Caterpillar Inc v John Deere Ltd

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FEDERAL COURT OF AUSTRALIA

Caterpillar Inc v John Deere Ltd [1999] FCA 1503

INTELLECTUAL PROPERTY – Patents – Infringement – leave to join American parent company – whether prima facie case of liability as joint tortfeasor or for authorisation of infringement – requirements of a prima facie case for relief – whether Court should exercise discretion to grant leave to serve originating process outside Australia – whether trial judge erred in failing to consider if the requisite inferences were open on the evidence – whether trial judge erred in drawing inferences of a seemingly final kind.

Patents Act 1990 (Cth) s 13(1)
Federal Court Rules O 8 r 2(2)

Decor Corporation Pty Ltd v Dart Industries Inc & Anor (1991) 33 FCR 397 referred
LED Builders Pty Ltd v Eagle Homes Pty Ltd (1997) 78 FCR 65 referred
Hi-Fert Pty Ltd & Anor v Kiukiang Maritime Carriers Inc & Anor (No 2) (1998) 155 ALR 328 followed
UnileverPlc v Gillette (UK) Limited [1989] RPC 583 discussed
Walker & Anor v Alemite Corporation (1933) 49 CLR 643 discussed
Belegging-en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd [1979] FSR 59 cited
Best Australia Ltd & Ors v Aquagas Marketing Pty Ltd & Ors (1988) 83 ALR 217 referred
Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 followed
Molnlycke AB & Anor v Procter & Gamble Limited & Ors (No 4) [1992] RPC 21 discussed
Advanced Building Systems Pty Ltd v Ramset Fasteners (Australia) Pty Ltd (1995) AIPC 91-129 cited
Morton-Norwich Products Inc v Intercen Ltd [1978] RPC 501 discussed
Murex Diagnostics Australia Pty Limited v Chiron Corporation & Anor (1994) 55 FCR 194 discussed
Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479 cited
Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205 cited
Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd & Ors (1998) 42 IPR 111 cited
Bristol-Myers Squibb Company v FH Faulding & Co Ltd (1998) 41 IPR 467 cited
Intel Corporation v General Instrument Corporation & Ors (No 2) [1991] RPC 235 cited
Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd& Ors (1995) 58 FCR 365 cited

CATERPILLAR INC. v JOHN DEERE LIMITED (ACN 008 671 725) & ORS

VG 739 of 1997

CARR, SUNDBERG and KENNY JJ
MELBOURNE
1 NOVEMBER 1999


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VG 739 OF 1997

BETWEEN:

CATERPILLAR INC.
Appellant

AND:

JOHN DEERE LIMITED (ACN 008 671 725)
First Respondent

QAS WHOLESALERS PTY LTD (ACN 005 508 609)
Second Respondent

AGRO MACHINERY PTY LTD (ACN 009 372 150)
Third Respondent

JUDGES:

CARR, SUNDBERG and KENNY JJ

DATE OF ORDER:

1 NOVEMBER 1999

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

(1)Leave be granted to the applicant for leave to appeal, to appeal from the decision and orders of Heerey J made on 28 April 1999.

(2)The appeal be allowed.

(3)Paragraph 1 of the orders made by Heerey J on 28…

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Details
Case
[1999] FCA 1503
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Caterpillar Inc brought a case against John Deere Ltd (Deere Australia) and John Deere USA Inc (Deere USA) for alleged patent infringement. Caterpillar claimed that Deere USA authorised Deere Australia to manufacture, use, and sell tractors that infringed its patent. The primary issue was whether Caterpillar had established a prima facie case to justify serving a writ outside Australia on Deere USA, and if not, whether the Court should grant leave to appeal the decision. Caterpillar argued that the documents produced by Deere Australia suggested that Deere USA had sanctioned, approved, and countenanced the infringing acts, or had granted Deere Australia the right to do so. The Court considered whether the trial judge had made an error in not determining whether the necessary inferences could be drawn from the evidence.

The Court held that Caterpillar had not made out a prima facie case as it failed to establish that Deere USA authorised Deere Australia to infringe the patent. The Court noted that the primary judge did not consider whether the necessary inferences were open on the evidence, which was a critical issue. The Court concluded that the case was attended by sufficient doubt to warrant reconsideration. The Court granted leave to appeal, set aside the orders made by the primary judge, and remitted the matter to the trial judge for further consideration. The respondents were ordered to pay the appellant's costs of and incidental to the appeal and the application for leave to appeal.

Orders

Orders of the court

(1) Leave be granted to the applicant for leave to appeal, to appeal from the decision and orders of Heerey J made on 28 April 1999.

(2) The appeal be allowed.

(3) Paragraph 1 of the orders made by Heerey J on 28 April 1999 be set aside.

(4) The respondents pay the appellant’s costs of and incidental to the appeal and the application for leave to appeal.

(5) The matter be remitted to the trial judge for further consideration and the making of orders in accordance with the judgment and reasons of the Court, including orders as to costs on the hearing below.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

As already noted, Caterpillar’s alternative submission was that it had, at the least, made out a prima facie case that Deere USA had authorised the importation and sale of the tractors in contravention of s 13(1) of the Patents Act: see the definition of “exploit” in Sch 1 of the Patents Act. There is some difference in the authorities as to the meaning of the word “authorise” for the purposes of s 13(1). The word has been said to mean “sanction, approve [or] countenance that which is done”, or “to purport to grant to a third person the right to do the act of which complaint is made.”: see Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994) 30 IPR 479 at 493, Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205 at 243, Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (1998) 42 IPR 111 at 129. Some authorities have expressly favoured the narrower meaning: see Advanced Building Systems at 39,200 and Bristol-Myers Squibb Company v FH Faulding & Co Ltd (1998) 41 IPR 467 at 488. At first instance, it was agreed by the parties that they would not invite the primary judge to determine whether the wide or narrow meaning was correct. Caterpillar’s submission was that even if it had not established a prima facie case of common design, nevertheless it had shown, to the requisite degree, that Deere USA had sanctioned, approved and countenanced the infringing acts, or had purported to grant Deere Australia the right to do those acts.failure to consider whether the requisite inferences were open on the evidence? In support of its submission that the primary judge’s decision did not turn on an answer to the correct question (i.e., whether the requisite inferences were open on the evidence) Caterpillar directed the Court’s attention to some of the documents produced by Deere Australia on subpoena. It submitted that those documents permitted inferences to be drawn to the effect of propositions advanced by it and disputed by Deere Australia. If it were, for this reason, open to a trial judge to translate those disputed propositions into findings of fact, then, so Caterpillar submitted, those findings, taken with the matters that were not in dispute, would support the relief claimed. When the documents forming exhibit “CPT-1 – Confidential” to an affidavit of Caterpillar’s solicitor (“the documents”) are read as a whole, it is, we think, open to infer the following.(1)Deere USA not only had the power to prevent Deere Australia from selling the tractors in Australia but, for some time prior to early 1998, had in fact done so;(2)Deere Australia had been required to obtain the authorisation or approval of Deere USA before it was able to sell the tractors in Australia; (3)Deere USA played a critical role in determining when and on what terms the tractors would be marketed in Australia; (4)there was consultation amongst the USA personnel as well as discussion between Deere USA and Deere Australia concerning the placement of the tractors in the Australian market; (5)the initial steps taken to place the tractors in the Australian market were in the nature of a joint project undertaken by Deere USA with Deere Australia; (6)an important object of the project was to prevent the market going to Caterpillar; (7)Deere USA provided special training for Deere Australia personnel in connection with the use of the tractors; (8)Deere USA made particular efforts to supply Deere Australia with material designed to assist in the promotion and sale of the tractors in Australia; (9)Deere USA wanted to be and was informed of the promotional and marketing plans being made by Deere Australia in connection with the sale of the tractors in Australia; (10)the authority of Deere USA over Deere Australia extended beyond the ordinary relationship of supplier/distributor into matters such as the management of exposure to changes in currency; (11)Deere Australia was regarded as a “branch customer” by Deere USA; and (12)whilst Deere Australia was to be responsible for the repair of the tractors, it was to report any breakdown to Deere USA.

Decision

Reasons for decision

We accept too that, as Caterpillar submitted, the effect of the decision, if it stands, is to make it very difficult for it to obtain access to documents held by Deere USA that are directly relevant to issues of infringement and invalidity. Moreover, Deere Australia is not under any comparable disadvantage and will, it seems, be able to rely as it chooses on those documents in the hands of Deere USA favouring its interest. These are not illegitimate considerations in the present context: cf UnileverPlc v Gillette (UK) Ltd [1989] RPC 583 at 601 (“Unilever”). is the decision below attended by sufficient doubt? In answering the question, whether the case is attended by sufficient doubt to warrant reconsideration, it is necessary first to consider the manner in which the matters were presented to the judge at first instance. (a)The parties’ presentation at first instance The case that Caterpillar would make against Deere USA in this proceeding if it were permitted to do so is (1) that Deere USA is liable as a joint tortfeasor with Deere Australia in connection with the alleged acts of infringement in that (a) Deere USA aided, abetted, procured, assisted in and made itself a party to those acts; or (b) the acts were done by Deere Australia in concert with Deere USA, or in pursuance of a common design between Deere Australia and Deere USA; alternatively (2) that Deere USA is liable as a principal for the infringement of the patent because it “authorised” (within the meaning of s 13(1) of the Patents Act 1990 (Cth) (“the Patents Act”)) Deere Australia to commit the infringing acts. Applications for leave to serve originating process outside Australia are governed in this Court by O 8 of the Federal Court Rules (“the Rules”). Pursuant to O 8 r 2(2), such leave may be granted where (1) the proceeding is one in relation to which the Court has jurisdiction; (2) the proceeding is of the requisite kind (i.e. a case of the kind referred to in O 8 r 1); and (3) the applicant has a prima facie case for the relief sought. It was the last-mentioned requirement that defeated Caterpillar at first instance. In submitting that it had made out a prima facie case, Caterpillar relied on numerous affidavits sworn by its solicitor, Mr C P Thompson and, more particularly, on the exhibits to those affidavits, many of which were documents that had been produced by Deere Australia pursuant to a subpoena issued at Caterpillar’s request. (Most of the subpoenaed documents were the subject of confidentiality orders both at first instance and on appeal. For that reason, we refer below to their relevant effect, rather than to their specific contents.) Deere Australia also relied on numerous affidavits sworn by its solicitor, Mr D J Ryan, as well as on an affidavit sworn on 22 January 1999 by its managing director, Mr M D Wilson. As it happened, Caterpillar also sought to rely on that affidavit which turned out to be critical to the outcome of its application at first instance.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.