Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4)

[2015] FCA 1372

FEDERAL COURT OF AUSTRALIA

Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372

Citation:

Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2015] FCA 1372

Parties:

AUSTRALIAN MUD COMPANY PTY LTD ACN 009 283 416 and REFLEX INSTRUMENTS ASIA PACIFIC PTY LTD ACN 124 204 191 v CORETELL PTY LTD ACN 119 188 493, MINCREST HOLDINGS PTY LTD ACN 068 672 471 (TRADING AS CAMTEQ INSTRUMENTS), NICKY KLEYN and KLEYN INVESTMENTS PTY LTD ACN 118 967 687 (TRADING AS CAMTEQ INTERNATIONAL SERVICES)

File number:

NSD 2082 of 2011

Judge:

MCKERRACHER J

Date of judgment:

4 December 2015

Catchwords:

PATENTS – innovation patents – system and method patents for the orientation of core samples extracted from the ground in connection with geological surveying and other drilling operations – construction of the claims – whether the claims are directed to orientation of core samples in the context of mineral exploration which involves hard rock formations where there is unlikely to be fractured rock or to petroleum exploration which involves soft, fractured or brittle rock – whether the patents are confined in their scope to a system and method carried out by a ‘unitary’ electronic device or embrace a ‘two part’ device – whether the claims require that the recording of time at which the core sample is detached is a separate and discrete action removed in time from the ‘inputting’ of the time – whether an essential integer of the applicants’ tool is that the core sample be ‘held in fixed relation to’ the inner tube at the time of detachment from the body of material – whether the integer ‘indication of the orientation’ in the claims is not present in the respondents’ tool in the ‘real time roll’ method of display

PATENTS – infringement – whether the respondents’ tools include the features of each of the claims of the system and method patent – liability of each of the respondents for infringement – direct infringement – whether the corporate respondents have infringed the patents by making, selling, suppling or otherwise disposing of, or offering for those purposes, the respondents’ tools – indirect infringement – whether the corporate respondents have authorised, procured, induced or joined in a common design with persons to whom the respondents’ tools have been supplied to use the tools, and those persons have so used the respondents’ tools – joint tortfeasorship – whether the second and fourth respondents authorised, procured or induced, or joined in a common design with the first respondent to do the acts alleged to amount to infringement – whether the third respondent authorised, procured or induced or joined in a common design with the corporate respondents to do the acts alleged to amount to infringement – whether the third respondent was directly and personally involved in the corporate respondents’ activities alleged to amount to infringement – innocent infringement – whether the respondents were not aware or had no reason to believe that a patent for the invention existed or that their acts constituted infringement in accordance with s 123 of the Patents Act 1990 (Cth) (Act)

PATENTS – relief for infringement – whether the applicants are entitled to any relief consequent on activities by the respondents in countries outside of Australia – whether the applicants are entitled to additional damages for patent infringement pursuant to s 122(1A) of the Act

PATENTS – invalidity – priority date – whether the patents are entitled to claim priority from the priority date of the provisional application – whether the claims are fairly based on matters disclosed in the earlier applications – whether the onus of establishing priority date rests on the party attacking the validity of the patents

PATENTS – invalidity – novelty – whether the patents are novel when compared with the prior art base – whether the invention is not novel in light of information made publicly available from publication of prior art documents – whether the Skopec paper, manuals and operating instructions of the applicants’ tool disclosed the integers of the patents prior to the priority date – whether the invention is not novel in light of information made publicly available from acts of prior use and disclosures of the system and method claimed in the patents before the priority date – whether the alleged prior use, that is, the promotion, demonstration and public exposure of the applicants’ tool, took place prior to the priority date – whether the alleged prior use constituted public disclosure – whether the negotiation of a distribution agreement between the owner of the relevant patent rights in the United Kingdom and an associated entity of the applicants in Australia prior to the priority date constituted invalidating commercial dealings in the invention – whether the nature of the testing of the applicants’ tool at mine sites was for commercial purposes and constituted prior use and destroyed novelty – whether the invention was ready for patenting at the time of the testing – whether the activities associated with the testing were confidential – whether the working of the invention in the testing must be disregarded as it was for the purposes of reasonable trial of the invention and, because of the nature of the invention, it was reasonable necessary for the working to be in public pursuant to s 24(1) of the Act and reg 2.2(2)(d) of the Patents Regulations 1991 (Cth)

PATENTS – invalidity – whether the patents lack an innovative step – whether the patents include significant differences from, and advantages over, the prior art – whether the claims in the Patents are fairly based on the matter described in the specifications – whether the patents were obtained by false suggestion or misrepresentation – whether the patents are not useful as the invention as claimed in the patents does not achieve the promises set out in the specifications – whether the specifications in the patents do not describe the inventions fully and are insufficient – whether the patents are inadequately defined – whether the claims in the patents are unclear – whether there were acts of prior secret use – whether the use of the invention was for the purpose of reasonable trial or experiment only – whether the party seeking to establish the invalidity of the patents has the onus of establishing a secret use of the invention prior to the priority date – whether the patents disclose a manner of manufacture in light of the alleged disclosures of the invention prior to the priority date – whether the applicants made unjustified threats within the meaning of s 128 of the Act and/or false or misleading and deceptive statements contrary to the Australian Consumer Law

Legislation:

Corporations Act 2001 (Cth) s 50AAA
Patents Act 1990 (Cth) ss 7(1), 7(4), 7(5), 9(a), 13, 18(1A)(a), 18(1A)(b)(i), 18(1A)(b)(ii), 18(1A)(c), 18(1A)(d), 24(1)(a), 24(1)(b), 40(2)(a), 40(2)(c), 40(3), 43, 79B, 117, 122(1A), 123(1), 128, 138(3)(b)
Patents Regulations 1991 (Cth) regs 2.2(2)(d)(i), 2.2(2)(d)(ii), 2.3(1A), 2.3(1)(c), 2.3(2), 3.12

Cases cited:

Apotex Pty Ltd v AstraZeneca AB (No 4) (2013) 100 IPR 285
Apotex Pty Ltd v Les Laboratoires Servier (No 2) (2012) 293 ALR 272
Apotex Pty Ltd v Sanofi-Aventis (2008) 78 IPR 485
Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 304 ALR 1
Aspirating IP Ltd v Vision Systems Ltd (2010) 88 IPR 52
Australian Mud Company Pty Ltd v Coretell Pty Ltd (2010) 88 IPR 270
Australian Mud Company Pty Ltd v Coretell Pty Ltd (2011) 93 IPR 188
Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75
Beadcrete Pty Ltd v Fei Yu (t/as Jewels 4 Pools) (No 2) (2013) 100 IPR 188
Belegging-en Exploitatiemaatschappij Lavender BV v Whitten Industrial Diamonds Limited [1979] FSR 59 [1979] FSR 59
BEST Australia Ltd v Aquagas Marketing Pty Ltd (1988) 12 IPR 143
Bitech Engineering v Garth Living Pty Ltd (2010) 86 IPR 468
Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd (2012) 210 FLR 21
Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 Bristol-Myers Squibb Company v F H Faulding & Co Ltd (2000) 97 FCR 524
Britax Childcare Pty Ltd v Infa-Secure Pty Ltd (2012) 290 ALR 47
Collins v Northern Territory (2007) 161 FCR 549
Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232
Danisco A/S v Novozymes A/S (No 2) (2011) 91 IPR 209
Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd (2008) 78 IPR 463
Dow Chemical AG v Spence Bryson & Company Ltd [1984] RPC 359
Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239
Eli Lilly & Co Ltd v Apotex Pty Ltd (2013) 100 IPR 451
Fieldturf Tarkett Inc v Tigerturf International Limited (2014) 107 IPR 46
Flexible Steel Lacings Co v Beltreco Ltd (2000) 49 IPR 331
Fresenius Medical Care Australia Pty Limited v Gambro Pty Limited (2005) 67 IPR 230
Garford Pty Ltd v DYWIDAG Systems International Pty Ltd (2015) 110 IPR 30
General Tire & Rubber Co v Firestone Tyre & Rubber Co Limited [1972] RPC 457
Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257
H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151
Harrison v Project & Design Co (Redcar) Ltd (1978) FSR 81
Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd [2008] FCAFC 139
Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd (2010) 85 IPR 525
Jupiters Ltd v Neurizon Pty Ltd (2005) 222 ALR 155
Keller v LED Technologies Pty Ltd (2010) 185 FCR 449
Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2007) 235 CLR 173
Longworth v Emerton (1951) 83 CLR 539
Melbourne J.S. v Terry Fluid Controls Pty Ltd (1993) 26 IPR 292
Merck & Co Inc v Arrow Pharmaceuticals Limited (2006) 154 FCR 31
Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited (1980) 144 CLR 253
Morton-Norwich Products Inc v lntercen Ltd [1978] RPC 501
Myall Australia Pty Ltd v RPL Central Pty Ltd (2011) 93 IPR 1
Re Newall & Elliot & Glass (1858) 140 ER 1087
Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 16 IPR 545
Northern Territory v Collins (2008) 235 CLR 619
Perard Engineering Ltd (Hubbard’s) Application (1976) RPC 363
Pfaff v Wells Electronics Inc 525 U.S. 55 (1998)
PhotoCure ASA v Queen's University at Kingston (2005) 216 ALR 41
Raben Footwear Pty Ltd v Polygram Records Inc (1997) 5 FCR 88
Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 164 ALR 239
Roadshow Films Pty Ltd v iiNet Limited (2012) 248 CLR 42
Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225
Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) (2011) 281 ALR 705
Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339
Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) (2010) 88 IPR 242
Synthon BV v SmithKline Beecham plc (2006) RPC 333
Unilin Beeher BV v Huili Building Materials Pty Ltd (No 2) [2007] FCA 1615
Varco Canada Limited v Pason Systems Corp 2013 FC 750
WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274
Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327
Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588
Re Wheatley's Patent Application (1984) 2 IPR 450
Windsurfing International Inc v Petit (1984) 3 IPR 449
Zetco Pty Ltd v Austworld Commodities Pty Ltd (No 2) [2011] FCA 848

Other reference material:

Skopec RA, Mann MM, Jeffers D, Grier SP, “Horizontal Core Acquisition and Orientation for Formation Evaluation” (1992) 7(1) Society of Petroleum Engineers Drilling Engineering 47

Dates of hearing:

14, 15, 16, 17, 22, 23, 24, 28, 29 and 30 April 2014, 1 and 2 May 2014, 14, 15, 21, 23 and 24 July 2014

Place:

Perth

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

772

Counsel for the Applicants/Cross Respondents:

Mr JM Hennessey SC with Mr C Dimitriadis

Solicitor for the Applicants/Cross-Respondents:

Gilbert + Tobin

Counsel for the Respondents/Cross-Claimant:

Mr BJ Hess QC and Dr LJ Duncan

Solicitor for the Respondents/Cross- Claimant:

Arns & Associates

IN THE FEDERAL COURT OF AUSTRALIA
new south wales DISTRICT REGISTRY
GENERAL DIVISION	NSD 2082 of 2011

BETWEEN:

AUSTRALIAN MUD COMPANY PTY LTD ACN 009 283 416
First Applicant/First Cross-Respondent

REFLEX INSTRUMENTS ASIA PACIFIC PTY LTD
ACN 124 204 191
Second Applicant/Second Cross-Respondent

AND:

CORETELL PTY LTD ACN 119 188 493
First Respondent/Cross-Claimant

MINCREST HOLDINGS PTY LTD ACN 068 672 471 (TRADING AS CAMTEQ INSTRUMENTS)
Second Respondent

NICKY KLEYN
Third Respondent

KLEYN INVESTMENTS PTY LTD ACN 118 967 687 (TRADING AS CAMTEQ INTERNATIONAL SERVICES)
Fourth Respondent

JUDGE:	MCKERRACHER J
DATE OF ORDER:	4 DECEMBER 2015
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.The Applicants file and serve a minute of orders reflecting these reasons within 30 days.

2.The Respondents file any responsive material within a further 21 days.

3.A further directions hearing be scheduled in late February 2016 to make and/or program the making of orders consequent upon these reasons and directions as to the future conduct of the proceeding.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
new south wales DISTRICT REGISTRY
GENERAL DIVISION	NSD 2082 of 2011

BETWEEN:

AUSTRALIAN MUD COMPANY PTY LTD ACN 009 283 416
First Applicant/First Cross-Respondent

REFLEX INSTRUMENTS ASIA PACIFIC PTY LTD
ACN 124 204 191
Second Applicant/Second Cross-Respondent

AND:

CORETELL PTY LTD ACN 119 188 493
First Respondent/Cross-Claimant

MINCREST HOLDINGS PTY LTD ACN 068 672 471 (TRADING AS CAMTEQ INSTRUMENTS)
Second Respondent

NICKY KLEYN
Third Respondent

KLEYN INVESTMENTS PTY LTD ACN 118 967 687 (TRADING AS CAMTEQ INTERNATIONAL SERVICES)
Fourth Respondent

JUDGE:	MCKERRACHER J
DATE:	4 DECEMBER 2015
PLACE:	PERTH

REASONS FOR JUDGMENT

1         THE DISPUTE	[1]
2         THE PATENTS	[11]
2.1      Background art	[14]
2.2      Disclosure of the invention	[17]
2.3      Best mode for carrying out the invention	[19]
2.4      The claims	[46]
2.5      Dates of grant	[48]
3         KEY FACTS	[55]
4         THE ISSUES	[73]
4.1      Infringement	[74]
4.1.1    Exclusive licensee and priority dates	[74]
4.1.2    Claims of direct infringement	[75]
4.1.3    Proper construction	[78]
4.1.4    Infringement of System Patent	[80]
4.1.4.1       Making ORIshot Tools	[80]
4.1.4.2       Sales and supply of ORIshot Tools, supply of ORIshot Tools for use	[82]
4.1.4.3       Features of claims	[84]
4.1.5    Infringement of Method Patent	[87]
4.1.5.1       Sale etc of ORIshot Tools	[95]
4.1.6    Accessorial liability	[98]
4.1.6.1       Mincrest and Kleyn Investments	[98]
4.1.6.2       Mr Kleyn	[101]
4.1.6.3       Priority dates	[103]
4.1.7    Innocent infringement	[109]
4.2      Invalidity	[110]
5         SOME GUIDING PRINCIPLES ON CONSTRUCTION	[113]
6         AN OVERVIEW OF THE ORAL EVIDENCE	[122]
6.1      Infringement	[126]
6.2      Invalidity	[159]
7         AMC’S CLAIM - INFRINGEMENT	[216]
7.1      Previous proceeding	[216]
7.2      The respondents’ arguments on infringement	[220]
7.2.1    The structure of the argument on infringement	[222]
7.2.2    A ‘unitary’ device	[224]
7.2.3    ‘Input means’ or ‘inputting’	[233]
7.2.4    Context of the Patents – hard rock	[241]
7.2.5    ‘Held in fixed relationship’	[250]
7.2.6    ‘Real time roll mode’	[255]
7.3      Conclusion on infringement	[263]
7.4      Liability of each of the respondents	[264]
7.5      Consideration of the liability of each of the respondents	[369]
7.6      Defence of innocent infringement	[419]
7.7      Activities outside Australia	[422]
7.8      A claim for additional damages	[425]
8         CORETELL’S CROSS-CLAIM – INVALIDITY	[430]
8.1      Priority Date	[437]
8.2      Novelty - prior art	[460]
8.3      Consideration of novelty – prior art	[473]
8.3.1    Skopec Paper and integers of the System Patent	[475]
8.3.1.1       Integers S1 – S3	[475]
8.3.1.2       Integer S4	[476]
8.3.1.3       Integer S5	[482]
8.3.1.4       Integer 6	[488]
8.3.1.5       Integer S7	[489]
8.3.1.6       Integer S8	[494]
8.3.1.7 Integer S9	[498]
8.3.1.8       Integers S10 and S11	[502]
8.3.1.9       Integer S12	[503]
8.3.1.10     Integers S13-S16	[506]
8.3.2    Skopec Paper and Integers of the Method Patent	[512]
8.3.2.1       Integers M4, M13, M20, M25	[513]
8.3.2.2       Integer M5	[516]
8.3.2.3       Integer M6	[519]
8.3.2.4       Integer M7	[522]
8.3.2.5       Integer M23	[525]
8.3.2.6       Integers M28 and M29	[526]
8.3.3    The Sperry-Sun and Baker Hughes manuals	[529]
8.3.4    Dr Skopec’s own alleged prior ‘use’	[531]
8.3.5 Publication of the ACT Tool operating instructions	[536]
8.4      Novelty – prior use	[540]
8.5      Consideration of the prior use arguments	[604]
8.6 Innovative step – s 18(1A)(b)(ii)	[668]
8.7 Lack of fair basis – s 40(3)	[683]
8.8 False suggestion or misrepresentation – s 138(3)(d)	[687]
8.9 Lack of utility – s 18(1A)(c)	[696]
8.10 Insufficiency of description – s 40(2)(a)	[720]
8.11 Definition of the invention – s 40(2)(c)	[730]
8.12 Clarity – s 40(3)	[734]
8.13 Prior secret use – s 18(1A)(d)	[737]
8.14 No manner of manufacture – s 18(1A)(a)	[758]
8.15 Unjustified threats and the ACL claims	[765]
9         CONCLUSION	[770]
APPENDIX A	[773]
APPENDIX B - RULINGS	[774]

1.                 THE DISPUTE

1. This proceeding commences, in this iteration at least, as a claim for relief in respect of infringement of two innovation patents.  The Patents relate to a system and method for orienting core samples extracted from the ground, commonly used in connection with geological surveying operations and other drilling operations.

2. Underground samples of ore bodies are collected by a drill which extracts a core.  The core samples so collected can be analysed for their geological content.  The quality of that analysis depends in part on identifying the orientation of the core sample relative to the host material from which the core has been extracted.  Tools have been invented to enable the core sample orientation to be identified.  This case involves consideration of such tools, practices and, particularly, the Patents in suit. 

3. For the applicants, the primary participants are Australian Mud Company Pty Ltd (AMC) and Reflex Instruments Asia Pacific Pty Ltd.  They are respectively the patentee and exclusive licensee of the Patents.  In turn, they are wholly owned subsidiaries of the publicly listed company, Imdex Limited. 

4. The tool which has been developed and commercialised by AMC for the orienting of core samples is described in the evidence as being the ‘ACT Tool’ or the ‘Ace Core Tool’. 

5. The respondent corporations are a group of associated companies.  Mr Nicky Kleyn is the sole shareholder in, director and company secretary of the first respondent, Coretell, and the fourth respondent, Kleyn Investments Pty Ltd.  He is one of two shareholders in, and directors of, the second respondent, Mincrest Holdings Pty Ltd (the other being his wife).  Mr Kleyn is the third respondent.  Coretell causes to be made and thereafter hires or causes to be hired, core orientation apparatus known or described as the ‘ORIshot’ or ‘ORIShot Tool’, both in Australia and in countries outside of Australia.  The ORIshot apparatus is used by exploration drillers under hiring arrangements with Coretell.  According to the respondents, Mincrest does not carry out trade or business in Australia, but acts as a trustee for a third party unconnected with the present proceedings or with any trade or business concerned with the ORIshot apparatus.  The respondents say that Kleyn Investments is not involved in any exploitation of the ORIshot apparatus.  It trades in a different apparatus known as the ‘Camteq Pro-Shot Multi shot Survey Instrument’. 

1. The applicants’ case is that the respondents have infringed the Patents by making, selling, supplying and otherwise dealing in various tools for orienting core samples and have done so flagrantly, with knowledge of, and in disregard of, the applicants’ rights under the Patents, such as to support an award of additional damages for patent infringement under s 122(1A) of the Patents Act 1990 (Cth).

2. However, by order made by Justice Nicholas on 4 May 2012 all of the issues as to the quantum of pecuniary relief, if any, have been reserved for later determination. 

3. The applicants also seek post-expiry injunctive relief consequent upon the alleged infringements that were committed during the term of the Patents. 

4. AMC contends that the ORIshot Tool infringes its Patents.  The respondents refute this on several grounds. 

5. Coretell (independent of the other respondents) also advances cross-claims which allege the invalidity of the Patents on numerous grounds, including lack of novelty on the basis of prior art and prior use.  In about September 1990, Messrs Skopec, Mann, Jeffers and Grier published a conference paper entitled ‘Horizontal Core Acquisition and Orientation for Formation Evaluation’ at a 1990 Conference in New Orleans, which was later published: Skopec et al, “Horizontal Core Acquisition and Orientation for Formation Evaluation” (1992) 7(1) Society of Petroleum Engineers Drilling Engineering 47 (Skopec Paper).  In January 2004, Mr Chris Bradford, an employee of Imdex, collected two ACT Tools from Mr Parfitt of the entity Chardec Consultants Limited in the United Kingdom.  Those ACT Tools were alleged to have been used subsequently at operations conducted by:

   (a)Mosslake Drilling at Manjimup in April 2004;

   (b)Drill Corp in Kalgoorlie in April 2004; and

   (c)Barminco in Kalgoorlie in May 2004.

   2.                 THE PATENTS

6. The two Patents are no 2010101356, which is the System Patent and no 2011101041, which is the Method Patent.  They are in similar terms. 

7. I will refer first to the content of the System Patent. 

8. The System Patent explains that the field of the invention relates to an orientation device, which is used for providing an indication of the orientation of a core sample relative to a body of material from which the core has been extracted, and also to a method of core sample orientation identification.

   2.1               Background art

9. There is a brief section dealing with ‘Background Art’, which explains the need for core sampling in geological surveying operations and the fact that core samples are obtained through core drilling operations.  Those operations, it is said, are typically conducted with a core drill comprising outer and inner tube assemblies.  A cutting head is attached to the outer tube assembly so that rotational torque applied to the outer tube assembly is transmitted to the cutting head.  A core is generated during the drilling operation, with the core progressively extending along the inner tube assembly as drilling progresses.  When a core sample is acquired, the core within the inner tube assembly is fractured.  The inner tube assembly and the fractured core sample contained in the inner tube are then retrieved from within the drill hole, typically by way of a retrieval cable lowered down the drill hole.  Once the inner tube assembly has been brought to the ground surface, the core sample can be removed and subjected to the necessary analysis. 

10. In discussing the background art, the System Patent explains that typically core drilling operations are performed at an angle to the vertical because it is desirable, for analysis purposes, to have an indication of the orientation of the core sample relative to the ground from which it was extracted.  It is therefore important there be some means of identifying the orientation of the core sample relative to the ground prior to it having been brought to the surface.  So, the System Patent explains that core orientation devices have been used to provide an indication of the orientation of the core sample. 

11. The System Patent explains that a common way of obtaining an indication of the orientation of a core sample is through the use of an orientation spear comprising a marker, such as a crayon projecting from one end of a thin steel shank, the other end of which is attached to a wire line (Spear Method).  The spear is then lowered down the drill hole prior to the inner tube assembly being introduced.  The marker on the orientation spear strikes the facing surface of material from which the core is to be generated, leaving a mark on it.  That mark is on the lower side of the drill hole because of the operation of gravity.  The inner tube assembly is then introduced into the outer tube assembly in the drill hole.  As drilling proceeds, a core sample is generated within the inner tube assembly.  The core sample so generated continues to carry the mark which was previously applied.  Upon completion of the core drilling run and retrieval of the core sample, the mark gives an indication of the orientation of the core sample at the time it was in the ground.  In addition to this method, there are other mechanical core orientation devices for marking a core sample prior to its extraction from the drill hole.  Those devices are typically adapted to be incorporated in the inner tube assembly for marking the core. 

    2.2               Disclosure of the invention

12. Under the heading ‘Disclosure of the Invention’, there is then a description of the way the invention operates as against the background of problems and difficulties associated with previous methodology.  In the disclosure of the invention, it is explained that in accordance with an aspect of the present invention, a core orientation system is provided for use with a core drill, the core drill having an inner tube and the system comprising:

    means for providing signals associated with the physical orientation of the inner tube of the core drill during drilling;

    means for measuring a time measurement indicative of the time during drilling when the core sample is detached from the body of material from which it is taken and held in fixed relation to the inner tube;

    input means for imputing the time measurement into the system;

    one or more processing means for processing the signals to produce data indicative of the orientation of the inner tube;

    one or more processing means for processing the data produced and the inputted time measurement to produce an indication of the orientation of the core sample relative to the material from which it is detached; and

    display means for the indication of the orientation of the core sample relative to the material from which it is detached. 
    (The consistory statements.)

13. There are several preferences indicated in the System Patent, specifically under the disclosure of the invention:

    Preferably, the system comprises one or more means for storing the data produced and the indication of the orientation of the core sample.

    Preferably, the means for storing the data comprised memory, the system comprising interface means having first means for storing the data in the memory and second means for accessing the memory to produce the indication of the orientation of the core sample when detached when required.

    Preferably, the means for storing data comprises memory, the system comprising a timer for determining predetermined time intervals relative to a reference time, and a means for storing the data in the memory upon each of the predetermined time intervals terminating.

    Preferably, the physical orientation of the core sample comprises: a rotational orientation about a longitudinal axis of the core sample; and/or an angular orientation of a longitudinal axis of the core sample above or below a horizontal plane.

    2.3               Best mode for carrying out the invention

14. There is then a ‘Brief Description of the Drawings’, which describes one specific embodiment of the invention and accompanying drawings.  The drawings are annexed to these reasons. 

15. Figure 1 in the drawing is a schematic view of a core drill with an orientation device according to the embodiment.  Figure 2 is a schematic side elevation view of the arrangement shown in Figure 1.  Figure 3 is a further schematic side elevation view of a lower part of the arrangement shown in Figure 2.  Figure 4 is a schematic side elevational view in section of the orientation device.  Figure 5 is a block diagram illustrating various components of the orientation device.  Figure 6 is a schematic plan view of a keypad and display provided at one end of the orientation device. 

16. Still continuing with the preferred embodiment, the System Patent goes on to describe the ‘best mode(s) for carrying out the invention’ by reference to the drawing figures which are annexed to these reasons.  The numbers in the following text correspond to the numbers in the annexed drawings of Figures.  The best mode shows, by referring to Figure 1, that there is a core orientation device 10 for a core drill 12.  The device 10 comprises an arrangement 14 for providing signals 16 associated with a physical orientation of the core orientation device 10.  According to the preferred embodiment, the physical orientation of the core orientation device 10 comprises rotation orientation 18 about a longitudinal axis 20 of the core orientation device 10.  The device includes processing means 22 for processing the signals 16 provided by the arrangement 14 so as to provide processed data 23 from which  a measure 24 of the rotational orientation 18 of the core orientation device 10 can be established.  The measure 24 is associated with the rotational orientation 18 of the device 10 at a particular moment in time. 

17. Continuing with the preferred embodiment discussion of the best mode for carrying out the invention, the System Patent indicates that a memory 26 is coupled to the processing means 22 for storing the processed data 23.  To this end there is provided an interface means 27 comprising first means 28 for storing the processed data 23, processed by the processing means 22 in the memory 26 and the second means 30 for accessing the memory 26 to provide the measure 24 of the rotational orientation 18 of core orientation device 10.  This allows the measure 24 to be obtained when required. 

18. Figure 2 shows the core drill 12 comprises an outer tube assembly 34 and an inner tube assembly 36 of ‘generally conventional construction’.  The orientation device 10 according to the embodiment is accommodated along the length 38 of the inner tube assembly 36, as shown in Figure 2. 

19. Under that arrangement, the inner tube assembly 36 comprises upper and lower parts 36a, 36b between which the orientation device 10 is fitted.  The upper part 36a includes a bearing 40, with the portion above the bearing 40 being rotatable with the outer tube assembly 34 and the portion below the bearing 40 being restrained against rotation because of frictional engagement with the core being generated.  Thus, in this manner, the bearing 40 allows the core orientation device 10 to rotate relative to the outer tube assembly 34 but not relative to the core sample when the core is received. 

20. It is explained that incorporating the orientation device 10 in the inner tube assembly 36 increases the overall length of the inner tube assembly 36, a consequence of which is that the overall length of the outer tube assembly 34 needs also to be increased.   A spacer 42 is provided in the outer tube assembly 34 for this purpose.  Apart from the modification to the inner tube assembly 36 to accommodate the orientation tool 10, and also the spacer 42 provided in the outer tube assembly 36, the core drill is of conventional construction and operates in a conventional way. 

21. Then by reference to Figure 3, it can be seen that the inner tube assembly 36 comprises a back end assembly 33, a replacement grease sub 35, the core orientation device 10, three metres of inner tube 37 and core lifter case 39. 

22. Figure 4 shows that the orientation device comprises a housing 44 of general cylindrical construction thereby defining the central longitudinal access 20.  The housing 44 has a general cylindrical side wall 46 and two opposed ends 48 and 50.  The end 48 is open and internally threaded to provide a female thread formation.  A male threaded formation 52 is provided on the cylindrical side 46 of the housing 40 inwardly spaced from the other end 50.  The effect of these two formations is that the orientation device 10 can be installed between, and in threaded engagement with, the upper and lower parts, 36a and 36b of the inner tube assembly 36, as shown in Figure 2.  The inner tube assembly 36 has complementary threaded portions which provide means for accommodating the core orientation device 10 along the length of the inner tube assembly 36. 

23. There is also an internal chassis 54 shown in the housing 44.  That chassis 54 has a cavity 56 which accommodates shock absorbing material 57 encasing a triaxial accelerometer means 58.  The shock absorbing material 57 comprises several layers of cushioning and there is an outer cushioning layer, an immediate cushioning layer and an inner cushioning layer embracing the triaxial accelerometer means 58.  The robustness of cushioning progressively decreases from the outer layer to the inner layer. 

24. Figure 5 shows the housing 44 accommodating a main printed circuit board 60 and an electrical power source 62 in the form of a lithium battery pack.  The processing means 22 comprises an electronic circuit with chip on the main printed circuit board 60.  The processing means 22 incorporates an analogue to digital converter 64, a low power microcontroller 66, which provides a processor, a timer and non-volatile memory 70, as illustrated in Figure 6.  Thus, in this embodiment the memory 26 forms part of the processing means 22. 

25. It is explained further in the System Patent that the interface means 27 forms part of the processing means 22 while having first means 28 for storing the process data 23 and second means 30 for accessing the memory 26 to provide the measure 24 of the rotational orientation 18 of the core orientation device 10 at the associated time.  There is a ‘watchdog circuit’ 71 provided for watching the system.  In instances where the device 10 shuts down, it can be reset at the surface. 

26. The triaxial accelerometer means 58 comprises three internal silicon accelerometers operating along orthogonal directions X, Y and Z.  The three accelerometers measure components of the earth’s gravitational field.  Mathematically transforming the outputs from the three accelerometers allows the rotational orientation 18 of the device 10 about its longitudinal axis 20 to be determined.  More particularly, the signals 16 produced by the triaxial accelerometer means 43 are determinative of the change in orientation of the device 10 and are transmitted to the analogue to digital converter 64, which in turn transmits signals or signal data to the microcontroller 66. 

27. The timer 68 is provided for ensuring that the processing means processes signals from the arrangement over predetermined time intervals.  In this embodiment, the processor means 22 includes integration means for integrating signals over a particular predetermined time interval of one minute.  When device 10 is operating, the relative operation of the device is determined at regular intervals as determined by processing means 22.  The processing means 22 employs the interface means 27 and second means 30 to store the processed data 23 and memory 26.  In this embodiment, the time intervals at which the orientation is determined and stored comprise intervals of one minute.  In this way, there is a stored record of the orientation of the device 10 at minute intervals.  The orientation of the device 10 corresponds to the orientation of the lower part 36b of the inner tube assembly 36, which in turn corresponds to the orientation of a core sample progressively entering the inner tube assembly 36, as the lower part 36b does not rotate relative to the core sample. 

28. In the operation of the core orientation device and the core drill, a first step comprises moving the core drill 12, having the core orientation device 12 forming part thereof from a first location to a drilling location.  After this, the core drill is operated to drill a core sample.  When the core drill is moved from the first location to the drilling location, the core orientation device generates acceleration signals associated with the rotational orientation 18 of the core orientation device 10.  The processing means 22 then processes the signals 16 to provide processed data 23 from which the measure 24 of rotational orientation 18 of the device 10 at a drilling location can be established.  The processed data 23 is stored in memory 26 for later recall such that the measure 23 of the rotational orientation of the device 10 can be obtained from it.  By using integration means and time intervals of one minute, the processed data 23 indicates the change orientation of the device 10 in one minute intervals commencing from the reference time that corresponds to the time at which the orientation device 10 was started. 

29. In this embodiment, as shown in Figure 6, the core orientation device includes a membrane keypad 72 and an LCD display 74, both of which are provided at end 50 of the device 10.  With this arrangement, the keypad 72 is accessible for operation from the end 50 and the display 74 is also visible from that end, but of course only when the orientation device 10 is not connected to the upper part 36a of the inner tube assembly 36.  The keypad 72 incorporates a window section 76 through which the LCD display 74 is visible.  In this embodiment, the keypad has four keys identified in Figure 4 as ‘N’, ‘R’, ‘+’ and ‘-’ keys.  The membrane keypad 72 and the display 74 are protected by the inner tube assembly 36 when accommodated in the female threaded portion. 

30. In this particular embodiment, the orientation device 10 is started by pressing the ‘N’ key on the keypad 72.  It is also necessary to record the time duration between starting the core orientation device 10 and extracting the core sample.  Typically, that is achieved by starting an external stopwatch at the time of starting the orientation device 10.  The System Patent states that the ‘[o]ther arrangements are, of course, possible’. 

31. In this embodiment, the stopwatch is started at the time that the orientation device 10 displays a signal on the display 31 indicating that the operation of the orientation device has started.  This provides for added accuracy.  Once the orientation device has been started and recording of the subsequent time duration has commenced, the inner tube assembly 36 is inserted into a drill hole for reception in the outer tube assembly 13.  The core drilling operation is then commenced.  During the drilling operation, a core is progressively generated within the inner tube assembly.  When it is ready to be extracted, the core drill operator refers to the timer and notes the time duration involved.  Specifically, the operator will note either the full minute that has previously elapsed or waits until the next full minute elapses, and then records that time (as it must be recalled later).  The operator then initiates the procedure for breaking the core from the body of material, ensuring that no rotation of the inner tube assembly 36 occurs. 

32. The inner tube assembly 36 is retrieved from the drill hole in the conventional manner.  Once it is at the surface, the upper part 36a of the inner tube assembly 36 is unscrewed from the orientation device 10, so as to expose the end 50 to provide access to the keypad 72 and the display 74.  The frictional engagement of the core and the inner tube assembly 36b along with bearing 40 allows the lower part 36b to rotate relative to the outer tube assembly 34, but not relative to the core sample. 

1. The device 10 includes means 80 for relating the measurement of the orientation of the core orientation device 10 with the current rotational orientation.  It allows for the core orientation device to consequently be rotated to reflect the measure of the device. 

2. In this embodiment, this is achieved by imputing the time duration as measured by an external stop watch into the orientation device 10 through the keypad 72.  That is done by pressing the ‘R’ key to display numbers ‘00’ and then pressing the ‘+/-’ keys to display the relevant time duration in minutes.  Once that time has been entered, the ‘R’ key is pressed once causing the means 80 for relating the core orientation device to the current rotational orientation thereof, to determine a current rotational orientation 81 from the processing means 22 and display a graphical indication 83 of the direction in which the orientation device 10 and the lower part 36b of the inner tube assembly 36 attached to it should be rotated.  Rotating the device and lower part 36b in this direction causes the core contained within the inner tube assembly 36b to move into an orientation corresponding to its orientation at the time that it was in the ground before extraction.  At this time, there is a symbol 85 displayed to alert the operator. 

3. Once the required orientation has been established, the core sample can be marked as necessary and removed from the lower part of the inner tube assembly 36b with the upper part 36a being fitted onto the orientation device 10 and the inner tube assembly 36 used for the next core sample drilling stage. 

4. The process by which the device determines and provides a graphical indication of the direction in which it should be rotated, together with the lower part 15b of the inner tube assembly 36 in order to be at an orientation corresponding to the orientation of the core sample in its original position within the ground, operates on the following basis.

5. The time measurement measured by the operator and entered into the keypad 72 represents the duration of time between starting the orientation device 10 and the point at which the particular drilling process was terminated in order to fracture the core sample from the body of material to which it is attached so that the core sample could be retrieved from the drill hole and brought to the surface level. 

6. The orientation is determined at predetermined intervals of a minute in this embodiment.  The timer simply allows identification of the particular minute interval at which the appropriate reading was taken and recorded. 

7. Inputting of the time measurement into the keypad 72 allows the controller 66 to compare the inputted reading to the various stored readings, and identify the relevant orientation reading.  The triaxial accelerometer means 58 provides signals responsive to the orientation of the orientation device 10 at any instant in time, including when operating at surface level.  Such signals allow the controller 66 to process the signals and determine orientation of the device at any instant.  The controller 53 can compare the instant of the device at surface level at any instant in time to the particular recorded reading corresponding to the orientation of the device at the time that the core sample was separated from the body of material to which it was previously attached.  This comparison is processed to provide data which is outputted to the display 74 to provide a visual indication of the direction in which the orientation device should be rotated. 

8. What this means is that in this orientation device, the orientation device does not require physical marking of a core sample prior to extraction from the ground.  Indeed, the orientation device according to the embodiment is particularly convenient for an operator to use, it is said, because all that is required is for the operator to start the device prior to the inner tube assembly 36 being inserted into the drill hole, and contemporaneously start a timer for recording the time duration before the drilling operation ceases to allow the core sample to be retrieved. 

   2.4               The claims

9. There are then the claims of the invention which correspond with the consistory statements, being in the following terms:

   1.A core orientation system for use with a core drill, the core drill having an inner tube, the system comprising:

   means to providing signals associated with the physical orientation of the inner tube of the core drill during drilling;

   means for measuring a time measurement indicative of the time during drilling when the core sample is detached from the body of material from which it is taken and held in fixed relation to the inner tube;

   input means for inputting the time measurement into the system;

   one or more processing means for processing the signals to produce data indicative of the orientation of the inner tube;

   one or more processing means for processing the data produced and the inputted time measurement to produce an indication of the orientation of the core sample relative to the material from which it is detached; and

   display means for the indication of the orientation of the core sample relative to the material from which it is detached. 

   2.A system as claimed in claim 1, comprising one or more means for storing the data produced and the indication of the orientation of the core sample. 

   3.A system as claimed in claim 2, wherein the means for storing the data comprise memory, the system comprising interface means having first means for storing the data in the memory and second means for accessing the memory to produce the indication of the orientation of the core sample when detached when required. 

   4.A system as claimed in claim 1 or 2, wherein the means to storing the data comprises memory, the system comprising a timer for determining predetermined time intervals relative to a reference time, and means for storing the data in the memory upon each of the predetermined time intervals terminating.

   5.A system as claimed in any one of the claims 1 to 4, wherein the physical orientation of the core sample comprises: a rotational orientation about a longitudinal axis of the core sample; and/or an angular orientation of a longitudinal axis of the core sample above or below a horizontal plane. 

10. The Method Patent is in very similar terms, with the attached diagrams being the same.  Of course it relates to a method rather than a system. 

    2.5               Dates of grant

11. The System Patent and the Method Patent were granted on 16 December 2010 and 15 September 2011 respectively. The date of each Patent, however, is earlier because they were granted on divisional applications filed pursuant to s 79B of the Act and are associated with a series of earlier patent applications.

12. The Patents are a divisional of standard patent application no 2010200162, filed on 15 January 2010, which, in turn, is a divisional of standard patent application no 2005256104 filed on 5 September 2005 (Complete Application).  Each claims priority from the Provisional Patent Application no 2004905021 filed on 3 September 2004.  This is a key date in Coretell’s invalidity case. 

13. As a result, although the System Patent and the Method Patent were applied for and granted in 2010 and 2011, prima facie, the date of the Patents is 5 September 2005, as this was the date of the filing of the Complete Application. 

14. Thus, the eight year term of the Patents under s 68 of the Act commenced on 5 September 2005 and ended on 5 September 2013. As a result, the Patents had expired at the time of trial. Although the Patents have expired, the applicants seek relief in respect of infringements that allegedly occurred up to and including 5 September 2013.

15. In summary then, the System Patent was:

    (a)granted on 16 December 2010;

    (b)certified on 5 September 2011; and

    (c)claims priority from the Provisional Application filed on 3 September 2004.

16. The Method Patent was;

    (a)granted on 15 September 2011;

    (b)certified on 1 November 2011; and

    (c)claims priority from the Provisional Application filed on 3 September 2004.

17. The priority date claimed under the Patents is 3 September 2004, being the date of filing of the Provisional Application.  Although this is not relevant to the applicants’ infringement contentions, it goes to the question as to the validity of the Patents raised by Coretell, which will be discussed below. 

    3.                 KEY FACTS

18. As noted, each of AMC and Reflex are wholly owned subsidiaries of Imdex.  They were incorporated in 1987 and 2007 respectively.  While AMC is the registered owner of the Patents, Reflex, which supplies digital surveying core orientation equipment to the mineral exploration drilling industry, is the exclusive licensee of the Patents. 

19. Coretell was incorporated in 2006. It is associated, within the meaning of s 50AAA of the Corporations Act 2001 (Cth) (CA), with Mincrest, which trades as Camteq Instruments.  Coretell’s business address is at 6 Davison Street, Maddington, Western Australia (Maddington Warehouse). 

20. Mincrest was incorporated in 1995 and is also associated, as is Coretell, with Kleyn Investments pursuant to s 50AAA CA. Mincrest is also the trustee of the Kleyn Family Trust ABN 39 593 588 385. Mincrest ceased trading in approximately February 2010.

21. Kleyn Investments was incorporated in 2006 and is the owner of the business name ‘Camteq International Services’ and is the trustee of the Kleyn Investment Trust ABN 71 981 737 047.  The business address of Kleyn Investments is the Maddington Warehouse. 

22. In respect of Coretell, Mincrest and Kleyn Investments, the third respondent, Mr Kleyn, is realistically the controlling mind and will in that he is:

    (a)the sole shareholder in, and director and company secretary of, Coretell;

    (b)one of two shareholders in, and directors of, Mincrest (the other being his wife who did not give evidence); and

    (c)the sole shareholder in, and director and company secretary of, Kleyn Investments.

23. As noted, the equipment under consideration in this proceeding involves core orientation tools, which indicate the orientation of core samples, and also in survey instruments which determine the geo-spatial properties of down-hole environments.  These pieces of equipment are complementary products.  Typically drilling rig operators require the supply of both before commencing drilling and mineral exploration activities. 

24. The applicants’ core orientation tool, the ACT Tool, was, from the date of its release on the Australian market until mid-2007, marketed by Ace Drilling Supplies, a business division of Imdex. Imdex acquired Reflex’s parent company on 1 August 2006 and merged Ace Drilling’s business into Reflex in July 2007.

25. There are two relevant models of Coretell equipment, the first being the Coretell Orientation Tool (First Tool) as described in the document entitled ‘Camteq-Orientation Tool quick user guide’ (Camteq User Manual); and secondly, the core orientation tool known as the ‘ORIshot’ referred to above.  This is described in the documents entitled ‘ORIshot Tool – quick user guide’ and ‘ORIshot multifunction Orientation Instrument’ (together the ORIshot User Manual).  The ORIshot Tool is comprised of a probe (part no CNPS100), and a handset (part no CNH 100).  Coretell updated, amongst other things, the ORIshot Tools’ handset design and wireless communication means in about May 2012. 

26. Mincrest manufactured, or caused to be manufactured, the First Tool between 5 September 2005 and November 2006, and kept stocks of the First Tool at Lot 4 Reservoir Road, Orange Grove, Western Australia (Orange Grove Premises).  Mincrest supplied six of the First Tool to MTL Philippines on 31 October 2006.  In or about July 2007, all dealings in relation to the First Tool ceased.

27. Since January 2009, Coretell has made and thereafter supplied, hired, offered for supply and hire, and kept for the purposes of supply and hire, ORIshot Tools to customers and distribution agents in Australia and countries outside Australia.  It has kept ORIshot Tools at the Orange Grove Premises and, since September 2010, at the Maddington Warehouse.  Coretell has also supplied ORIshot Tools to customers and distribution agents in Australia and in countries outside Australia, together with the ORIshot User Manual, and such ORIshot Tools have been used in accordance with the ORIshot User Manual. 

28. The First Tool and the ORIshot Tool were the subject of a claim by Imdex, AMC and Reflex of patent infringement of Innovation Patent no 2006100113, which claim was dismissed, both at first instance by Justice Barker in Australian Mud Company Pty Ltd v Coretell Pty Ltd (2010) 88 IPR 270 (AMC No 1) and on appeal by the Full Court (Bennett, Gilmour and Yates JJ) in Australian Mud Company Pty Ltd v Coretell Pty Ltd (2011) 93 IPR 188 (AMC Full Court).  

29. The ORIshot Tool comprises three components:

    (a)a pair of down-hole orientation tools;

    (b)two adaptors; and

    (c)a handset controller.

30. An expert, Dr Anton Kepic, called by AMC explained that in general terms the ORIshot Tools are sent down a drilling exploration hole with a core drill.  Two such tools are provided so that one can be down the hole while the other is on the surface with information being read from it by the operator. 

31. The down-hole component of the ORIshot Tool continuously logs orientation data at set intervals while drilling proceeds.  After the core sample is obtained, that component is retrieved and taken to the surface.  By using the handset, orientation data is then displayed. It is the data recorded immediately prior to the core sample being broken away from its in situ location.  Instructions on how to place the retrieved core in that in situ orientation are displayed on the handset. 

32. The ORIshot Tool works by way of time synchronisation between two time keeping devices.  One is located in the down-hole orientation tool and the other is located in the handset controller.  Once the two time keeping devices are synchronised, the down-hole orientation tool is attached to the inner tube assembly of the core drill and sent down the hole.  Drilling is then commenced and a core sample is generated.  The inner tube assembly attaches to the rock core so that it cannot rotate relative to the core sample.  Because the orientation tool is firmly attached to the inner tube assembly, which is in turn attached to the core sample, the orientation of the down-hole orientation tool corresponds to that of the core sample.  Orientation data then is generated and recorded at set time intervals during this process in the manner described above.  The data is generated by means of accelerometers. 

33. When the operator is ready to break the core sample away from its in situ location, a ‘TAKE MEASUREMENT’ button is pressed on the handset controller.  That function logs the elapsed time from the synchronisation time or reference time to the point of taking the measurement.  This is recorded in the handset controller. 

34. The down-hole orientation tool, which is attached to the inner tube, which is in turn attached to the core sample, is then retrieved to the surface along with a core sample.  At the surface, the down-hole orientation tool and the handset controller then communicate with each by way of radio frequency modules. 

35. There is then a display of orientation data on the handset controller.  This is achieved by pressing appropriate buttons on the handset controller obtained through communication with the down-hole orientation tool.  By pressing a button entitled ‘VIEW DATA’ on the handset controller, the core sample can be placed in its original in situ orientation when the ‘TAKE MEASUREMENT’ button is pressed immediately prior to the core being broken away from its in situ location.  Symbols are then displayed on an LCD display of the handset controller showing which way the core should be rotated to coincide with its in situ orientation.  For example, ‘>>>>’ indicates that the core should be rotated clockwise and ‘<<<<’ indicates that it should be rotated anti-clockwise.  The display also indicates the ‘dip’ or ‘inclination’ at which the core sample was taken. 

    4.                 THE ISSUES

36. The following are the areas of dispute in relation to infringement. 

    4.1               Infringement

    4.1.1Exclusive licensee and priority dates

37. The parties are in dispute regarding whether:

    (a)Reflex is and was at all times the exclusive licensee of the Patents; and

    (b)the Patents take the priority date of the Provisional Application filed on 3 September 2004; and

    (c)the Patents expired on 5 September 2013 so that the applicants’ entitlement to relief ceased at that date.

    4.1.2Claims of direct infringement

38. The applicants’ claims relate to alleged acts of any of the respondents between 5 September 2005, being the date on which the Complete Application was filed and, in the alternative, since 16 December 2010 being the day after the divisional parent application was filed.  The applicants allege direct infringement of both of the Patents by all of the corporate respondents.

39. Coretell admits to making and supplying the ORIshot Tools from 16 December 2010, and that customers used those tools in accordance with instructions provided, but the respondents otherwise deny the allegations of infringement.

40. The respondents further dispute that the applicants could be entitled to any relief consequent on any activities by the respondents in countries outside Australia.

    4.1.3Proper construction

41. The respondents contend, and the applicants dispute, that on a proper construction of the claims of the Patents, having regard to their respective specifications, the claimed ‘system’ of each of claims 1 to 5 of the System Patent, and the claimed ‘method’ of each of claims 1 to 5 of the Method Patent, are each relevantly confined in their scope to a system and method carried out by an integrated unitary electronic apparatus in one piece as described and as illustrated in the Patents so that, by reason of that construction, the ORIshot Tools do not infringe the Patents.

42. Coretell further contends, and the applicants dispute, that:

    (a)if, as the applicants contend (but Coretell rejects) the integers of ‘input means’ and ‘inputting’ as they variously appear throughout the claims of the System Patent and the Method Patent, exclude activities or operations carried out by the driller/operator at the surface such as to record the time of detachment of the core sample, then there can be no infringement by the ORIshot Tools which has such activities carried out ‘externally’ on the surface by the operator in conjunction with a handset; and

    (b)the integer ‘indication of the orientation’ as it variously appears throughout the claims which is said by the applicants to require a visual indication of the direction in which the core sample should be rotated is not present in the ORIshot Tools in the “Real-time Roll” method of display as that method displays only the current roll angle and roll angle at the time of detachment of the core sample

    4.1.4Infringement of System Patent

    4.1.4.1Making ORIshot Tools

43. As already noted, the applicants allege that since 16 December 2010, and further since 5 September 2005, the corporate respondents made core sample orientation tools. The respondents admit that Coretell has made, and offered for that purpose, the ORIshot Tools since 16 December 2010. 

44. The respondents deny that Mincrest or Kleyn Investments made or offered to make any core sample orientation tools as alleged. 

    4.1.4.2Sales and supply of ORIshot Tools, supply of ORIshot Tools for use

45. The applicants allege that since 16 December 2010, and further since 5 September 2005, the corporate respondents sold, or otherwise disposed of, offered to sell or otherwise dispose of the ORIshot Tools.  The respondents admit that since 16 December 2010 Coretell has supplied, hired and offered for supply and hire core orientation tools.  

1. The respondents deny that Mincrest or Kleyn Investments supplied, hired and offered for supply and hire core orientation tools as alleged. 

   4.1.4.3Features of claims

2. The applicants allege that the ORIshot Tools include the features of each of the claims of the System Patent.

3. The respondents deny these allegations about the ORIshot Tools.

4. The respondents further allege that the applicants had no granted and published patent rights on 16 December 2010.

   4.1.5Infringement of Method Patent

5. The applicants allege that the ORIshot Tools are: 

   (a)capable of being used in a method including the features of each of the claims of the Method Patent; and

   (b)are only capable of that one reasonable use having regard to their nature or design.

6. The respondents deny these allegations about the ORIshot Tools.

7. The applicants allege that the ORIshot Tools are:

   (a)not staple commercial products; and

   (b)the corporate respondents had reason to believe that the persons to whom they were supplied would use them in a method including each of the claims of the Method Patent.

8. Coretell admits that it had reason to believe that its customers would use the ORIshot Tools in accordance with the instructions provided with those tools.  Otherwise, the respondents deny these allegations. 

9. The applicants allege that the corporate respondents have given, or published advertisements containing, instructions or inducements for the use of the ORIshot Tools and use of the ORIshot Tools in accordance with those instructions or inducements will involve them being used in a method including the features of the claims of the Method Patent. 

10. Coretell admits that it supplied and hired the ORIshot Tools with instructions for the use of those tools.  Otherwise, the respondents deny these allegations.

11. The applicants allege that since 16 December 2010, alternatively since 5 September 2005, the respondents have authorised, procured, induced or joined in a common design with persons to whom the ORIshot Tools have been supplied to use those ORIshot Tools in a method including the features of the claims of the Method Patent and those persons have so used the ORIshot Tools. 

12. Coretell admits that it supplied and hired ORIshot Tools with instructions with reason to believe that the tools would be used in accordance with the instructions.  Otherwise, the respondents deny these allegations.

    4.1.5.1Sale etc of ORIshot Tools

13. The applicants allege that the respondents have infringed the claims of the Method Patent by reason of:

    (a)their unauthorised acts since 16 December 2010, alternatively since 5 September 2005, of making, selling, supplying or otherwise disposing of, or offering for those purposes, ORIshot Tools;

    (b)their supply since 16 December 2010, alternatively since 5 September 2005, of ORIshot Tools for use;

    (c)the use of ORIshot Tools since 16 December 2010, alternatively since 5 September 2005, in a method including the features of each of the claims in the Method Patent.

14. These claims are denied by the respondents.

15. The respondents further allege that the applicants had no granted and published patent rights in respect of the Method Patent prior to 29 September 2011 and had no granted and published patent rights on 16 December 2010.

    4.1.6Accessorial liability

    4.1.6.1Mincrest and Kleyn Investments

16. The applicants allege that Mincrest or Kleyn Investments authorised, procured or induced, or joined in a common design with Coretell to do the acts alleged to amount of infringement.

17. The respondents deny the above allegations and contend further that:

    (a)Mincrest did not carry on any trade or business in Australia at all material times after 16 December 2010; and

    (b)Kleyn Investments’ business has been solely concerned since 16 December 2010 with exploitation of the Pro-Shot and not with any exploitation of the ORIshot Tools. 

18. The applicants dispute the contentions in (a) and (b) above.

    4.1.6.2Mr Kleyn

19. The applicants allege that Mr Kleyn has authorised, procured or induced or joined in a common design with the corporate respondents to do the acts alleged to amount of infringement.  

20. The respondents deny these allegations.

    4.1.6.3Priority dates

21. The applicants allege that:

    (a)the Patents are entitled to claim priority from the Provisional Application filed on 3 September 2004;

    (b)the Complete Application, filed on 5 September 2005:

    (i)is the divisional parent of the divisional parent application filed on 15 January 2010; and

    (ii)therefore the divisional grandparent of the Patents.

22. This is denied by the respondents.

23. The applicants allege that the System Patent was granted to AMC on 16 December 2010.  The respondents allege that the System Patent was granted to AMC on 6 January 2011. 

24. The applicants allege that the Method Patent was granted to AMC on 15 September 2011.  The respondents allege that the Method Patent was granted to AMC on 29 September 2011.

25. Coretell contends that:

    (a)it is for the applicants to establish the ‘fair basis’ for their claim to a priority date for the Patents of 3 September 2004 based on the asserted disclosure in the Provisional Application; and

    (b)if the Court construes the scope of the claims of the System Patent and the Method Patent as being broad enough to comprehend the Coretell tools involving two separate devices which are in dynamic electronic communication, there is no requisite disclosure in the priority documents to support the claims as so broadly construed and consequently denies the applicants’ entitlement to rely on that priority date of 3 September 2004.

26. Coretell also contends (and the applicants dispute) that:

    (a)an essential feature of the invention as variously claimed in the Patents is that the core sample as a unitary piece, that is, unfractured, be held in fixed relation to the inner tube at the time of detachment from the body of material;

    (b)further essential features are the feature to the effect of ‘removing the inner tube, with the core sample held therein in fixed relation to it, from the body of material’ and/or the feature to the effect of ‘means for measuring a time measurement indicative of the time during drilling when the core sample is detached from the body of material from which it is taken and held in fixed relation to the inner tube’;

    (c)neither the provisional specification nor the complete specification disclose these essential features and, accordingly, the Patents are not entitled to any earlier priority date than the respective dates of filing of the Patents.

    4.1.7Innocent infringement

27. The respondents rely on s 123(1) of the Act and contend that, if the Court finds that Coretell or any of the other respondents infringed the Patents, or one of them, then the respondents were not aware, and had no reason to believe, that a patent for the invention existed or that their acts constituted infringement. Accordingly the applicants would be disentitled to relief for any such infringement.

    4.2               Invalidity

28. Coretell, while denying any infringement, also contends by cross-claim that the Patents are invalid on numerous grounds, which will be developed fully in the section concerned with Coretell’s cross-claims.  Those grounds involving consideration of:

    ·the priority date;

    ·lack of novelty - prior art;

    ·lack of novelty - prior use;

    ·lack of innovative step;

    ·lack of fair basis;

    ·patents obtained by false suggestion or misrepresentation;

    ·lack of utility;

    ·insufficiency of description;

    ·inadequate definition;

    ·inadequate clarity;

    ·prior secret use; and

    ·no manner of manufacture disclosed.

29. Coretell also claims in relation to unjustified threats and/or statutory breaches of the Australian Consumer Law, which is contained in Sch 2 of the Competition and Consumer Act 2010 (Cth) (ACL).

30. The applicants take issue with all of these allegations.

    5.                 SOME GUIDING PRINCIPLES ON CONSTRUCTION

31. I intend at this point only to touch lightly upon principles of construction for two reasons.  First, the principles are not contentious and not being contested in this proceeding.  Secondly, I have dealt with the authorities below, topic by topic in relation to each of the specifically disputed areas. 

32. It is impermissible for either the Court or the witnesses to approach the issues of construction with any regard to the alleged infringing articles:  Fresenius Medical Care Australia Pty Limited v Gambro Pty Limited (2005) 67 IPR 230 per Wilcox, Branson and Bennett JJ (at [95]). As observed by Heerey J in Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327 (at [21]):

    All that needs be added is the perhaps trite observation that the alleged infringement is to be ignored when construing the patent.  Although the forensic contest will throw up the particular construction issues to be resolved, a patent must, as the saying goes, be construed as if the infringer had never been born.

33. This was also confirmed in Danisco A/S v Novozymes A/S (No 2) (2011) 91 IPR 209 per Bennett J (at [38]) and Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) (2011) 281 ALR 705 per Jagot J (at [135] and [153]).

34. Overall, the question of construction of a patent specification is a question for the Court.  The specification is a public document and not a document operating inter partes.  However, the Court is to place itself in the position of a person acquainted with the state of the art and manufacture at the relevant time and educate itself about the meaning of the technical terms, if any:  Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 (at [24]).

35. Justice Hely in Flexible Steel Lacings Co v Beltreco Ltd (2000) 49 IPR 331 (at [81]) said:

    …the construction of the specification is for the Court, not for the expert witness. Insofar as a view expressed by an expert depends upon a reading of the patent, it cannot carry the day unless the Court reads the patent in the same way. …

36. The specification, including the claims, is not to be read in the abstract but construed in light of the common general knowledge and the art as at the priority date:  Kimberly-Clark.

37. The words of a specification should generally be given their ordinary English meaning, unless a person skilled in the art would, in the context of the claims, give the words a special meaning, or unless the specification ascribes a special meaning to them:  Britax Childcare Pty Ltd v Infa-Secure Pty Ltd (2012) 290 ALR 47 per Middleton J (at [224]).

38. As a general proposition, patent specifications should be construed with a view to validity and making the patent work:  H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 per Emmett J (at [52]-[53]).

39. The specification and claims must be construed in light of the common general knowledge of a worker in the field before the priority date.  Traditionally, such a person (or persons) come within the description of a hypothetical, non-inventive worker in the relevant field of technology in Australia, who is equipped with the common general knowledge in the art:  Minnesota Mining and Manufacturing Company v Beiersdorf (Australia) Limited (1980) 144 CLR 253.

    6.                 AN OVERVIEW OF THE ORAL EVIDENCE

40. As will be apparent, I will address the applicants’ case first and, secondly, Coretell’s cross-claim.  This accords with the order in which the cases were presented.  Both cases were put very strenuously.  There were, in some instances, strong credit attacks in respect of various witnesses.  The respondents, through Coretell, put numerous defence and cross-claim allegations against the applicants’ case or as senior counsel for the applicants described it, ‘every imaginable defence’.  The applicants’ case was, by comparison, relatively focused. 

41. Many rulings were made in the course of the trial on objections.  The rulings did not warrant separate recording in these reasons, with the possible exception only of one ruling, and one anticipated ruling, which I have discussed in Appendix B to these reasons.

42. I propose to say something now of the role played by various witnesses in connection with the issues in the case and the extent to which I regarded the evidence of those witnesses, in a general sense, as assisting the case advanced by the party calling the witness. 

43. It should be emphasised that I am presently dealing with general observations on some of the more important witnesses.  More detailed attention to the evidence of those and other witnesses appears topic by topic. 

    6.1               Infringement

44. Insofar as infringement was concerned, the applicants called Dr Kepic as an independent expert.  Dr Kepic is an Associate Professor of the Department of Exploration Geophysics at Curtin University, Western Australia.  He, along with virtually all witnesses in the case, has provided one or more witness statements or affidavits on which he was examined and cross-examined.

45. Dr Kepic has substantial practical and academic experience in the exploration drilling industry, including direct experience with core sampling operations, although he had not himself been involved in the operation of core orientation tools at an operational drilling rig.  Dr Kepic gave evidence relevant to the construction of the claims of the Patents and the features of the respondents’ tools. 

46. I accepted the evidence of Dr Kepic, including concessions that he made which were potentially of assistance to the respondents.  He has practical and academic experience in the exploration industry, including experience in dealing with core samples.

47. Dr Kepic was well placed to give evidence on the Patents from the perspective of a person skilled in the art.  By that expression, I mean a person with a ‘practical interest in the subject matter of the invention’:  see, for example, Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225 per Finkelstein J (at [40] and [46]). The relevant subject matter for present purposes in which a practical interest is required is the subject matter of the techniques and technology used in core sample orientation. Dr Kepic has considerable experience in the hard rock exploration industry. He designed and operated bore hole survey instruments from 1997 to 2002. Although he has not, himself, been an operator of core orientation tools at an operational drilling rig, nevertheless, his knowledge of the technology was substantial. During his professional duties at Australian mining sites, he has been involved in inspecting recovered drill core and making measurements of the core immediately after the drilling sequence. Only qualified drillers are permitted to use core orientation tools and other drilling equipment, so it is unsurprising that Dr Kepic has not operated a drill himself.

48. The respondents did not file any directly responsive expert evidence commenting on that of Dr Kepic.  They relied upon their cross-examination of him.  They have not, in my view, called any skilled person with greater or more direct experience in relation to the technology, which is the subject of the Patents.  The respondents did not rely upon any positive evidence on the infringement case advanced by the applicants.  Rather they sought to extinguish the applicants’ case.  I will not at this point comment in detail as to all of the evidence of Dr Kepic, other than to identify that he gave detailed evidence in his first affidavit in relation to the construction of the Patents and the features of the respondents’ ORIshot Tool.  He concluded, and I accept, that the ORIshot Tool, in each of its three versions, incorporates the features of each of the claims of the System Patent and the Method Patent. 

49. A significant feature of Dr Kepic’s cross-examination was devoted to the respondents’ argument that the ORIshot Tool is a two part device, unlike the ACT Tool. Dr Kepic adhered to the views expressed in his first affidavit in cross-examination. He said:

    Well, Dr Kepic, that’s a matter for his Honour, but can I just make this last observation, that – I’m going to put this to:  that when you gave the evidence in the earlier trial when we were involved in this handset issue – I will quote it to you.  That part of your evidence was that you would – that one would have to be literal in the meanest sense to say that the Coretell equipment is excluded from claim 1 of the patent.  Paragraph 74 of his Honour’s judgment.  Now, I’m going to put this to you, Dr Kepic, that the whole approach that you’re taking to your evidence here is precisely that.  That you’re motivated by saying that you would have to be the meanest person not to have the Coretell equipment within these claims?---Well, again, quoted – it seemed to me, and it still seems to me, the word “mean”, “narrow”, “literal” – if I step back and away from the detail and the wording and such, and I look at the equipment that I was given and said “Here is a patent.  Here is the equipment.  Does this equipment look like it acts as you might expect something out of that patent would be developed?”  And when I looked at, it ticks nearly every box.  That’s why I consider this whole handset peripheral, moving functionality in or out of the thing, it – it’s sort of a sideshow.  If I look objectively and think to myself, “Okay” – and as you pointed out, we’ve just gone at length – if we decide to have a scheme where we have a data logger in the hole, we have synchronisation at the surface, etcetera, etcetera, what’s the logical progression?  All the logical elements are there and, as I see it, they’re in the patent.  So when I step back and just look at it, it’s – it seems to me, as an expert, that you could almost read the patent and develop that tool as I saw it in there.  It largely has – all the elements are there.  Again, whether or not I’m the expert, to be honest, the whole device/devices thing is – is just something that’s very foreign to me as a scientist, as a – and such.  It’s just a minor part of something that is – so obviously translates one to one from the claims in its functionality and what it does, when I could design two or three variants that would not even transgress this patent.  2004, right now, whatever.  So I just find it very hard to sympathise, if you will, on the great details when it’s – it’s relative easy, to be honest, to tick the boxes and see this tool looks pretty much like what the patent says.

50. I accept Dr Kepic’s evidence that the process which was undertaken is a relatively straightforward one of comparing the features of the ORIshot Tool and its mode of operation with the features of the claims as he understood them.  This was a conventional approach.  Specifically, on the main line of cross-examination, Dr Kepic consistently rejected the contention that the claims did not contemplate a ‘two part device’.  He also rejected the argument put to him in cross-examination that pressing the ORIshot Tool’s ‘TAKE MEASUREMENT’ button was an ‘input means’ or ‘inputting’ and, further, that its ‘Real-Time Roll’ display was not an ‘indication of orientation of the core sample’.  I accept Dr Kepic’s answers and the explanations for them.

51. Another expert witness called for the applicants on the infringement case was Mr Andrew Ross, a chartered accountant.  Mr Ross addresses the financial and operational involvement of the respondents in the Camteq business, and the extent to which Mr Kleyn and others have, or have not, benefitted from that business.

52. The evidence of Mr Ross was compelling.  It entirely accorded with what will be seen to be my rejection of the evidence given by Mr Kleyn.  He presented two expert reports, which will be discussed at greater length below, but I note that the evidence is that, apart from a brief period in late 2012, Coretell did not employ any of the numerous staff working for the Coretell business, did not incur operational expenses, such as wages, plant and equipment, office expenses and such, associated with its multi-million dollar core tool business and, apart from a single motor vehicle, did not own any of the plant or equipment at the business premises at the Maddington Warehouse.  Rather, the evidence shows that it was Kleyn Investments which engaged the staff and paid certain operational expenses associated with Coretell’s core tool business.  Prior to moving to the Maddington Warehouse, Mincrest bore these expenses.  No rent was paid to the related company, Goldview Assets Pty Ltd in certain periods and, accordingly, Mr Ross concluded that ‘Coretell was not operating as an independent entity’ during the periods for which he was supplied with accounting records. 

1. In addition to those particulars, reference was also made by Coretell to a further statement contained in the System Patent at p 8, lines 12-16, and the Method Patent at p 10, lines 15-19.  These words are similar in substance to the three passages mentioned above, which concern the inner tube assembly being restrained against rotation relative to the core sample because of frictional engagement with the core sample and, thus, there being no physical marking required. 

2. In my view, there is nothing in these passages which constitutes promises or representations of general application to the effect that the invention as claimed will always work in a particular way, or that the processes described will be effective in all environments.  They are merely part of the detailed description of the best mode for carrying out the invention is intended to work. 

3. Within the actual specifications, there are no such statements of similar nature, in particular, in the ‘Background Art’ section of the specifications or in the section headed ‘Disclosure of the Invention’. 

4. I have already found that it is clear that the statements concerned must be construed in the context in which they appear, and from the perspective of a person skilled in the relevant art who has knowledge of how such things work.  Such a person would know that it is clear that the inventions are directed to core sampling in hard rock formations where there is unlikely to be fractured rock.  They are not directed to petroleum exploration in soft, fractured or brittle rock.  There has been much discussion of this topic in these reasons. 

5. I accept the applicants’ submissions, and the evidence upon which they rely, that a skilled person with knowledge of core orientation systems would simply not expect or understand that equipment of this kind would be able to successfully orient core in all types of rock formations, or in all cases in which it is used.

6. Dr Skopec accepted that there was no promise or statement in the ‘Background Art’ section that the system would be useful in petroleum exploration.  He also accepted, as a reader of each of the Patents, that the statements discussed above which Coretell refer to in support of the inutility argument were statements simply contained in the description of the ‘Best Mode for Carrying Out the Invention’.  They did not constitute promises that every system having the features of the claims would work in that particular way. 

7. I accept the evidence of Professor Tapson that he did not understand the Patents to make the ‘promises’ which were suggested by Coretell in reliance upon the initial evidence of Dr Skopec.  Professor Tapson’s observation was that the passage concerning rotation during drilling did not suggest or promise that there would be no relative motion between the inner tube and the core sample during drilling.  Rather, the passage simply described the function and configuration of the bearing arrangement. 

8. As noted by Professor Tapson, the Patents made no promises about the accuracy or reliability of the inventions, nor did Coretell identify any such promises in the specification.  Professor Tapson is an example of a person skilled in the art who gave evidence that the claimed inventions made it clear that they were intended for use in mineral exploration and hard rock formations in which fracture is unlikely to occur.  He gave evidence that no reasonable, skilled engineer would understand the claims to be directed to geology or drilling applications that are inherently unsuitable to the working of the invention claimed by the Patents.  Similar evidence was also advanced by Mr Brown which confirmed this at a practical level.

9. In conclusion, in my opinion, Coretell has not established the relevant promises, and, crucially, no evidence has been advanced to demonstrate that the alleged promises were not satisfied or met.  Indeed, all the evidence is to the contrary. 

   8.10 Insufficiency of description – s 40(2)(a)

10. Coretell appears to still contend that the Patents are invalid pursuant to s 40(2)(a) in that the specifications do not describe the inventions fully and are insufficient, including the best method known to the applicants in that:

    (a)in actual operation of the invention as described and claimed. the invention does not achieve the promises described above in relation to a lack of utility; and

    (b)there is no sufficient description in the Patents for the skilled addressee to achieve an unfractured core sample or the feature to the effect of ‘removing the inner tube, with the core sample held therein in fixed relation to it, from the body of material’ or the feature to the effect of ‘means for measuring a time measurement indicative of the time during drilling when the core sample is detached from the body of material from which it is taken and held in fixed relation to the inner tube.’

11. Section 40 requires that ‘a complete specification must … describe the invention fully, including the best method known to the applicant of performing the invention’.

12. It is common ground on the case law that that the specification must enable a person skilled in the relevant art to produce something within each claim without new inventions or additions or prolonged study of matters presenting additional difficulty:  Lockwood (No 2) (at [60]). It is only necessary for the description to enable a single embodiment within each claim. The question is whether these requirements are satisfied in the present instance.

13. Coretell contends that it is an agreed fact that the pleaded aspect of ‘the core sample being held in fixed relation to the inner tube’ must be considered as an essential feature expressly, or by implication, in all the claims being:

    (a)System Patent (claim 1), expressly;

    (b)Method Patent (claim 1 and claim 2), expressly; and

    (c)Method Patent (claims 3-5), by implication.

14. Coretell notes that Professor Tapson in his written evidence advanced the following as being essential requirements for the working of the claimed invention:

    (a)the core sample must be unitary and unfractured as would occur with ‘hard rock exploration activity’, by contrast to the Skopec technology application; and

    (b)following detachment, the core sample must be held in fixed relation to the inner tube at the time of detachment and this was achieved by the core lifter. 

15. However, Coretell suggests that Professor Tapson subsequently qualified this evidence in what it says was an ‘unconvincing’ manner.

16. Coretell says that Dr Skopec noted that there is no description in the Patents to provide support for this claimed essential feature.  In summary, according to Coretell, Dr Skopec states that the oblique reference to a core lifter does not provide any information as to the function that that core lifter is to perform, including particularly as to the holding of any core sample in the claimed fixed relation to the inner tube and maintaining this throughout the orientation process.

17. In consequence, Coretell argues, the specification description is insufficient in its instructions as to the working of the invention as claimed in order to ensure that fulfilment of the claimed essential feature.  In particular, without continuing experimentation in an operation context, Coretell says that it could never be clear whether or not the core sample is held within the requisite fixed relation with the tube and there is no description as to how this would be achieved.  Dr Skopec commented that various types of core lifters or core catchers could be applicable, and there is no delineation of any particular type of core catcher that meets the claimed requirement.  Coretell says that it follows that both Patents must be invalid because of the insufficiency of description. 

18. The applicants argue that the requirements are satisfied by the detailed description of the preferred embodiment in the section of the Patents headed ‘Best Mode(s) for Carrying Out the Invention’ by reference to the accompanying drawings.  The applicants say that to succeed Coretell would have to adduce evidence which establishes that a skilled person would not be capable of applying that description to produce something within each claim. 

19. The applicants contend, and I accept, that Coretell has not adduced evidence from any such person to that effect, nor is there any evidence to support the contention that a skilled person would be incapable of achieving the required result that the core sample would be held in fixed relation to the inner tube as claimed by following the description.  The applicants contend, and I accept, that the sufficiency grounds fails on this basis. 

    8.11 Definition of the invention – s 40(2)(c)

20. Coretell contends that if the Court construes the claims of the Patents as encompassing a two part device, the claims would not define the invention as required by s 40(2)(c) of the Act, that is, that the specification does not ‘end with at least one and no more than 5 claims’ defining the invention.

21. I have already found that the description and claims of the Patents are not limited to the use of a unitary device.

22. To the extent that Coretell relies on the assertion that the claims are ambiguous to support this ground, the case law indicates that invalidity will only arise under s 40(2)(c) of the Act if the claim is ambiguous to the extent that it is ‘incapable of resolution by a skilled addressed by the application of common sense and common knowledge’: PhotoCure ASA v Queen's University at Kingston (2005) 216 ALR 41 per Merkel J (at [117]).

23. In my view, this argument cannot succeed.  It cannot be said, and there is no evidence to support Coretell’s argument, that the claims are ambiguous to such an extent.  

    8.12 Clarity – s 40(3)

24. In relation to clarity, the same theme continues for Coretell, who contends that the claims are not clear as required by s 40(3) of the Act, given the finding that the claims encompass a two part device.

25. Section 40(3) requires that the claims must be ‘clear and succinct’. The appropriate test is whether the claim is drafted to a workable standard suitable to the intended use: Minnesota Mining & Manufacturing Co per Aickin J (at 274).  Thus, the High Court observed in Welch Perrin (at [610]) that ‘any purely verbal or grammatical question that can be resolved according to ordinary rules for the construction of written documents, does not, once it has been resolved, leave uncertain the ambit of the monopoly claimed’.

26. In my view, fact that the applicants did not invent or describe a two part device, in contrast to a ‘unitary’ device, does not lead to a lack of clarity within the statutory meaning.  The claimed system and method, as has been previously held, encompass the use of a ‘two part device’.  There is no evidence in support of the assertion that a skilled person could not readily understand what is claimed for lack of clarity as to whether the claim concerned a unitary or two part device.  There is no support for the lack of clarity ground.  This ground is rejected. 

    8.13 Prior secret use – s 18(1A)(d)

27. Coretell contends that the Patents are liable to be revoked pursuant to s 138(3)(b) because invention as claimed in the Patents was secretly used in Australia within the meaning of s 18(1A)(d) of the Act. Coretell’s claim is that it is not a patentable invention because there have been acts of secret use before the Priority Date, 3 September 2004, by, or on behalf of Chardec, AMC or Imdex (Ace Drilling).

28. This ground is an alternative to Coretell’s primary attack of prior use, which is the second part of the novelty challenge considered above.  Coretell says that it is clear from the evidence that the admitted prior uses were not confidential or secret, and, in fact, were public.  If it is found that they were private, Coretell argues that there has been prior secret use. 

29. The challenge under either head, including the secret use challenge, arise from the ‘extensive activities’, Coretell says, caused to take place before 3 September 2004 by, or on behalf of Chardec, and by, or on behalf of, Imdex/Ace Drilling.  Coretell submits these activities included commercial dealings and use on multiple occasions for commercial promotions at various drilling sites of the orientation device described in the Patents, and the method and system were disclosed.

30. By s 9 of the Act, certain matters are ‘not to be taken as secret use’, including:

    (a)any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for the purpose of reasonable trial or experiment only. 

    (emphasis added)

31. Secret use was considered in some detail in Grove Hill, and Azuko and Bradken.  In Azuko, Gyles J (with whom Beaumont J agreed) dismissed (at [180]-[183]) the mischief to which the invalidating ground of secret use is directed. According to Gyles J (at [181]), a patent will be invalid if the patentee has engaged in conduct before the priority date which results in ‘a de facto extension of the patent term’. 

32. Coretell argues there was extensive secret use of the invention in the Patents with customers or potential customers when the ACT Tool was demonstrated to customers for purposes including to evaluate its commercial acceptability. Particularly, Coretell says that the inventor, Mr Parfitt, on behalf of Chardec, disclosed full working examples of the invention to its customer, Ace Drilling/Imdex, who in turn disclosed those working examples of the invention to other customers, or potential customers. Coretell submits that Mr Parfitt allowed ‘wide and unguarded use of the invention in Australia’ before any application for a patent was made. Coretell says that the evidence is against such disclosures being in confidence, however, it is clear on the evidence that the purpose of the disclosures included assessing commercial acceptability of the invention prior to determination of whether to proceed with a full-scale marketing and production programme. Coretell contends that, despite the proven working readiness of the ACT Tool, the filing of any patent application was unreasonably delayed for many months, and as a consequence the duration of the monopoly obtained was extended.

33. Coretell refers to and repeats its submissions made with respect to novelty and the failure of the applicants to establish the defence of reasonable trial under s 24(1) of the Act.

34. Coretell argues that the applicants bear the onus of proof in establishing that the use of the ACT Tool was not secret use.  It is important to deal with this onus argument at the outset. 

35. The starting point is that Coretell, as the party seeking to establish invalidity of the Patents, has the onus of establishing this ground of revocation pursuant to s 138(3)(b) of the Act by non-compliance with s 18(1A)(d). The onus is on Coretell to prove a ‘secret use’ of the invention occurred in a manner contrary to s 18(1A)(d) of the Act.

36. In my view, it is clear that the onus borne by Coretell includes the onus of establishing that the use does not fall within any of the categories of use listed in s 9(a) to s 9(d) of the Act, which are excluded from the definition of ‘secret use’. It is not apparent to me that s 9 of the Act sets up a positive defence which must be proved by the party against whom the assertion of secret use is advanced. Rather, it is necessary for the party on whom the general onus of establishing that secret use occurred to eliminate the uses in s 9(a) to s 9(d) of the Act.

37. In this particular case very little turns on whose onus it is, but the better view, in my opinion, is that the onus remains on the party asserting secret use throughout in proving secret use.  In this case, that party is Coretell. 

38. I note that this approach appears to be consistent with the views expressed by Dowsett J in Grove Hill when considering authorities relevant to the onus of establishing secret use (at [214]-[220]). His Honour concluded in the following terms (at [221]):

    … Whilst there may have been an evidential onus upon the [patentee] to raise the issue of reasonable trial or experiment, and perhaps even to address that issue in so far as it lay within its knowledge, it did so by calling Mr Mansur to give relevant evidence.  In the end, however, the onus remained upon the [party alleging secret use] to satisfy the Court that there had been a disqualifying secret use, having regard to the combined operation of ss 9 and 18.  Proof of use which may have been for the purpose of trial or experiment only would not have discharged that onus.  It is worth observing that in virtually all cases, the invention in question will have been secretly used for necessary experimental and/or trial purposes.  It cannot have been intended that in proceedings for revocation, the inventor should be put to proof of the reasonableness of such use simply because the applicant for revocation alleges disqualifying secret use.  Such an outcome, if intended, would surely have been directly addressed.
    (emphasis added)

39. Importantly, his Honour observed in that passage that proof of use which may have been for the purpose of trial or experiment only by the party alleging secret use would not have discharged the onus of proving secret use.  I followed that approach in Bradken (at [366]).

40. It is necessary then to consider the meaning of the matters which are ‘not to be taken as secret use’, including s 9(a) of the Act which is extracted above. In particular, the meaning of the expression ‘… for the purpose of reasonable trial or experiment only’.

41. The principles relevant to what constitutes ‘reasonable trial or experiment only’ were considered in Grove Hill and Bradken.  The view taken by Justice Dowsett in Grove Hill (at [229]) was that any collateral commercial advantage from ‘field trials’ was irrelevant if the true purpose of the use was for trial, and the trial was necessary. In Bradken, I took the view (at [359]-[360]) that the word ‘only’ in s 9(a) of the Act did not exclude the anticipation of any ultimate commercial benefit through the use in question, as that could be expected to be theoretically present in any case.  The approach taken in Bradken was intended to accord with the approach of Dowsett J in Grove Hill. 

42. In my view, the state of the law is that the concept of ‘reasonable trial and experiment’ itself does not preclude that such trial and experiment be conducted in a circumstance which has in mind an ultimate commercial benefit. The word ‘only’ must be read in this light, otherwise almost all trial and experiment would be excluded. To the contrary, it is not intended under the Act that any and all commercial considerations be removed from ‘reasonable trial and experiment’. This would be quite unrealistic and unworkable.

43. The question then is whether Coretell has established that the authorised use of the prototype ACT Tool before the Priority Date was not for the purpose of ‘reasonable trial and experiment only’ within the meaning of s 9(a) of the Act. As I have already found, the prototype had to be trialled in real world conditions and it was reasonable to do so in different locations, having regard to the different conditions experienced in those locations which could affect the nature of the apparatus and the claimed invention. This was discussed in detail in dealing with the prior use case, but I reiterate that my conclusion, for the reasons already given, is that activities which took place in Australia prior to 3 September 2004 involved the reasonable trial of the ACT Tool and did not involve any commercial exploitation. There were no orders for the ACT Tool submitted or received before 3 September 2004, indeed, there was not a distributorship agreement which would have permitted such commercial dealing until after that date. While that would not in itself be determinative, the parties made it clear that until the agreement was formally reached, there would be no orders submitted and delivered, either between the applicants and Chardec or from third parties.

1. Coretell also argues that steps undertaken by Mr Parfitt to order parts for the ACT Tool involved a use that was not for the purposes of reasonable trial or experiment. However, such activities did not involve any use of the claimed inventions, namely, the system and the method in the Patents.

2. To the extent that Coretell relies upon the argument that Mr Parfitt himself had no intention of patenting the invention, in my view, this does not assist Coretell as the real question is not only the subjective intention of the inventor was, but what actually occurred in the trial processes. It was abundantly clear that those who were to file a provisional patent intended to do so. The whole exercise of trialling the ACT Tool prototype was occurring in conjunction with preparations for filing a provisional patent and in conjunction with negotiating and arriving at terms on the distributorship agreement. All of these things had to come together. Unless the tool worked in the trials, either modified or unmodified (and the evidence is clear that modifications were made following the trials), clearly the parties would not have reached the ultimate distributorship agreement, nor would there have been any purpose in filing a provisional patent.

3. In any event, to the extent that the respondents rely upon activity of Mr Parfitt outside of Australia, and it may be that they do not, that activity could not be secret use ‘within the patent area’ as required by s 18(1A)(d) of the Act. The secret use argument must be rejected.

4. My assessment of the evidence on the disclosure prior to 3 September 2004 was set out above in considerable detail in relation to Coretell’s claim of invalidity for lack of novelty due to prior use. 

   8.14 No manner of manufacture – s 18(1A)(a)

5. Coretell further contends that each of the Patents is liable to be revoked pursuant to s 138(3)(b) of the Act as there is no subject matter in the Patents and no manner of manufacture within the meaning of s 18(1A)(a) of the Act and s 6 of the Statute of Monopolies 1623 (UK). Coretell claims that, by reason of disclosure to the public of the ACT Tool prior to 3 September 2004, the claims of the Patents are merely to a working direction as a method or a system for the use or performance of, by then, a known and published apparatus in the form of a core orientation tool as described in the Patents in a manner inherently appropriate to the working performance of the core orientation tool as designed.

6. Coretell, in referring to these extensive disclosures, says that they were ‘to the many members of the exploration drilling community to whom the tools were published in the months prior to 3 September 2004’.  I reject this submission.  In my view, the evidence falls dramatically short of the submissions advanced for Coretell. 

7. On the other hand, I accept that Mr Brown agreed that Drill Corp, Barminco and Mosslake were good potential customers for the new tool if it worked, and I accept that there is some evidence that when the tools were so tested with those entities, information about the tools may leak into the industry generally. 

8. I do not accept Mr Kleyn’s evidence on this topic. I do not accept that there were widespread disclosures to the public, or even to a relevant section of the public concerned with the tools. The evidence fell well short of this, as I indicated in detail in relation to prior use. I do not accept the factual submission that on or before 3 September 2004 the ACT Tool was well known and its manner of operation was well understood, contrary to the sense discussed by the Full Court in Merck & Co Inc v Arrow Pharmaceuticals Limited (2006) 154 FCR 31, where it was found (at [75]) that the relevant patent specification disclosed ‘no new substance, no new characteristic …, no new use and no new method’.

9. Coretell argues that ‘[g]iven the wide and unguarded disclosures of the [ACT Tool], how it works or performs as a system or method, was already known to interested persons in the field of exploration drilling’.  I reject the description of the disclosures as being ‘wide and unguarded’, and also reject that the evidence establishes the degree of knowledge for which Coretell contends. 

10. In addition, it is argued by Coretell that the system of the ACT Tool and its method of working was so simple and straightforward that the tool was simply left with experienced drillers without the need for any detailed instruction or supervision before the Priority Date. I reject this submission as to the state of the evidence. I reject entirely this ground of invalidity.

11. There is nothing on the face of the Patents to suggest that what is claimed is not new or otherwise lacks the necessary quality of inventiveness.  There is no admission to that effect, nor is any inference open.  Both of the Patents claim a manner of manufacture which satisfy the requirements outlined in Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232.

    8.15 Unjustified threats and the ACL claims

12. Coretell contends that threats were made within the meaning of s 128 of the Act, against Coretell because the applicants alleged and maintained that Coretell was infringing the Patents, and also DHS, as a customer or potential customer of Coretell, because the applicants notified it that it had commenced this proceeding and recommended that it seek independent legal advice.

13. Coretell further alleges that:

    (a)the unjustified threats to DHS would also be understood to mean that the Patents would be found to be valid and enforceable, the respondents would be found to have infringed the Patents and the applicants would succeed in the proceeding;

    (b)those statements were false and published maliciously;

    (c)those statements were calculated to cause Coretell’s customers or potential customers to avoid or cease business dealings with Coretell and to cause pecuniary damage to Coretell; and

    (d)Coretell has been injured and suffered general loss in its business and loss and damage.

14. Coretell further alleges that the unjustified threat to DHS also amounted to a future representation that the Patents would be found to be valid and enforceable, the respondents would be found to have infringed the Patents and the applicant would succeed in the proceeding, which representations were false or alternatively misleading or deceptive, in contravention of s 18(1) of the ACL.

15. The applicants admit sending the letter dated 6 December 2011 to DHS, but deny it gives rise to an entitlement to pecuniary relief arising out of the threats or representations.  

16. These claims by Coretell cannot succeed in light of the conclusion that I have reached in favour of the applicants on infringement. 

    9.                 CONCLUSION

17. It has been agreed that the granting of any relief, and it will be in favour of the applicants only, should be deferred until after delivery of these reasons.  It should be apparent from the foregoing, however, that I have found that the Patents are valid and that they have been infringed.  Obviously, the consequences of those conclusions will require consideration. 

18. The cross-claim will be dismissed.  Other questions, such as post-expiry injunctions can be the subject of specific submissions. 

19. On the basis for the foregoing, I make the following orders:

    1.The Applicants file and serve a minute of orders reflecting these reasons within 30 days.

    2.The Respondents file any responsive material within a further 21 days.

    3.A further directions hearing be scheduled in late February 2016 to make and/or program the making of orders consequent upon these reasons and directions as to the future conduct of the proceeding.

I certify that the preceding seven hundred and seventy-two (772) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: 

Dated:       4 December 2015

APPENDIX A

The figures are as follows:

APPENDIX B - RULINGS

1.I have annexed evidentiary reasons for two rulings given in the course of the trial. 

RULING MADE ON 30 APRIL 2014 (Day 10 of the trial):

2.In his second affidavit, sworn on 30 October 2013. with the benefit of some discovery and some affidavits sworn in response to his first affidavit, Mr Bradford swore a 48 page affidavit in reply to the affidavits for the applicants which take substantial issue with the contents of his first affidavit.  It was clear that there was a very stark distinction between the evidence to be adduced by the applicants and the respondents about events that took place in 2003 and 2004. 

3.The objection in issue arose in respect of a paragraph of the second affidavit which deals with the use of the ACT Tool subsequent to May 2004. The evidence was sought to be adduced (at [109]) as follows:

… As noted above, the core orientation tool with serial number 0001 was sent back to Mr Parfitt in the United Kingdom for inspection on or about 24 June 2004 and was returned to Ace Drilling not long afterwards. I refer to confidential exhibit CB-20, being the email from Ms Gregg to myself and Mr Reid dated 23 June 2004, and an email from me to Mr Parfitt dated 24 June 2004.  Between 26 May 2004 and 24 June 2004, core orientation tool 0001 continued to be used in the field in Australia.  The tools were given to clients who were considered good customers of Ace Drilling… 

4.Objection was taken and upheld to a passage which followed the passage extracted above and read in the following terms ‘… and showed some interest in hiring the tools’. 

5.I granted senior counsel for the respondents leave to develop that point in examination in chief.  In examination in chief the following exchanges occurred:

And you might remember – and you’ve given evidence about these tools going out to various drilling sites and demonstrations with various customers, or being shown to various customers, to use the word neutrally.  Do you remember that?---Yes.

And that had finished about May 2004?---Yes.

Speak up a bit, Mr Bradford, if you?---Yes, it was.  Yes.

Thank you.  After May 2004.  Thereafter, what, in your knowledge, happened with those tools?---Once I had completed demonstrating those tools to clients. I believe those tools were sent to Kalgoorlie for our Kalgoorlie manager to show another client.

Yes.  And after that date – after the Kalgoorlie showing, what then happened to the tools?  Do you have any?---I believe the tools went on hire.

Yes.  On hire?---Yes.

To whom?---It would be one of four companies that .....  dealt with.

And who were they?

MR HENNESSY:   I object, your Honour.  Well, just by virtue of the last sentence, it’s plain that the witness is now just going to speculate.  It’s not sufficient foundation for---

MR HESS:   Well, perhaps I will go back a step.  You say one of four companies.  Can you identify the four companies?

MR HENNESSY:   No.  I object.  We – just getting at it another way.  All he has done – the last question---

HIS HONOUR:   Mr Bradford, would you mind just stepping outside the court for a short moment.  We will just discuss this.  We won’t be a moment.

6.I allowed the objection on the basis that the very general nature of the description of the clients and the interest that they showed was inadmissible hearsay and summary.

7.In my view, in light of the importance of this evidence, the proper way to adduce it would be to call evidence from anyone who actually took and used the machine as suggested.  It is clear and taken in context, that this evidence is hearsay, speculative and imprecise.  I do not consider it is appropriate that such important evidence should be led in that fashion.  Given its importance, it should be given on a first hand basis from an actual user.  Alternatively, if the witness is able to identify (admissibly) with precision exactly who received a tool from whom within the company, then that evidence could be given, but beyond that, it is not admissible. 

8.I disallowed any further questioning of Mr Bradford on this topic.

A CALL FOR DOCUMENTS – THURSDAY, 1 MAY 2014 (Day 11 of the trial)

9.At the end of day 10 of the trial senior counsel for the respondents produced a subpoena dated 20 December 2013 for production of documents by Imdex, a non-party company which is related to the applicants.

10.The schedule of documents in the subpoena was extensive.

11.It is common ground that documents were produced under the subpoena but senior counsel for the respondents contends that other documents referred to in cross-examination were not produced.  The respondents sought orders that those documents be produced by Imdex.  Production was opposed.  No notice had been given to the applicants of any such application but the respondents answered this complaint by indicating that they were not in a position to understand the internal workings of the applicants and Imdex until cross-examination.  Senior counsel for the applicants complained that these matters should have been pursued by interlocutory applications for compliance in December 2013 rather than by way of ambush, effectively, at trial.  There was no response to that complaint other than the fact that the respondents did not know of the internal workings of Imdex in December 2013.

12.The documentation sought, if it exists, is, at least arguably, relevant to the cross-claim advanced by the respondents in relation to commercialisation of the invention.

13.Ultimately, reliance on the submission was abandoned.  Nevertheless, I did indicate that I would expect that the question of whether such reports exist or not to be clarified by Imdex or the applicants and, if they existed, I would expect them to be produced.  If they no longer existed, having been created over 10 years ago and search for them revealed that they no longer existed, evidence to that effect should be adduced, failing which I indicated that I may entertain a further application.

14.During a break in the trial, counsel informed me that such documentation was pursued and produced by the applicants.