Azuko Pty Ltd v Old Digger Pty Ltd
[2001] FCA 1079
•8 AUGUST 2001
FEDERAL COURT OF AUSTRALIA
Azuko Pty Ltd v Old Digger Pty Ltd [2001] FCA 1079
INTELLECTUAL PROPERTY – patents – alleged infringement – whether substance of invention taken – whether modification of patented invention had practical significance – consideration of essential and non-essential integers of the claims said to be infringed – whether or not an essential integer missing in the relevant patent claims – revocation – alleged anticipation – alleged prior “secret use” – whether invention “secretly used” – whether reasonable trial and experiment – whether use in the course of a confidential disclosure – whether confidential manufacture prior to application for patent amounted to “use” – consideration of historical basis for “secret use” ground of revocation – consideration of definitions of “use”, “secretly use”, “secretly used”, “not … used”, and “exploit” in current previous legislation – whether there had been a “de facto” extension of the patent term – consideration of the test of illegitimate extension of the patent term.
WORDS AND PHRASES – “use”, “used”, “secretly used”, “reasonable trial and experiment”.
Patents Act 1990 (Cth)
Patents Act 1903 (Cth)
Patents Act 1952 (Cth)
Patents and Designs Act 1932 (Imp)
Patents Act 1949 (Imp)Sale of Goods Act 1895 (SA)
Sargant Report 1931 (UK)
Statute of Monopolies 1623Birmingham Sound Reproducers Ltd v Collaro Limited [1956] RPC 232 referred to
Bramah v Hardcastle (1789) Holroyd 81 followed
Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 applied
Betts v Menzies (1859) 120 ER 1181 followed
Catnic Components Limited v Hill & Smith Limited [1982] RPC 183 distinguished
Commonwealth Industrial Gases Limited v MWA Holdings Pty Ltd (1970) 180 CLR 160 applied
Fellows v Thomas William Lench (1917) 34 RPC cited
Fomento Industrial SA v Mentmore Manufacturing Co Limited [1956] RPC 87 not followed
Hudson Scott & Sons Ltd v Barringer Wallis & Manners Ltd (1906) 23 RPC 79 cited
Interlego A.G. v Toltoys Pty Ltd (1973) 130 CLR 461 cited
Merrell Dow Pharmaceuticals Inc v H V Norton & Co Ltd [1996] RPC 76 referred to
Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 referred to
Morgan v Seaward (1837) 2 M & W 544, 150 ER 874 followed
Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 referred to
Populin v HB Nominees (1982) 41 ALR 471 referred to
Radiation Limited v Galliers & Klaerr Proprietary Limited (1938) 60 CLR 36 referred to
Rodi and Wienenberger AG v Henry Showell Limited [1969] RPC 367 referred to
R v Patents Appeal Tribunal, Ex parte Beecham Group Ltd [1974] AC 646 referred to
Raleigh Cycle Coy Ltd v H Miller & Coy Ltd (1948) 65 RPC 141 referred to
Re Wheatley’s Application (1984) 2 IPR 450 distinguishedRehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 referred to
Robertson v Purdey (1907) 24 RPC 273 followed
State Rail Authority v Earthline Constructions (1999) 73 ALJR 306; (1999) 160 ALR 588 referred to
Welch Perrin Co Pty Ltd v Worrel (1961) 106 CLR 588 referred to
Welcome Real-Time SA v Catuity Inc [2001] FCA 445 followed
Walker v Alemite Corporation (1933) 49 CLR 643 applied
Water Board v Moustakas (1988) 180 CLR 491 referred toAZUKO PTY LTD AND SEISMIC SUPPLY INTERNATIONAL PTY LTD V OLD DIGGER PTY LTD (formerly SDS DIGGER TOOLS PTY LTD)
NO. SG 70 OF 2000
JUDGES: BEAUMONT, HEEREY & GYLES JJ
DATE: 8 AUGUST 2001
PLACE: SYDNEY (HEARD IN ADELAIDE AND SYDNEY)
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SG 70 OF 2000
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
AZUKO PTY LTD
AND
SEISMIC SUPPLY INTERNATIONAL PTY LTD
APPELLANTSAND:
OLD DIGGER PTY LTD (formerly SDS DIGGER TOOLS PTY LTD)
RESPONDENTJUDGES:
BEAUMONT, HEEREY & GYLES JJ
DATE OF ORDER:
8 AUGUST 2001
WHERE MADE:
SYDNEY(HEARD IN ADELAIDE AND SYDNEY)
THE COURT ORDERS THAT:
1.Appeal allowed in part.
2.Set aside that part of the orders made at first instance as declared that claims 2, 8, 13 and 14 of the SDS Patent were infringed and enjoined that infringement.
3.Appeal otherwise dismissed.
4.Order that the appellants pay the respondent’s costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SG 70 OF 2000
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
AZUKO PTY LTD
AND
SEISMIC SUPPLY INTERNATIONAL PTY LTD
APPELLANTSAND:
OLD DIGGER PTY LTD (formerly SDS DIGGER TOOLS PTY LTD)
RESPONDENT
JUDGES:
BEAUMONT, HEEREY & GYLES JJ
DATE:
8 AUGUST 2001
PLACE:
SYDNEY (HEARD IN ADELAIDE AND SYDNEY)
REASONS FOR JUDGMENT
BEAUMONT J:
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 2
THE CLAIMS OF THE SDS PATENT ALLEGED TO HAVE BEEN INFRINGED........ ..... 3
THE CLAIMS OF THE GIEHL PATENT ALLEGED TO HAVE BEEN INFRINGED........ . 5
THE RELEVANT ISSUES AT TRIAL........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 5(a) Digger’s infringement claims........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 5
(b) Azuko’s revocation claim........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 6BACKGROUND FACTS FOUND BY THE PRIMARY JUDGE........ ........ ........ ........ ........ .... 6
(a) Problems to which improvements in drilling techniques had been directed........ ........ .. 7
(b) The SDS hammers........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 13
(c) The Premier tools........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 13
(d) The Giehl invention........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 15THE PRIMARY JUDGE’S FINDINGS AND CONCLUSIONS ON THE SDS INFRINGEMENT CLAIM........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 15
AZUKO’S CHALLENGE TO HIS HONOUR’S FINDING OF INFRINGEMENT OF THE SDS PATENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 20
CONCLUSIONS ON THE APPEAL FROM THE FINDING OF INFRINGEMENT OF THE SDS PATENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 28(a) Claim 1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 28
(b) Claims 2, 8, 13 and 14........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 36
(c) Claims 3, 7 and 9........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 37THE PRIMARY JUDGE’S FINDINGS AND CONCLUSIONS ON THE GIEHL INFRINGEMENT CLAIM........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 37
AZUKO’S CHALLENGE TO HIS HONOUR’S FINDING OF INFRINGEMENT OF THE GIEHL PATENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 40
CONCLUSION ON THE APPEAL FROM THE FINDING OF INFRINGEMENT OF THE GIEHL PATENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 42Claim 1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 43
Claims 4 and 5........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 46REVOCATION ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 46
(a) Alleged anticipation........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 46
(b) Alleged prior secret use........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 46COSTS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 47
PROPOSED ORDERS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 47INTRODUCTION
Old Digger Pty Ltd (“Digger”) instituted proceedings in this Court against Azuko Pty Ltd (“Azuko”) and Seismic Supply International Pty Ltd (“Seismic”) (hereafter collectively, Azuko) claiming relief for infringement of two patents owned by Digger (referred to respectively as the “SDS patent” and the “Giehl patent”). The dates of grant under the Patents Act 1990 (Cth) were 19 December 1996 and 7 January 1997 respectively. Azuko not only denied any infringement but also, by its counter-claim, sought revocation of both patents.
The inventions described in the patents both concern features of a down hole reverse circulation percussive hammer incorporating a face sampling drill bit. Hammers of this kind are used in the mining industry for exploratory drilling. Their intended purpose is to permit the collection of cuttings from the drill face which are of sufficient quality and quantity to permit reliable geological evaluation. Digger contended that the inventions claimed in the patents markedly improved the quality and quantity of sample recovery over other rock drilling arrangements known at the relevant priority dates.
The primary Judge (von Doussa J) held that Azuko and Seismic had infringed some of the claims of each patent. Further, his Honour dismissed the cross-claim for revocation (see Old Digger Pty Ltd v Azuko Pty Ltd (2001) 51 IPR 43). Azuko now appeals from this judgment.
THE CLAIMS OF THE SDS PATENT ALLEGED TO HAVE BEEN INFRINGED
The consistory clause of Australian Letters Patent No. 638571 entitled “Transmission sleeve for a down hole hammer” (the SDS patent) states that the invention –
“… relates to a sacrificial transmission sleeve for a reverse circulation down hole hammer of the percussive type actuated by a fluid such as compressed air….
…
The … sleeve … is designed to provide an effective seal between the bore of the hole and the drill tube and to wear down at a similar rate to the drill bit thus maintaining the seal throughout the lifetime of the drill bit. The seal created by the … sleeve … permits an acceptable sample recovery rate to be maintained without either increased sample contamination or increased air consumption. Further the … sleeve … allows the use of larger drill bits ….
Sacrificial [here] means that the … sleeve is intended to be consumed in drilling much the same way as the drill bit is.”
The consistory clause further states that –
“The … sleeve is a relatively inexpensive, relatively short life, sacrificial element to protect and prolong the life of the … hammer … adjacent the drill bit … and achieves good sealing between the hole and the drive sub … to attain better collection … and less contamination … and reduces loss of chippings ….”
The claims made include the following:
1.A sacrificial transmission sleeve when used with a reverse circulation down hole hammer of the percussive type actuated by a fluid under pressure, including an outer sleeve, a drill bit retaining means held in the outer sleeve, and a drill bit retained in the retaining means and extending forwardly therefrom; the transmission sleeve comprising a body and an annular flange, the body having a first inner surface and a second outer surface, the diameter of the second outer surface being greater than that of outer sleeve and substantially the same as that of the drill bit, the transmission sleeve located near an end of the down hole hammer proximate the drill bit, the annular flange being of diameter substantially the same as the drill bit and extending from the body towards the drill bit, and the wear characteristics of the transmission sleeve being similar to that of the drill bit, whereby, in use, the transmission sleeve wears at a similar rate to the drill bit.
2.A sacrificial transmission sleeve according to claim 1, in which at least a length of said drill bit is provided with a plurality of longitudinal grooves forming exhaust air passages in sides of the drill bit and wherein said flange encircles at least a portion of said length in such a manner as to form a continuous shroud to assist in the downward passage of the exhaust air to a cutting face of the drill bit.
3.A sacrificial transmission sleeve according to claim 1 or 2, wherein said transmission sleeve is clamped to said hammer between said outer sleeve and said drill bit retaining means.”
Claims 7 to 9 describe a reverse circulation down hole hammer of the percussive type working in association with a transmission sleeve and drill assembly as claimed in claims 1 to 3 respectively.
Claims 13 and 14 are omnibus claims which read:
13.A sacrificial transmission sleeve when used with a reverse circulation down hole hammer substantially as hereinbefore described with reference to Figure 1, Figure 2 or Figure 3 of the accompanying drawings.
14.A reverse circulation down hole hammer substantially as hereinbefore described with reference to Figure 1, Figure 2 or Figure 3 of the accompanying drawings.
THE CLAIMS OF THE GIEHL PATENT ALLEGED TO HAVE BEEN INFRINGED
Australian Letters Patent No. 656724 entitled “Percussive drilling arrangement” (the Giehl patent) claims:
1.A drill bit assembly for in-the-hole hammer reverse circulation percussive drilling using air pressure to both drive the percussion hammer and clear cuttings, the bit having a plurality of outermost channels extending in direction parallel to the axis of the bit down the outer side of the bit and having a collection duct or ducts passing through the bit with its collection opening or openings through the face of the bit and an outlet at the axially aligned opposite end of the bit, and an outermost cover acting as a shroud which is located to engage against and extend around the outer side of the drill bit and form with the channels conduits which are shaped and positioned so that air flow to clear the cuttings will be directed by reason of passage through a one or more of the conduits directly at the periphery of the cutting face of the bit for subsequent passage across the face of the bit to the collection opening or openings of the collection duct or ducts through the face of the bit and such that substantially all of such directed air will flow through such collection opening or openings to the collection duct or ducts.
…
4.A drill bit assembly substantially as described in the specification with reference to and as illustrated by the accompanying drawings.
5.A drill bit assembly as in any one of the preceding claims incorporated in an in-the-hole hammer reverse circulation percussive drill using air pressure to both drive the percussion hammer and clear cuttings and such that air flow to clear the cuttings from the face of the bit will be directed by reason of passage through a respective one of the conduits thereby directly at the periphery of the cutting face of the bit for subsequent passage across the face of the bit.
THE RELEVANT ISSUES AT TRIAL
(a) Digger’s infringement claims
Central to Digger’s allegations of infringement were the features of the “transmission sleeve” (in the SDS patent) and of the “shroud” (in the Giehl patent), expressions which were used interchangeably at the trial with the description “gauge sleeve” used by his Honour.
It was not disputed at the trial that, on the dates alleged in the particulars of infringement, Azuko manufactured and distributed face sampling reverse circulation down hole hammers known as the Premier PR5, the Premier PR54 and the Premier PR40. There are design differences between the PR5 and PR54 models, but those differences relate to the internal mechanism of the hammer, and not to the gauge sleeve. The PR54 and PR40 hammers are of the same design, but have different diameters. The PR5 operates a five inch drill bit, whereas the PR54 operates a five and a half inch drill bit and the PR40 operates a four inch drill bit. Each of these hammers (hereafter “Premier tools”) was said to infringe the patents in suit.
Infringement was disputed on various grounds, but principally on the grounds that within the meaning of the SDS patent, Premier tools do not have a “transmission sleeve”; and that, within the meaning of the Giehl patent, the Premier tools do not have “an outermost cover acting as a shroud which is located to engage against and extend around the outer side of the drill bit and form with the channels conduits…”.
(b) Azuko’s revocation claim
Revocation of the patents was sought by claims of alleged invalidity that were largely common to both patents, although it was also claimed that the SDS patent was invalid because it had been anticipated by the Giehl patent, which had an earlier priority date. (The priority date of the Giehl patent was 19 April 1990. There was a dispute about the priority date of the claims in the SDS patent contained in the specification as sealed, but Digger alleged a priority date of 26 April 1990.) Azuko contended that the alleged inventions lacked novelty and were obvious, having regard to the prior art base and prior information available in Australia before the relevant priority dates. The prior art base alleged comprised the publication of a number of earlier patents, and the use of other drill assemblies said to incorporate transmission sleeves and shrouds which anticipated the inventions claimed in the patents in suit. A number of other publications in mining journals were also relied on. It was further contended that the alleged inventions had been secretly used in Australia by the inventor, Werner Giehl, before the respective priority dates of the patents, thus invalidating the patent.
BACKGROUND FACTS FOUND BY THE PRIMARY JUDGE
Von Doussa J made the following findings, which were not challenged on the appeal, with respect to the background facts:
(a) Problems to which improvements in drilling techniques had been directed
qThe subject inventions have application in exploratory drilling where cuttings from the drill hole are collected for analysis by geologists. The object is to recover the greatest possible percentage of cuttings from the drill face, free of contamination from material from elsewhere in the drill hole, and to accurately determine the depth from which a sample has been collected. Problems, to which improvements in drilling techniques have been directed, include the reduction of sample loss, and the prevention of contamination.
qIn the early 1970’s, exploratory drilling was carried out by rotary drilling with tri-cone bits. Initially, cuttings from the bits were recovered by delivering high pressure air through a central duct in the drill string to the bottom of the drill hole, the cuttings being then entrained and carried to the surface by the air in the annular gap between the drill string and the wall of the hole. This mode of conveying cuttings to the surface is known as a conventional drilling system. As cuttings travel up the annular space, there is a significant risk of contamination by additional materials from elsewhere in the hole which can be collected on the way. During the 1970’s, coaxial (dual walled) drilling rods became available. With these rods, it was possible to deliver high pressure air to the bottom of the hole through one system of ducts, and to recover the cuttings combined with the air released at the bottom of the hole through another duct system, namely the central duct in the drill string. This mode of recovery of the cuttings reduced the risk of contamination from material higher in the hole collected as air returned to the surface (as with a conventional drilling system). However, contamination could still occur if material higher in the hole fell to the bottom, and intermixed with fresh cuttings as the drill string rotated.
qRotary drilling with tri-cone bits was largely overtaken in the late 1970’s by the use of down hole percussion hammers, consisting of an air operated reciprocating piston which rapidly strikes the head of an anvil bit. At the same time, the drill string is rotated by mechanical force applied at the drilling rig on the ground surface, thereby rotating the bit. The components of a down hole percussive hammer include an outer sleeve or housing for the body of the hammer, an upper sub assembly which fastens the hammer to the drill string, and a lower sub assembly into which the drill bit fits and through which rotational force is applied. (The lower sub assembly is commonly referred to as the “drive sub”.) The face of the bit is armed with tungsten carbide buttons. The force of the hammer blows, transmitted to the rock at the face of the bit, breaks the rock into small fragments.
qIn early models of down hole percussive hammers, air expelled after driving the hammer was exhausted through an opening at the centre of the bit face. This air flowed outwards across the face of the bit, carrying with it loose cuttings that were then carried to the surface in the exhaust air through the annular space between the drill string and the wall of the hole in the same way as the conventional drilling system used in rotary drilling. However, with the advent of coaxial drilling rods, “crossover subs” were introduced to enable the application of a reverse circulation system. The upper sub assembly incorporated external channels and a passageway leading from the annular space between the outer housing of the hammer body and the wall of the hole to the central duct in the drill string. By restricting air flow by sealing means between the upper sub assembly and the wall of the drill hole above the crossover passageways, the exhaust air and cuttings from the drill face were directed into the central duct in the drill string, and carried to the surface.
qThis substantially reduced the risk of contamination from material higher in the hole, but did not reduce the risk of contamination from material in the wall of the hole from the face of the bit to the crossover sub, a distance of several feet. Over this distance, the cuttings continued to pass through the annular space between the outer sleeve of the hammer and the wall of the hole. The reverse circulation system, combined with a crossover sub, helped to reduce sample contamination, but introduced a new problem not present in conventional drilling: it was not possible to completely seal the annular space between the upper sub assembly of the hammer and the wall of the hole, as this would jam the hammer in the hole. Some gap was necessary, but through this gap, air and cuttings could escape, causing “blow back”. The greater the gap, the greater the escape of cuttings up the outside of the drill stem to the surface. Further, material from the wall of the hole could fall, and if the gap permitted, this material would drop below the sealing means, and contaminate cuttings entering the crossover sub.
qThe next major improvement in reverse circulation drilling was the advent of face sampling down hole percussion hammers. The intended mode of collection of cuttings in these hammers involves the release of air at or below the drive sub, so that air travels down the outside of the drill head, then across the face of the bit carrying the cuttings to ducts in the face of the bit. These lead, in turn, to the passage in the centre of the drill string, then to the surface. The intent of this process is that cuttings are collected direct from the face of the drill bit, further reducing the risk of contamination. As with earlier forms of reverse circulation drilling, the efficiency of sample collection was influenced by the effectiveness of the sealing means employed to prevent air escaping through the annular space between the outer sleeve of the hammer and the wall of the hole.
qEarly face sampling hammers included (in about 1976 or 1977) the Bakerdrill, (then some ten years later) the Bulroc, the Samplex, the Halco-Lister, the Mincon, the Klemm (Hydroc) and the Ingersol-Rand hammers, each of which Azuko pleaded as relevant prior art – either by the publication of patents of which the hammers were said to be the commercial embodiments, by their description in brochures and literature publicly available in Australia, or by their use in Australia. These hammers did not receive widespread acceptance in the mining industry in Australia. Indeed, apart from a version of the Bulroc hammer (which differed from the preferred embodiment described in the Bulroc patent) the hammers were hardly used, but remained with suppliers as display items. There was evidence that the Bulroc hammer was tested by a number of drilling companies, but it seems that its commercial use in Australia was limited. The industry perception was that the drilling capability of the hammer was slow, and, more important for present purposes, the sampling efficiency was inadequate. The hammer did not recover a sufficient proportion of the cuttings.
qBefore the priority dates of the subject patents, it was common general knowledge in the drilling industry that the efficiency of sample recovery in face sampling reverse circulation drilling depended, in part, upon the effectiveness of the sealing means engaged to prevent blow-back of air. It was generally thought that if the annular space between the outer sleeve of the hammer and the hole could be sufficiently sealed, enough exhaust air from the hammer would flow into the ducts in the face of the drill bit to ensure that a sufficient sample was returned to the surface through the central passage inside the drill string. It was generally understood that the sealing means should be near the lower end of the down hole hammer, so as to minimise the risk of contamination, and of air dissipating into the surrounding strata. A complete seal was practically impossible, as this would cause the hammer to jam in the hole. Features of some of the prior art patents were directed to achieving sealing means between the hammer and the wall of the hole. It was also generally understood that sample recovery was assisted by directing airflow, which exhausted from the hammer through the drive sub, towards the head of the bit.
qAnother drilling problem arose from inevitable wear to the tungsten carbide buttons on the drill bit. The diameter of the hole being drilled is determined by the outermost buttons forming the gauge row. As the gauge row buttons wear, the diameter of the hole diminishes, thus narrowing the annular gap between the outer housing of the hammer and the wall of the hole. Before the introduction of a compensating sleeve (fitted to the outer surface of the housing of the hammer) which wore down in sympathy with the wearing of the gauge row buttons, the reducing diameter of the hole led to a risk of the hammer jamming. Jamming, at the least, causes unproductive down time; and, at worst, may lead to the loss of expensive equipment down the hole, and the abandonment of the hole. Drillers were faced with a dilemma: if a drilling pass commenced with a drill bit that provided minimal clearance between the outer housing of the hammer and the wall of the hole, a good recovery was initially achieved, but the length of the pass possible before the risk of jamming occurred was diminished. Alternatively, if a gap was initially provided which allowed for wear of the bit as the hole deepened, the efficiency of the sample recovery was compromised.
qOne of the patents pleaded by Azuko as an anticipation of the inventions claimed in the patents in suit was Australian Patent, application no. 43643/89, published on 26 April 1990 (the DTA compensating ring patent). The application was filed by Digger (then named Drilling Tools Australia Pty Ltd (“DTA”)), for a “Compensating Ring for a Down Hole Hammer”. The invention described in the application was “a sacrificial compensating ring … designed to provide an effective seal between the bore of the hole and the drill tube and to wear down at a similar rate as the drill bit to maintain such seal as the drill bit wears”. The specification stated that “[s]acrificial in the context of the present invention means that the compensating ring is intended to be consumed in drilling much the same as the drill bit is”. The compensating ring had been invented and developed by four of DTA’s personnel at that time – Brian Sanfead, John Elsby, John Urquhart Dewar and Andrew Greathead. Messrs Elsby, Greathead and Sanfead were also the inventors of the invention the subject of the SDS patent. DTA had started to develop a prototype reverse circulation hammer in late 1987. The potential for such hammers was seen as promising and a period of twelve months rigorous testing was undertaken by the company. This led to the development of the compensating ring.
qThe incorporation of features reflecting the above-mentioned common knowledge into those face sampling reverse circulation hammers which preceded embodiments of the patents in suit did not satisfactorily overcome the problem of inefficient sample recovery. A continuing problem was described in the preamble in the body of the specification of the Giehl patent as follows:
“Australian Patent Application No. 80143/87 … describes an arrangement characterised by a drill stem comprising coaxial air ducts. Compressed air flows down one of the ducts to a reciprocating valveless motor. The other air duct is connected to the collection ducts. The arrangement allows for collection of material chips from a known drill depth with minimal contamination of other materials from other depths and sources. Such an arrangement has proved to be of significant improvement compared to previous arrangements. But, there has been a problem of significant loss of chips recovered from the cutting head. Experimentation has shown that the air transports only about 70% of the chips [to] the surface.
To discover the cause of loss of chips has required very extensive investigations, trials and discovery. The chips form a very important source of information regarding the cut material. This is particularly the case where substances drilled for are found only in small concentrations.
Accordingly, the problem has been to provide an arrangement and method by which some greater efficiency of drilling and collection of chips can be achieved.”
[Australian Patent Application No. 80143/87, upon grant became the 1987 Giehl patent (discussed later) which, Azuko contended, anticipated the Giehl patent in suit.]The consistory clause describes the invention in the subject Giehl patent as follows:
“The invention may be said to reside in a drill bit assembly … the bit having a plurality of outermost channels extending in direction parallel to the axis of the bit down the outer side of the bit and having a collection duct or ducts passing through the bit with its collection opening or openings through the face of the bit and an outlet at the axially aligned opposite end of the bit, and an outermost cover acting as a shroud which is located to engage against and extend around the outer side of the drill bit and form with the channels conduits which are shaped and positioned so that air flow to clear the cuttings will be directed by reason of passage through … one or more of the conduits directly at the periphery of the cutting face of the bit for subsequent passage across the face of the bit to the collection opening or openings …” (emphasis added by his Honour).
The specification goes on to explain:
“What appears to happen with such an assembly is that the air is constrained within the conduit shape defined by the respective channel and the enclosing shroud and it is therefore caused to flow in strongly directed manner directly at the periphery of the cutting face of the bit and thereby over the periphery of the working face and thence across the face.”
qThe continuing problem, which still existed in April 1990, is described in more detail in the preamble in the body of the specification of the SDS patent:
“In general, in the art of reverse circulation drilling, a relatively small annular clearance, of typically 3mm, is provided between the drill tube and the bore of the hole being drilled. The clearance must be kept relatively small so that air preferentially travels around the drill bit and forces the rock cuttings from the bottom of the hole through a passageway in the drill itself and the drill string to the surface by the action of compressed air exhausted around the sides of the drill bit and at the face of the bit. To further minimise leakage of air and/or rock cuttings into the annular space, the exhaust ports at the sides of the drill bit, and the drive sub or chuck must be adapted so as to direct air to the face of the bit. A further requirement of reverse circulation drilling is [to] maximise the recovery of rock sample from the bottom of the hole. This aim is achieved in practice by having the maximum outside diameter of the drill bit as close as possible to the maximum outside diameter of the drill tube. However, as the cutting face of the drill bit bores out the hole, it wears down and becomes smaller in diameter. When the diameter of the drill bit approaches that of the drill tube, the drill bit would normally be replaced to prevent damage to the drill tube occurring through contact between the drill tube an[d] the wall of the hole.
If a drill bit is used with a maximum outside diameter greater than that of the drill tube, the clearance between the drill tube and the bore of the hole is increased. This type of arrangement leads to longer bit life but increases the leakage of air into the annular clearance, reduces the rate of sample recovery and results in higher sample contamination.”
q(As has been noted above) the combination of the integers comprising the invention described in the SDS patent is said to address these problems, since the transmission sleeve (a) is sacrificial in that it is intended to be consumed in drilling in much the same way as the drill bit; it is intended to wear preferentially avoiding the replacement of other more expensive components, and allows the use of larger drill bits for a given diameter drill tube than would otherwise be the case; (b) provides an improved and effective seal between the bore hole and the drill tube throughout the lifetime of the drill bit, because it seals the hole closer to the face of the bit, and the seal is maintained over a longer length; and (c) provides an improved rate of sample recovery, without undue sample contamination or undue air consumption, by releasing the exhaust air from the hammer closer to the face of the drill bit.
(b) The SDS hammers
Digger commenced the commercial production and sale of the preferred embodiment of the SDS patent (the SDS hammer) in about September 1990. SDS hammers received industry acceptance in Australia, and they became widely used. They achieved rates of sample recovery which satisfied the exploration geologists. Evidence led about the success of the SDS hammers provided strong support for Digger’s case that the integers in claims 1 and 2 of the SDS patent, incorporated in the SDS hammer, constituted a novel improvement that largely overcame the continuing problem identified in earlier hammer assemblies. Important to the success of the SDS hammer was the fact that the gauge sleeve (transmission sleeve) directs the air flow to clear the cuttings directly at the periphery of the cutting face of the bit; this is also an essential integer of the Giehl patent.
(c) The Premier tools
Azuko, trading as “Premier Rock Tools”, competed with Digger in the manufacture and supply of drilling equipment to the mining and exploration industry. The circumstances leading up to the design, manufacture and distribution of the Premier tools were as follows:
¨Prior to February 1993, Patrick Purcell held a fifty per cent interest in Digger through a company controlled by him, Mincon International Limited (“Mincon”). In February 1993, Patrick Purcell sold his fifty per cent interest to Fred Moir, who was the other co-owner of the applicant at the time. Thereafter the applicant underwent a name change to SDS Digger Tools Pty Ltd (and has since undergone a further name change to Old Digger Pty Ltd). Joseph Michael Purcell, the son of Patrick Purcell, worked for Mincon at times between 1980 and 1988. He was seconded to work for Digger in Australia for three months between August and October 1990. He then returned to work as a design engineer for Mincon. In April 1991, he took up a position with Digger as its chief design engineer, and held that position until 2 July 1993. During that time he worked in Australia with Mr Elsby (Digger’s general manager), and Mr Sanfead (Digger’s production development manager). Joseph Purcell’s duties included producing designs of hammers and bits, both conventional and reverse circulation, threaded bits, and various other Digger products. In their several capacities, Messrs Joseph Purcell, Elsby and Sanfead had access to Digger’s design information relating to its products. Joseph Purcell became familiar with the design of Digger’s reverse circulation hammers, models RC60 and RC55. He designed the reverse circulation hammers known as models RC44 and RC46. The RC44, RC46, RC55 and RC60 produced by Digger all exhibit the design described in the SDS patent and differ only in size. Shortly after he commenced with Digger, Joseph Purcell’s duties required him to consider correspondence from Digger’s patent attorney regarding the completed specification for the SDS patent. His correspondence with the patent attorney concerned, in particular, the final integer in claim 1 relating to wear characteristics.
¨Following Patrick Purcell’s sale of his interest in Digger, he and Joseph Purcell, together with Mr Elsby, took steps to set up a new company initially called Veldan Pty Ltd (“Veldan”) and which is now Azuko. It was proposed that the company would manufacture threader bits which would put it in competition with only a very small part of Digger’s business. However, the business of Veldan soon went beyond that and Veldan commenced production of parts, including spare parts used in conjunction with SDS hammers and bits. Following his resignation from Digger on 2 July 1993, Joseph Purcell became concerned with setting up Azuko. Mr Elsby resigned from Digger and commenced working for Azuko in November 1993. Joseph Purcell commenced working for Azuko in February 1994, and Mr Sanfead resigned from Digger, joining Azuko in March 1994. In July 1994, Digger took proceedings in the Supreme Court of Western Australia against Messrs Elsby, Joseph Purcell, Patrick Purcell, Sanfead and Veldan (and others) seeking an injunction restraining the use by those parties of SDS computer programs containing Digger’s design information, and programs for sophisticated manufacturing machinery used in making Digger’s drilling equipment. After the grant of this injunctive relief, Joseph Purcell set about designing the PR5 Premier tool. In his evidence he said:
“When I was designing the PR5 hammer, I knew that it must not infringe the SDS Patent. From working at SDS and using and applying the SDS Patent, my understanding was that a reverse circulation down hole hammer design would not infringe the SDS Patent if it did not include a shroud. A shroud is the common name for the part referred to in the SDS Patent as a ‘transmission sleeve’, and is so named because it covers and ‘shrouds’ the head of the bit.”
The PR54 and PR40 models of Premier tools followed the PR5 model. The Premier tools achieved market acceptance, and competed with the SDS products.
(d) The Giehl invention
The invention the subject of the Giehl patent was made by Werner Giehl. Mr Giehl’s tertiary training and earlier professional experience was as a surgical and orthopaedic instrument maker; but, since 1968, he had also designed and manufactured items of drilling equipment. At the time that he applied for patent protection for his invention (the provisional specification was filed on 19 April 1990) he was not associated with Digger, which later acquired the invention from him. Digger was the owner of the patent at the time that Joseph Purcell worked for SDS; and he was aware of it when designing the Premier tools.
THE PRIMARY JUDGE’S FINDINGS AND CONCLUSIONS ON THE SDS INFRINGEMENT CLAIM
His Honour’s process of reasoning towards his findings and conclusions was as follows:
·It is helpful to compare Fig. 1 from the SDS patent specification (relating to the preferred embodiment of the invention) with a comparable drawing of a Premier tool prepared by Joseph Purcell. The figure from the SDS patent is descriptive of the commercial embodiment of the invention in the SDS hammers, although it must be borne in mind that the relevant comparison that must be made in determining infringement is not between the features of the SDS hammers and Premier tools, but between the claims in the patents and the Premier tools. Figure 1 is as follows:
Figure 1 is relevantly described in the SDS specification as follows:
“Shown in figure 1 … is a down hole hammer 10 comprising a drill bit 12 having air passages 13, a cutting face 14 and a plurality of apertures 16 extending into a central aperture 18. The drill bit 12 is retained in a drill bit retaining means in the form of a drive sub 20 [or chuck] by slip split rings 22 and splines 23 which are dimensioned so as to allow for exhaust air passages 13 between the drill bit 12 and the drive sub 20 in known manner. The drive sub 20 is held in an outer sleeve 24 typically by way of a threaded portion 26 of the outer sleeve 24. The outer sleeve 24 surrounds porting means (not shown) of known type to enable a piston (not shown) to reciprocally strike the bit 12 in known manner. … Longitudinally intermediate of the outer sleeve 24 and the drive sub 20 is a sacrificial transmission sleeve 28 having a body 29 comprising a first inner surface 30 substantially conforming to the drive sub 20 and a second outer surface 32. … As may also be seen, the body 29 is partially proud of the outer sleeve 24.
Preferably, the diameter of the transmission sleeve 28, as measured at the body 29 … is substantially the same as that of the drill bit 12.
The transmission sleeve 28 further comprises an annular flange 38 extending from the body 29 of the transmission sleeve 28 towards the drill bit 12. The flange 38 is disposed with an interior surface 40 overlying the drive sub 20 extending beyond the drive sub 20 towards the drill bit 12.
…
The flange 38 is adapted to encircle a portion of the drill bit which defines longitudinal grooves forming the exhaust air passages 13 in the sides of the bit in such a manner as to form a continuous shroud around at least a part of the grooves so as to assist in the downward passage of the exhaust air to the face of the drill bit 12.
…
The transmission sleeve 28 of the present invention serves to provide a more effective seal with the hole 108 than the compensating ring of our earlier Australian Patent Application No. 43643/89, as it seals the hole 108 closer to the face 14 of the drill bit 12. Further, the flange 38 allows the seal to be maintained over a longer length. This reduces the chances of sample contamination and/or increased air consumption.
·It was common ground that “transmission sleeve 28” is so described above because it transmits air in the manner described in the specification.
·The Premier tools incorporate a gauge sleeve which in shape, dimensions and position is similar to the transmission sleeve in the SDS hammer. The Premier gauge sleeve has a body and an annular flange. The outer diameter of the body of the gauge sleeve is greater than the outer diameter of the outer sleeve (the hammer housing) and substantially the same diameter as the drill bit. The annular flange has a diameter which is substantially the same as the drill bit. Moreover, the Premier gauge sleeve extends from the body towards the drill bit. These are features of the sacrificial transmission sleeve claimed in claim 1 of the SDS patent. However, as can be seen from the above diagrams, the gauge sleeve in the Premier hammers does not extend in an axial direction downward from the drive sub. In the Premier hammers, the drive sub has been extended so that it terminates flush with the lower end of the gauge sleeve.
·The Premier tools comprise a hammer of the type described, and claimed, in the SDS patent. The expression “drill bit retaining means” is not an engineering term; it carries its ordinary meaning. The SDS patent describes the drill bit retaining means as being in the form of a drive sub. The Premier tools plainly have a drill bit retaining means of the kind described in the SDS patent. Further, the Premier tools are used with a gauge sleeve that is “sacrificial” in nature. The gauge sleeve fitted to the Premier tools is consumed in much the same way as the drill bit; and it wears in preference to other components of the hammer assembly, and, in particular, the outer housing of the hammer and the drive sub.
·In their defence, Azuko contended that whilst the gauge sleeve of the Premier tool is sacrificial, it is not a “transmission” sleeve within the meaning of the SDS claims, as it does not transmit air; because it does not transmit air, the gauge sleeve simply fulfils the function of a compensating ring, like that described in the DTA compensating ring patent (above); in the Premier tools, the transmission of air is performed by the drive sub which ends flush with the gauge sleeve. Azuko further contended that the wear characteristics of the Premier gauge sleeve are not “similar to that of the drill bit”; and that the Premier gauge sleeve does not wear at a “similar rate” within the meaning of the final integer of claim 1 in the SDS patent.
·On a literal construction of the claims, a gauge sleeve, to meet the description “transmission sleeve” will be a sleeve that transmits air. In the manner in which the Premier tools have been designed and manufactured, the gauge sleeve is not performing that function. But authorities (see below) teach that infringement is a question of fact, and infringement may occur where the respondent “takes the substance of the invention, yet stays outside the express words of the claim, unless the wording of the claim makes it clear that the relevant area has been deliberately left outside the claim”.
·The extension of the Premier drive sub is a minor variation, a “trifling variation of no mechanical significance”. The configuration of the extended portion of the drive sub in the Premier tools, which masks the inner surface of the gauge sleeve, serves merely to replace channels formed in the bit and enclosed by the inner surface of the transmission sleeve described in the SDS patent with mirror image channels formed in the drive sub, and enclosed by the surface of the drill bit. In normal operation, the variation does not result in the Premier tool losing any of the advantages of the invention claimed in the SDS patent. The Premier tool is “the functional equivalent” of the SDS invention. This is a plain case of Azuko taking “the substantial idea” disclosed in the specification of the SDS patent and “seeking to avoid the literal meaning of the claims by a contrived modification that has no practical significance in the normal operation of the drilling apparatus”.
·By their terms, none of the claims indicates that a modification of the kind undertaken by Azuko has been deliberately left outside the scope of any of the claims. Rather, the body of the SDS patent specification concludes with the statement that:
“Modifications and variations such as would be apparent to a skilled addressee are deemed within the scope of the present invention.”
·A modification of the kind made by Azuko would be apparent to a skilled addressee, particularly having regard to claim 5 and the accompanying figure representing that embodiment.
·The gauge sleeve on the Premier tools acts to seal the annular space between the hammer assembly and the bore hole much closer to the face of the bit than was known before April 1990. The gauge sleeve works in combination with the drive sub on the Premier tool to direct the flow of exhaust air, and to restrain it until released at the head of the drill bit proximate to the face of the bit. The gauge sleeve is also a sacrificial component of the Premier tools.
·In relation to claim 2 of the SDS patent, Azuko contended that even if the drive sub and gauge sleeve are treated as a combined item which constrains and directs exhaust air until released, the gauge sleeve and drive sub do not encircle a portion of the drill bit “in such manner as to form a continuous shroud to assist in the downward passage of the exhaust air to [the] cutting face of the drill bit”. But the Premier drive sub/gauge sleeve combination does encircle a portion of the length of the drill bit in a manner to form a continuous shroud to assist in the downward passage of exhaust air to the cutting face of the drill bit. This arrangement in the Premier tool shrouds the longitudinal grooves in the side of the drill bit head at their commencement in the shoulder of the bit; and it directs the passage of exhaust air into these grooves, and directly at the cutting face, particularly when the hammer is operating in the closed (i.e. normal operating) position. The Premier tools, like Digger’s hammers, are designed and intended for use in hard conditions. The expert evidence demonstrated that the operating gap between the weight bearing surface of the drive sub and the shoulder of the head of the bit would be very small, and not such that the combination of the gauge sleeve and a drive sub in Premier tools would not perform the function of directing exhaust air into the longitudinal grooves of the drill bit proximate to the cutting face.
·It is not a requirement of either claim 1 or claim 2 of the SDS patent that the sacrificial transmission sleeve encircle and cover part of the head of the drill bit below the weight bearing shoulder. There is nothing in the claims in the SDS patent, or in the specification, to suggest such a requirement.
·The gauge sleeve on the Premier tools is clamped to the hammer between the outer sleeve of the hammer and the drill bit retaining means, namely the drive sub, and that integer of claim 3 is present.
·In the result, the Premier tools infringe claims 1, 2, 3, 7, 8, and 9 of the SDS patent. The Premier tools also infringe the omnibus claims in claims 13 and 14, which incorporate the drawings into the claim. The Premier tools are substantially as described in the body of the SDS patent and Figure 1 which accompanies the specification.
(Claim 4 was not relied on by Digger at the trial. Further, his Honour held that claim 5 was not infringed. Digger has not cross-appealed from this finding.)
AZUKO’S CHALLENGE TO HIS HONOUR’S FINDING OF INFRINGEMENT OF THE SDS PATENT
Azuko’s challenge is relevantly based upon the following submissions:
qClaim 1 is for a sacrificial transmission sleeve, not for the whole combination of a reverse circulation down hole hammer (cf. claim 7). The words “sacrificial transmission sleeve” and the words after and including the words “the transmission sleeve comprising” constitute the definition of the invention and its essential integers. The remaining words describe the hammer which is being improved.
qAs has been seen, his Honour noted that it was common ground that the transmission sleeve 28 “is so described … as it transmits air in the manner described in the specification”. That description begins with admissions about the state of the art of reverse circulation drilling. This explains the limitations in the claims, that is, their essential integers. It also demonstrates that the claims have deliberately left open devices, such as Azuko’s, which do not possess all of those integers.
qThe specification says (with respect to the known art) –
“To further minimise leakage of air and/or rock cuttings into the annular space, the exhaust ports at the side of the drill bit, and the drive sub or chuck must be adapted so as to direct air to the face of the bit” (p 2, ll 13 – 16; emphasis added in the submission).
qThe specification goes on (p 3, ll 12 – 21) to refer to DTA’s prior compensating ring patent; and to describe (p 3, l 22 – p4, l 10) the sacrificial transmission sleeve of the SDS invention as performing the same functions as the sacrificial compensating ring of the prior DTA invention. There follow consistory clauses in the same terms, in effect, as claims 1, 4, 5 and 7, which depict three particular ways in which a transmission sleeve is constructed as follows:
(1)The first aspect (claim 1; fig 1; specification p 4, ll 11 – 29) – a separate transmission sleeve outside the drive sub whose flange extends from the body and extends “beyond the drive sub 20 towards the drill bit 12” (p 7, ll 15 – 20). Fig. 1 shows this. But the Premier device has a sleeve whose flange does not extend beyond the drive sub 20. It plays no role in the transmission of air. However, his Honour did not refer to the passage in the specification at p 7, ll 15 – 20. (In that passage, it is provided: “the transmission sleeve 28 further comprises an annular-flange 38 extending from the body 29 of the … sleeve … towards the drill bit 12. The flange … is disposed with an interior surface 40 overlying the drive sub 20 extending beyond [it] … towards the drill bit….”)
(2)The second aspect (claim 4; Fig 2; p 4, ll 30 – 34) – a transmission sleeve formed integrally with the outer sleeve. Again it has a flange 116, which “is disposed with an interior surface 18 overlaying the drive sub 20 towards the drill bit 12” (p 9, ll 24 – 26). Fig. 2 shows this. But, as has been submitted, the Premier device has a sleeve whose flange does not extend beyond the drive sub 20. It plays no role in the transmission of air. However, his Honour did not refer to the passage at p 9, ll 24 – 26. (The passage provides: “the flange .. is disposed with an interior surface … overlying the drive sub extending beyond [it] … towards the drill bit ….”)
(It will be recalled that Digger did not press claim 4 at the trial.)
(3)The third aspect (claim 5; Fig 3; p 4, l 35 – p 4A, l 2) – a transmission sleeve formed integrally with the drive sub. The flange extends from a wider part of the drive sub (“the body”). The drive sub 200 “has dimensions which correspond to those of the drive 20 and transmission sleeve 28” of the first embodiment (p 10, ll 4 – 19). This is a specific description of the drive sub being, in effect, extended to form the transmission sleeve. It is “formed integrally” with the transmission sleeve, which is sacrificial. But Azuko’s device has an extended drive sub which transmits air. This is not sacrificial and does not possess the diameter and wear characteristics claimed. There is a separate compensating ring or sleeve.
(It will be remembered that his Honour found that claim 5 had not been infringed; and that Digger has not cross-appealed from this finding.)
qIn holding that none of the claims indicated that a modification of the kind undertaken by Azuko had been deliberately left outside the scope of the claim, the primary Judge referred to the frequently cited observation of Aickin J in Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 (at 286) (the “3M case”) that a defendant may not take the substance of an invention “unless the wording of the claims makes it clear that the relevant area has been deliberately left outside the claim”. But here, the patentee describes and claims three specific constructions as follows: (i) a separate drive sub and separate sacrificial sleeve with a flange extending below the drive sub; (ii) an outer sleeve integrally formed with a sacrificial sleeve with a flange extending below the drive sub; and (iii) a drive sub integrally formed with a sacrificial sleeve and possessing a flange extending below the drive sub. The claims are written to cover these specific embodiments and the patentee has, in truth, “deliberately left outside the claims” any other constructions. The construction of the Premier device, viz., an extended drive sub which directs air to the face of the bit, is described as prior art (p 2, ll 13 – 16), as is the Premier construction of a separate compensating sleeve (p 3, ll 12 – 21).
qThe SDS claims were presumably drafted in order to retain their novelty and inventiveness in light of the admitted prior art, including down hole hammers where “the drive sub or chuck must be adapted to direct air to the face of the bit”. This describes the Premier device.
qThe prior art also included the patentee’s prior compensating ring patent, where air is transmitted between the drive sub and side of the drill bit and there is a separate sacrificial sleeve or ring with appropriate diameter and wear characteristics. This also describes the Premier device.
qHis Honour found that, on a literal construction of the claims, in order to meet the description “transmission sleeve”, a gauge sleeve will be a sleeve that transmits air; and that, in the manner in which the Premier tools have been designed and manufactured, the gauge sleeve is not performing that function. This should have led to the conclusion that there was no infringement. However, the primary Judge, noting cases where the relevant area has been “deliberately left outside the claim”, went on to refer to a passage in the specification (p 13, ll 4 – 6) that “modifications and variations such as would be apparent to a skilled addressee are deemed within the scope of the present invention”. But, in Welch Perrin Co Pty Ltd v Worrel (1961) 106 CLR 588, Dixon CJ, Kitto and Windeyer JJ said of a similar statement (at 614):
“This seems to mean no more than that the invention is not to be regarded as restricted to machines made exactly as described, but that any machine covered by the words of the claims is to be considered as within the scope of the invention. This is little more than a cautiously introduced assertion of the doctrine that a mere substitution of known mechanical equivalents will not suffice to avoid infringement.”
qIt is, however, impermissible to use a passage of this kind to enlarge the scope of the claims: see observations in Welch Perrin (at 610) as follows:
“The specification must be read as a whole. But it is a whole made up of several parts, and those parts have different functions. Courts have often insisted that it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim by adding to those words glosses drawn from other parts of the specification.”
qHis Honour misapplied the principle explained in the 3M case. Infringement requires that all integers of the claim be taken, with the exception of the substitution of a mechanical equivalent of an inessential integer. Bowen CJ, Deane and Ellicott JJ said in Populin v HB Nominees (1982) 41 ALR 471 (at 475) that –
“… the patentee must show that the defendant has taken each and every one of the essential integers of the patentee’s claim. Therefore if, on its true construction, the claim in a patent claims a particular combination of integers and the alleged infringer of it omits one of them he will escape liability.”
qThe invention must be defined with precision and with clarity in the claims. His Honour said that the Premier tool was the “functional equivalent” of the SDS invention. The primary Judge was here purporting to apply the “pith and marrow” or “substantial infringement” principle. But the application of this principle is limited to two possible situations: (i) where the alleged infringing article possesses a mechanical equivalent of an inessential integer; or (ii) where, as held in Catnic Components Limited v Hill & Smith Limited [1982] RPC 183 (considered below), upon a too literal construction of an integer of a claim, the alleged infringing device would escape infringement. In both these situations, it is necessary to determine first whether or not the alleged infringing article possesses each and every integer of the claim. In considering the question of a mechanical equivalent of an inessential integer, an assessment is made of the “essentiality” of the integers taken or omitted by the alleged infringing device. If it possesses all of the essential integers, it will infringe: Gummow J in Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 said (at 527 – 528):
“[W]here what is in question is an inessential integer, a device which contains the essential integers will fall within the claim, whether or not an inessential integer is replaced by an obviously equivalent device or omitted altogether; hence, the expression ‘mechanical equivalent’.”
qBut this is a very narrow class of case. In Birmingham Sound Reproducers Ltd v Collaro Limited [1956] RPC 232 the Court of Appeal held (at 243 – 244) that the “pith and marrow” (or “pith and substance”) doctrine should be confined to “unessential differences”. Infringement was not demonstrated merely by showing the performance of substantially similar functions by the apparatus. This was approved by the House of Lords in Rodi and Wienenberger AG v Henry Showell Limited [1969] RPC 367, where (at 391) Lord Upjohn observed:
“To constitute infringement the article must take each and every one of the essential integers of the claim. Non-essential integers may be omitted or replaced by mechanical equivalents; there will still be infringement. I believe that this states the whole substance of the ‘pith and marrow’ theory of infringement.”
qIn the present case, none of the relevant integers is inessential, so that the question of mechanical equivalent of inessential integers does not arise.
qNo consideration was given by the primary Judge to the question whether the integers of the claims said to be infringed were either essential or inessential. In practice, the likelihood that an integer of a claim will, on its proper construction, be held to be inessential, is remote.
qThe second class of case (i.e. (ii) above) is solely, as in Catnic, a question of construction. In Catnic, Lord Diplock said (at 243) that a patent specification “should be given a purposive construction rather than a purely literal one …” and in Commonwealth Industrial Gases Limited v MWA Holdings Pty Ltd (1970) 180 CLR 160 (cited by the primary Judge), Menzies J held that a difference may be so insignificant that the essential feature is, in truth, present. In such a case, it might be relevant to inquire whether a variation from the literal meaning of the words used in a claim will have a functional difference; and, in this way, to assess whether there was an intention to exclude from what has been claimed everything except what comes within a literal meaning. But it does not follow that there is infringement where (as here) one or more essential integers is wholly absent.
qThe primary Judge also cited the following observations of Dixon J in Radiation Limited v Galliers & Klaerr Proprietary Limited (1938) 60 CLR 36 (at 51):
“[T]he issue is not whether the words of the claim can be applied with verbal accuracy or felicity to the article or device alleged to infringe. It is whether the substantial idea disclosed by the specification and made the subject of a definite claim has been taken and embodied in the infringing thing.”
qHowever, the primary Judge referred merely to the substantial idea disclosed in the specification, whereas Dixon J spoke also of what was “made the subject of a definite claim”. It is the claim which must be taken. Thus, in this second line of cases (i.e. (ii) above or the “Catnic theory”) the focus is on the construction of the claims. This is a very narrow exception, which is limited to cases where the precise words of a claim are capable of being “overly narrowly” interpreted. It does not cover a case where an integer is left out altogether, where it is irrelevant to inquire whether the articles function the same way. Catnic and CIG do not create a new category of “non-textual” infringement (reference is made to the observations of Gummow J in Nicaro, above, at 528 – 529).
qHere, the Premier drive sub performs the function of transmitting air. It is not a sacrificial sleeve, and does not possess the wear characteristics integers, or the diameter integer. Similarly, the Premier “gauge sleeve” does not transmit air. It is not a transmission sleeve, as his Honour held. Accordingly, the integers of a sacrificial transmission which possesses the wear characteristics claimed are not present. This is not a case of an insignificant modification or a mechanical equivalent of an inessential integer.
qThe reference by his Honour to “channels formed in the bit and enclosed by the inner surface of the transmission sleeve described in the SDS patent with mirror image channels formed in the drive sub, and enclosed by the surface of the drill bit …” is, in truth, a reference to claim 1 of the Giehl patent, not the SDS patent. On his Honour’s approach, there is no consideration of the question whether the essential integers of the SDS patent, being a transmission sleeve, are present.
qThe Premier’s sleeve and drive sub perform two distinct functions: to direct air and to act as a sacrificial compensating ring. There can be no suggestion that Premier’s sleeve assists the drive sub in any physical way in directing (transmitting) the air. The SDS patent does not teach that discrete elements which separately perform distinct functions can be regarded as a combined element, or as elements which act in combination to perform the functions.
qBecause claim 2 is dependent on claim 1, it too is not infringed. His Honour also (as noted) relied upon Mr McGoggan’s expert evidence about the drive sub/gauge sleeve “combination”, but takes it too far. It is not a “combination” or “arrangement” of elements which encircles or shrouds the grooves in the bit: it is the drive sub alone. The gauge sleeve plays no role in this. His Honour’s approach to claims 1 and 2 depends on whether the separate parts (drive sub and gauge sleeve) of the Premier device, which separately perform the separate functions of directing or transmitting air (the Premier drive sub) and acting as a compensating ring or sleeve (the Premier gauge sleeve) can, in the discourse of the patent, properly be regarded as acting in combination to perform both functions. This is not a question for expert evidence.
qBecause claim 3 is dependent upon claims 1 and 2, it is also not infringed.
qSince claims 7, 8 and 9 are claims for hammers which include sacrificial transmission sleeves that correspond with claims 1, 2 and 3, they are not infringed.
qClaims 13 and 14 are omnibus claims, but are narrower than the other claims. Claim 13 is for a sacrificial transmission sleeve substantially as described and with reference to the drawings in Figs. 1, 2 or 3. Claim 14 also refers to Figs. 1, 2 or 3, but is limited to “a reverse circulation down hammer”. As Lord Morton said in Raleigh Cycle Coy Ltd v H Miller & Coy Ltd (1948) 65 RPC 141 (at 158), a claim in these terms (“substantially as described”) whilst apparently admitting of a broad construction, is really intended to be a “narrow claim incorporating the drawings as part of the description, and directed to saving the patent from revocation, if all wider claims are held to be bad”. That is, the claim is limited, in effect, to the precise embodiments of the invention illustrated in the specification, although some minor variations might still be caught. The limitation to the drawings is, in effect, essential to the validity of such a claim which would otherwise risk being either too uncertain, or broader than the invention claimed. An omnibus claim will be valid if limited by reference to drawings, and not by the specification description. The question is approached, as Gummow J did in Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 (at 91) in a conventional way, by asking whether the essential features of the device as described in the specification, and with reference to the drawings, were present in the alleged infringing device. For the reasons stated in the earlier submissions on claim 1, it must follow that claims 13 and 14, as limited by reference to the first aspect, depicted in Fig. 1, are not infringed.
qInfringement of claim 4, the second aspect, was not pressed at trial – the integrally formed transmission sleeve and outer sleeve is not present. Thus claims 13 and 14, as limited to Fig. 2, are not infringed.
qGiven his Honour’s rejection of Digger’s contention that claim 5 (which relates to the third aspect, depicted in Fig. 3) was infringed, it must follow that claims 13 and 14, as limited to Fig. 3, are not infringed.
CONCLUSIONS ON THE APPEAL FROM THE FINDING OF INFRINGEMENT OF THE SDS PATENT
It will be convenient to consider the relevant claims in turn.
(a) Claim 1
It will be remembered that this claim includes relevantly these features:
(i)“a sacrificial transmission sleeve … [when used with a … hammer …, including an outer sleeve … and a (retained) drill bit] …”.
(ii) “the … sleeve comprising a body of an annular flange”.
(iii)“the body having a first inner surface and a second outer surface”.
(iv)“the diameter of the second outer surface being greater than that of [the] outer sleeve and substantially the same as that of the drill bit”.
(v)“the … sleeve [being] located near an end of the … hammer proximate the drill bit”.
(vi)“the annular flange being of diameter substantially the same as the drill bit and extending from the body towards the drill bit”.
(vii)“the wear characteristics of the … sleeve being similar to that of the drill bit”.
As his Honour noticed, the question of infringement is to be decided upon a proper understanding of what is described in the body of the specification and on a proper construction of the claims. At the same time, in ascertaining the width of a particular claim, it is not permissible to vary or qualify the plain and unambiguous meaning of the claim by reference to the body of the specification; subject to the proviso that if an expression in the claim is not clear, then it is permissible to resort to the body of the specification to define or clarify the meaning of the words used in the claim (see Interlego A.G. v Toltoys Pty Ltd (1973) 130 CLR 461 at 478 – 479; Rehm, above, per Gummow J at 89).
His Honour cited the preamble to the specification and the explanation of Fig. 1. Reference might also be made to the following statements in the specification:
“The drill bit 12 is retained in a drill bit retaining means in the form of a drive sub 20 by split rings 22 and splines 23 which are dimensioned so as to allow for exhaust air passages 13 between the drill bit 12 and the drive sub 20 in known manner. The drive sub 20 is held in an outer sleeve 24 typically by way of a threaded portion 26 of the outer sleeve 24.” [p 6 ll 9 – 15]
“The transmission sleeve 28 … [provides] a more effective seal with the hole 108 … closer to the face 14 of the drill bit 12. Further, the flange 38 allows the seal to be maintained over a longer length. This reduces the chances of sample contamination and/or increased air consumption.
As can be seen from Figure 6 the flange 38 of the transmission sleeve 28 surrounds the air exhaust ports 13. Air travelling through the exhaust port is thus released closer to the face 14 of the drill bit 12. This results in an improved sample recovery rate.” [p 8 ll 7 – 19]
(It was common ground that the reference to “drill bit” in the claims contemplated the drill bit’s cutting face.)
In my opinion, in construing claim 1, resort to the specification is necessary in order to clarify the meaning of the phrase “transmission sleeve”, since the sense of “transmission” is not explained in the claim itself. As has been mentioned, it was common ground at the trial (correctly I think) that the reference to “transmission” in the claims was intended to refer to the transmission of air in the manner described in the specification.
The first question then for his Honour was whether there had been any textual infringement of this claim. His Honour proceeded upon the footing (correctly I think, and there was no challenge to this by Digger) that there was no literal infringement of claim 1. The question then for his Honour was, as Gummow J put it in Rehm, above (at 92), “whether the substance of the invention as claimed in [the relevant] claim … has been taken”. This required an analysis of the essential integers of claim 1 and comparison with Premier’s products.
In this connection, the primary Judge made the following comparison:
¨the Premier tools incorporate a gauge sleeve similar in shape, dimensions and position to the SDS transmission sleeve.
¨the Premier gauge sleeve extends, as does the SDS invention, from the body towards the drill bit.
In my opinion, each of these elements was an essential integer of claim 1 of the SDS patent. His Honour described them as “features”, and it appears from the context of that description that the primary Judge treated them as “essential” integers. However, as his Honour then proceeded to observe, the gauge sleeve in the Premier hammers does not extend in an axial direction downward from the drive sub, as the SDS invention does. Rather, in the Premier hammers, the drive sub has been extended so that it terminates flush with the lower end of the gauge sleeve.
Nonetheless, I agree with his Honour’s characterisation of the Premier tools as comprising “a hammer of the type described and claimed” in the SDS patent, for the reasons he gave; that is, the Premier tools (i) have a drill bit retaining means of the SDS kind; and (ii) are used with a gauge sleeve that is “sacrificial”, and is consumed in much the same way as the SDS drill bit, wearing in preference to other components of the hammer assembly, particularly the outer housing of the hammer and the drive sub.
However, the question remains of the significance, if any, for present purposes of the (air) “transmission” aspect of the SDS sleeve – as contrasted with the fact that in the Premier tools, the transmission of air is performed by the drive sub which ends flush with the gauge sleeve. It will be recalled that his Honour proceeded as follows in addressing this specific issue:
(1)The question of infringement is to be decided upon “a proper understanding” of what is described in the body of the specification, and on a “proper construction” of the claims.
(2)Taken literally, a “transmission sleeve” will be a sleeve that transmits air. However, the Premier gauge sleeve does not perform that function.
(3)Yet, infringement is a question of fact and infringement may occur where the respondent takes the substance of the invention although staying outside the express words of the claim, unless the wording of the claim makes it clear that the relevant area has been deliberately left outside the claim. (His Honour refers to 3M, Radiation, CIG, Populin and Catnic for these propositions.)
(4)The extension of the Premier drive sub is a “minor variation”, described by an expert as a “trifling variation of no mechanical significance”. The configuration of the extended portion of the Premier drive sub, which “masks” the inner surface of the gauge sleeve, serves merely to replace channels formed in the bit and enclosed by the inner surface of the SDS transmission sleeve with mirror image channels formed in the drive sub, and enclosed by the surface of the drill bit. In normal operation, the variation does not result in the Premier losing any of the advantages of the SDS invention. The Premier tool is the functional equivalent of the SDS invention. The substantial idea disclosed in the SDS specification has been taken by seeking to avoid the literal meaning of the claims by a contrived modification that has no practical significance in the normal operation of the drilling apparatus.
(5)By their terms, none of the claims indicate that this modification has been deliberately left outside the scope of any of the claims.
(6)Premier’s gauge sleeve acts to seal the annular space between the hammer assembly and the bore hole much closer to the face of the bit than was known before April 1990. The gauge sleeve works with the drive sub to direct the flow of exhaust air, and to restrain it until released at the head of the drill bit proximate to the face of the bit. The sleeve is also a sacrificial component.
It will be convenient to consider each of these steps in turn.
As to step (1): This is a question of law. I agree, as earlier indicated.
As to step (2): This is a question of fact. Again, I agree. As I followed the argument, this appears to be common ground.
As to step (3): This is a question of law. I agree, for these reasons:
·Although Azuko argues that his Honour did not mention or apply the distinction between “essential” and “non-essential” features, I cannot accept the argument. For one thing, his Honour cited, and relied upon, the following observations of Menzies J in the CIG case (at 167 – 168) in which specific reference is twice made to “essential feature[s]”:
“Patent rights are not to be set at nought by such a subterfuge which I am satisfied added nothing to the equipment and was made merely in an attempt to take full advantage of the invention while avoiding infringement of the plaintiff’s letters patent by a modification so small as to be insignificant. …
The cases do establish that, if the alleged infringement differs materially from an essential feature of the plaintiff’s claim, there can be no infringement. … In this present case normality of the reflector is made an essential feature of the plaintiff’s patent. As I have said, however, the modified manufacture since 1966 does not avoid the essential feature because the reflector as made thereafter is so close to being flat that the defendant’s manufacture and sales still takes the plaintiff’s invention.” (Emphasis added)
·For another, the primary Judge cited Populin at 475 – 477, where the significance of the familiar distinction is fully explained.
·In my view, his Honour not only fully appreciated the distinction, but also applied it. In step 4, he described the extension of the drive sub as a “minor” or “trifling” variation of no mechanical significance. This is, in substance, to characterise that aspect as non-essential.
As to step (4): His Honour’s characterisation (“minor” or “trifling” or “of no mechanical significance”) was an inference based upon expert opinion evidence. As such, his Honour was entitled to rely upon it. As I followed the argument, Azuko does not seriously suggest that, provided it was admissible (as in my view it clearly was) it was not open to the primary Judge to do so.
However, Azuko does rely on the suggestion of a mistaken reference to, and reliance upon, claim 1 of the Giehl patent, in the following passage which succeeded the “minor” etc characterisation –
“The configuration of the extended portion of the [Premier] drive sub …, which masks the inner surface of the … sleeve, serves merely to replace channels formed in the bit and enclosed by the inner surface of the … sleeve described in the SDS patent with mirror image channels formed in the drive sub, and enclosed by the surface of the drill bit.” (Emphasis added).
The section emphasised may be compared with the terms of claim 1 of the Giehl patent (above). It will be recalled that this claim described “the [drill] bit having a plurality of outermost channels … etc.”. Whilst there is some similarity revealed by this comparison, I do not think that it materially detracts from his Honour’s approach, based as it was upon acceptance of expert evidence that the extension of the Premier drive sub is a “minor” or “trifling” or “contrived” variation of no mechanical significance.
As has been seen, Azuko’s argument also focused upon Catnic and the “purposive” theory of specification interpretation. But, for present purposes, it is not necessary to consider, as the submissions of both sides sought to do, whether there is a real (or merely virtual) distinction between the “literal” and “purposive” approaches to construction in this connection. On either approach, it was open to his Honour to find, on the expert opinion evidence, that a “minor” variation did not avoid infringement of an essential feature of the SDS invention.
Although Lord Diplock in Catnic made several important generalisations in this context, the particular circumstances of that case and the issues there should not be overlooked. The statement of the claim there used the following language:
“A lintel … having a second rigid support member extending vertically from or from near the rear edge of the first horizontal plate ….” (Emphasis added)
The defendants’ product differed from the plaintiffs’ invention only in that the defendants’ rigid support member, instead of being perpendicular to the base, was inclined 6º or 8º from the vertical. It was held by the House of Lords that the question in each case of alleged infringement was whether persons of relevant practical knowledge and experience would understand that strict compliance with a particular descriptive word or phrase was intended by the patentee to be an essential requirement of the invention, so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked; that such question would only be answered in the negative when it would be apparent to a reader skilled in the art that such a descriptive word or phrase could not have been intended to exclude minor variants which would have no material effect upon the working of the invention; that no plausible reason had been advanced why a limitation should have been intended excluding a back plate not positioned at precisely 90º to both horizontal plates, yet close enough to make no material difference to the working of the lintel; that “extending vertically” was in context capable of meaning “near enough to vertical to enable the back plate to perform satisfactorily all the functions that it could perform if it were precisely vertical”; and that it would be obvious to a builder that the patentee did not intend to make exact verticality of the back plate an essential feature of the invention.
The present primary Judge referred to, and relied upon, Catnic, in my opinion correctly. It may be said of this case, by way of analogy, that the exact position of the sleeve was likewise not intended to be an essential feature of the SDS invention.
His Honour also, properly in my view, relied upon observations of Menzies J in CIG. There, the letters patent was for an invention relating to mixer tubes for use in gas burners, to reduce flashback. Menzies J said (at 167 – 168):
“[T]he defendants admitted infringement of letters patent 202348 up to the middle of 1966, but deny it thereafter. What I find happened is that the defendants, having simply copied articles of the plaintiff’s manufacture, upon receipt in the middle of 1966 of a letter from the plaintiff’s patent attorneys alleging infringement of letters patent 202348, consulted their own patent attorneys and thereafter modified their own manufacture by drilling the mixer tube to a very slightly concave, rather than a perfectly flat, base. In my judgment the modification so made did not prevent equipment manufactured and sold thereafter from constituting an infringement of the letters patent. Patent rights are not to be set at nought by such a subterfuge which I am satisfied added nothing to the equipment and was made merely in an attempt to take full advantage of the invention while avoiding infringement of the plaintiff’s letters patent by a modification so small as to be insignificant. I find that the base of the mixer chambers, which the defendants manufactured and sold after the middle of 1996, was so close to the plaintiff’s specification in that the degree of concavity was so slight that such manufacture and sale continued to amount to infringement.”
Of course, CIG was decided before Catnic, but takes a similar approach which, I think, is properly seen as analogous here.
In short, I am of the opinion that Azuko’s argument here very much depends upon satisfying the Court that the primary Judge failed to understand or apply the distinction, critical for infringement purposes, between essential and non-essential integers; yet when his Honour’s reasons are read as a whole, it emerges that there is really no warrant for the assertion. The application of the distinction was necessarily a matter of characterisation, and thus of judgment and degree, in which a comparative assessment had to be made of claim 1 of the SDS patent and the Premier tools by reference to their respective essential features. Plainly, in my opinion, his Honour undertook that assessment, and, aided by an expert opinion, concluded that those respective features were, in substance, identical, the only departure being “minor”, “trifling” and “of no mechanical significance”. That approach was, I think, sound in principle, and its application was justified as being in accord with expert testimony, which his Honour was entitled to use in reaching his conclusion.
It follows, in my opinion, that the appeal against the finding of infringement of claim 1 ought to be dismissed.
(b) Claims 2, 8, 13 and 14
It will be remembered that claim 2 has the following features:
¨a sacrificial transmission sleeve according to claim 1;
¨in which at least a length of the drill bit is provided with a plurality of longitudinal grooves forming exhaust air passages in sides of the drill bit;
¨wherein the flange encircles at least a portion of the length of the bit in such a manner as to form a continuous shroud to assist in the downward passage of the exhaust air to a cutting face of the bit.
It will also be recalled that his Honour here relied upon expert opinion evidence that the operating gap between the weight bearing surface of the Premier drive sub and the shoulder of the head of the bit would be very small; and not such that the combination of the gauge sleeve and drive sub would not perform the function of directing exhaust air into the longitudinal grooves of the bit proximate to the cutting face. His Honour further relied upon expert opinion evidence in concluding that the combination of Premier’s drive sub and gauge sleeve encircles a portion of the length of the bit so as to form a continuous shroud to assist in the downward passage of exhaust air into the longitudinal grooves in the side of the bit.
As I followed Azuko’s argument, it was submitted that this was not an area for technical expert evidence; rather, Azuko’s argument went, the expert had sought to trespass into purely legal areas, specifically the construction of the specification.
Clearly, any expert opinion could not be decisive of an interpretation issue.
I agree with Gyles J that the critical difference between the Premier Tool and claim 2 is the relationship between the annular flange of the transmission sleeve and the drive sub; and that the configuration and characteristics of the annular flange of the sleeve in the transmission of air are essential features. It follows, as Gyles J has explained, that in essential respects the function of the sleeve in the transmission of air is different, and that, accordingly, claims 2, 8, 13 and 14 were not infringed.
(c) Claims 3, 7 and 9
For the reasons given by Gyles J, since these claims relevantly depend upon claim 1 in essential respects, it must also follow that Azuko’s challenges in respect of claims 3, 7 and 9 should fail.
THE PRIMARY JUDGE’S FINDINGS AND CONCLUSIONS ON THE GIEHL INFRINGEMENT CLAIM
The abstract of these letters patent provides the following drawing and explanation:
(54) Title: percussive drilling arrangement
57 Abstract
The percussive drilling arrangement (1) uses compressed air to transport chips of material cut by a drill to the surface for collection. The drill head assembly (4) is characterised by a cover means (32, 33) limiting the length of air channels (10, 11) in the drill head assembly (4) exposed to the bore hole before the drill cutting face (13). The air is directed from the channels (10, 11) about the drill bit (5), across the cutting face (13) and into collection ducts (14, 15), picking up the material chips and carrying them to the surface.
It will be remembered that the Giehl patent concerns “an outermost cover acting as a shroud”. In the preferred embodiment depicted in the drawing of the Giehl patent, the outermost cover acting as a shroud is fitted in a similar position in relation to the drill bit as the transmission sleeve in the SDS patent. The specification says:
“In preference, the said cover means are part of a drill chuck sub adapted to affix to a drill stem. Alternatively, the said cover means are fixed about the said drill bit by a drill chuck sub adapted to affix to a drill stem. It will be appreciated that it is a minor matter to design the cover means to be separate but held in place by the drill chuck sub. However, the former is preferred.”
It was common ground that the expression “drill chuck sub” in the Giehl specification means a drive sub.
His Honour’s findings and conclusions were, in essence, as follows:
·It was not disputed by Azuko that the Premier tools incorporate the first five integers of claim 1, namely: (a) a drill bit assembly for in-the-hole hammer reverse circulation percussive drilling; (b) the use of air pressure to both drive the percussion hammer and to clear cuttings; (c) a bit having a plurality of outermost channels extending in a direction parallel to the axis of the bit down the outer side of the bit; (d) a collection duct or ducts passing through the bit with its collection opening or openings through the face of the bit; and (e) an outlet at the axially aligned opposite end of the bit. However, Azuko contended that the remaining integers are not present, that is: (f) an outermost cover acting as a shroud which is located to engage against, and extend around, the outer side of the drill bit; and (g) (which) form(s) with the channels conduits which are shaped and positioned so that air flow to clear the cuttings will be directed by reason of passage through one or more of the conduits directly at the periphery of the cutting face of the bit.
·Azuko argued that although the gauge sleeve of the Premier hammer was an “outermost cover”, it did not act as a “shroud” which was located to engage against and extend around the outer side of the drill bit, so as to form conduits with channels in the drill bit. But, for the reasons given by his Honour for rejecting similar submissions in relation to the SDS patent, the Premier gauge sleeve and drive sub, in combination, act to relevantly direct air, and answer the description of a “shroud” within the meaning of claim 1 of the Giehl patent. The “substantial idea” of the claim has been taken, and the design modification of the drive sub to “mask” the inner surface of the gauge sleeve, is “a mere subterfuge adopted in an attempt to take full advantage of the invention, while avoiding infringement of the letter of the claims”. As with the SDS patent, there is nothing in the wording of the claims which makes it clear that the relevant idea has been deliberately left outside the claim. Significantly, the invention claimed concerns the direction of air by means of a shroud, so that the air flow to clear the cuttings will be directly at the periphery of the cutting face of the bit. The invention is not concerned with a sacrificial sleeve which maintains a seal, whilst wearing down sympathetically with the gauge row of the drill bit. In the preferred embodiment, the subject of the drawings accompanying the specification, air is relevantly directed by the inner surface of the drive sub. That is exactly what occurs in the Premier tools.
·In the Giehl patent, there is no requirement, in either the claims or in the specification, that the cover acting as a shroud covers part of the drill bit below the weight-bearing shoulder of the bit. Part of the teaching in the specification is directed to the portion of the channels on the outside of the drill bit which are not covered. An alternative description of the invention on page 4 of the specification reads as follows (noting that the expression “drill head” in the specification describes the totality of the bottom assembly including the bit (or “drill”) and the drive sub):
“Alternatively the invention can be said to reside in a drill head that includes a plurality of channels each extending from the working face of the drill, the arrangement being characterised in that there is a cowl surrounding the drill head and shaped and adapted with the remainder of the drill head whereby each of the respective channels has its otherwise open side closed by the cowl to the extent that there is only a relatively short channel part which extends directly from the working face of the drill up the side of the drill head which is not so closed off.
It appears that the channels and the cover means of such an arrangement constrain the flow of air. Further, the air is strongly directed toward at the edge of the cutting face. Then the air flows to the collection ducts…” (emphasis added by his Honour)
·In his evidence, Joseph Purcell said that, in designing the Premier tools to avoid infringing the SDS patent –
“In basic terms, I brought the face of the bit closer to the drive sub, rather than extending the drive sub towards the face of the bit” (Exhibit 23).
·By this design, the Premier tools took and applied the substance of the invention as described above in the Giehl patent, and thereby infringed claims 1, 4 and 5.
AZUKO’S CHALLENGE TO HIS HONOUR’S FINDING OF INFRINGEMENT OF THE GIEHL PATENT
Azuko’s challenge is made essentially as follows:
qIn holding that claims 1, 4 and 5 of the Giehl patent were infringed, his Honour adopted here also his approach to the SDS infringement claim. As was submitted in relation to the SDS patent, that approach should not have been adopted. In particular, the submissions on the Premier gauge sleeve and drive sub acting “in combination” to direct air and on the “substance of the invention” are relied on.
qAgain, focus should be on the essential integers of the claims. In considering the Giehl claims, his Honour largely applies his reasoning, and the evidence, on the SDS patent. But this evidence is not relevant to the integers of the Giehl patent, except perhaps to support the general idea of “subterfuge”. Yet, if an essential integer is absent, no amount of subterfuge can restore it. There is no independent reasoning as to why integers (f) and (g) (see above) are present. The reference by his Honour to the design modification of the drive sub to “mask” the inner surface of the gauge sleeve is intended to reiterate what his Honour had earlier said in considering the claim of infringement of the SDS patent. But it is the Premier drive sub which acts as a cover or shroud. Nothing in the Giehl patent excludes this. In fact, it is described in the specification as the preferred embodiment (p 2, l 22 – 23) and Fig. 1 shows the drive sub acting as a cover or shroud. Gauge sleeves are irrelevant to the Giehl patent. So is their masking. However, in the Premier device cover, the drive sub is not an “outermost cover”. The compensating gauge sleeve is the outermost cover. Thus, the essential integer of “an outermost cover acting as a shroud”, i.e. integer (f), is absent.
qFurther, the channels of claim 1 extend “down the outer side of the bit”, that is, all the way to the periphery of the cutting face. This is what is meant in integer (c), and by integer (g).
qThis construction is made clear by the terms of the specification (p 2, ll 17 – 21; 29 – 32; p 3, l 5; p 4, ll 5 – 10; 12 – 16; p 5, ll 24 – 25 – see below); and by Fig. 3, which shows the arcuate profile of the channels extending all the way to the bottom.
(The Giehl specification states:
“[T]he air is constrained within the conduit shape defined by the respective channel[s] and the enclosing shroud and it is therefore caused to flow in strongly directed manner directly at the periphery of the cutting face of the bit and therefore over the periphery of the working face and thence across the face” [p 2 ll 17 – 21].
…
“[T]he … grooves being adapted to direct air from the … channels to the … collection duct or ducts, the … cutting face being concave, the channels being at least in part of a[r]cuate profile and adapted to direct air to the proximity of the cutting face” [p 2 ll 29 – 32].
…
“… a length of the … channels adjacent to the cutting face not covered by the cover means being less than 50% …” [p 3 ll 5 – 6].
…
“… [T]here is a cowl surrounding the drill head and shaped and adapted with the remainder of the drill head whereby each of the respective channels has it[s] otherwise open side closed by the cowl to the extent that there is only a relatively short channel part which extends directly from the working face of the drill up the side of the drill head which is not closed off” [p 4 ll 5 – 10].
“The flow of air from the channels can be improved by a smooth transition of the channels adjacent to the cutting face to the side of the drill head assembly. It was originally believed that the air flow would be directed by the drill bore from the channels and across the cutting face of the drill bit” [p 4 ll 12 – 16].
“Exhaust air from the reciprocating motor … flows into the drill chuck sub … through apertures at 9. The air flows through open channels … to the edge of the drill bit … “ [p 5 ll 24 – 25].)
Figure 3, a bottom view of the drilling face, is this drawing:
qAgain, his Honour holds here that infringement is a matter of function rather than essential integers. But claim 1 defines the relevant matter specifically as something achieved “by reason of passage through one or more of the conduits directly at the periphery of the cutting face of the bit”. Thus, essential integer (g) is absent.
qClaims 4 and 5 are not infringed for the same reasons. Omnibus claim 4 is narrower than claim 1.
qClaim 5 is dependent on either claim 1 or 4 and is, accordingly, not infringed.
CONCLUSION ON THE APPEAL FROM THE FINDING OF INFRINGEMENT OF THE GIEHL PATENT
It will be convenient to consider claim 1 first.
Claim 1
In order to place the submissions on the appeal in their context, reference should be made to all of the relevant language of the specification in its sequence as follows (commencing with an extract from the opening paragraph):
“Air exhausted from the motor is directed to the bore hole from the side of the drill head. From there the air flows cross the drill cutting face into collection ducts …” [p 1 ll 6 – 8].
“The invention may be said to reside [as stated in claim 1] in a drill bit assembly … the bit having a plurality of outermost channels …, and an outermost cover acting as a shroud which is located against and extend[s] around the outer side of drill bit and form[s] with the channels conduits which are shaped and positioned so that the air flow to clear the cuttings will be directed by reason of passage through one or more of the conduits directly at the periphery of the cutting face of the bit for subsequent passage across the face of the bit and such that substantially all of such directed air will flow through [the] collection … openings to the collection … ducts” [p 2 ll 1 – 16].
“[T]he air is constrained within the conduit shape defined by the respective channel[s] and the enclosing shroud and it is therefore caused to flow in strongly directed manner directly at the cutting face of the bit and thereby over the periphery of the working face and thence across the face” [p 2 ll 17 – 21].
“In preference, the said cover means are part of a drill chuck sub adapted to affix to a drill stem. Alternatively, the … cover means are fixed about the … drill bit by a drill chuck sub adapted to affix to a drill stem. It will be appreciated that it is a minor matter to design the cover means to be separate but held in place by the drill chuck sub. However, the former is preferred” [p 2 ll 22 – 5].
“Preferably the drill head assembly includes interlocking means, e.g. splines adapted to prevent rotation of the cover means being substantially tubular …, a length of the … channels adjacent to the cutting face not covered by the cover means being less than 50% and preferably approximately 30% of the circumference of the … cutting face. It is desirable to reduce air flow up the bore hole. With the maximum diameter of the cover means being slightly smaller than the maximum diameter of the cutting face this can be done” [p 3 ll 1 – 11].
“Also, if without undue restriction on the air flow through the channels the length of the uncovered channels is minimised the air flow across the cutting face is maximised. This length has been found to be about 30% of the diameter of the cutting face …” [p 3 ll 12 – 15].
“Alternatively the invention can be said to reside in a method of drilling which comprises the step of using a drill bit assembly …, the bit having at least one outermost channel extending in direction down the outer side of the bit, an outer shroud engaging against the outer side of the drill bit and extending in this way along the channel so as to confine the air and by reason of the shape and arrangement of the conduit thereby formed constraining the direction of air flow …” [p 3 ll 17 – 25].
“Alternatively the invention can be said to reside in a drill head that includes a plurality of channels each extending from the working face of the drill, … [with] … a cowl surrounding the drill head whereby each of the respective channels has [its] otherwise open side closed by the cowl to the extent that there is only a relatively short channel part which extends directly from the working face of the drill up the side the drill head which is not so closed off” [p 4 ll 1 – 9].
“It appears that the channels and the cover means of such an arrangement constrain the flow of air” [p 4 ll 10 – 11].
”The drill chuck sub … slides over the drill bit … to a position limited by the bearing surfaces … of the drill chuck sub … and of the drill bit …. Interlocking means are formed between the drill bit … and drill chuck sub … by splines … [which] prevent rotation of the … bit … relative to the … sub. The … sub … includes a covering means, cowl, shroud or skirt … to cover the channels [p 6 ll 10 – 16].
“[T]he long tubular shape of the conduit … formed [by the arrangement] … causes air to be directed in such a way that, even considering the large volume and velocity of air that will result … there will still be a concentrated blast of air aimed directly at the periphery of the drill bit” [p 6 ll 23 – 27].
“A feature of the arrangement of the embodiment then is that the distance between the end of the cover or shroud and the periphery of the drill bit is not excessive and is relatively short being not much more than the depth of the main channel part. This causes a concentrated controlling and funnelling of air which has been found to provide the best advantage of the arrangement” [p 7 ll 1 – 5].
It will be recalled that it was accepted by Azuko that its assembly incorporated some of the essential features of claim 1 as follows:
·a drill bit assembly;
·which uses air pressure;
·where the bit has a plurality of outermost channels extending in a direction parallel to the axis of the bit down the outer side of the bit;
·with collection ducts passing through the bit with its collection openings through the face of the bit; and
·with an outlet at the axially aligned opposite end of the bit.
But, as has been noted, Azuko disputed that its assembly incorporates the following essential features of this claim:
“[A]n outermost cover acting as a shroud which is located to engage against and extend around the outer side of the drill bit and form with the channels conduits which are shaped and positioned so that air flow to clear the cuttings will be directed … directly at the periphery of the cutting face of the bit ….”
I agree with his Honour’s observation that this aspect raises issues that are, in substance, the same as those raised in Azuko’s main defence to the SDS infringement claim; that is, Azuko argues that its gauge sleeve, the “outermost cover”, does not act as the relevant “shroud”; rather, the argument runs, it is its drive sub which is the “shroud”, but it is not the “outermost cover”.
In my opinion, it was legitimate in the present context and in accord with principle, for the primary Judge to rely upon expert opinion evidence that Premier’s gauge sleeve and drive sub “in combination act to relevantly direct air and answer the description of a shroud within the meaning of claim 1 …”; that the “substantial idea” of claim 1 had been “taken”; and that the design modification of the drive sub to mask the inner surface of the sleeve” is a mere subterfuge adopted in an attempt to take full advantage of the invention, while avoiding infringement of the letter of the claims”.
I further agree with his Honour’s characterisation of the Giehl invention as “concern[ing] the direction of air by means of a shroud so that the air flow to clear the cuttings will be directly at the periphery of the cutting face of the bit”; and as “not concerned with a sacrificial sleeve which maintains a seal whilst wearing down sympathetically with the … bit”. As the primary Judge noted, in the preferred embodiment (as indicated in Fig. 1, above), air is relevantly directed by the inner surface of the drive sub, and this is what occurs in the case of the Premier tools. I agree with Digger’s submission that the Premier’s drive sub answers the description of a “shroud” within claim 1; and that it is artificial to say that the drive sub can cease to be characterised as a “shroud” because a sleeve is added outside it. Moreover, as counsel for Digger has pointed out, the inventor specially contemplated (p 2 ll 22 – 26, above) that the outer cover can comprise a drive sub and a separate cover means.
It follows, in my view, that this aspect of the appeal should fail.
Claims 4 and 5
As I followed Azuko’s argument, these need not be separately addressed, since Azuko accepted that the fate of this aspect of its appeal depends upon the outcome of its challenge in respect of the holding of infringement of claim 1.
I turn next to the appeal from the dismissal of the cross-claim for revocation of the patents in suit.
REVOCATION ISSUES
(a) Alleged anticipation
Subject to the following qualification, I agree with Heerey J that the primary Judge did not err in his approach and conclusion on the question whether the SDS or Giehl patents had been anticipated by the Bakerdrill, Bulroc, Samplex or Klemm devices. The qualification is this. In respect of the Bakerdrill device, I agree with Heerey J that its gauge sleeve does not extend below the drive sub and has no function in directing exhaust air; and that this was a valid point of distinction here. However, as will have been seen, I cannot, with respect, agree with Heerey J’s further observation that this was in truth the converse of Azuko’s position on infringement.
(b) Alleged prior secret use
I agree with Gyles J that there was here no relevant “use” within the meaning of s 18(1)(d). Accordingly, I need not consider whether s 9(a) or (b) might apply.
COSTS
Since the respondents have succeeded on most of the issues on the appeal, it is appropriate (a) not to disturb his Honour’s award to the respondent of its costs of the trial; and (b) to order that the appellants pay the respondent’s costs of the appeal.
PROPOSED ORDERS
Accordingly, I propose the following orders:
1. Appeal allowed in part.
2.Set aside that part of the orders made at first instance as declared that claims 2, 8, 13 and 14 of the SDS Patent were infringed and enjoined that infringement.
3.Appeal otherwise dismissed.
4.Order that the appellants pay the respondent’s costs of the appeal.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont. Associate:
Dated: 8 August 2001
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SG 70 OF 2000
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
AZUKO PTY LTD
AND
SEISMIC SUPPLY INTERNATIONAL PTY LTD
APPELLANTSAND:
OLD DIGGER PTY LTD (formerly SDS DIGGER TOOLS PTY LTD)
RESPONDENT
JUDGES:
BEAUMONT, HEEREY & GYLES JJ
DATE:
8 AUGUST 2001
PLACE:
SYDNEY
REASONS FOR JUDGMENT
HEEREY J:
The facts of this matter, the relevant statutory provisions, the reasons of the primary judge and the arguments of the parties on appeal are set out in the reasons for judgment of Beaumont J. I shall not repeat them, except to the extent necessary to explain the reasons for the conclusions I have reached.
I INFRINGEMENT OF THE SDS PATENT
From a technical and functional point of view, it may be accepted (as found by a trial judge) that the downwards extension of the Premier Tool drive sub is a trifling variation of no mechanical significance. However, the relationship between the sleeve, the drive sub and the drill bit in the relevant claims, and the function of the sleeve in relation to the transmission of air is quite different to that in the Premier Tool. The fact that the claims could have been drafted differently to arrive at the same functional result would, no doubt, be true of many patent claims. Once the feature missing is seen to be defining or essential, a difference such as there is here cannot be regarded as inessential. In my opinion, these claims are not infringed as there is an essential integer missing.
The issue is more difficult in relation to Claim 1. This claim does not contain any express statement as to the physical relationship between the sleeve and the drill bit retaining means (or drive sub). The only physical relationship between the transmission sleeve and the drill bit described is that the sleeve is “located near an end of the down hole hammer proximate the drill bit”, that the flange has a “diameter substantially the same as the drill bit” and that the flange extends from the body of the sleeve towards the drill bit. The drill bit retaining means (drive sub) is held in the outer sleeve, not the transmission sleeve. The drill bit is retained in the retaining means (drive sub), not the transmission sleeve.
As submitted by counsel for the respondent, there is no express requirement that the flange of the sleeve extend below the drive sub, or that the flange of the sleeve be adjacent to any part of the drill bit without the interposition of the drive sub, which amounts to the same thing so far as is relevant here. Is this to be implied? I do not think that the requirement that the flange extend from the body “towards” the drill bit gives rise to such an implication. That statement says nothing about the relationship between the sleeve and the lower extremity of the drive sub. Indeed, nothing is said as to the configuration of the flange of the sleeve apart from extension towards the drill bit. The only possible source for the implication is the description “transmission” sleeve. Although it does not follow from the words of the claim, it was accepted below that this referred to the transmission of air, presumably because “transmission” was an ambiguity which might be cleared up by resort to the body of the specification. The fact remains that that feature is not described or referred to in Claim 1 and no means are described to achieve it (by contrast with Claim 2). In my view, the description of the sleeve as a transmission sleeve does not amount to an integer of the claim. If the flange of the sleeve, extending towards the drill bit, also extends below the drive sub (as would be consistent with the claim), then it would, no doubt, play a part in the transmission of air. In this sense, the sleeve as claimed is adapted to or suitable for playing a part in the transmission of air. However, I do not read Claim 1 as limited to such use.
Claim 1 is only for a sleeve, with certain described characteristics, when used with a type of hammer which includes (but is not only comprised of) certain nominated parts. Provided that a sleeve with those characteristics is used with a hammer of the relevant type, containing at least all of the nominated parts, then the claim is infringed. As I have said, such a sleeve may be adapted for use as a “transmission” sleeve when used with this type of hammer. Whether the alleged infringer chooses to use the sleeve in that way will not determine infringement. The express focus of this claim is on the sacrificial aspect of the sleeve rather than (as in Claim 2) on the means of assisting in the downward passage of air to the cutting face of the drill bit.
However, if, contrary to my opinion, the description “transmission” does amount to an integer of Claim 1, then I agree with the manner in which the trial judge dealt with the issue. The stratagem of so disposing other parts of the hammer as to avoid air striking the inner surface of the sleeve, whilst preserving the functional characteristics of the sleeve as to the transmission of air, may be ignored in accordance with the authorities discussed by the trial judge and Beaumont J. It is little different in principle from applying a thin veneer of plastic over the inner surface of the sleeve, and contending that the downward air strikes the plastic not the sleeve. If the capacity to transmit air be a feature of the sleeve claimed by this claim, then that feature is present in the sleeve as such which is utilised in the Premier Tool, although that feature of the sleeve is not availed of in that design of hammer. The same could not have been said if, for example, the sleeve were utilised in a fashion which did not involve the sleeve in wearing, and wearing at a similar rate to the drill bit, as the wear characteristics of the invention are expressly claimed, and in absence of this integer there would be no infringement.
I thus conclude that there is no missing integer. I agree with Beaumont J that the finding of infringement of Claim 1 should not be disturbed. It follows that the finding of infringement of Claim 3 is correct insofar as it is dependent upon Claim 1, as the integer additional to those in Claim 1 is also found in the Premier Tool. It also follows that the findings of infringement of Claims 7 and 9 are correct. The location of the sleeve in the hammer in Claim 7 is the only feature added to that which is envisaged by Claim 1, and that feature is found in the Premier Tool. The particular means identified in Claim 9 is also found in the Premier Tool.
infringement of giehl patent
The critical issue is whether, as submitted by the appellants, the presence of the outer sleeve on the Premier Tool means that the shroud constituted by the drive sub is not “outermost” as required by the Giehl claims. The other matters argued are various aspects of this. In my opinion, there are two answers to this submission.
The first is that, in all respects relevant to this patent, the sleeve and the drive sub operate jointly and together, or, indeed, as one. The sacrificial aspects of the sleeve are irrelevant to the Giehl patent. The fact that the sleeve is adjacent to the drive sub, but that they are not integral to each other, does not affect operation as a shroud in the sense involved here. Thus, taken together, they are “outermost”. The second (which is perhaps a variation on the first) is that adding an integer which is functionally irrelevant to the claims in the patent, which has the effect that the shroud ceases to be “outermost”, can be ignored in assessing infringement. This is not a case in which the claim prohibits or excludes the addition of other features such as, in this case, a sacrificial layer. Put another way, the device claimed need not be comprised only of the features identified. It is claimed in the body of the specification that the solution proposed to the problem identified was a relationship between the drill bit and the drive sub creating the particular air channels the operation of which form the essence of the invention. This is present in the Premier Tool.
In short, counsel for the respondent was correct in submitting that it is artificial to say that the drive sub ceases to be a shroud within the meaning of the claims simply because a sleeve is added outside it. It is in relation to this kind of question that effect can, and should, be given to what is called purposive construction in accordance with the authorities discussed by the trial judge and Beaumont J. I would not disturb the judgment of the trial judge that the Premier Tool infringed Claims 1, 4 and 5 of the Giehl patent.
secret use – giehl INVENTION
It is worth recalling how this point arises. The Particulars of Objection which supported the cross-claim for revocation had alleged, in par 2, eight claims of prior use of the invention by various parties, including the inventor, Mr Giehl. Paragraph 5 (and the heading preceding it) were as follows:
“Secret Use
5.If the uses referred to in paragraph 2 above or any of them were secret uses (which is denied) the respondents will alternatively contend that the invention so far as claimed in the claims of the Giehl Patent was thereby secretly used in Australia before the priority date of the Giehl Patent.”
In circumstances to be explained, two amendments were made to the particulars of use in par 2 during the course of the hearing, the second of which was as follows:
“(10) Prior Use by Werner Giehl
The invention of the Giehl Patent was used before the priority date of all the claims of the Giehl Patent by Werner Giehl, by(a)the manufacture of circulation hammers in accordance with the claims of the Giehl patent in Adelaide in about March 1990 for the purpose of sale by Mr Giehl (see Mr Giehl’s evidence on 15 July 1999); and/or
(b)the placing of an order to purchase five or six of those hammers placed by Peter Gaden of Gaden Drilling made orally to Mr Giehl in Darwin in about March 1990 (see Mr Giehl’s evidence on 15 July 1999).”
Paragraph 3A was also added in the following terms:
“3A. Secret Use by Werner Giehl
The invention of the Giehl Patent was secretly used before the priority date of all the claims of the Giehl Patent by or with the authority of the patentee or its predecessor in title being a use by Werner Giehl, by(a)the manufacture of circulation hammers in accordance with the claims of the Giehl patent in Adelaide in about March 1990 for the purpose of sale by Mr Giehl (see Mr Giehl’s evidence on 15 July 1999); and/or
(b)the placing of an order to purchase five or six of those hammers placed by Peter Gaden of Gaden Drilling made orally to Mr Giehl in Darwin in about March 1990 (see Mr Giehl’s evidence on 15 July 1999).”
Relevant defences to the cross-claim were pleaded as follows:
“A.None of the said events as alleged constituted relevant prior uses such as to make the Giehl patent not novel pursuant to Section 100(1)(g) of the Patents Act 1952 as at its priority date of 19 April 1990 in that:
(a)None of the said events was a prior use as that expression is known to the patent law of Australia.
(b)None of the said events constituted any publication alternatively making available to the public in Australia before 19 April 1990 the invention the subject of the Giehl patent; and/or
(c)None of the said events made available to the public in Australia each and all of the features of the invention claimed in the Giehl patent.
Particulars
…
(d)Werner Giehl (Adelaide) – March 1990
The alleged prior use by Werner Giehl of a prototype reverse circulation percussive hammer owned by Werner Giehl was in confidence and not in public and there was no relevant publication or use of the hammer by Werner Giehl.
(e)Werner Giehl/Gaden Drilling (NT) – March 1990
The alleged prior use arose in circumstances of trials and experiments by Werner Giehl and Gaden Drilling on his behalf of a reverse circulation percussive hammer owned by Werner Giehl in circumstances where the trials and experiments were by Gaden Drilling and the nature of the trials and experiments was such as to impose upon Gaden Drilling an equitable obligation of confidence.
B.None of the said events was such as to make the apparatus relevantly known to the public in Australia so as to make the invention obvious and not involving an inventive step pursuant to Section 100(1)(e) of the Patents Act 1952 as at its priority date of 19 April 1990 in that:
(a)None of the said events was a prior use as that expression is known to the patent law of Australia.
(b)None of the said uses constituted any publication alternatively making available to the public in Australia before 19 April 1990 the invention the subject of the Giehl patent; and/or
(c)None of the said events made available to the public in Australia each and all of the features of the invention claimed in the Giehl patent.
Particulars
The Particulars at paragraph 9A(a) to (e) are referred to and repeated.
10.Further or in the alternative to paragraph 9 hereof, if by reason of Section 234(2) and (5) of the Patents Act 1990 and Regulation 23.26 made pursuant thereto the Patents Act 1990 applies to the Respondents’ cross-claim in the proceeding to the extent that the Patents Act 1990 does not contain an equivalent ground of revocation to one found in the Patents Act 1952 then the Applicant says that by reason of the definition of “prior art base” in the Patents Act 1990, the Respondents are precluded from relying upon the alleged prior uses set out in the Particulars of Prior User set out at paragraph 9 hereof so far as the same allege invalidity of the Giehl Patent on the grounds of:
(i)lack of novelty
(ii)lack of inventive step
in that the said events constituting the alleged prior uses relevantly did not constitute the making of information publicly available through doing a relevant act in the patent area.
Particulars
(a)The particulars referred to at sub-paragraphs (a) to (e) at paragraph 9A hereof are referred to and repeated.
(b)In any event if as alleged by the Respondents the alleged prior use by Werner Giehl or Gaden Drilling was a secret use by Werner Giehl who is the predecessor of the patentee of the Giehl Patent then the Applicant relies on Section 18(1)(d) of the Patents Act 1990.
11.Further or in the alternative to paragraph 9 hereof if, by reason of Section 234(2) and (5) of the Patents Act 1990 and Regulation 23.26 made pursuant thereto, the Patents Act 1952 continues to apply to the Respondents’ cross-claim in the proceeding then the Applicant says that:
…
11.4Werner Giehl – Adelaide (March 1990)
(a)If any such alleged prior use was a secret use by Werner Giehl as alleged by the Respondents (which prior use is denied) then by reason of Section 100(2) of the Patents Act 1952 the Respondents are precluded from relying on the provisions of Section 100(1)(e) or (g) of the Patents Act 1952 in respect of any such prior use of the invention the subject of the Giehl patent by Werner Giehl in Adelaide in March 1990 as alleged by the Respondents at paragraph 2(b((10) and 3A of the last amended particulars of objection to the SDS patent of July 1999.
Particulars
The particulars at sub-paragraph 9A(d) are referred to and repeated.
(b)By reason of Section 100(3)(a) of the Patents Act 1952, the Respondents are precluded from relying on the provisions of Section 100(1)(l) of the Patents Act 1952 in respect of the said use in that the said use was for the purpose of reasonable trial and experiment only.
Particulars
The applicant refers to and repeats the particulars at sub-paragraph 11.4(a).
11.5Werner Giehl and Gaden Drilling (March 1990)
(a)If any such alleged prior use was a secret use as alleged by the Respondents (which prior use is denied) then by reason of Section 100(2) of the Patents Act 1952 the Respondents are precluded from relying on the provisions of Section 100(1)(e) or (g) of the Patents Act 1952 in respect of any such prior use of the invention the subject of the Giehl patent by Werner Giehl and Gaden Drilling (March 1990) as alleged by the Respondents at paragraph 2(b)(10) and 3A of the last amended particulars of objection to the SDS patent of July 1999.
Particulars
The applicant refers to and repeats the Particulars at sub-paragraph 9.5(e).
(b)By reason of Section 100(3)(a) of the Patents Act 1952, the Respondents are precluded from relying on the provisions of Section 100(1)(l) of the Patents Act 1952 in respect of the said use in that the said use was for the purpose of reasonable trial and experiment only.
Particulars
The applicant refers to and repeats the particulars at sub-paragraph 11.5(a).
12.Further and in any event, by reason of Section 158(1)(h) of the Patents Act 1952, the Respondents are precluded from relying on any use by Werner Giehl/Gaden Drilling in March 1990 in that:
(i)the alleged prior use was by Werner Giehl and Gaden Drilling on his behalf for the purposes of reasonable trial only.
(ii)It was reasonably necessary having regard to the nature of the invention that such use should have been in public (which public use in any event is denied).
(iii)The use was in March 1990 and was within one year of the date of application of the Giehl patent on 19 April 1990.”
A statement by Mr Giehl made in January 1999 dealt extensively, and chronologically, with the development of the invention through three prototypes. The third prototype was dealt with in pars 35 to 46 of the statement, which trace the history of dealings between Mr Giehl and Mr Peter Gaden of Gaden Drilling in the Northern Territory. The background is explained in the following extract:
35.… Once a prototype has been designed it must be tested in the field. In choosing where to test the third prototype it was necessary for me to have access to reverse circulation drill rigs. As the design of the third prototype developed, I was aware of the need to keep my design confidential. I decided to approach a Mr Peter Gaden of Gaden Drilling in the Northern Territory. Mr Gaden had been a friend of mine for 15 to 20 years and I was sure that he would allow me to test the third prototype at drill sites at which his company was working from time to time, such drill sites being situated around the town of Bachelor which is about 80kms south of Darwin. I rang Mr Gaden and he was more than happy to make his drilling rigs available for me to use for confidential testing. Although it meant that I would incur travelling costs of going to Darwin to test the third prototype, it was important to me to do the testing on sites where I knew that the tests could be conducted in private. Unlike at Kambalda in 1985 and Condoblin in 1987, I had no desire to invite third parties to any testing of the third prototype as the testing was required so that I could further develop and refine the design of the third prototype. It is common when testing a prototype for the refinement of the design of the prototype to take place over a long period. I envisaged that further modifications would be required over a period of time once as and when testing took place and performance results had been assessed. In this case because testing was taking place in the Northern Territory, the period over which the third prototype was developed to its final stage took longer than it would have had I been able to perform tests in Adelaide. Between mid to late 1998 and about March 1990, I travelled to the Northern Territory approximately ten times to test the developing third prototype. These trips cost me about $15,000.00 in air fares.”
The final stages were described as follows:
“44.When in Darwin in or about March 1990 towards the end of the period of testing of the third prototype, I recall that a Drillquip reverse circulation hammer on the market at that time was in use on site. The drillquip hammer did not have a cover. The Drillquip hammer, when operated, produced the normal quantities of dust and dirt and small samples rising to the surface up the side of the hole being drilled. I witnessed from several miles away dust shooting into the air. It was at that time that Mr Gaden suggested to me that I should seek legal protection for the cover I had designed. I agreed with him.
45.On my return to Adelaide in or about March 1990, I manufactured several more hammers in accordance with the design of the final version of the third prototype which included the cover. I maintained the design feature of engaging the cover with the drive-sub by welding. It was not until about 4 or 5 years later that I designed the cover as a separate component which fitted (without welding) over the drive-sub and extended down over the sides of the drill bit.
46.Before attempting to trial in public or sell any of the hammers I had manufactured, I sought legal advice from Adelaide patent attorney Mr Howard Schultz of Collison & Co in relation to seeking patent protection for the cover I had designed. Mr Schultz advised me that he would prepare a provisional application for lodging at the Australian Patents Office. This provisional application was filed on 19 April 1990. … The said application details a drawing of the third prototype. I recall that after lodging the Giehl patent application, Mr Gaden placed an order for about 6 of the third prototype hammers with cover.”
During the evidence of Mr Giehl on 15 July 1999, the cross examination occurred which is set out in the judgment of the trial judge as follows:
“Yes?---I knew Mr Gaden for 20 years and I would have done business with him for 20 years.
That’s right, and when you went up to Darwin in connection with the events that you describe regarding the third prototype in your statement, was that in connection with the supply of equipment to him?---No, that was already to – the hammer, what he had there.
But I suggest to you you had other business reasons for going up to see him as well as testing the hammer?---No, it was at that time for testing. We only went up for testing. The business, what we did, he done with the fax and talk to my people at the office. So didn’t – we just brought that up in between driving.
I see, but during this period he did order other equipment from you?---Yes.
Which you supplied?---Yes, lots of it.
And he was in the habit of ordering equipment from you?---Yes.
I suppose you regarded him as a good potential customer for when your hammer was ready for the market?---He was.
He was?---Yes.
When you were up there developing the hammer, as you say in your statement, you discussed with him I suppose supplying the hammer to him?---Yes.
Did he say he wanted to order some?---He did.
Was that while you were up there testing it?---No, the ordering came in afterwards, once we had tested them, and we only had the one hammer there. We had to run it, we had to bring it back, then we made the second one up. I had to bring it back – like, the same identical hammers, one up, one down, one up, one down.
But while this was happening he must have said to you things like, ‘Well, if this works I’ll want to buy some’?---That’s right, yes.
So you knew he was a potential customer if you’d got a product that
worked?---He always was a good customer.…
And then in [your witness statement] you say, ‘On my return to Adelaide in about March 1990 I manufactured several more hammers in accordance with the design of the final version of the third prototype’ - - -?---That’s right.‘… which included the cover.’ Is that right?---That’s correct.
Now, that was after you’d done all the testing and the third prototype, so far as you were concerned, was working?---That’s right.
The hammers you manufactured there, you manufactured for sale?---Afterwards, yes.
When you returned to Adelaide in about March 1990?---It was still a bit later.
Well, you see, you say there in [your witness statement], ‘On my return to Adelaide in about March 1990 I manufactured several more hammers in accordance with the design of the final version of the third prototype’?---That’s correct.
Do you see that?---That’s correct.
That was immediately on your return to Adelaide?---Can I say something?
Well, was it immediately on your return to Adelaide?---It was immediately, yes.
You manufactured several hammers?---Lots of them.
Yes. And so far as you were concerned, the hammers you manufactured were ready to work?---That’s right.
But you didn’t sell any of them?---Until later.
Until later. You didn’t sell any of them until Mr Schulze had filed the provisional application of 19 April 1990?---That’s correct.
How many of the hammers you manufactured did you have in stock on 19 April 1990?---I would have had about 15 or 20.
15 or 20?---Yes.
They were manufactured and it was your intention to sell them?---That’s correct.
You knew that Mr Gaden was likely to buy one or more?---He already ordered at that time five or six.
What, he gave you that order then you were up in Darwin?---When we were there, yes. He said, ‘Make us some hammers up and let us know afterwards.’”
That evidence led to an application by the respondent to amend on the following day, in the course of which counsel for the respondent said that in support of the relevant amendment he did not seek to go beyond Mr Giehl’s evidence given the previous day in cross-examination and that in Mr Giehl’s statement. It was put that the necessity for the amendment only came about after the evidence which had been given on the previous day. On that basis, there was no objection to the amendment by the applicant.
The findings of primary fact by the judge were:
(1)That orders were placed by Mr Gaden and received by Mr Giehl prior to 19 April 1990;
(2)At least some of the fifteen or twenty hammers were manufactured after the order was received and before 19 April 1990;
(3)The order from Mr Gaden was unsolicited;
(4)The order received from Mr Gaden was not accepted by Mr Giehl before the priority date;
(5)Mr Giehl did not place his invention on public display or seek to solicit orders from the public before the priority date.
Although there is no specific finding, there does not seem to be any doubt on the evidence of Mr Giehl that he intended to sell such of the hammers as had been manufactured by 19 April 1990 once patent protection had been obtained and he regarded himself as free to safely do so. There was no finding that the hammers were manufactured to fulfil the unsolicited and unaccepted order. There was, and could be, no finding that Mr Gaden acquired any rights or that Mr Giehl undertook any obligations in relation to the manufactured hammers. The net result is that the factual allegations in pars 2(10) and 3A of the Particulars of Objection are established, with the immaterial difference that the order may not have been placed in Darwin.
For relevant purposes the Patents Act 1990 (Cth) (“the 1990 Act”) provides that:
(1)public use of an invention by anyone prior to the priority date of a patent destroys novelty and is a ground of revocation;
(2)“secret use” of an invention prior to the priority date of a patent by or on behalf of the patentee is a ground of revocation except for certain uses, including use for the purpose of reasonable trial or experiment only, and use occurring solely in the course of a confidential disclosure of the invention by or on behalf of the patentee.
(This follows from ss 138(3)(b), 18(1)(b) and (d), 9(a) (b) and (c), 7(1) and the definition of “prior art base” in Schedule 1 of the 1990 Act.)
The pleadings raise issues of both “use” as anticipation and “secret use”. The trial judge sensibly looked at them together. The first issue on the pleadings is whether the acts in question are “use” under either limb: public or secret.
In my opinion, the trial judge was plainly right to reject the argument reflected in pars 2(10)(b) and 3A(b) of the particulars of objection, namely, that the receipt of an unsolicited order from the person who had been involved in testing of the prototype was use by Mr Giehl of the invention in any sense. It did not involve Mr Giehl in any relevant activity at all. There is no challenge to this finding.
The question left is as to the significance of the facts alleged in pars 2(10)(a) and 3A(a) of the Particulars of Objection which amount to manufacture simpliciter but with a view to eventual sale after application was made for the patent. There was, and could be, no finding that the appellants had proved that what was done was public. The evidence does not disclose any third party being involved in the manufacture. Even if employees were involved, it could be assumed that they would be bound by confidence. It can also be taken that, leaving aside consideration of uses within s 9 of the 1990 Act, what was done was intended to be, and was, secret, in the sense of being confidential. Indeed, it is plain enough that Mr Giehl had received advice as to patent law and practice and was concerned to ensure that there was no public disclosure before the priority date.
Counsel for both parties have made comprehensive written and oral submissions as to whether what occurred was “use” of the invention. Having considered these submissions, I have come to the conclusion that making the items in question was not “use” of the invention for relevant purposes. In my opinion, this follows from an understanding of the principle involved.
The trial judge drew attention to the relevant historical basis for the secret use ground of revocation, namely, to prevent a patentee from gaining a longer monopoly than the statutory period by enjoying a period of de facto monopoly through the secret use before the priority date, without meeting the corresponding obligation attaching to such a monopoly, namely, the public disclosure of the invention. This can be traced back (at least) to the informative case of Morgan v Seaward (1837) 2 M & W 544, 150 ER 874 (“Seaward”), where Parke B said (at 559):
“… if the inventor could sell his invention, keeping the secret to himself, and, when it was likely to be discovered by another, take out a patent, he might have, practically, a monopoly for a much longer period than fourteen years.”
In Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 (“Bristol-Myers”) Lord Diplock said (at 680-681):
“… For the other mischief against which that statute was directed was that even monopolies of new manufactures should not extend beyond 14 years. If the inventor had already reaped commercial benefit from a de facto monopoly in his discovery owing to his concealment from all other traders of the way in which the new substance could be made, he was not to be permitted to prolong his monopoly for an additional 14 years. So “public use” in the sense of commercial dealing in a product claimed as an invention, by any trader even though it were by the inventor himself, rendered invalid any patent for the product claimed.
In the case of use by traders, at any rate, the expression “public use” was not employed to mark the contrast between public and secret use but to distinguish commercial from experimental use in the course of discovering, perfecting and trying out the invention so as to test its suitability for commercial use. As the expression “manufactures” in the Statute of Monopolies indicates, it was the commercial usefulness of the new inventions that provided the reason for encouraging them by grants of temporary monopolies to their inventors, and this object of the statute would be defeated if mere experimental uses of this kind either by the applicant for the patent or by others who had worked privily on the same discovery were to be a bar to the grant of a patent to him who first publicly disclosed the way in which the invention could be carried out.” (emphasis added)
This passage suggests a practical test: has what occurred amounted to a de facto extension of the patent term? The answer to this will usually depend upon whether the patentee reaped commercial benefit from what was done before the priority date. In the present case, in my opinion, there has been no de facto extension of the term of the patent by making the articles in question.
This rationale for secret use invalidating a patent should not be confused with another historical basis for invalidity explained by Lord Diplock in Bristol-Myers (at 680):
“So in construing the words “used” and “use” in the context in which they appear in both sections 14 and 32 of the Patents Act 1949, it is legitimate to consider the sense in which they were employed by the judges before the passing of the Act of 1932 in cases dealing with prior use as a ground for revocation of a patent or as a defence to an action for infringement. In those cases they were construing the word “use” in the phrase: “such manufactures which others at the time of making such letters patent and grants shall not use” appearing in section 6 of the Statute of Monopolies itself, and thus in the light of the mischief against which that statute had been directed.
From earliest times it has been taken for granted that by that phrase it was intended to declare unlawful the grant of any patent which would put it into the power of the grantee to prevent any other trader from doing whatever he had done before in the course of his trade. In the earlier cases one often finds the prior use by others which rendered a patent invalid described as “public use”; but where the invention claimed was a new product it was never doubted that any dealing with that product by way of trade, whether by buying it or selling it with a view to profit or making it for the purposes of sale, constituted such “public use”.”
The two bases come together when a patentee deals with a product of the invention by way of trade (see, for example, Hudson Scott & Sons Ltd v Barringer Wallis & Manners Ltd (1906) 23 RPC 79 (“Hudson Scott”) ). Such use would normally be public, not secret.
The test of illegitimate extension of the patent term yields satisfactory results in differing circumstances. If the invention is a process or method, to secretly use the process or method to make goods for sale can readily be seen as a secret commercial use of the invention which would extend the patent if done prior to the priority date. Another example of secret commercial use of that character is if the product which is manufactured according to a product claim is then secretly used as part of a manufacturing process to make other goods before the priority date. Another example would be the use of a device made according to the SDS patent as part of a drill rig engaged in commercial drilling, but in conditions of secrecy, prior to the priority date. To make an article for ultimate sale has, no doubt, a commercial aspect, but it does not amount to use of the product made and does not involve any de facto extension of the term of a patent claiming the product. The manufacturing of goods is not, in my opinion, commercial use of those goods.
No decision was cited by the appellants to illustrate any like situation being held to be use by a patentee, secretly or otherwise, destructive of validity. The trial judge correctly distinguished Re Wheatley’s Patent Application (1984) 2 IPR 450 and referred to the decision of Kekewich J in HudsonScott (which might be seen as the high water mark of use). To accept the respondent’s submission would be contrary to the tendency of Seaward and Betts v Menzies (1859) 1 El & El 990, 120 ER 1181 (at 1007, 1011, 1013-1014, 1017-1018) (unaffected as to this point by the appeal reported at (1862) 10 HLC 118, 11 ER 970). In one of the seminal patent cases, Bramah v Hardcastle (1789) Holroyd 81 (1602-1842); 1 Carp PC 168, there was evidence that the patentee had made two or three of the machines claimed before he obtained his patent. Counsel for the patentee admitted that that circumstance did not invalidate the patent. No authority since has shown that concession to be wrong. The manner in which Parker J in Robertson v Purdey (1907) 24 RPC 273 (“Purdey”) dealt with the Nobbs gun (at 290-291) and the Baker gun (at 302) is inconsistent with the appellants’ submission – see, for example, at 302:
“I have now therefore to consider whether, as a matter of law, those three guns were not only made but were used in such a way as to invalidate a Patent for substantially the same invention …”
Counsel for the appellants have referred to obiter dicta from the judgment of Jenkins LJ in Fomento Industrial SA v Mentmore Manufacturing Co Ltd (1956) 73 RPC 88 as follows (at 115):
“I think that, where an invention specifies an article of a particular description, a person who makes an article in accordance with that specification is using the invention, whatever he does with the article when made. If making the article does not amount to using it, I do not see why selling it should do so; and it would seem (with respect to Mr Shelley’s submission to the contrary) obviously absurd to hold that selling the article when made would not be “use” for this purpose. Of course, a pen in one sense is not used until it is actually written with; but I do not think that “use” in this context can be given that narrow meaning. “Use” here relates, as I think, not to the article but to the invention. Thus, to give a simple illustration, if I obtain from a doctor a prescription for a bottle of medicine and take it to my chemist to be made up, the chemist, in making it up, is “using” the prescription. If I take the medicine home and drink it, I am “using” the medicine; but the chemist was undoubtedly using the prescription in making up the medicine, even though he dropped the bottle on the floor and lost the medicine after he had made it up, or I threw the medicine away instead of drinking it.”
Lloyd Jacob J at first instance had found the patent in suit invalid by reason of particular instances of prior public use. His Lordship did not deal with or find the facts in relation to a particular of objection of prior secret use based upon prior manufacture by the patentee. After a hearing on appeal of eleven days, each member of the Court of Appeal (Evershed MR, Jenkins LJ and Birkett LJ) delivered a separate ex tempore judgment on the day after argument had concluded, apparently taking the whole day between them. The appeal was unanimously dismissed based upon particular instances of prior public use and neither Evershed MR nor Birkett LJ dealt with the secret use point. Jenkins LJ did not refer to any authority, including Purdey which had been cited by counsel for the patentee for the proposition that “used” meant “used” and not “manufactured”. The actual decision by Jenkins LJ on the point was that there had been large-scale manufacture and sale of the articles in accordance with the invention prior to the priority date rather than simply secret use by manufacture. In my respectful opinion, the reasoning of his Lordship is unconvincing. His reference to the prescription confuses a process claim with a product claim.
My conclusion on this issue does not depend upon “use” being exclusive of the other aspects of the monopoly granted to a patentee which are reflected in the definition of “exploit” in the 1990 Act. It may be accepted that the various kinds of exploitation may overlap in different circumstances. I would accept, for example, that to sell goods might be seen as commercial use of the goods. However, reference to the different kinds of exploitation goes back to words in the original form of letters patent “to make, use, exercise and vend the invention” and the distinctions cannot be ignored (cf Heerey J in Welcome Real-Time SA v Catuity Inc [2001] FCA 445 at [101]-[103]).
If I were wrong concerning secret use, I would have difficulty with the conclusions of the trial judge as to the application of s 9(a) and (b) of the 1990 Act, substantially for the reasons advanced by the appellants and accepted by Heerey J. However, it is not necessary for me to come to a final view as to that.
other grounds of invalidity
I agree that the appellants have not shown that the trial judge erred in rejecting all other grounds advanced for invalidity of each patent.
conclusion
I would allow the appeal in part, and set aside that part of the orders below as found infringement of Claims 2, 8, 13 and 14 of the SDS patent, but otherwise dismiss the appeal. I would not disturb the costs order below. I would order that the appellants pay the costs of the respondent. The finding of infringement of each patent has been maintained.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate:
Dated: 8 August 2001
Counsel for the Appellants: Mr D K Catterns QC
Ms S J GoddardSolicitor for the Appellants: Freehills Counsel for the Respondent: Mr B N Caine
Mr B J HessSolicitor for the Respondent: Norman Waterhouse Date of Hearing: 28, 29, 30 November 2000, 27 February 2001, 19 July 2001 Date of Judgment: 8 August 2001
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