sought, and a consideration of the issues
regarding the remainder of the relief still prayed for
[15] Shortly before the
commencement of the proceedings before me, the applicant abandoned
the second and the third attacks referred
to above, namely those in
respect of the alleged irregular acceptance of the 1993 renewal
payment by way of a cheque and the 2003
entertainment of the
restoration application for the period 1993 to 2002.
It is common cause that
the restoration application was granted in terms of the provisions of
section 47 of the Act. In terms
of section 47(2), the second
respondent's intention to apply for the restoration was duly
advertised in the Patent Journal of February
2004. The
applicant did not oppose the restoration application or enquire about
the circumstances which gave rise for the
need for such a
restoration. I find no explanation in the voluminous record for
the applicant's failure to do so.
[16] What is left for
consideration and adjudication is the application to review and set
aside the alleged irregular acceptance
by the Registrar in 1992 of
the second respondent's Form P10 renewal application with revenue
stamps to the value of R30,00 instead
of R36,00 after the tariff had
been increased a few days earlier (on 27 December 1991) in
terms of
Government Notice
no R3163 of 27 December 1991.
[17] I consider it useful,
and of some relevance, to make a few remarks about the "renewal
history" of the patent, from
its inception on 8 February 1988
until its expiry on 8 February 2008.
[18] The second
respondent's patent manager was, at all relevant times, his spouse,
Ms Aideen Pidgeon ("Ms Pidgeon").
It was her
duty to see to the regular and timeous renewal of the patent in
consultation with her husband. It is common cause
that the
patent was duly renewed for the first three years namely in February
1989, 1990 and 1991. It is also common cause
that the second
respondent, at all relevant times, had the firm intention to
diligently and timeously renew the patent.
Ms Pidgeon offered
detailed and undisputed evidence on oath relating to the various
steps she took over the years to ensure the
proper renewal of the
patent. Towards the end of 1991, the second respondent
instructed her to obtain a copy of the relevant
Government Gazette
regulating the prescribed fees for patent renewals and to attend to
the renewal of the patent by not later than the due date, 8 February
1992. She made use of the "builders holiday" which
normally commences at about 15 December of each year, during
1991 to visit the Government Printer before Christmas. She
requested and obtained the relevant schedule of fees published
in
terms of the Act. At the time of preparing her affidavits in
this matter, she no longer had a copy of the relevant
Government
Notice
, but she was advised that it would have been
Government
Notice
no R3038 of 28 December 1990. In terms of that
Government Notice
, the prescribed renewal fee was R30,00.
It was payable before the expiration of the fourth year from the date
of the application
of the patent, in this case before 8 February
1992.
It is common cause that
after Ms Pidgeon had visited the Government Printer, and on
27 December 1991, with effect from 1 January
1992, the amended
tariffs were published, as I have pointed out, by
Government
Notice
R3163. Ms Pidgeon was unaware of this latest
amendment when she proceeded to complete the relevant Form P10 on
8 January
1992 and when she affixed the revenue stamps to the
value of R30,00. She posted the form on 9 January 1992 as is
evident
from the relevant "certificate of posting of a
registered article" attached to one of her affidavits. She
received
the form back some time later, duly endorsed with the
official stamp of the Registrar, indicating that the patent had been
renewed
for another period of one year with effect from 8 February
1992. If she had been aware of the regulation published on 27
December 1991, or if the Registrar had drawn her attention thereto,
she would have paid the extra amount of R6,00.
The patentee, the second
respondent, was also not aware of the R6,00 increase in the fee at
the time when the R30,00 was paid.
The second respondent
concedes that objectively, the Registrar should not have accepted the
payment of R30,00 as a valid renewal
payment and ought to have
informed the patentee that a further amount of R6,00 was payable in
order to renew the patent in 1992.
This evidence of the second
respondent is also supported by Mr Daniel Petrus Boshoff, a
former employee of the South African
Patent 0ffice who was an
assistant director of patents between 1985 and 1995 when he retired.
Mr Boshoff also testified
that the Patent 0ffice (the Registrar)
made a mistake in accepting the short payment. In my view,
there is much to be said
for the second respondent's submission that
the Registrar and his officials were probably not aware of the new
Government Notice
that had been published at a time when most
members of the public would not have been aware thereof, namely over
the Christmas
holiday period.
It is common cause that
the second respondent (and also Ms Pidgeon for that matter) only got
wind of the attack on the 1992 short
payment when this application
was served in April 2010, more than 18 years after the event.
Had they been aware of any difficulties
in this regard at an earlier
stage, and of a suggestion that the patent may have lapsed as a
result of the short payment, they
would undoubtedly have applied for
a restoration in terms of section 47 of the Act. When they
finally became aware of the
attack in April 2010, the patent had
already expired so that there was no longer any room for a
restoration application.
Finally, I point out that
Ms Pidgeon's 8 January
1992 Form P10
renewal application forms part
of the record. According to Mr Michau, the mischief complained
of namely the acceptance of
the 1992 renewal fee, manifests itself in
the Registrar's official stamp to be seen over the R30,00 revenue
stamps on the Form
P10.
[19] I turn to the 1993
renewal. The historic details appear from affidavits offered by
Ms Pidgeon which contain her
undisputed evidence on the subject.
During April 1993 the
second respondent instructed Ms Pidgeon to renew the patent by paying
the renewal fees for a period of nine
years in advance, namely until
February 2002. This instruction came after February 1993 (when
the purported 1992 extension
would have expired) but section 46(2) of
the Act reads as follows:
"(2)
A patent shall lapse at the end of the period prescribed for the
payment of any prescribed renewal fee, if it is not paid
within that
period: Provided that the Registrar may upon application and subject
to the payment of such additional fee as may be
prescribed, extend
the period for payment of any such fee for a period not exceeding six
months."
Ms Pidgeon calculated the
renewal fees for the period of 9 years (8 February 1993 to 8
February 2002) together with the fine
for the late payment to amount
to R842,00. She made out a cheque for this amount and the
cheque forms part of the record.
She phoned the Patent 0ffice
and enquired whether the calculation was correct. The officer
at the Patent 0ffice told her
that the payment was "too much"
and the cheque should be made out for an amount of R707,00. 0n
the officer's advice
she cancelled the first cheque and prepared
another cheque for the latter amount. This last-mentioned
cheque is also part
of the record. She posted the cheque with a
schedule setting out how the figure is arrived at and the Form P10,
duly completed,
asking for the 9 year extension. All these
documents form part of the record. Subsequently, Ms Pidgeon
received the
Form P10 back, duly stamped by the Registrar, together
with a receipt from the latter for the payment of R707,00. The
date
stamp on the P10 is 19 April 1993 and the date stamp on the
receipt is 20 April 1993. Ms Pidgeon was now satisfied that the
patent had been renewed for 9 years until 8 February 2002, and
diarized her file accordingly.
0n or about 3 June 2002, on
the instructions of the patentee (second respondent), she phoned the
Patent 0ffice's renewal department
to determine the renewal fees
(plus penalties for late payment) for the remaining term of the
patent until February 2008.
She was then advised by one of the
Registrar's officers that the patent had lapsed on 8 February 2001.
The officer also advised
that a
caveat
had been registered on
the patent. Ms Pidgeon told the officer about the 1993 renewal
and how the amount had been calculated
and sent the relevant
documents to the officer for inspection. This satisfied the
officer that the patent had been renewed
until 8 February 2002
whereupon the officer also advised Ms Pidgeon as to the
outstanding renewal fees for the remainder of
the life of the patent
and the penalties (the so-called extension provided for in section
46(2),
supra
). Ms Pidgeon now prepared the
necessary Form P10 which she posted to the Registrar with the
required revenue stamps.
She subsequently received the duly
stamped and signed Form P10 from the Registrar. The date stamp
is 5 June 2002.
Ms Pidgeon and her husband were now
satisfied that the patent had been properly renewed until it would
expire in February
2008.
[20] The following events
led to the restoration application of 0ctober 2003: in February 2003
the respondents (as plaintiffs) issued
summons against another firm
of engineers and architects for the alleged infringement of the
patent. In May 2003, these defendants
filed a plea alleging
that the patent had lapsed owing to non-payment of the renewal fees.
The defendant's attorneys informed
the attorneys of the plaintiffs
(present respondents) that they had determined, through registration
of a
caveat
to monitor payment of the renewal fees already in
1998 that the patent had lapsed on 8 February 2001 and that the
renewal fees
were never paid for the period 8 February 2001 to 8
February 2002. The gist of this argument is that the payment of
R707,00
which Ms Pidgeon made in 1993 (on the advice of the
Registrar) was not enough to cover the renewals until February 2002
but only
until February 2001. This state of affairs was
subsequently confirmed by the plaintiffs' attorneys whereupon Ms
Pidgeon instructed
his attorney to launch the restoration
application, which, as I have said, was granted on an unopposed
basis. It is
clear that the omission in paying the full
amount in respect of renewal fees was unintentional and that there
was no undue delay
on the part of the respondents to launch the
restoration application.
I add that, when the
second respondent got wind of the plea that the patent had lapsed, he
sent Ms Pidgeon to the Patent 0ffice
where she was again given the
assurance that everything had been paid up to date. The
Registrar even wrote a letter (handwritten)
which reads -
"The
Patent 0ffice acknowledges that this payment was paid in full for the
period 8 February 1993 to 8 February 2002 and not
to 8 February
2001 as was mistakenly indicated on the Register. If any
queries come in … office for reference."
Nevertheless, as already
indicated, the restoration application was launched, advertised and
granted.
[21] I add that the
Registrar's file contains a document recording "renewals"
and
"restorations". There is nothing in the
"restorations" column, so that the 2003 restoration is not
mentioned
in the Patents Register. In the "renewals"
column, it is meticulously recorded that consecutive renewal payments
were made for the period 8 February 1991 to 8 February 2007 (the
first three years between 1988 and 1991 are not mentioned,
but it is
common cause, as already indicated, that those renewals were in
order).
[22] In view of the
aforegoing, the "renewal history" of the patent can be
summarized as follows:
1.
For the first four years of the patent's existence, from February
2008 to February 1992, the renewals were in order.
2.
For the renewal period February 1992 to February 1993 there was a
short payment of R6,00 namely R30,00 instead of R36,00.
The
payment was made by Ms Pidgeon in January 1992, ignorant of the
fact that the tariff had been increased a few days earlier,
on 27
December 1991. An equally ignorant Registrar accepted the
payment as correct. Shortly before the payment was
made (and
before the 27 December amendment of the tariff) Ms Pidgeon
visited the Government Printer where she was informed
that the
previous tariff was still in place. The Registrar's file
reflects a proper renewal for this period. The Patent
Register
is silent as to any irregularity. It is, however, common cause
that the Registrar made a mistake when accepting
the short payment.
When
the Registrar was asked for reasons, in terms of PAJA, for the
decision to accept the short payment, she stated the following
on
22 July 2010:
"The
acceptance of the payment of the 1992 renewal fee on Form P10 with
revenue stamps to the value of R30,00 instead of the
prescribed fee
of R36,00 occurred due to an administrative oversight. The
Registrar condoned the irregularity in terms of
section 89 read
together with
section 16
of the
Patents Act no 57 of 1978
. A
notice in terms of
section 16(1)
was not issued since no interested
party could have been identified at the time of condonation."
Section 89
provides:
"The
registrar or the commissioner may authorize the condonation or
correction of any irregularity in any proceedings before
him,
provided such condonation or correction is not detrimental to the
interests of any person."
Mr Michau
argued, correctly in my view, that the day to day renewal of patents
can hardly be described as "any proceedings
before him".
It was argued that the section deals with an incorrect procedure
having been followed in legal proceedings.
It is not clear to
me whether it is necessary to elevate the "proceedings"
mentioned in
section 89
to "legal proceedings", but it is
clear, as argued by Mr Michau, that there is no indication
whatsoever that the
Registrar has the power to condone an
underpayment of renewal fees. In the case of an underpayment,
the correct procedure
would be for the patentee to provide for an
extension of time for payment of the full amount as intended by the
requirements of
section 46(2)
, or, perhaps, to approach the court for
appropriate relief if the short payment is discovered eighteen years
later, like in the
present case. In this regard, it is alleged
in the founding affidavit on behalf of the applicant that the latter
got wind
of the short payment in April 2010, after its attorneys had
embarked upon an exercise to search for irregularities in respect of
all the renewal payments.
As to the
Registrar's reference to the provisions of
section 16
, Mr Michau,
again correctly in my view, argued that
section 16
finds no
application in the present case: it deals with matters where the
Registrar and the Commissioner are vested with discretionary
powers.
This is not such a case.
3.
The payment which Ms Pidgeon made in March 1993 to ensure the
renewal of the patent for the next 9 years until February
2002, was a
short payment and only good enough to ensure renewals up to February
2001. There was consequently no renewal
payment for the period
February 2001 to February 2002 so that the patent lapsed, as intended
by the provisions of
section 46(2)
,
supra
, of the Act.
The fact that Ms Pidgeon wanted to pay a larger amount, but was
told by the Registrar to pay the lesser
figure, is unfortunate, but
does not avail the respondents. Nevertheless, the lapsing of
the patent after 8 February
2001 was remedied with the
successful restoration application of 2003/2004. The exact date
when the restoration was granted
remains unclear to me but it would
have been, I assume, during or about 2004.
4.
As already illustrated, it is common cause that the renewals for the
six years between February 2002 and February 2008 (when
the patent
expired) were properly brought about.
Has a
proper case been made out for the granting of the remaining relief
sought, namely the reviewing and setting aside of the acceptance
by
the Registrar of the 1992 R30,00 renewal payment?
[23] The main thrust of the
applicant's argument, if I understood it correctly, is the following:
the purported renewal of the patent
in 1992 (when Ms Pidgeon's
R30,00 payment was accepted) was unlawful and contrary to the
provisions of the Act so that the
patent, as a matter of law, lapsed
in 1992. In this regard, the applicant relies on the mandatory
provisions in section 46(2)
that "a patent shall lapse at
the end of the period prescribed for the payment of any prescribed
renewal fee, if it is
not paid within that period" (with the
rider that the Registrar may upon application extend the period for
payment).
Consequently, so the
argument continues, subsequent renewals and the restoration were of
no moment because if the 1992 renewal is
set aside, it would mean
that the patent had lapsed and there was nothing to renew or
restore. The restoration application
did not seek to cure the
defective 1992 renewal but only the subsequent 2001 lapse as I have
explained. The subsequent restoration
proceedings were
therefore an exercise in futility.
[24] I have difficulty in
accepting this argument. Mr Michau formulates his
submission as follows in his heads of argument:
"There
had been subsequent renewals and also a restoration of the patent in
question but these are of no moment because
if the 1992 renewal is
set aside
, the patent had lapsed and there was nothing to renew
or restore." (Emphasis added.)
It is clear, therefore,
that counsel recognizes that the "1992 renewal" first has
to be set aside before the lapsing of
the patent in 1992 can be
regarded as a reality. This is also, presumably, why the
remaining relief sought is aimed at the
reviewing and setting aside
of the acceptance of the 1992 renewal payment. This is also
developed further in paragraph 66.1
of the founding affidavit
(already quoted) where the applicant seeks the review and setting
aside of the "irregular acceptance
by the Registrar in 1992 of
the second respondent's Form P10 with revenue stamps to the value of
R30,00". This is also,
presumably, why I was not asked to
issue a
declarator
to the effect that the patent lapsed in
1992. It should also be borne in mind that this was not a case
of non-payment of
the renewal fee as described in section 46(2) and
as happened when the patent lapsed in 2001 because the February 2002
payment
was not made at all. This was, indeed, a
bona fide
attempt to renew the patent (albeit by making a short payment) with
the full blessing of the equally ignorant Registrar.
As I
already pointed out, the Registrar, in accepting the short payment,
made a mistake and, in that sense, committed an irregular
administrative act which, in appropriate circumstances, may fall to
be set aside on review in terms of the provisions of PAJA.
This
is what the applicant seeks to achieve.
[25] It is now well settled
that an unlawful administrative act remains valid until set aside by
the court. The learned judges,
in
0udekraal Estates (Pty)
Ltd v City of Cape Town and 0thers
2004 6 SA 222
(SCA) at 241H to
242C put it as follows:
"In
other words, was the Cape Metropolitan Council entitled to disregard
the Administrator's approval and all its consequences
merely because
it believed that they were invalid provided that its belief was
correct? In our view, it was not. Until
the
Administrator's approval (and thus also the consequences of the
approval) is set aside by a court in proceedings for judicial
review
it exists in fact and it has legal consequences that cannot simply be
overlooked. The proper functioning of a modern
State would be
considerably compromised if all administrative acts could be given
effect to or ignored depending upon the view
the subject takes of the
validity of the act in question. No doubt it is for this reason
that our law has always recognized
that even an unlawful
administrative act is capable of producing legally valid consequences
for so long as the unlawful act is
not set aside."
At 244A the
following is also said by the learned Judges of Appeal:
"If
the validity of consequent acts is dependent on no more than the
factual existence of the initial act then the consequent
act will
have legal effect for so long as the initial act is not set aside by
a competent court."
- See the
full discussion of the subject in
0udekraal
from 241G-247C.
[26] From the aforegoing,
it would appear that the acceptance of the 1992 renewal payment (and
with it the 1992 renewal of the patent)
remains in force until set
aside. It follows that the consequent acts of successfully
initiating and concluding restoration
proceedings of the patent for
the period 1993 to 2002 also has legal effect, at least for so long
as the 1992 renewal is not set
aside and, for that matter, for as
long as the 2003/2004 restoration is not set aside.
[27] Where I was not asked
to decide, in the form of a
declarator,
whether or not the
patent promptly lapsed in February 1992, I decline to do so. In
any event, as I pointed out, the applicant
appears to recognize
that the patent cannot be regarded as having lapsed in 1992 before
the alleged irregular administrative act
of the Registrar, when he
accepted the short payment, is reviewed and set aside.
[28] What remains for
decision, is whether or not the irregular administrative act,
performed more than 21 years ago, ought to be
set aside. I have
a discretion in this regard. In
Chairperson, Standing Tender
Committee and 0thers v JFE Sapela Electronics (Pty) Ltd and 0thers
2008 2 SA 638
(SCA) the following was stated at 650E G:
"In
my view the circumstances of the present case as outlined above, are
such that it falls within the category of those cases
where by reason
of the effluxion of time (and intervening events) an invalid
administrative act must be permitted to stand.
While the court
a quo
correctly found that the award of each of the three
tenders was invalid when made, it appears not to have appreciated
that it had
a discretion to decline to set aside those awards.
It follows that in my view the court
a quo
erred in making the
order it did and this court is free to set aside that order."
[29] It is
also convenient to quote what was said in
Sapela
at 649J-650E:
"In
appropriate circumstances a court will decline, in the exercise of
its discretion, to set aside an invalid administrative
act. As
was observed in
0udekraal
… at 246D:
'It
is that discretion that accords to judicial review its essential and
pivotal role in administrative law, for it constitutes
the
indispensable moderating tool for avoiding or minimizing injustice
when legality and certainty collide.'
A
typical example would be the case where an aggrieved party fails to
institute review proceedings within a reasonable time …
In a sense, therefore, the effect of the delay is to 'validate' what
would otherwise be a nullity. See
0udekraal Estates
paragraph 27 at 242E F. In the present case, as I have
found, there was no culpable delay on the part of the respondents.
But the object of the rule is not to punish the party seeking the
review. Its
raison d'étre
was said by Brandt JA
in
Associated Institutions Pension Fund and 0thers v Van Zyl and
0thers
2005 2 SA 302
(SCA) … in paragraph 46 to be
twofold:
'First,
the failure to bring a review within a reasonable time may cause
prejudice to the respondent. Secondly, there is a
public
interest element in the finality of administrative decisions and the
exercise of administrative functions.'
Under
the rubric of the second I would add considerations of pragmatism and
practicality."
[30] I made a point of
sketching the "renewal history" of the patent in some
detail. I consider the facts of
this case to be of
relevance when it comes to considering whether or not to exercise my
discretion in favour of setting aside the
administrative action
complained of. The mischief under attack took place 21 years
ago. When this application
was launched, it was about 18 years
after the event. At all relevant times the patentee had the
bona fide
intention of renewing the patent. The 1992
payment was made timeously and with the blessing of the Registrar.
It was
made after Ms Pidgeon had checked the then applicable
tariffs with the Government Printer. The payment was made a few
days after the new tariffs were published two days after Christmas.
The Registrar made no mention of the short payment (or
a possible
lapsing of the patent) in the Patents Register. Indeed,
according to the reasons furnished in terms of PAJA, the
Registrar
states that the short payment was "condoned". The
patentee only became aware of the alleged short payment
and
irregularity when this application was served on him in 2010.
This was after the patent had expired. There was
no room for a
restoration application.
The 1992 renewal could not
prejudice any party, or at least any known party for purposes of the
present enquiry: the applicant only
became aware of the patent four
years later, in 1996, when the licensing agreement was entered into
with the respondents.
The allegation in the particulars of
claim (issued in 2008 after the expiry of the patent) to the effect
that the patent was at
all relevant times in force, was made in good
faith.
The lapsing of the patent
in February 2001 was cured with the 2003/2004 restoration
application. The short payment, covering
renewals only up to
February 2001 instead of up to February 2002, also came about because
the Registrar advised Ms Pidgeon
to pay a lesser amount than
what she intended paying in the first place. The restoration
application was duly published in
the patent journal but not opposed
by the applicant. The application to review and set aside the
restoration was abandoned,
and the same applies to the application
for the review and setting aside of the acceptance of the 1993
renewal payment. Again,
the patentee was unaware of the lapsing
of the patent until the news was broken to him during the 2003
litigation exercise.
[31] Before me, counsel for
the applicant complained that a refusal to set aside the 1992 renewal
payment so that the patent can
be regarded as having lapsed in
February 1992, will prejudice the applicant who will then not be able
to raise a defence in a civil
trial to the effect that the patent was
of no force and effect during the contract period. As I
understand the
dicta
in
0udekraal, supra
, the patent
was in any event renewed in 1993 and stood renewed until February
2001, before it was restored in 2004. The alleged
"lapse"
of 1992 would have taken place before the contract was entered into
in 1996. The applicant will still be
entitled to any exemptions
or compensation which may be available to it in respect of actions
performed while the patent was lapsed
between February 2001 and its
restoration, in terms of the provisions of section 48 of the Act.
[32] 0n the other hand, the
second respondent, as deponent to the opposing affidavit, described
the prejudice to the respondents
in the event of "a finding of
invalidity of the administrative actions of the Registrar after so
many years" and presumably
on the assumption that the
restoration application would also be set aside (when the affidavit
was deposed to, the attack on the
restoration application had not yet
been abandoned). The second respondent sketches the prejudice
in the following terms:
"Some
of the relevant facts and considerations are the following:
24.1
the third respondent has granted between 10 and 15 sub-licences under
the patent to other parties on the basis that the patent
was validly
renewed;
24.2
I roughly estimate that 120 000 RDP houses were constructed
under the sub-licences utilizing the method described by the
invention;
24.3
an amount of approximately R8 750,000 was collected by the third
respondent in terms of the various licence agreements.
Its
clients, in many instances, were project managers or engineers who
collected such fees, in turn, from their clients (the owner,
contractor, principal agent, state organ, etc);
24.4
if the patent is now to be invalidated due to an administrative
oversight, the domino effect of claims for repayment of fees
collected and paid over by each such role-player, will be tremendous
and obviously destructive of the third respondent's corporate
existence and also my personal financial position;
24.5
the public therefore, represented by all of these intermediaries,
agents, principals and clients in respect of thousands of
projects,
will be severely affected by setting aside the actions and/or
decisions of the Registrar;
24.6
after the lapse of so many years, it is impossible to trace the
officials who were responsible for taking the administrative
actions
complained of by the applicant …
25.
In the interest of finality, practicality and pragmatism (
my note
:
this is an obvious reference to the
dicta
in
Sapela, supra
)
I submit that the honourable court should, in the exercise of its
discretion and in the event that it finds that the actions of
the
Registrar are reviewable, decline to set aside such actions or
decisions."
[33] I find it unnecessary
to decide whether or not there was an undue delay on the part of the
applicant to investigate the status
of the patent and to launch this
review application. I consider that there are clear signals to
that effect, but I take the
matter no further. As appears from
the
dicta
in
Sapela, supra,
an undue delay is not a
prerequisite for the exercising of the discretion against setting
aside the irregular administrative act.
[34] Finally, I make the
remark in lighter vein that there is something unusual (perhaps even
something not cricket!) about the
nature of the relief sought: the
applicant is seeking to undo the renewal exercise of 1992 in order to
lay the foundation for a
pronouncement that the patent lapsed at that
time. In a sense, the applicant is seeking to "bring
about" the lapsing
of the patent. If the applicant was
confident that the patent lapsed without more because of the short
payment and the mandatory
provisions of section 46(2), it could have
asked for a
declarator
to that effect. And what is to
become of poor Ms Pidgeon's R30,00? Is it to be refunded to
her? And perhaps with
interest by now exceeding R6,00?
[35] In all the
circumstances, I have come to the conclusion that this is an
appropriate case where I should exercise my discretion
to decline to
set aside the administrative action complained of. This is a
case where the "public interest element in
the finality of
administrative decisions and the exercise of administrative
functions" should be recognized. It is also
a case where
"considerations of pragmatism and practicality" militate
against the granting of the application.
In the result, the
application falls to be dismissed.
[36] In view of the
conclusion which I have arrived at, I do not consider it necessary to
deal with another argument offered on
behalf of the respondents,
namely that the applicant failed to exhaust internal remedies at its
disposal, as intended by the provisions
of section 7(2) of PAJA,
before launching this application.
Some remarks about the
question of costs
[37] After the applicant
filed its replying papers, the second and third respondents filed a
further affidavit, with annexures,
which they described as a
"rejoinder affidavit". This was presumably done with
the provisions of Uniform Rule 6(5)(e)
in mind. The filing of
this "rejoinder affidavit" was not opposed, and the
applicant responded with a "joinder"
with some further
annexures. The "rejoinder affidavit" of the
respondents starts at p278 of the record.
[38] I am not persuaded
that it would be appropriate to order the unsuccessful applicant to
pay the costs flowing from the "rejoinder
exercise".
In my view, it would be more appropriate to direct each party to pay
its own costs flowing from the "rejoinder
exercise".
The order
[39] I make
the following order:
1.
The application is dismissed.
2.
The applicant is ordered to pay the costs of the second and third
respondents, which will include the costs of two counsel, barring
the
costs flowing from the rejoinder affidavits, in respect of which each
party will pay its own costs.
W R C PRINSLOO
JUDGE OF THE
NORTH GAUTENG HIGH COURT
23902-2010
HEARD ON: 25
MARCH 2013
FOR THE
APPLICANT:R MICHAU SC
INSTRUCTED
BY: SPOOR & FISHER
FOR THE 2
ND
AND 3
RD
RESPONDENTS: L J VAN TONDER AND A M HEYSTEK
INSTRUCTED
BY: D M KISCH INC