Austal Ships Sales Pty Ltd & Ors v Aktiebolag

[2008] HCATrans 400

[2008] HCATrans 400

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S344 of 2008

B e t w e e n -

AUSTAL SHIPS SALES PTY LTD

First Applicant

AUSTAL SHIPS PTY LTD

Second Applicant

AUSTAL LIMITED

Third Applicant

and

STENA REDERI AKTIEBOLAG

Respondent

Application for special leave to appeal

FRENCH CJ
GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 5 DECEMBER 2008, AT 9.53 AM

Copyright in the High Court of Australia

MR B.N. CAINE, SC:   If it please the Court, I appear with my learned friend, MR R.J.L. McCORMACK, on behalf of the applicants.  (instructed by Griffith Hack Lawyers)

MR J.V. NICHOLAS, SC:   May it please the Court, I appear for the respondent with my learned friend, MR C. DIMITRIADIS.  (instructed by Spruson & Ferguson Lawyers)

FRENCH CJ:   Thank you.  Yes, Mr Caine.

MR CAINE:   If the Court pleases.  The issue which this case raises for consideration is the proper interpretation of dependent claims in patent specifications.

KIRBY J:   This is a case where there is an affidavit filed in this Court, an affidavit of Gregory Morris Chambers.

MR CAINE:   There is, your Honour.

KIRBY J:   It says that civilisation is collapsing as a result of this litigation.

MR CAINE:   It suggests, we say, strongly, your Honour, that there is a wider public importance than ‑ ‑ ‑

KIRBY J:   Is that read without opposition or were you concerned?  Is there any cross‑examination of Mr Chambers?

MR NICHOLAS:   There is no cross‑examination, your Honours, but we do have a difficulty with what appears from paragraph 8 on beginning at page 94, which is ‑ ‑ ‑

GUMMOW J:   You have an affidavit too, at page 150.

MR NICHOLAS:   Yes, which we will read if we need to, your Honour, but ‑ ‑ ‑

GUMMOW J:   Which says the world is still turning.

MR NICHOLAS:   Precisely.

KIRBY J:   It is the battle of the affidavits.

MR NICHOLAS:   Precisely.

KIRBY J:   You turn up in special leaves.

MR NICHOLAS:   But some of what appears in paragraph 8 and following is highly argumentative.  There is no proper ‑ ‑ ‑

KIRBY J:   You can deal with that in your argument then.

MR NICHOLAS:   If your Honours are happy for me to deal with it that way, I am content to ‑ ‑ ‑

KIRBY J:   Either you are objecting or you are not objecting.

MR NICHOLAS:   I was objecting to paragraph 8 and following, your Honour, if your Honour puts it that way. 

FRENCH CJ:   Let us hear what has to be said about it and then we will see if it makes any difference.

MR NICHOLAS:   If your Honour pleases. 

FRENCH CJ:   Yes, all right.  Go on, Mr Caine.

MR CAINE:   I will identify the broadest issue, your Honour.  More particularly, the issue is whether the use of the particular words “according to” in the preamble to claim 7 in this case, the later claim ‑ ‑ ‑

FRENCH CJ:   Whether it sets up a logical inconsistency? 

MR CAINE:   Yes, your Honour.

FRENCH CJ:   That is it basically, is it not?

MR CAINE:   It is whether the words “according to” have the effect of importing each and all of the features of the anterior claim.  We say that that issue is a narrow question of law and not one, surprisingly in a patent case, that is entangled with issues of fact.  To deal with the evidence that Justice Kirby has referred to, we say that although this is an issue which arises in the context of construing a claim in a particular patent, the patent in suit, it is a matter of wider public importance because ‑ ‑ ‑

GUMMOW J:   Does it turn on the construction of the Act in any way?

MR CAINE:   No, your Honour. Section 40 has a relevance, your Honour, but it is this. Can I identify the two errors we say the Full Court fell into just to presage my treatment of the two claims in dispute. We say, first of all, that the Full Court made a construction error by notionally rewriting claim 7, the dependent claim, so as to obliterate the dependency with the effect, in essence, of converting that claim into an independent claim when, on its face, it is plainly dependent. They also fell into a second error related to a want of clarity. We say that having found that the two width integers, or width features, that are incorporated in claim 7 were alternatives, that is, that they were inconsistent, the Court should have gone on to find that section 40(3) of the Act, which requires the requisite clarity to be absent in the claims, claim 7, therefore to be bad.

Against that backdrop, can I deal with the two claims that lie at the core of the dispute  It is claim 1 and claim 7.  The Court can find those at application book 117 to 118.  I can deal with this in the broad, and that is to say that by way of overview, each of those claims define particular features of a hull for a seagoing vessel, particularly of a catamaran kind.  It deals with the patents directed really to the sort of high speed ferries that one sees in various waters, including Sydney Harbour.

GUMMOW J:   Looking at this set of claims as a whole, this construction problem that has been spotted with this particular claim, is that replicated in any of the other claims?  In other words, where it says “according to” and then it adds material, is the added material inconsistent as distinct from additional to what is in the earlier claim?

MR CAINE:   Two aspects to that, your Honour.  One is that the language of dependency, that is, according to any one of claims 1 to X, is employed in all claims except claim 1, the broadest independent claim, and the omnibus claim, claim 10, but there is no evidence ‑ ‑ ‑

GUMMOW J:   I know, but the point I am trying to get out of you is this.  The problem that is merged with claim 7, is that replicated with any of the other claims?

MR CAINE:   It infects claims 8 and 9, your Honour, but there was no contest before the trial judge ‑ ‑ ‑

GUMMOW J:   I know that, but we are trying to construe the instrument.

MR CAINE:   Yes, your Honour. 

GUMMOW J:   Does it first emerge with claim 7 or does it emerge in any of the claims 2 to 6?

MR CAINE:   The only factual inconsistency is said to arise in 7.  The evidence did not address the other integers, your Honour.  The only integers that were in dispute were 1.5 in claim 1, which is what we have called the “width integer’, 1.6 in claim 1, which is a different matter concerning the narrow‑waisted portion of the hull and claim 7 itself.  The other integers in the other claims were not the subject of any controversy.

FRENCH CJ:   Your debate is about the width integer, is it not?

MR CAINE:   Yes, your Honour. 

FRENCH CJ:   Continually decreases versus substantially constant?

MR CAINE:   Yes, your Honour.  It arises in this way, that the width integer appears first in claim 1 where the requirement is that the width of the hull at the waterline continually decrease, as your Honour says, and that collides with the width integer in claim 7, which deals with the width and defines it as substantially constant.  There are two aspects of that that I wanted to raise.  One was, first of all, that the width integer in claim 1 was deliberately inserted by way of an amendment.  Prior to the amendment, the width integer was not continually decrease, but rather generally decrease.  The requirement that it continually decrease, that is, one that is more readily satisfied than its predecessor, was replaced by – I am sorry.  Generally decrease was the predecessor; continually decrease is the present form.  When we get to claim 7, the Court can see that it is, on its face, expressed in the preamble, as it were, to incorporate each of the features of claim 1, that is, conventionally construed, we would say, each and all of the features, most notably the width feature.

FRENCH CJ:   So that beyond the point at which it is substantially constant, the width integer in 7 – well, 7 would simply pick up the width integer in 1, would it not?

MR CAINE:   There is a reason for that, your Honour.

FRENCH CJ:   So it is like ‑ ‑ ‑

MR CAINE:   Yes.  There is a reason for that, your Honour, and that is that if the Court looks at the application book at 66, there is a convenient schematic, just for present purposes, of a hull.  Claim 1 is a requirement that governs or controls the width of the hull at the waterline across the entire length of the hull from the stern to the bow.  Claim 7 is addressed to something quite different, that is, a different part of the hull, the sternward quarter only, that is, the last 25 per cent of the boat. 

What the amendment makes clear is that – I should say, claim 7 has not changed in its form, notwithstanding the amendment to claim 1.  It may be that it is an historic accident that claim 7 is expressed in the language that we say leads to the conclusion that it is bad for want of clarity.  It arises in this way, that when claim 1 was read to require the hull generally decrease, it could sit happily with claim 7, which required the sternward quarter to be substantially constant.  So, for example, if the sternward quarter was parallel and thereafter it decreased towards the bow, it would answer the description both of the general decrease and a substantially constant sternward quarter.  It was the amendment to claim 1 that has, it seems, given rise to the conflict or the inconsistency.

The Court, under section 116 of the Act, can have regard to the patent specification prior to amendment in order to construe the claims.  We say that what that shows, that is, the history of the amendments shows, that the patentee intended to have both features appear in the hull, that is, one that governed an overall decrease, that is, a narrowing along each point of the hull, and also one which governed more specifically the configuration of the sternward quarter.

GUMMOW J:   Did the Full Court deal with this argument?

MR CAINE:    Yes, your Honour.  That was put before the primary judge and again on appeal, your Honour.

GUMMOW J:   Where do they deal with it?

MR CAINE:   They do not, your Honour, in their written reasons.  The only attention given to this issue by the Full Court in what I might say, with respect, is rather scant reasoning appears in paragraph 41 and paragraph 47 – perhaps 46 and 47.  That is the only attention that the Full Court has given to this issue.

GUMMOW J:   Paragraphs?

MR CAINE:   Paragraph 41, your Honour, at application book 67 and then over the page in perhaps 46, but more particularly 47.  They are the only paragraphs that are directed to this collision between features. 

FRENCH CJ:   What it amounts to is reading, is it, 7 so that the words “where in the width of” read effectively as “save that”?

MR CAINE:   Or alternatively, your Honour, we say the net effect of what the Full Court has done is to rewrite claim 7 so as to obliterate the dependency.  It has given the width integer in claim 1 no work to do at all in claim 7.

FRENCH CJ:   Beyond the point at which the substantial constancy ceases, the continual decrease picks up, does it not, because they say it thereafter narrows towards the prow of the vessel?

MR CAINE:   It is not the same language, your Honour, with respect.  There is a narrowing, but it is not the same language as one sees in claim 1.  Claim 1 requires over the entire length of the hull that it continually decrease in a forward direction, that is, the continual decrease, being at each point as you move forward towards the bow, it narrows.

FRENCH CJ:   Yes.  That is right. 

MR CAINE:   Whereas claim 7 deals with the sternward quarter and then in the language that your Honour has referred to, it requires it to narrow towards the prow.  That does not, of itself, necessarily send a different message or provide a different definition to that which earlier existed before amendment, that is, it could narrow without continuously decreasing.

FRENCH CJ:   I suppose what I am trying to expose by this is what we are really dealing with here is a particular constructional debate which may or may not be controversial, but does not really expose a question of general importance or principle.

MR CAINE:   Your Honour, I have to meet that squarely, as it were, and I do that in this way, that the evidence of the patent attorney and solicitor, Mr Chambers, who has put on the affidavit that Justice Kirby referred to at the outset, establishes that the words “according to” are a common form of language that is used in patent drafting.  It is a widespread practice both here and overseas and ‑ ‑ ‑

KIRBY J:   I do not think, with respect, that Mr Afaras’ affidavit really meets this because his main point is that if you look at the blogs and websites, they have not dealt with it, but, goodness, the decision was only made in July 2008.  So, even though I realise that for some people this is obsessive in its importance, it would not necessarily have come through the commentaries up until now. 

MR CAINE:   Yes, your Honour.

KIRBY J:   At some stage I would like you to comment on Mr Chambers’ suggestion that this puts Australia in breach of the Paris Convention and the United States Free Trade Agreement because, at least as far as I am concerned, that would be an important matter.

MR CAINE:   Your Honour, I do not think we could put it as high as that.  The thrust of Mr Chambers’ evidence, your Honour, is that we live and work in the patent community in an international framework.  In particular, Australia is a member of the PCT, as your Honour knows, and a significant proportion of patents that are filed in Australia both as a result of that and in any event originate overseas and are drafted by foreign attorneys where their rules and practice relating to appended claims are in accord with our own.  What Mr Chambers says is that if the Full Court decision stands, there will be a significant departure, not only from Australian practice, but also it will have ramifications for overseas applicants.  His evidence is ‑ ‑ ‑

GUMMOW J:   You need to back that up really.

MR CAINE:   Your Honour, even if the facts are as bare as these, that he says in his experience there are a significant number of international filings and in paragraph ‑ ‑ ‑

GUMMOW J:   Of course there are.  Of course the ordinary idea is that these claims are dependent.  I have said so myself in judgments, but that does not relieve one of the need to construe the particular instrument.

MR CAINE:   Yes, your Honour, but in the Court construing it ‑ ‑ ‑

GUMMOW J:   Unless you have some point that the Act does not permit the construction of claims in the way that these claims are said to be formulated, it just becomes the particular case.

KIRBY J:   What is wrong with that note in the document attached to Mr Afaras’ affidavit, which says:

There is no requirement of patent law that subsequent claims narrow the scope of earlier claims, even though, as a matter of practice, this is often the case. 

MR CAINE:   Yes, your Honour.

KIRBY J:   What is wrong with that as a matter of conclusion on what the Full Court has said and as a matter of sensible practice?

MR CAINE:   Your Honour is talking about the second sentence in paragraph 47 of the Full Court appeal?

KIRBY J:   On 153.  I am referring to the Australian and New Zealand Intellectual Property Law.  There is an indented italicised summary of what is taken to be the rule that is established here.

MR CAINE:   I think he is picking up, your Honour – it seems to be a quote ‑ ‑ ‑

KIRBY J:   It is a quote, is it?

MR CAINE:    ‑ ‑ ‑from paragraph 47 of the Full Court judgment at 68.

KIRBY J:   I see.  Yes, you are quite right.

MR CAINE:   What the Court says is, of course, right.  There is no requirement of patent law per se that subsequent claims narrow.  They  may be independent claims, but what we say is that once the ‑ ‑ ‑

GUMMOW J:   What do you say about the use sought to be made by your opponents of Blanco White’s work?

MR CAINE:   We say that case itself ‑ ‑ ‑

GUMMOW J:   Yes.  We have read the case.

MR CAINE:     ‑ ‑ ‑does not support the proposition and it relies entirely on a commentary by the author in a footnote.

GUMMOW J:   Yes, that is right.  There are authors and authors, and Blanco White is just not an ordinary scribbler.

MR CAINE:   I will have to meet that too, your Honour.  But if one reads the case, it amounts to this, your Honour.  There was a claim to a machine and the dependent claim simply said – it incorporated by reference part only of the earlier claim.  It said, “We claim the machine” and then they superadded another feature.  So it was not a case, in any event, where there was an entire dependency ‑ ‑ ‑

GUMMOW J:   The claim was the combination with the machine according to claim 1 of an attachment.

MR CAINE:   That is right, your Honour.  There was a radius bar which was the attachment.  We say that is unexceptional.  They incorporate specifically part only of the anterior claim and then superadd the radius bar, the attachment.  That does not provide a proper foundation ‑ ‑ ‑

GUMMOW J:   Mr Justice Romer said claim 8 is merely a claim for the combination of the radius bar attachment with the machine comprised in claim 1 or claim 2.

MR CAINE:   Yes, your Honour.  It is quite unexceptional, your Honour.  It certainly does not support any modification or rewriting of a dependent claim.

GUMMOW J:   It does not support any principle that you do not look at the particular set of claims and do your best.

MR CAINE:   Your Honour, I cannot say that if the Court were to ventilate this matter on appeal that we would be creating new law.  What would be happening, in the course of ventilating the issues required to deal with this narrow point, they would be elucidating established principles in the particular context of dependent claims. 

GUMMOW J:   Since Project Blue Sky – and I know that was a statutory case – we try and read instruments to produce a result that is not erratic and which gives effects to the words as far as you can.

MR CAINE:   Yes, your Honour.

GUMMOW J:   You can read this so that claim 1 lives with the other claim, and that is what the Full Court did.  Why would one not do that?

MR CAINE:   We say, your Honour, it is not a proper construction.  We had contended in our primary submission below that the two claims could co‑exist.

GUMMOW J:   What is the result of your construction? 

MR CAINE:   Our construction, your Honour, is that the Full Court having found ‑ ‑ ‑

GUMMOW J:   No, your construction ‑ ‑ ‑

MR CAINE:    ‑ ‑ ‑that the two features are inconsistent, we say it follows that the claim is bad for want of clarity.

GUMMOW J:   The claim is what?

MR CAINE:   Bad for want of clarity, your Honour. 

GUMMOW J:   I see.

MR CAINE:   That was a matter, your Honour, that we put by way of alternative submission both in writing and orally before the Full Court, and I said at the end that it did not need to be remitted to the trial judge in order for relief to be granted should the Court, contrary to our primary submission ‑ ‑ ‑

GUMMOW J:   There is no claim of invalidity before us, is there?

MR CAINE:   The way I have put it in the Full Court, your Honour, was it was a matter that was pleaded.  It was not ‑ ‑ ‑

GUMMOW J:   I am looking at the ground for special leave.

MR CAINE:   No, your Honour.

GUMMOW J:   All right.  The answer to my question was “no”. 

MR CAINE:   Your Honour, we say the issue goes more widely and raises a matter that would educate the patent community, as it were, about the proper treatment of dependent claims, notwithstanding it is, of course, a construction of the claim, the patent in suit.  But we say it is not so idiosyncratic as not to provide useful tuition, as it were, from this Court at an authoritative level about why it is that dependent claims, using that clear and conventional language, ought not to be obliterated in the way the Full Court appears to have done.  Their reasons are scant, as I indicated to the Court.  It is only in those two paragraphs.  They do not explain, save for a finding that the claims are alternatives, why it is that the notional rewriting that I have identified is justified.  We say contextually it is not.  Thank you, your Honour.

FRENCH CJ:   Thank you, Mr Caine.   Mr Nicholas, we will not need to call on you.

MR NICHOLAS:   May it please the Court.

FRENCH CJ: The dispute between the parties in this matter turned upon the construction of claim 7 of the patent in suit and, in particular, its relationship to claim 1. No issue of interpretation of section 40 of the Patents Act 1990 is said to arise nor is there any allegation of the invalidity of the claim in suit.

We are not satisfied that there are sufficient prospects of success in displacing the conclusions of the Full Court to warrant the grant of special leave nor are we satisfied that the Full Court decision raises any question of general principle regarding the construction of patent claims.

Special leave will be refused with costs.

The Court will adjourn to reconstitute for the next matter.

AT 10.15AM THE MATTER WAS CONCLUDED