Amrad Operations Pty Ltd v Genelabs Technologies Inc

Case •

[1999] FCA 633

•

12 MAY 1999

FEDERAL COURT OF AUSTRALIA

Amrad Operations Pty Ltd v Genelabs Technologies Inc [1999] FCA 633

PRACTICE AND PROCEDURE – service of originating process outside the jurisdiction – whether prima facie case made out under Patents Act 1990 ss 133 and 135.

Patents Act 1990 (Cth), s 133(1), s 135

Patents Regulations 1991, reg 12.1(1)

Emory University v. Biochem Pharma Inc. (1998) 157 ALR 371 referred
Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 applied
Murex Diagnostics Australia Pty Limited v Chiron Corporation (1994) 55 FCR 194 applied
Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 referred
Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 referred
In re Hatschek’s Patents.  Ex parte Zerenner [1909] 2 Ch 68 applied
Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation (1969) 119 CLR 572 applied
Kalle and Co A.G.’s Patent [1966] FSR 112 referred
Therma-Tru Corp’s Patent [1997] RPC 777 referred
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 referred

Terrell on the Law of Patents (14th Ed, 1994) pp 307-310 referred

AMRAD OPERATIONS PTY LTD (ACN 053 997 176) v GENELABS TECHNOLOGIES, INC. & ORS
V 124 of 1999

KENNY J

MELBOURNE

12 MAY 1999

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 124 OF 1999

BETWEEN:

AMRAD OPERATIONS PTY LTD (ACN 053 997 176)
Applicant

AND:

GENELABS TECHNOLOGIES, INC.
First Respondent

THE GOVERNMENT OF THE UNITED STATES OF AMERICA, AS REPRESENTED BY THE SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND HIS SUCCESSORS
Second Respondent

ABBOTT GmbH DIAGNOSTIKA
Third Respondent

JUDGE:

KENNY J

DATE OF ORDER:

12 MAY 1999

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.    (a)     Abbott GmbH Diagnostika cease to be a party.

(b)     Abbott Laboratories of 14th Street and Sherridan Road, Chicago, Illinios, United States of America be substituted as the third respondent.

(c)      The title to the proceeding in the application, statement of claim and the Statutory Declaration of Gerard Henry filed with the statement of claim be amended accordingly.

(d)     The application be further amended by deleting the name and address of Abbott GmbH Diagnostika wherever appearing and substituting therefor Abbott Laboratories of 14th Street and Sherridan Road, Chicago, Illinios, United States of America.

2.    Leave be granted to the applicant under Order 8 rule 2(2) -

(a)    to serve the amended application and statement of claim (including the Confidential Schedule thereto) and the Statutory Declaration of Gerard Henry dated 22 March 1999 (including Annexure “A” and Confidential Exhibit “B” thereto) in this proceeding out of the Commonwealth of Australia and in the United States of America on the first respondent at 505 Penobscot Drive, Redwood City, California 94063, United States of America or elsewhere in the United States of America.

(b)   to serve the amended application and statement of claim (without the Confidential Schedule) and the said Statutory Declaration of Gerard Henry (with Annexure “A” but without the Confidential Exhibit “B” thereto) out of the Commonwealth and in the United States of America on the second respondent at the Department of Health and Human Service, 200 Independence Avenue, S.W. Room 615F, Washington DC 20201, United States of America or elsewhere in the United States of America.

(c)    to serve the amended application and statement of claim (without the Confidential Schedule) and the said Statutory Declaration of Gerard Henry (with Annexure “A” but without the Confidential Exhibit “B” thereto) out of the Commonwealth and in the United States of America on the third respondent, Abbott Laboratories at 14th Street and Sherridan Road, Chicago, Illinios, United States of America or elsewhere in the United States of America.

3.The Confidential Schedule to the statement of claim and the Confidential Exhibit “B” to the said Statutory Declaration of Gerard Henry be filed and received in the Victoria Registry of this Court in sealed envelopes and kept sealed up and not open to inspection by any person other than the Court, the applicant (and its solicitors and counsel) and the first respondent (and its solicitors and counsel) until further Order.

4.Until further order, the following exhibits –

(i)   Exhibit “RBJ-10-Confidential” to the affidavit of Richard Barry Jarvis herein sworn on 30 April 1999;

(ii)   Exhibit “DAA-5-Confidential” to the affidavit of David Andrew Anderson sworn herein on 4 May 1999; and

(iii)     Exhibit “RJK-3-Confidential” to the affidavit of Robert John Klupacs sworn herein on 4 May 1999,

and the contents thereof be kept confidential in these proceedings and not open to public inspection and not be disclosed to any person other than the Court, the applicant (and its solicitors and counsel), and the first respondent (and it solicitors and counsel).

5.The applicant’s costs of this motion be reserved.

6.A copy of this order be served on each respondent at the time of service pursuant to Order 2 above.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 124 OF 1999

BETWEEN:

AMRAD OPERATIONS PTY LTD (ACN 053 997 176)
Applicant

AND:

GENELABS TECHNOLOGIES, INC.
First Respondent

THE GOVERNMENT OF THE UNITED STATES OF AMERICA, AS REPRESENTED BY THE SECRETARY OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND HIS SUCCESSORS
Second Respondent

ABBOTT GmbH DIAGNOSTIKA
Third Respondent

JUDGE:

KENNY J

DATE:

12 MAY 1999

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. The applicant has made application under s 133(1) of the Patents Act 1990 (Cth) (“the Act”) for, amongst other things, an order requiring the first and second respondents to grant a licence to it to work the patented inventions which are the subject of Australian Letters Patent No. 639,209 and Australian Letters Patent No. 644,878 (collectively, the patents). By its statement of claim, the applicant alleges that (1) it is in incorporated “under the laws of the State of Victoria”; (2) the first respondent is incorporated under the laws of the State of California in the United States of America; (3) the third respondent is a corporation claiming an interest in the patents as an unregistered non-exclusive licensee of the first respondent (or of the first and second respondents); (4) the first and second respondents are registered under the Act as the joint proprietors of the patents; (5) more than three years have passed since the patents were sealed; and (6) the reasonable requirements of the public with respect to the inventions the subject of the patents (collectively, the patented inventions) have not been satisfied. Further or alternatively to (6), the applicant alleges (7) that the patented inventions are not being worked in Australia on a commercial scale, but are capable of being worked in Australia; further or alternatively, (8) the demand in Australia for the patented product is not reasonably met because of the failure of the first and second respondents (a) to manufacture the patented product to an adequate extent, and to supply it on reasonable terms; and/or (b) to grant licences on reasonable terms; further or alternatively, (9) an existing trade or industry in Australia or a new trade or industry in Australia is unfairly prejudiced because of the first and second respondents’ failure (a) to manufacture the patented product to an adequate extent, and supply it on reasonable terms and/or (b) to grant licences on reasonable terms. Finally, the applicant alleges that it has tried for a reasonable period, but without success, to obtain from the patentees in respect of the patented inventions an authorisation to work the patented inventions on reasonable terms and conditions, and the patentees have refused to grant a licence to the applicant.

  2. By notice of motion dated 30 April 1999, the applicant seeks ex parte (1) an order granting leave, pursuant to Order 6 rules 8(1)(a), 9(a) and 11(1) and/or Order 13 rule 2(1), to amend its application and statement of claim by substituting, as the third respondent, Abbott Laboratories of 14th Street and Sherridan Road, Chicago, Illinios in the United States of America in the place of Abbott GmbH Diagnostika and consequential orders; (2) an order granting leave under Order 8 rule 2(2) to serve the amended application and statement of claim on the respondents out of the Commonwealth of Australia and in the United States of America; (3) an order that the Confidential Schedule to the statement of claim and the Confidential Exhibit “B” to the statutory declaration of Gerard Henry be filed and received in the Victoria Registry of the Court in sealed envelopes and kept sealed up and not open to inspection by any person other than the Court, the applicant, the first respondent (and those parties’ solicitors and counsel); and (4) an order to the same effect in respect of certain specified exhibits. 

  3. In support of its motion, the applicant relied on an affidavit sworn by Richard Barry Jarvis on 30 April 1999 (“the Jarvis affidavit”), an affidavit sworn by David Andrew Anderson on 4 May 1999 (“the Anderson affidavit”) and an affidavit sworn by Robert John Klupacs on 4 May 1999 (“the Klupacs affidavit”). 

  4. According to the Klupacs affidavit, the applicant wishes to manufacture in Australia for distribution and sale in Australia and overseas an Hepatitis E Virus (HEV) IgM diagnostic assay, both in ELISA format and in the ICT format.  According to that affidavit, it has the skill and expertise, equipment and manufacturing and financial resources to do so.  The significance of the proposed product or products is set out in both the Anderson affidavit and the Klupacs affidavit.  According to the Klupacs affidavit, the applicant has been attempting to obtain appropriate authorisation to work the patented inventions since about 11 June 1997, but without success. 

    leave to amend application and statement of claim

  5. Having regard to s139(1) of the Act and to the matters set out in paragraphs 12-16 of the Jarvis affidavit and in paragraphs 8(a), 24, 48 and 49 of the Klupacs affidavit, I would grant leave to the applicant to amend its application and, in so far as necessary, its statement of claim (and the statutory declaration of Gerard Henry filed with the statement of claim) by substituting Abbott Laboratories of 14th Street and Sherridan Road, Chicago, Illinios, United States of America, for Abbott GmbH Diagnostika.  See also Emory University v Biochem Pharma Inc. (1998) 157 ALR 371 at 377.

    leave to serve out of the commonwealth

  6. Before an order under Order 8 rule 2(2) permitting service of originating process outside the jurisdiction can be made, the applicant must establish a prima facie case for the relief which it seeks:  Order 8, rule 2(2)(c).  That requirement was discussed in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539. In that case, the Full Court, consisting of Beaumont, Drummond and Sundberg JJ, said at 549:

    In Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 390, in a passage which has been cited with approval on many occasions, Heerey J said:

    “the requirement of O 8, r 2(2)(c) has to be met at the outset of the proceedings.  It does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant’s case at trial … It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, amongst other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.”

    In Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110, after setting out this passage, French J said that “a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed”. In WSGAL Pty Ltd v Trade Practices Commission (1992) 39 FCR 472 at 476 Beaumont J said:

    “Such a preliminary question [sc., whether a prima facie case exists] should not call for a substantial inquiry.  The kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue … [The] purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case.”

    A prima facie case will be made out if, on the material before the Court, inferences are open which, if translated into findings of fact, would support the relief claimed:  see also Murex Diagnostics Australia Pty Limited v Chiron Corporation (1994) 55 FCR 194 at 205 per Burchett J.

  7. For the purposes of Order 8 rule 2(2)(c), it seems that, generally speaking, it is sufficient for the applicant to make out a prima facie case for a claimed form of relief on one cause of action.  It does not matter that a prima facie case in respect of the same relief (or different relief) in respect of another cause of action is not made out.  See Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 at 373; Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387 at 393; although note Sydbank, at 551.

  8. Section 133 of the Act relevantly provides:

    (1)A person may apply to a prescribed court, after the end of the prescribed period, for an order requiring the patentee to grant the applicant a licence to work the patented invention.

    (2)After hearing the application, the court may, subject to this section, make the order if satisfied that:

    (a)the reasonable requirements of the public with respect to the patented invention have not been satisfied; and

    (b)the patentee has given no satisfactory reason for failing to exploit the patent.

    …

    (3A)Before making the order, the court must be satisfied that the applicant has tried for a reasonable period, but without success, to obtain from the patentee in respect of the patented invention an authorisation to work the invention on reasonable terms and conditions.

    …

    The Federal Court is a prescribed court: see s 3 and Schedule 1 of the Act. The prescribed period has, it seems, ended: see Jarvis affidavit, paragraph 7 and Patents Regulations 1991, regulation 12.1(1).

  9. The case for the applicant on the motion is that, on the material before the Court, it has established a prima facie case that (a) the reasonable requirements of the public with respect to the patented invention have not been satisfied; and (b) the applicant has tried for a reasonable period, but without success, to obtain from the patentee an authorisation to work the invention on reasonable terms and conditions. 

  10. The applicant by its counsel submits that it is not required to show that the patentee has given no satisfactory reason for failing to exploit the patent, since the onus of giving a satisfactory reason lies upon the patentee:  see In re Hatschek’s Patents.  Ex parte Zerenner [1909] 2 Ch 68 at 82. I accept that submission.

  11. Section 135 of the Act relevantly provides:

    (1)For the purposes of sections 133 and 134, the reasonable requirements of the public with respect to a patented invention are to be taken not to have been satisfied if:

    (a)     an existing trade or industry in Australia, or the establishment of a new trade or industry in Australia, is unfairly prejudiced, or the demand in Australia for the patented product, or for a product resulting from the patented process, is not reasonably met, because of the patentee’s failure:

    (i)to manufacture the patented product to an adequate extent, and supply it on reasonable terms; or

    …

    (iv)to grant licences on reasonable terms; or

    (b)     …

    (c)   if the patented invention is not being worked in Australia on a commercial scale, but is capable of being worked in Australia.

  12. Counsel for the applicant expressly reserved the applicant’s position on the question whether or not s 135 was exhaustive, that question being left open, so he submitted, by Menzies J in Fastening Supplies Pty Ltd v Olin Mathieson Chemical Corporation (1969) 119 CLR 572. For the purposes of this application, counsel was content to rely on, first, s 135(1)(c) and, secondly, on s 135(1)(a)(i) and (iv).

  13. Counsel for the applicant submitted that the word “worked” in s 135(1)(c) means, in the present context, “manufactured” and referred the Court to Hatscheck’s Patents at 81, 85-6, 90-1; Kalle and Co A.G.’s Patent [1966] FSR 112; Therma-Tru Corp’s Patent [1997] RPC 777; Fastening Supplies 119 CLR at 574-5 and Terrell on the Law of Patents (14th Ed, 1994) pp 307-310. For the purposes of the Act (see s 3), however, the word “work” is defined in Schedule 1 as meaning, in relation to a patented invention,

    (a)where the invention is a product — make or import the product; or

    (b)where the invention is a method or process — use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use.

    According to the Klupacs affidavit and the Anderson affidavit, there are two diagnostic assay kits for HEV available in Australia, namely, an IgG diagnostic assay distributed by Abbott Laboratories and an IgM diagnostic assay distributed or available for distribution by Diagnostic Technologies on behalf of Genelabs Technologies, Inc.  Both are imported into Australia, having been manufactured elsewhere, and are in ELISA format.So far as the applicant is aware, the use of the IgM diagnostic assay in Australia is confined to Westmead Hospital in Sydney.  Nothing similar is said by the applicant concerning the IgG diagnostic assay, but see paragraphs 44 to 46 of the Klupacs affidavit and paragraphs 26, 32, 33 and 40 to 45 of the Anderson affidavit. 

  14. All in all, having regard to the matters set out in the Klupacs affidavit and the Anderson affidavit, including matters concerning the applicant’s ability to work the patented inventions and its attempts to obtain an authorisation to work the inventions on reasonable terms and conditions, I am satisfied that inferences are open which, if translated into findings of fact, would support the relief claimed by the applicant based on s 133 and s 135(1)(c) of the Act.

  15. Although it is strictly unnecessary to consider s 135(1)(a), I am satisfied that the Klupacs affidavit and the Anderson affidavit also establish a prima facie case for the relief claimed by the applicant based on s 135(1)(a)(i) and (iv) of the Act.

  16. Apart from the requirement in para (c) of Order 8 rule 2(2) that the applicant show a prima facie case for the relief he seeks, the Court must also be satisfied that the proceeding is a proceeding in which the Court has jurisdiction and that it is one to which rule 1 applies.  No reason is suggested for doubting the jurisdiction of the Court.  Rule 1 sets out the instances in which service may be effected outside the Commonwealth.  They include where the proceeding is founded on a cause of action arising in the Commonwealth (para (a)), where the proceeding is founded on a breach of an Act, where the breach is committed in the Commonwealth (para (b)), and where the proceeding concerns the construction, or effect or enforcement of an Act (para (l)).

  17. The proceeding in question is, I think, founded on a cause of action arising in the Commonwealth.  The refusal of the licence sought by the applicant is, I think, to be taken to have occurred in Australia:  cf Sydbank 68 FCR at 546-8. By virtue of s 133 and s 135, in order to succeed on at least part of the claims which it has pleaded, the applicant must show that certain matters have occurred (or have failed to occur) in Australia: s 135(1)(a) and (c). Further, I accept, for present purposes, that the proceeding concerns “the construction, effect or enforcement of an Act”, namely, the Patents Act 1990. 

  1. There remains the discretionary question, whether this Court is an inappropriate forum, as explained in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 560-565. There is nothing in the material presently before the Court to indicate that that might be so. The cause of action is based on an Australian statute and, for the main, on matters occurring or failing to occur within Australia. Cf Merpro Montassa Ltd v Conoco Specialty Products Inc. 28 FCR at 395.

  2. Accordingly I would grant leave to the applicant under Order 8 rule 2(2) to serve the amended application and the statement of claim, together with the statutory declaration of Gerard Henry filed with the statement of claim, outside the Commonwealth and in the United States. 

    confidentiality orders

  3. On the basis of the material set out in paragraphs 17 to 20 of the Jarvis affidavit and paragraphs 22 and 32 to 35 of the Klupacs affidavit, I would make the confidentiality orders sought by the applicant.

  4. I would make orders in the terms proposed by the applicant. 


I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Associate:

Dated:             12 May 1999

Counsel for the Applicant: Mr J F Lyons
Solicitor for the Applicant: Davies Collison Cave
Counsel for the Respondent: No Appearance
Solicitor for the Respondent: No Appearance
Date of Hearing: 5 May 1999
Date of Judgment: 12 May 1999
Most Recent Citation