Friday, 2 October 2015

T 595/11: underpayment of appeal fee and still admissable?


A 20% reduced appeal fee was paid by the Appellant (patent owner) who filed a notice of appeal in Dutch, while the patent owner is a legal person in Switzerland. The EPO communicated the file number to the Appellant and the Respondent (opponent) and indicated that the case was referred to a specific Board without any further comments. Later, when the respondent informed the Board that the Appellant was not entitled to the fee reduction, the Appellant paid the remaining portion of the fee and requested that the EPO to accept the late payment of the full appeal fee through the application of the principle of good faith (according to G2/97: the principle of the protection of legitimate expectations). In this case the Board discusses whether the Appellant could have expected that the EPO checked the entitlement to the fee reduction early enough such that the Appellant could have remedied the Appeal, for example, by paying the full fee on time or by filing a request for re-establishment of rights. In response to arguments of the Respondent, the Board had also to consider whether the consequence of its decision would adversely affect one or more parties to the Appeal if the principle of the protection of legitimate expectations applies to this case.

Summary of Facts and Submissions

(...) 

Reasons for the Decision

1. Deemed filing of the appeal

1.1 Pursuant to Article 108 EPC, second sentence, the notice of appeal shall not be deemed to have been filed until the fee for appeal has been paid. Article 8 RFees, first sentence stipulates that the time limit for payment shall in principle be deemed to have been observed only if the full amount of the fee has been paid in due time. In the present case, the time limit for filing the notice of appeal and thereby the time limit for paying the appeal fee expired on 22 March 2011. A reduced appeal fee pursuant to Rule 6(3) EPC was paid on 11 March 2011, and a full appeal fee was paid on 12 May 2015 (see points II and VI above).

1.2 The appellant does not dispute that the filing of the notice of appeal in Dutch language did not entitle it to benefit from the fee reduction. Instead it is contended that the EPO must accept the late payment of the full appeal fee through the application of the principle of good faith.
The Board concurs with the appellant that this principle, also referred to as the principle of the protection of legitimate expectations, is applicable in the proceedings before the EPO, and also in appeal proceedings (G 2/97 of 12 November 1998, OJ EPO 1999, 123, point 1 of the Reasons). In the present case it has to be examined if a legitimate expectation of the appellant existed that the EPO should have warned him significantly earlier of the deficiency, namely the use of the wrong language and the only partially paid appeal fee.

1.3 The Board also concurs with the appellant that the Office had a duty to examine the appeal for such formal requirements, and to call the attention of the appellant to any deficiencies. This duty is not merely a question of good faith on the part of the EPO, but indeed a legal duty. This is implied by Rule 101 EPC, which explicitly concerns the compliance of the appeal with Article 108, i.e. also implies the examination of payment of the correct appeal fee, among other criteria. The Board notes that in practice, this duty of the Office is performed by the Registrars of the Boards, pursuant to Article 2 (1) of the Decision of the Presidium of the Boards of Appeal dated November 2007 concerning the transfer of functions to the Registrars of the Boards of Appeal (Supplementary publication to OJ EPO 1/2015, page 66), analogously to the entrustment of certain duties to the formalities officers of the first instance departments. The duty to examine the correct fee payment, including the entitlement for fee reduction is also apparent from the Guidelines, see Part A (entitled "Guidelines for Formalities Examination"), Chapter XI. 9. in the version in force from April 2010 and thus applicable for the present appeal at the time of filing.

1.4 It is another matter that there is no general legitimate expectation that this examination of the correct fee payment and a possible warning of the appellant should take place before the expiry of the applicable time limit, as found by Enlarged Board of Appeal in G2/97, and also followed by the present Board (in a different composition) in case T 642/12 of 11 January 2013, cited by the respondent. Therefore, the present case is not comparable with that underlying T 642/12, where non-entitlement to the appeal fee reduction of the Swiss registered appellant-proprietor filing the notice of appeal in Dutch was noted by the respondent-opponent shortly after expiry of the time limit under Article 108 EPC. The question remains, however, if the EPO can be expected to perform this check within a reasonable time frame, and whether this time frame has been observed in the present case. As the respondent correctly argued, if the Board were to proceed under the assumption that such legitimate expectations of the appellant do exist, than they must have been established at some point of time.

1.5 The respondent further argued that it is simply not possible to define exactly from which point in time the expectations could have arisen, and this demonstrates that they indeed did not arise. The Board accepts that the EPC and its implementing legal framework indeed do not prescribe some fixed and well-defined time limit for performing the formalities check of the appeal. However, looking at the whole procedural legal framework and the established practice at the Boards of Appeal, the Board finds the proposition that this check need not be done within a reasonable time frame, but at any time after the filing of the appeal, to be inacceptable as well as unequitable.

1.6 While the Board is aware that currently appeals may be pending for several years before they are decided on their merits, the Board does not see herein any reason for the EPO not to perform the required formal checks as soon as possible after the filing of the appeal, if not before than certainly relatively shortly after the expiry of the applicable time limits, when it can be expected that potential appellants will have performed all necessary procedural acts and therefore the complete formal check of the appeal by the Registrar - including the check of the correct fee payment - can be done efficiently. This is particularly so in light of the fact that the payment of the correct appeal fee is first and foremost in the interest of the Office, given that the very functioning of the Office is dependent on the fees paid by the parties. It is also an issue that normally can be checked without any great difficulty, quite independent from the substantive merits or other procedural issues of the appeal. Given that it is also a precondition for the legal existence of the appeal, it is in the common interest of all parties, and also that of the Office, to identify any issues that at this early stage could potentially cause loss of rights and thus would make further efforts unnecessary.

1.7 The question remains whether in the present case the Board needs to define the exact time frame within which the payment of the fee needs to be checked and the party be warned. The Board considers this not to be necessary. It holds that this may be a question of days, weeks or even months, depending on the individual circumstances. The argument that any time frame should be such that a warning can be expected in time for the appellant to be able to file a request for re-establishment of rights, appears persuasive. However, the issue need not be decided now, as the Board is confident that whatever this expected time frame might be, it is certainly shorter than the four whole years that have passed in the present case between the expiry of the time limit for filing the appeal (and for paying the full appeal fee) and the time when the Office first made the appellant aware of this issue.

1.8 Having thus established that the Office had a duty to inform the appellant within a reasonable time frame after expiry of the Article 108 time limit but did not do so, it remains to be decided what the consequences should be. The Board considers that an objective observer relying on the duty of the Office to act as explained above would have concluded that the appeal has been examined for such formalities as the appeal fee, in particular in the light of the fact that the Board invited the respondent to comment on the appeal and itself issued a substantive communication without mentioning the issue of the appeal fee (see point VI). Thus the Board concludes that the legitimate expectations of the appellant (and possibly other parties) that the fee payment was in good order and would no longer be objected to, were indeed established. To this extent the Board follows the lines of argument relied on by decision J 14/94 of 15 December 1994 (OJ EPO 1995, 824) cited by the appellant, see No. 7 of the Reasons, last paragraph. The Board adds that the appellant has also demonstrated good faith on its part in that the missing fraction of the appeal fee was ultimately paid.

1.9 The Board adds that as far as possible, the consequences of the non-observance of the duty should not be to the detriment of any party, i.e. it is not merely the legitimate interests of the appellant that must be protected in an inter partes case. To that extent, the Board concurs with the respondent. The problem is that the failure of the Office to check correct fee payment and issue a warning in good time cannot be remedied in the present case without at least one party suffering some disadvantage or detriment. Here the Board can only strive to find what it considers to be an equitable balance of the consequences to either party.

1.10 The respondents argue that the recognition and acceptance of the appeal fee and thereby the deemed filing of the appeal affect them adversely. Whether or not the respondents have been put in an objectively worse position depends on a comparison of their present procedural situation and the situation which could have been expected to arise if the Office had lived up to its duty and noted the fee problem in time. It seems realistic to assume that appellants could and would have then filed a request for re-establishment of rights, which might or might not have been successful. It is also conceivable, that if the Office had carried out its duty diligently, it might even have done the check and warned the appellant before the expiry of the time limit, given that the appeal was filed and the fee was paid eleven calendar days before the applicable time limit, so that re-establishment would not have been necessary at all. At any rate, it is indeed possible that recognising the appeal now after discovery of the error may have put the respondents in the worse position of being prevented from immediately achieving their obvious and legitimate goal, the failure of the appeal. But considered in the broader perspective it is also possible that they might not have gained anything, so that they still would have had to deal with the appeal on its merits and accept its outcome.

1.11 The respondents suggest that the Board should (implicitly, at least from now on) adhere closely to the letter of the law, and should reject the appeal as inadmissible, absent a timely and fully paid appeal fee. The Board is of the opinion that such an outcome would also not be equitable. The negligence of the Office has already indisputably put the appellant in a situation that is significantly worse, in that previously available remedies - a request for the re-establishment of rights under Article 122 EPC - are no longer available. If the Board were to now deem the appeal not filed because of the deficient appeal fee, this would undoubtedly and most certainly be to the detriment of the appellant. This certain worsening of the appellant's position must be weighed against the possible, conjectural worsening of the respondents' position, even if accepting that the preconditions for such a situation undisputedly were created by the appellant themselves.

1.12 Against this background, absent any other obvious solution of the issue before it, the Board must choose between a possible and a certain adverse effect, where it also must consider that the possible, but nevertheless conjectural adverse effect is the prevention of an immediate success of the respondent's case (i.e. the revocation becoming final), while the certain adverse effect is the immediate loss of the appeal. Here the question arises whether and how far the Board should take it into consideration that this situation was created by an error of the appellant in the first place, and the respondent is, so to say, completely innocent. The Board finds this proposition problematic. The duty of the Office to check the appeal is first and foremost designed to discover such errors. This is a duty not only towards the appellant, but towards all parties and the public, because it is in the common interest of all that such errors are discovered in time. Against this background, there can be no expectation that the adverse consequences of an failure of the Office to discover an error, once made, should be limited to certain parties only. It may appear equitable that the adverse effect should possibly be limited to the party which made the error in the first place. But it is questionable if here the appellant genuinely contributed to the Office's failure, the apparently missing or erroneous check of the appeal. This check had to be done in any case, quite independent of the error made by appellant. Thus it cannot be said that the Office's failure was caused by the appellant, and therefore it cannot be expected that the adverse consequences of this failure should exclusively affect the appellant.

1.13 Weighing up the legitimate interests of both sides and also that of third parties, and considering the overall circumstances of the present case, the Board concludes that the original error might have had serious and inequitable consequences through the Office's failure to discover it. Therefore, it is equitable that the Office' failure is made good and the error is now allowed to be remedied, as far as possible. Seeing that some adverse effect is inevitable, the Board considers that the possibility of a real, but otherwise in itself not necessarily decisive setback (here the non-occurrence of an immediate success) for a party is more preferable than a certain decisive loss of all rights for another party, in particular given the fact that for a long time none of the parties did expect the latter. Put differently, a merely possible injury obviously is less serious than certain death. Therefore in the present case the Board accepts, through the application of the principle of protection of legitimate expectations, that the appeal fee has been timely and fully paid. The Board considers that in this manner overall, least harm is done to all parties. The Office has not suffered any loss either, as the fees were eventually paid in full. It is also satisfactory that in the end the appeal can be decided on its merits.

1.14 The Board also rejects the further arguments of the respondent against the application of the good faith principle. (...)

1.15 A further argument of the respondent is that admissibility is usually not decided until the final decision, and also for this reason no legitimate expectations could have been established. The Board concurs with the first part of this statement. (...)

1.16 The respondent raised in its letter of 23 April 2015 the objection that the notice of appeal was filed in Dutch so that the notice of appeal should be deemed not to have been filed pursuant to Article 14(4) EPC, last sentence. The parties did not argue this issue in any further detail either in writing or during the oral proceedings. The Board considers that the use of Dutch and the underpayment of the appeal fee are essentially closely related errors, and their effects in the proceedings are also very similar. The use of Dutch apparently only served to achieve the entitlement to a fee reduction. As with late payment of the fee, it stands in no relation to the admissibility or the merits of the appeal. Given that the English translation was provided at the same time, no practical difficulties were caused either for the Office or for the respondent (the intention to prevent such practical language difficulties would appear to be the main reason why a document is deemed not filed if no translation is filed in time, Article 14(4) EPC, last sentence). The Board therefore considers that there is no reason to treat this issue differently from the issue of the fee payment, and concludes that the principle of protection of legitimate expectations as outlined above also applies to the language of the notice of appeal, and accepts that the notice of appeal is not invalid because of the use of a wrong language.

1.17 The Board is satisfied that the further admissibility criteria of a valid appeal are fulfilled. The Board concludes that the appeal is deemed to have been filed and admissible.

(...)

Order

For these reasons it is decided that:

1. The decision under appeal is set aside.

2. The case is remitted to the department of the first instance for further prosecution.

This decision T 595/11 (pdf) has European Case Law Identifier:  ECLI:EP:BA:2015:T059511.20150527. The file wrapper can be found here. Photo "Twenty percent off on laptop shows discounts" by Stuart Miles obtained via FreeDigitalPhotos.net.

9 comments :

  1. It shows that Boards of Appeal are capable to critically look at the way their formalities work (or not) which is reassuring. On the other hand, this my comfort the President of the EPO that the BA are a bunch of lazy people which need to increase their efficiency....

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  2. Or they need to hire more people being seriously understaffed.

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  3. To me the real question is the contrast with T 0642/12, by the same applicant, by the same representative - having filed a appeal around the same time with a similar shortfall. So, timely action by the opponent is decisive for rendering the appeal deemed not filed?

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    1. Curious. It is the same board. And 2 out of 3 members are the same. The decisions have also been made quite close together, only about a year and a half apart.

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  4. Thanks to Ferr for noting the discrepancy between the two decisions. May be the Board found its decision not fully justified, for instance in view of T 290/90 in which it was considered that the missing 20% were a small amount.

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  5. The only specific difference I can find from T642/12 is it seems that prompt response by the other party voids a good-faith 'excuse'.

    However, we have discussed this today at work. Remember that part of the justification for 20% not being a small amount (generically, without specific circumstances) was that it was meant to be a sizable discount! Now, with the discount being 30% (SMEs), it may well mean this older case law is superseded and 20% will then be (finally!) a small amount.

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  6. This comment has been removed by the author.

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  7. would be interesting to know how much this attempt at a 20% "discount" ended up costing. penny wise, pound (and proceduraly) foolish.

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  8. A rather big cost I'd say, but we gain the interesting case law. :-)

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