Austal Ships Pty Ltd v Damien Smith - [2011] APO 4

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Austal Ships Pty Ltd v Damien Smith [2011] APO 04

Patent Application: 2007221850

Title:Multi-hull Vessel Cross Deck Structure

Patent Applicant:  Damien Smith
Requestor:  Austal Ships Pty Ltd
Delegate:  Ed Knock
Decision Date:  24 January 2011
Hearing Date:  17 November 2010, in Canberra
Catchwords:  PATENTS - requests under sections 32 and 36 – inventive concept conceived while previously employed – implied term of employment existed – requests upheld – cost in accordance with Schedule 8 awarded against the applicant

Representation: Patent applicant: Damien Smith represented himself
Opponent:Julian Cooke of counsel

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2007221850

Title:Multi-hull Vessel Cross Deck Structure

Patent Applicant: Damien Smith
Date of Decision: 24 January 2011
DECISION
The inventive concept of application 2007221850 was invented by Mr Smith while he was still employed by Austal Ships Pty Ltd, and while he was still bound by an implied contract of employment giving Austal Ships Pty Ltd entitlement to the invention.
Austal Ships Pty Ltd has entitlement to the inventive concept disclosed in application 2007221850.
I declare under section 36(1) that Austal Ships Pty Ltd is the eligible person in respect to all patentable matter common to patent application 2007221850 and drawing D01286-018. Drawing
D01286-018 is Annexure NAA 7 to the statutory declaration dated 14 May 2010 by Neville

Anthony Armstrong in the evidence of these proceedings. Mr Smith remains the eligible person in respect of the residual matter disclosed in patent application 2007221850.
The effect of the above declaration is to give Austal Ships Pty Ltd the right to file a separate application under section 29 of the Patents Act, for the patentable matter for which it is the eligible person, within three months of the declaration.
Furthermore, I direct under section 32 of the Patents Act that if after three months Austal Ships Pty Ltd has chosen not to avail itself of the right to file a separate application, then application 2007221850 is to proceed jointly in the names of Austal Ships Pty Ltd and Damien Smith.
Given that decisions under section 32 are reviewable by the Administrative Appeals Tribunal (AAT), I state that this direction will not come into effect until the time period for seeking review before the AAT has expired and no application for review of this decision has been made.
I note that decisions under section 36 are appellable to the Federal Court under section 36(5). The effect of any appeal under section 36(5) would be to stay any action that Austal Ships Pty Ltd might take under section 36(4) until the appeal is determined.
Costs according to Schedule 8 are awarded against Damien Smith.
REASONS FOR DECISION
Background

Patent application 2007221850 was filed on 5 October 2007. It was associated with provisional patent application 2006905541, which was filed on 6 October 2006. The inventor and applicant is Mr Damien Smith. The application has not yet been subjected to examination.
On 4 March 2010 Austal Ships Pty Ltd (Austal) filed a request under section 32 for determination of a dispute between applicants, and an application to the Commissioner for declaration of an eligible person.
The background to this matter is straightforward. Damien Smith commenced employment with a company related to Austal on 19 January 2000, and was employed directly by Austal from 28 May 2002. His employment status was converted to “casual” (sometimes referred to as “part-time” in the evidence) on 20 August 2003, and ultimately he resigned on 2 April 2004. The parting appears to have not been an entirely happy one.
Prompted by a request from a customer, Mr Smith claims to have conceived the present invention between 28 September 2006 and 6 October 2006; that is, in the week before he filed his provisional application. While he thus seems to have acted with considerable swiftness in filing his provisional application (apparently without professional assistance), this is not to say that events could not have transpired in the manner Mr Smith has attested.
Austal, on the other hand, while conceding that Mr Smith is the true inventor, claims that it is the sole eligible person pursuant to section 15(1)(b) of the Patents Act because Mr Smith made the invention during the course of his employment with Austal. Alternatively, Austal claims that it and Mr Smith are jointly entitled to the invention because Mr Smith created at least part of the invention during the course of his employment with Austal.
Both the requestor and the applicant provided evidence in support and evidence in response. In each instance the evidence was a single statutory declaration. In the case of the applicant Mr Smith was the declarant on both occasions, and for the requestor Neville Anthony Armstrong was the declarant on both occasions. Mr Armstrong had been Mr Smith’s line manager during his employment at Austal.
Law
Section 32 of the Patents Act provides that if a dispute arises between any two or more interested parties, the Commissioner may make any determinations the Commissioner thinks fit for enabling the application to proceed in the name of one or more of the interested parties or for regulating the manner in which it is to proceed, as the case requires.
Under schedule 1 of the Act, “interested party”, in relation to a patent application, means the applicant or a joint applicant, or a person who claims to be entitled to the grant of a patent on the application, either alone or jointly with another person.
Austal has claimed that it is at least jointly entitled to the grant of a patent on the present application by virtue of the inventor having made the invention during his employment by Austal, and thus clearly meets the description of an interested party for the purposes of section 32.
Section 36(1) provides for a person to apply to the Commissioner for a declaration that the nominated person is not an eligible person, but that some other person is an eligible person. “Nominated person” is defined by schedule 1 to mean the person identified in a patent request as the person to whom the patent is to be granted, and “eligible person” is defined as a person to whom a patent may be granted under section 15.
Section 15(1) provides that a patent for an invention may only be granted to a person who:
a)is the inventor; or
b)would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
c)derives title to the invention from the inventor or a person mentioned in paragraph (b); or
d)is the legal personal representative of a deceased person mentioned in paragraph (a), (b), or (c).
The law governing disputes over entitlement was recently considered by the Full Court of the Federal Court of Australia in University of Western Australia v Gray [2009] FCAFC 116. The Court accepted that entitlement is assessed by considering three matters:
1.identify the “inventive concept” of the invention as defined by the claims;
2.determine inventorship including the person responsible for the inventive concept and the time of conception as distinct from its verification and reduction into practice; and
3.determine how many contractual or fiduciary relationships give rise to proprietary rights in the invention.
In deciding a matter such as this the Commissioner is entitled to act on any material which is "logically probative" of the issues under consideration. In reaching a conclusion on any issue, the standard of proof required is the civil standard of proof on the balance of probabilities (see, for example, Dunlop Holdings Ltd's Application, (1979) RPC 523). Furthermore it is clear from the authorities (see, for example, Stamp v W J Powell Pty Ltd, [1918] HCA 14; (1918) 24 CLR 339) that it is incumbent upon an opponent to prove its case. Thus in this case the onus is on the requestor, Austal, to provide clear evidence to justify a finding that Mr Smith, the inventor, invented the invention which is the subject of this application while in the employ of Austal, and that the nature of that employment was such as to give entitlement in the invention to Austal. In the present matter I must consider the evidence and decide the issues mindful of these general parameters.
The inventive concept
The inventive concept disclosed by the present application is the main area of contention between the parties. The specification has not yet been exposed to examination, and the drafter of the specification appears to have taken the usual approach of casting their net widely. (By now, Mr Smith had availed himself of a patent attorney.) The specification contains three independent claims. Claim 1 reads as follows:
“A cross deck structure for a vessel, the structure including a plurality of elongate decking members for transversely connecting together hulls as cross decking of a multi hull vessel, each decking member including an upper deck surface, a lower deck surface, each decking member including a forward edge for connection to a respective rearward edge of a next forward adjacent decking member, and a rearward edge for connection to a respective forward edge of a next rearward decking member, the respective adjacent decking members being integrally joined together to form the cross deck structure.”
Stripped of its verbiage, this claim encompasses any plurality of elongate planar elements capable of being joined in any fashion at their edges to form a deck suitable for use on a multihull structure. The specification exemplifies bonding, adhering or welding as possible ways in which the elongate planar elements may be joined, but it is clearly not limited to these.
Claim 13 is perhaps of even broader scope. It defines the invention as:
“An extruded decking member for use in any one of the preceding claims, including an upper deck surface, a lower surface, a forward edge for connection to a next forward decking member, and a rearward edge for connection to a next rearward decking member.”
Thus this claim seems to encompass just a single element capable of being joined with others at their edges to form a deck. For reasons that are not immediately obvious the element is now defined as being “extruded”, but on proper analysis I think it likely that this feature would be considered as non-essential.
Claim 11 claims the deck member or structure in situ on a multihull vessel. It defines the invention as:
“A multi hull vessel incorporating at least two buoyant hulls connected transversely by a series of decking members extending between the hulls, the decking members extending between the hulls, the decking members integrally joined one to the next.”
However, the claims in circumstances such as these (that is, entitlement proceedings) are not the sole determinant of what the inventive concept is. As the court stated in Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FLR 527; 244 ALR 626; 75 IPR 1; [2008] FCAFC 9:
“The invention or inventive concept of a patent should be discerned from the specification, the whole of the specification including the claims. The body of the specification describes the invention and should explain the inventive concepts involved. While the claims may claim less than the whole of the invention, they represent the patentee’s description of the invention sought to be protected and for which the monopoly is claimed. The claims assist in understanding the invention and the inventive concept or concepts that gave rise to it. There may be only one invention but it may be the subject of more than one inventive concept or inventive contribution. The invention may consist of a combination of elements. It may be that different persons contributed to that combination.”
The need to look beyond the claims would seem particularly imperative in the present situation where the application is one which has not been accepted.
In their evidence, both Mr Armstrong and Mr Smith have expressed their perceptions of the inventive concept. Mr Armstrong’s offering is that the inventive concept:
“is the transverse (as opposed to longitudinal) orientation of a multi-hull vessel’s structural Cross-deck structure and primary stiffeners so as to improve the vessel’s structural properties”.
Mr Smith puts the inventive concept as:
“a)A cross deck structure formed by a plurality of transverse members, between the buoyant hulls of a multihull vessel.
b) Wherein the transverse members perform, without the need for traditionally separately fabricated structure, perform [sic] the functions of a cross deck structure.
i.Providing support for cargo, equipment and personnel.
ii.Preventing the ingress of water.
iii.Provide for the structural connection between the hulls and support for the deck of the vessel.
c) The transverse members are joined fore and aft via welding or bonding to form a unitary cross deck.
d) The transverse members are designed, as appropriate for their size an [sic] position in the structural system, to:
i.To make best use of material by careful selection of the dimensions of the member.
ii.Allow efficient connection to the buoyant hull, via angled elements.
iii.Accommodate the effect of impact with the water surface.”
At a later point in his evidence Mr Smith states that the invention would exclude fabricated multicellular box structures and extruded or fabricated transverse framing attached to a separate plate. This is the issue which lies at the heart of this matter. I will return to it presently.
At the hearing, Mr Cooke put the inventive concept somewhat differently to what Mr Armstrong had. He stated:
“the inventive concept of the invention disclosed in the application is the cross deck structure of a multihull vessel comprising transverse orientated adjacent decking members being integrally joined together to form the cross-deck structure”.
I consider that this take on the inventive concept comes closest to my own. It draws upon the following aspects of the specification: the stated problem, the consistory statement and the broadest claim (to a multihull vessel). Mr Cooke cited good authority for this approach, in the form of Polwood v Foxworth (supra), Charlesworth v The Commonwealth of Australia (2008) 77 IPR 170, and CSR Building Products Ltd v Abnoos (2009) 81 IPR 641. In common with Mr Armstrong’s and Mr Smith’s versions, it places the cross deck structure in situ in a multihull vessel. The only modification I would make would be to specify that the decking members are elongate, as is defined in claim 1. Although it could be argued that this is implicit in Mr Cooke’s wording, this qualification would appear to be needed to provide sense to the term “transverse”, it being the implication that it is the lengthwise direction of decking members which is transverse to the hulls (although this may need to be made explicit in order that a requisite level of clarity be achieved in the claims).
Further support for this being the inventive concept is, I believe, provided by the statement of the advantages provided by the invention. It is as follows:
“The unitary cross deck structure incorporating the successive decking members welded together permits a deck to be constructed from a predetermined selection of extrusion lengths, thus reducing the number of different deck components required. Further, deck construction can be simplified by standardizing decking components, and additionally, the vessel is strengthened from loading and torsional forces by the transverse connection between hulls and the consecutive welding together of the adjacent decking members fore and aft. Hydrodynamic and inertial forces upon the vessel are resisted by the combined effect of the torsional and bending stresses developed by the extruded transversely arranged decking members.”
But what of Mr Smith’s contention that the inventive concept does not include multicellular box frame structures, which he reiterated several occasions at the hearing? Mr Smith had an obvious motive for this contention in the fact that Austal have put forward evidence that Mr Smith had proposed transverse multicellular box frame decking components while he was working for Austal. There are some circumstances at the periphery of this matter that Mr Smith claimed lent support to his contention. In particular, the multihull vessels that the invention appears to be directed to are much smaller than the Austal ones - 14m cf 101m. Because of the reduced forces upon the smaller craft, a non-multicellular box frame structure (that is, decking comprising just a single layer of material) would seem more feasible and is all that is described in the preferred embodiment, and on that basis be all that is contemplated by the specification. This seems to me to be a valid point. However, I am less convinced by the other circumstances Mr Smith alluded to. Mr Smith drew attention to the use of the term “members” in the claims as pointing to the exclusion of multicellular box frame structure. I fail to see this. The term “member” is frequently employed in claims for just the reason of its generality and inclusiveness, and I see that as being the case here - it refers to any structure that can be used as a deck, which would include a multicellular box frame structure. Such a member could have an upper deck surface and a lower deck surface (using the phraseology of claim 1), albeit separated by a muticellular box frame.
Mr Smith also argued that the multicellular box frame structure could not be included within the inventive concept because it was admitted prior art in the specification. This argument had its foundation in comments by the delegate of the Commissioner in Charlesworth v The Commonwealth of Australia (supra), as follows:
“I said that if a specification describes certain devices, methods, documents, etc as embodying the “prior art” then, in my opinion, it is useful to proceed on the basis that, by these references, the applicant (or inventor) is pointing out what their invention is not.”
However, there is a flaw to Mr Smith’s argument, in that the recitation of prior art in the specification does not refer to transverse multicellular box frame structures.
Finally, Mr Smith stated several times that, as the inventor he knew what his invention was, and his invention was not intended to include multicellular box frame structures. That is all right so far as it goes, but for present purposes it is the intention as expressed in the specification which is significant, and none other.
I note also that in his evidence Mr Smith has referred to his invention as involving a “box plank arrangement”, and indeed his preferred embodiment does use a plurality of hollow planks as transverse stiffeners, which does not seem greatly removed from a multicellular box frame structure.
I therefore conclude that the inventive concept of the present application is:
a multihull vessel having a cross-deck structure comprising a plurality of elongate decking members located transversely to the hulls and integrally joined together at their side edges to form the cross-deck structure.
Inventorship
Inventorship itself is not at issue in this matter, as the requestor Austal concedes that Mr Smith is the sole inventor. However the question of at what time that the invention was made is critical to the resolution of this matter. Mr Smith has stated in his evidence that the invention was made in its entirety in the week before he filed his provisional application. Austal, on the other hand, contend that the invention was, in part, made when Mr Smith was employed by it about two years previously. Austal have provided some hard evidence to substantiate that contention, in the form of an engineering drawing designated D01286-018, dated 12 August 2003, and titled “Proposed Transversely Stiffened Tunnel Construction”. The drawing itself is a bit short on explanation, but the following text from a report designated 286-6 and dated 31 August 2003 elaborates:
“Transversely Planked Tunnel Bottom
The stresses in the bottom plating of the tunnel is limited by buckling. Traditionally our tunnels are longitudinally framed; by turning the stringers to run transversely the buckling strength of the tunnel is increased by 400%. It is proposed to use an extruded box plank run transversely. The benefit of this arrangement is it allows a simplification in the design of the superstructure that will save around 20 tonne.
Affected Departments: Aluminium production
Structural design”

There are also Reports 286-4 and 286-10 in the evidence which have similar text. Mr Smith is named as the author in all these documents.
Mr Cooke made much of the fact that this case was unusual in that there was hard evidence available to substantiate inventorship. Be that as it may, the drawing itself required close examination in order to ascertain what was being illustrated. However, the text from the 286-6 report seems unambiguous in disclosing that there are edgewise linked “decking members” oriented transversely to the hulls of the vessel. Mr Smith did not appear to dispute this, as one might well expect him to do if it were open to him - he is, after all, the author - but instead employed a line of defence that the D01286-018 drawing related to multicellular box type cross deck structures. With this I agree, as I think did Mr Cooke. However, in light of the wording of the specification, I cannot agree with Mr Smith’s subsequent assertion that:
“The invention is conceived to be an alternative to multicellular box type cross deck structures.”
The upshot is that the disclosure of drawing D01286-018, when read in conjunction with Report Numbers 286-4, 286-6 and 286-10, appears capable of being read directly onto the inventive concept as constituted above.
Contractual or fiduciary relationships
Upon initial employment with Austal, Mr Smith was employed under an Australian Workplace Agreement (AWA). He was explicitly employed as a Naval Architect. Initially he was located in the Austal Drawing Office, and on “about 2 June 2003” he relocated to the R&D Office. On 20 August 2003 he switched to being employed as “casual staff”, and apparently signed an agreement to that effect. I say “apparently” because Mr Smith claimed to be unable to recall signing this agreement, although he agreed that the signature looked like his. Mr Smith also tried to cast doubt on the genuineness of this document by noting that his name had not been printed in the space provided for that purpose at the end of the document (although it appeared earlier in the document), and noting that the document was not dated at its end (although a date had been entered early in the document at a place provided for that purpose).
Mr Smith had good reason to wish to disown the casual employment document, as it had an explicit “Intellectual Property Rights” clause, in these terms:
“All discoveries, designs, inventions, drawings, and other intellectual property produced by the Employee during the course of their employment shall be the property of Austal.”
The AWA did not have an Intellectual Property (IP) clause. It did refer to the existence of company “guidelines and policies” - which I presume were in documentary form - that were to be provided to the employee, but these were not in the evidence so it is not known if any of these related to IP. Or it may have been the case that Austal considered that in the case of an AWA it had enough protection under common law and equitable principles to make it unnecessary to stipulate its intellectual property rights.
Putting aside the question of whether Mr Smith had any explicit contractual responsibilities to Austal in respect of IP, I believe that the fact that an employer-employee relationship existed between the parties gave Austal certain rights under common law and equitable principles in respect of intellectual property created by Mr Smith. The law governing employer entitlement to employee inventions was summarised in Victoria University of Technology v Wilson [2004] VSC 33 at 104:
“The law is well settled upon the position of an officer or employee who makes an invention affecting the business of his or her employer. It is an implied term of employment that any invention or discovery made in the course of the employment of the employee in doing that which he is engaged and instructed to do during the time of his employment, and during working hours, and using the materials of his employers, is the property of the employer and not of the employee. Having made a discovery or invention in the course of such work, the employee becomes a trustee for the employer of that invention or discovery, and he is therefore as a trustee bound to give the benefit of any such discovery or invention to his employer. But the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship. And that is so even if the invention is germane to and useful for the employer’s business, and even though the employee may have made use of the employer’s time and resources in bringing the invention to completion. Certainly, all the circumstances must be considered in each case, but unless the contract of employment expressly so provides, or the invention is the product of work which the employee was paid to perform, it is unlikely that any invention made by the employee will be held to belong to the employer.”
Given that Mr Smith was employed as a naval architect and that the drawing D01286-018 and its creative content was produced in the course of his work, and in accordance with the duties of his position, clearly the intellectual property contained in the drawing comes within the implied term of employment referred to in Victoria University of Technology v Wilson (supra).
At the hearing, Mr Cooke cited two passages from University of Western Australia v Gray (supra) which seem particularly relevant to the present matter. In the first of these, French J referred at [121] to the House of Lords decision in Sterling Engineering Co Ltd v Patchett [1955] AC 534, (1955) 72 RPC 50, where Viscount Simonds said of property produced by an employee (at 544):
“If the employment is of a designer that which he designs is thus the property of the employer which he alone can dispose of. If it is patentable it is for the employer to say whether it shall be patented, and he can require the employee to do what is necessary to that end.”
and in the second French J, in summarising the common law with respect to employee inventors arising from the British authorities, said at [130]:
“Where an employee has been employed for the purpose of solving a technical problem or improving the employer’s technology or to make inventions, then there will be an implied term in the contract that the inventions made by the employee in the discharge of such contractual duties belong to the employer.”
In his evidence Mr Smith outlined his understanding of his employment duties as follows:
“My role at Austal was to prepare detailed structural design of vessels. In this role I prepared detailed design drawings based on general concept drawings for the vessel. I was not employed as an inventor or to invent as part of my normal duties, rather, my role involved application of normal naval architect skills and knowledge derived from my training, experience and text book information, and to apply these skills within the vessel build specification and legislation and regulations governing vessel safety and performance characteristics.”
This sounds reasonable. But the fact remains that the law holds that if anyone is placed in the circumstances that Mr Smith was and they devise an invention, then entitlement to that invention lies with the employer. Thus I find that entitlement to the patentable matter disclosed in drawing D01286-018, read in conjunction with Report Numbers 286-4, 286-6 and 286-10, lies with Austal by operation of section 15(1)(b) of the Patents Act.
Conclusion
The central issue in this dispute is who is the owner of the inventive concept. I have found that the inventive concept of application 2007221850 was invented by Mr Smith while he was still employed by Austal Ships Pty Ltd, and while he was still bound by an implied contract of employment, resulting in Austal Ships Pty Ltd having entitlement to the invention. However, the content of specification of 2007221850 is indicative of Mr Smith having built upon the inventive concept and taken it in a new direction since resigning from Austal Ships Pty Ltd.
Thus Austal Ships Pty Ltd is the eligible person in respect to all patentable matter common to patent application 2007221850 and drawing D01286-018. Drawing D01286-018 is Annexure NAA 7 to the statutory declaration dated 14 May 2010 by Neville Anthony Armstrong in the evidence of these proceedings. Mr Smith remains the eligible person in respect of the residual matter disclosed in patent application 2007221850. I will make a declaration under section 36(1) and give directions under section 32 to give effect to this finding.
The request under sections 32 and 36 by Austal Ships Pty Ltd is upheld.
Costs
The usual practice for section 32 and 36 matters is that costs are awarded according to schedule 8 unless there are circumstances justifying a variation. Mr Smith requested such a variation, based it seems on the disparity of resources available to each party. That is a plea which is often heard, but is not something I can act upon. The actions of the requestor in this matter seem to have been entirely reasonable and facilitative, and appear to involve no more than a prudent safeguarding of its interests. I see no reason to vary the costs.
I may need to make one stipulation. The patent attorney for the requestor - Paul Dewer - was listed to appear by phone at the hearing. However he took no part in the hearing, by phone or otherwise, and therefore no costs pertaining to his participation in the hearing apply.
As to whom to award costs against, the usual practice is that costs follow the event. I see no reason to vary this practice either. In this matter the requestor has been successful. Therefore I award costs under Schedule 8 against the applicant Damien Smith.
Ed Knock
Delegate of the Commissioner of Patents