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IN THE COURT OF THE COMMISSIONER OF PATENTS RSA

Case No 92/9925

DATE: 15/10/2010

Zietsman, David Wallace......................................................................... Applicant

and

Electronic Media Network Limited...........................................................First Respondent

Multichoice Africa (Proprietary) Limited............................................. Second Respondent

Application......for leave to appeal

Coram …........Sapire AJ, commissioner

JUDGMENT

The Applicant seeks leave to appeal to the Supreme Court of Appeal against the granting of an order requiring the applicant to furnish security for Respondents' costs in an action, pending before the commissioner. In the action, the applicant seeks relief against the respondents here cited and other parties, for alleged infringement of a patent held by the Applicant. I, as commissioner, made the order on 1st December 2009.

The Applicant is somewhat out of time in making this application and applies, as he is constrained to do, for condonation of his default. By accord of the parties, I will condone applicant's default if the merits of the application favour the granting of the leave to appeal.

The Respondents in this application, (to whom I will continue to refer as such) had previously been granted an order by the commissioner requiring the Applicant to furnish security for Respondents' costs of the infringement action in an amount of R250 000. The Supreme Court of Appeal, set this order aside, principally for the reason that the present respondents had not in their application for the furnishing of security, sufficiently disclosed and demonstrated a arguably viable defence to the Applicant's claim arising out of the alleged infringement. In allowing the appeal against the commissioner's order requiring the furnishing of security for the respondents' costs in the action Streicher JA said:

"18.2 It is stated in the founding affidavit to the first and the second respondents' application that they intend making application to set aside certain amendments to the relevant patent on the basis that the amendments do not comply with the provisions of s 51(6) of the Act. However, they do not state what the effect of the setting aside of the amendments would be on the appellant's claim. They demand that security be furnished without even alleging that they have a defence to the appellant's claim, let alone stating what the nature of their defence is. They are doing so notwithstanding the fact that s 17(2)(b) specifically provides that the Commissioner may have regard to the prospects of success or the bona fides of the party from whom security is required.

[19] In my view, it would be quite unreasonable to order the appellant,, an incola natural person, to provide security for an action instituted by him, at the behest of a defendant who may not even have a defence worthy of consideration. The first and second respondents submitted that, in the light of the fact that the appellant made no allegation in regard to his prospects of success either, it should be accepted that they do have a defence which is not devoid of any merit. There are two answers to this submission. First, the onus is on the first and second respondents as applicants for security to persuade a court that security should be ordered. Second, not only is a defence not disclosed in the application, it is not alleged that a defence has at any stage been disclosed to the appellant. Therefore, assuming the first and second respondents have a defence to the appellant's action, it does not appear from the papers filed that the appellant is in a position to deal with the merits of the defence."

The Respondents have in their second application, made allegations regarding the pending application under section 51(10) of the Act in which the Respondents claim the setting aside of the amendment of the complete specification of RSA patent 92/9925 (the Patent) allowed by the Registrar of Patents on 12th October 1994. The Respondents have explained why the amendment may be successfully attacked and why if successful in such attack, they would have a defence to Applicants claims. These allegations I considered sufficient to remedy the deficiencies in the first application, which persuaded the Supreme Court of Appeal to set aside the order for security for costs, which the Commissioner had granted. Perceiving that the Respondents had cured the deficiencies, I granted the order, against which the Applicant now seeks to appeal.

The Applicant had argued, and having failed therein, wishes now to present such argument to the Supreme Court of Appeal, that the decision of the Appeal Court barred the second application. This because, Applicant contended, such decision determined the question of the Applicant's liability to provide security for costs of the action, definitively and finally. The Respondents on the other hand contended that res judicata did not apply as the Respondents based the second application, on new factual allegations, the absence of which was the reason for the decision of the Supreme Court of Appeal. These factual allegations fully indicated the ambit of Respondents' application in terms of Section 51(10), and that success therein would provide a complete defence to Applicant's action. The Applicant, however, submitted that, the "new facts" were not new at all, but were known to the Respondents when the first application was made. For some unknown or unexplained reason the Respondents, did not include the allegation of these facts in the original application. The applicant had argued that the Respondents could not bring the application a second time including facts, which the applicant previously knew about but which they omitted from the first application.

In making this argument the Applicant relied on the decision in Shepstone & Wylie and others v Geyser N.O. 1998(3) SA 1036 SCA. In dealing with the refusal of an order requiring a plaintiff to furnish security Hefer JA said

"The order determining this collateral dispute is therefore final and definitive for at no later stage in the proceedings could the applicants obtain the substance of what had been refused to him. If he had been prejudiced by the court, this prejudice was irredeemable"

Later in the judgment the learned judge did indicate that the same relief could however be obtained in subsequent proceedings if new facts were alleged.

Applicant's argument went further and relying on the judgment of the Supreme Court of Appeal in CTP Ltd v Independent Newspaper Holdings Ltd 1999(1)SA 452 submitted that the allegations made by the Respondents in the second application amplifying those of the first in application, to remedy the deficiencies found by the court of appeal were not "new facts".

The respondents knew the facts alleged when they made the first application, applicant argued, and having omitted alleging them in the first application could not seek the same .relief in a subsequent application, this time including the previously omitted allegations..

The argument of the Respondents was that the effect of the Judgment of the court of appeal amounted to one of absolution. The issue was whether the Respondents were entitled to security for costs from the Applicant if a viable defence to the action was alleged. There was no judgment on this issue making it res judicata.

I accepted the Respondents' argument. It is however arguable with some prospect of success, that the Supreme Court of Appeal may view the matter differently.

Turning to a portion of my judgment, which requires explanation. The second sentence in the third paragraph on page 3 of my judgment inadvertently conveys the very opposite of what I intended. Neither side, in the course of argument on this application, raised the subject with which I was dealing in this portion of my judgment. I intended to convey that the order for the furnishing of security could not relate to the costs in the application brought by the present respondents. The sentence should read

"It does not seem that the security should relate to those costs which will be incurred in the prosecution of the proceedings under section 51(10)." The procedure the parties should follow is first to determine the application. Only thereafter should Plaintiff proceed with his action if so advised having regard to the outcome of the application. The furnishing of security for costs should not be a delaying factor in proceeding with the Respondents' application and will only arise after the application is finally decided.

The order on this application is:-

a) The applicant's late filing of this application is condoned

b) The Applicant is given leave to appeal to the Supreme Court of Appeal against an order made in this court on 1st December 2009 requiring the applicant to furnish security for costs in an action instituted by the applicant against the Respondents,

c) The costs of this application are to be costs in the Appeal

S Sapire

Commissioner

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