D.G. Searle & Co v Drug Houses of Australia Pty Ltd

[1984] FCA 122

Re: G. D. SEARLE & CO.
And: DRUG HOUSES OF AUSTRALIA PTY. LTD.
V. No. G298 of 1983
Patents - High Court and Federal Judiciary
2 FCR 399 / 3 IPR 184

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop(1), Sheppard(2) and Neaves(2) JJ.

CATCHWORDS

Patents - petition for extension of term under s.90 - application for leave to file caveat out of time - discretion under Victorian Supreme Court (Industrial Property) Rules 1981 - competency of appeal - prescribed court exercising Federal jurisdiction - practice and procedure of prescribed courts.

Patents Acts 1952 ss.90, 91, 92, 146, 148

Patents Regulations reg.37

Supreme Court (Industrial Property) Rules 1981 (Vic.) 0.5 r.1

Patents - Extension of term - Practice and procedure - Extension of time for filing caveat - Supreme Court (Industrial Property) Rules - Validity of rules - Power of judges of State court to impose time limitation and permit extension of time - Patents Act 1952 (Cth) s. 146 - Supreme Court (Industrial Property) Rules 1981 (Vic.) O. 5, r. 1.

High Court and Federal Judiciary - Federal Court of Australia - Jurisdiction - Appellate jurisdiction - Order of State Supreme Court under rules of State court in respect of proceedings under Patents Act - Supreme Court exercising federal jurisdiction - Patents Act 1952 (Cth) ss. 91, 146 - Federal Court of Australia Act 1976 (Cth) s. 24 (1)(c).

Patents - Extension of term - Practice and procedure - Extension of time for filing caveat - Failure to search Official Register - Ignorance of law - Discretionary relief.

HEADNOTE

The Supreme Court of Victoria pursuant to O. 5, r. 1 of the Supreme Court (Industrial Property) Rules 1981 (Vic.) granted an extension of time for the filing and service of a caveat under the Patents Act 1952 (Cth) s. 91, the failure allegedly being due to ignorance of Australian law.

Held (dismissing the appeal): (1) In the absence of any regulations being made pursuant to the Patents Act 1952 (Cth), s. 146 (4) the judges of the Supreme Court of Victoria have the power to make rules as to practice and procedure in respect of patent matters which are within jurisdiction. Therefore O. 5, r. 1 of the Supreme Court (Industrial Property) Rules 1981 is valid.

(2) Whilst the order appealed from was made under the Supreme Court (Industrial Property) Rules the order was made when the court was exercising jurisdiction under the Patents Act because the order was made in respect of a matter incidental to proceedings within s. 146 (1). Therefore there was a right of appeal to the Federal Court of Australia pursuant to the Federal Court of Australia Act 1976 s. 24(1) (c).

Parkes Rural Distributions Pty. Ltd. v. Glasson (1983) 48 A.L.R. 601 at 609 and R. v. Commonwealth Court of Conciliation and Arbitration; ex parte Barrett (1945) 70 C.L.R. 141 at 154, applied.

(3) (per Sheppard and Neaves JJ.) There is no obligation on a person such as the respondent to maintain a search of the Official Journal provided for in s. 175 of the Act.

Re Hopkinson's Patent (1896) 13 R.P.C. 114, distinguished.

Re Maschinenfabrik Augsburg-Nurnberg A.G.'s Patents (1929) 47 R.P.C. 193 at 200, applied.

(4) (per Northrop J.) There is no principle of law that ignorance of Australian law or a failure to see an advertisement in the Official Journal is a complete bar to the granting of leave to file a caveat after the expiration of the time specified in the rules of court.

Re Hopkinson's Patent (1896) 13 R.P.C. 114, explained.

Re Maschinenfabrik Augsburg - Nurnberg A.G.'s Patents (1929) 47 R.P.C. 193 at 199-200, applied.

HEARING

Melbourne, 1984, March 15; May 14. #DATE 14:5:1984

APPEAL.

Appeal from an interlocutory order granting an extension of time within which to file a caveat under the Patents Act 1952 (Cth) s. 91. The order was made pursuant to Supreme Court (Industrial Property) Rules 1981 (Vic.) O. 5, r. 1.

J. McL. Emmerson, for the applicant.

J.A. Strahan, for the respondent.

Solicitors for the appellant: Moules.

Solicitors for the respondent: Blake & Riggall.

B.A.G.

ORDER

1. The motion of Drug Houses of Australia Pty. Ltd. dated 8 March 1984 be refused.

2. The appeal against the order of the Supreme Court of Victoria made on 6 December 1983 be dismissed.

3. The appellant pay 90% of the respondent's costs of the motion and the appeal.

Orders accordingly.

JUDGE1

G. D. Searle & Co. ("Searle") of Chicago, Illinois in the United States of America, is a corporation organised and existing under the laws of the State of Delaware in the United States of America. Searle has appealed against an order of the Supreme Court of Victoria made on 6 December 1983 allowing Drug Houses of Australia Pty. Ltd. ("Drug Houses") until 9 December 1983 to file and serve a caveat under section 91 Patents Act 1952 against the extension of Patents No's. 422,217 and 499,551. The order of the Supreme Court was made pursuant to the power conferred by 0.5 r.1 of the Supreme Court (Industrial Property) Rules 1981. The relevant parts of r.1 are set out;

"1.(1) A caveat under section 91 of the Patents Act 1952, . . . shall be filed . . . within the time stated in the advertisement published in accordance with the Patents Regulations in relation to the petition . . . as the time within which the petition . . . is to be lodged, or within such further time as the Court allows."

The appeal was due to come on for hearing before a Full Court of the Federal Court on 15 March 1984. By notice dated 8 March 1984, Drug Houses gave notice that when the appeal came on for hearing it would move the Court for an order dismissing the appeal as incompetent; see 0.52 r.18 Federal Court Rules. The issue raised by the motion was of small compass, but it and another issue arising in connection with the motion are of importance.

Under sub-section 148(1) Patents Act, an appeal lies to the Federal Court from an "order of a prescribed court exercising jurisdiction under this Act". The Supreme Court of Victoria is a prescribed court under that Act. In support of the motion, counsel for Drug Houses contended that the order appealed from was not an order of the Supreme Court "exercising jurisdiction under" the Patents Act, but was an order of the Supreme Court exercising jurisdiction under 0.5 r.1 of the Supreme Court (Industrial Property) Rules in relation to a matter of practice and procedure of the Supreme Court.

To understand the contention, it is necessary to state briefly the relevant facts. On 7 July 1972, Letters Patent No. 422,217 dated as from 17 April 1967 were granted to Searle. Unless extended, the term of the Letters Patent would have expired on 17 April 1983. Searle desired to have the Letters Patent extended for a further term under s.90 Patents Act. Under sub-section 90(1) a patentee "may, after advertising, as prescribed, his intention to do so, present to a prescribed Court, at least six months before the expiration of the term of the patent, or within such further time as a prescribed court allows, a petition praying that his patent be extended for a further term". Under Reg. 37, Patent Regulations, a patentee intending to present a petition under s.90 Patents Act is required to advertise his intention to do so in the Official Journal. The advertisement must state "a time being not less than one month and not more than three months after the advertisement is published in the Official Journal, within which the petition . . . is to be lodged".

Under s.91 Patents Act a person interested may file in the prescribed court a caveat against the extension and, by s.92, on the hearing of the petition a person who has filed a caveat shall be made a respondent to the petition.

In the Patents Act, the words "the Official Journal" mean the Official Journal referred to in s.175. Under that section, the Commissioner of Patents ("the Commissioner") is required to issue periodically an Official Journal containing such matters as are prescribed or as the Commissioner sees fit. There is no doubt that the Official Journal performs an essential and unique role in patent law.

Sections 90, 91 and 92 Patents Act and Patent Reg. 37 prescribe a timetable for notice of an application for an extension of term of patent to enable persons interested to become parties to the petition to oppose the granting of the extension of term. Subject to what is said later, neither the Patents Act nor the Patents Regulations prescribe a time by which a person interested is required to file a caveat. Logically, and apart from special circumstances such as those in Sanofi v. Parke Davis Pty. Ltd. (No. 1) (1982) 149 C.L.R. 147; see also Sanofi v. Parke Davis Pty. Ltd. (No. 2) (1983) 49 A.L.R. 1; a caveat could be filed at any time before a petition is granted extending the term of the patent. As a matter of practice and procedure, it is logical that the Court which has jurisdiction to hear and determine petitions under s.90 Patents Act should make rules of court relating to those petitions, including the times within which the caveats should be filed. Order 5 r.1, Supreme Court (Industrial Property) Rules is such a rule and, subject to what is said later, I have no doubt the Judges of the Supreme Court had power to make that rule. Prior to 1 February 1977, petitions under s.90 Patents Act were required to be made to the High Court and the provisions of O.66A, r.15(1) High Court Rules, were similar to the provisions of 0.5 r.1 of the Victorian rules.

On 2 September 1982, Searle advertised in the Official Journal its intention to present a petition to the Supreme Court of Victoria for an extension of term of its patent. The petition was presented to the Supreme Court on 15 October 1982, being within the period specified in the advertisement. Drug Houses, being a person interested under s.91 Patents Act, had not filed and served a caveat by 2 December 1982, being the latest time for so doing as specified in 0.5 r.1, Supreme Court (Industrial Property) Rules. By notice of motion dated 24 May 1983, Drug Houses applied to the Supreme Court under 0.5 r.1 for an order giving it further time within which to file a caveat under s.91 Patents Act. The motion was made pursuant to the power contained in 0.5 r.1.In fact, and as appears from the notice itself, the motion was made in the matter of the petition by Searle under s.90 Patents Act. The heading on the notice of motion is set out:

"IN THE SUPREME COURT
OF VICTORIA IP No. 11 of 1982
INDUSTRIAL PROPERTY LIST

IN THE MATTER of the Patents Act 1952

and

IN THE MATTER of Letters Patent dated as of the 17th day of April 1967 numbered 422,217 and granted to G.D. SEARLE & CO. of Chicago, Illinois in the United States of America for an invention entitled 'Sweetening Agents'

and

IN THE MATTER of Letters Patent dated as of the 8th day of May 1970 numbered 499,551 and granted to G. D. SEARLE & CO. aforesaid for an invention entitled 'Sweetening Compositions and Method'"

Application by Drug Houses for an extension of time in which to file a caveat involved a matter of practice and procedure in the Supreme Court of Victoria, but the matter before the Supreme Court was the petition by Searle for the extension of term of a patent. Under sub-section 146(1) Patents Act, the Supreme Court "has jurisdiction to hear and determine" that petition. In hearing and determining that petition, the Supreme Court is exercising Federal jurisdiction under the Patents Act. That jurisdiction extends to all matters connected with or incidental to the hearing and determination of the petition including applications to file a caveat under s.91 Patents Act out of time, as prescribed by the Supreme Court (Industrial Property) Rules. In my opinion, in determining an application for leave to file a caveat out of time, the Supreme Court is exercising jurisdiction under the Patents Act.

The petition is a proceeding under the Patents Act within the meaning of sub-section 146(1) of that Act and the application for leave to file a caveat against the granting of the prayer in that petition is a matter connected with or incidental to that petition. In sub-sections 146(1) and 148(1) the word "under" in the phrases "under this Act" connotes "in pursuance of" or "under the authority of"; compare the reasoning of Bowen C.J. and Lockhart J. in Australian National University v. Burns (1982) 43 A.L.R. 25 at pp. 31-2. In Parkes Rural Distributions Pty .Ltd. v. Glasson (1983) 48 A.L.R. 601, a Full Court of the Federal Court had to determine whether a decision had been made "under an enactment" within the meaning of the Administrative Decisions (Judicial Review) Act 1977 where the decision had been made in accordance with a scheme adopted pursuant to a Commonwealth Act, but where the certificate evidencing the decision was issued under a State Act which was not an enactment under the Judicial Review Act. In a joint judgment, Bowen C.J. and Northrop J. said at p.609:

"In s 5 Judicial Review Act the word 'under' when used in the phrase 'under an enactment connotes 'in pursuance of' or 'under the authority of'; Australian National University v. Burns (1982) 43 ALR 25 per Bowen CJ and Lockhart J at 31.

On the facts of the present case, the decision of the respondent was made under the Commonwealth Act and the scheme and thus was made under an enactment within the Judicial Review Act. In making the decision the respondent acted in pursuance of the scheme which had been formulated by the Minister pursuant to the Commonwealth Act. It is true that the respondent was authorized by an appointment under the State Act, but that is beside the point. The respondent was acting in pursuance of the scheme being an instrument under the Judicial Review Act. The power conferred by the State Act was a necessary power in order to implement the Commonwealth Act. To say that the decision was also made under the Petroleum Products Subsidy Act 1965 (NSW) would not be to deny these propositions."

The same principles should be applied to the resolution of the motion by Drug Houses. To say that the order appealed from was made under the Supreme Court (Industrial Property) Rules does not deny the proposition that the order was made by the Supreme Court "exercising jurisdiction under" the Patents Act. Accordingly, in my opinion, the Federal Court has jurisdiction to hear and determine the appeal; see paragraph 24(1) (c) Federal Court of Australia Act 1976.

The wider issue raised by the motion concerns the validity of 0.5 r.1 Supreme Court (Industrial Property) Rules. Prior to 15 May 1979, the Patents Act contained no provisions prescribing the time within which a caveat under s.91 should be filed. By s.71 Jurisdiction of Courts (Miscellaneous Amendments) Act 1979, which section came into operation on 15 May 1979, sub-section 146(4) was inserted in the Patents Act. That sub-section, as amended by s.184. Statute Law (Miscellaneous Amendments) Act (No. 1) 1982, is set out:

"(4) The regulations may make provision for and in relation to the practice and procedure of prescribed courts in an action or proceeding under this Act, including provision prescribing the time within which any action or proceeding may be instituted or any other act or thing may be done, and providing for the extension of any such time."

To date no regulations have been made prescribing the time within which a caveat under s.91 must be filed. In the absence of regulations being made under sub-section 146(4) Patents Act, I find it difficult to see how that sub-section would have prevented the Judges of the Supreme Court from making the Supreme Court (Industrial Property) Rules, insofar as they relat to caveats under s.91. Those rules relate to matters of practice and procedure in the Supreme Court. Drug Houses applied to the Supreme Court under those rules and the application was granted. Searle appeals from the order granting that application. It would make a mockery of the law if, in all the circumstances of this case, the Judges of the Supreme Court had no power to regulate the practice and procedure of matters coming within its jurisdiction, whether Federal or not. If relevant regulations are made under s.146(4) Patents Act, those regulations might apply instead of the Supreme Court Rules. That issue does not arise on this appeal.

The motion by Drug Houses should be refused.

The order appealed from is of an interlocutory nature concerning a matter of practice and procedure. The order does not effectively determine any substantive rights. In those circumstances, an appellate court should be extremely reluctant to interfere; see Adam P. Brown Male Fashions Pty. Ltd. v. Philip Morris Inc. (1981) 148 C.L.R. 170 per Murphy J. at p.180. In the same case, Gibbs C.J., Aickin, Wilson and Brennan JJ. in a joint judgment said at pp.176-7:

"There is no reason to doubt that the disputed decision of Smithers J. concerned a matter of practice and procedure. The essence of such a matter is described in terms which are sufficient for present purposes in Salmond on Jurisprudence 10 ed. (1947), p.476:

'Substantive law is concerned with the ends which the administration of justice seeks; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated.'

An interlocutory order for an injunction is a matter of practice and procedure. See McHarg v. Universal Stock Exchange Ltd. ((1895) 2 Q.B. 81, at p.82); Minister for the Army v. Parbury Henty and Co. Pty. Ltd. ((1945) 70 C.L.R. 459, at p.489); White v. White ((1947) V.L.R. 434, at p.438).

Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd. ((1978) V.R. 431, at p.440); on the other hand, De Mestre v. A.D. Hunter Pty. Ltd. ((1952) 77 W.N. (N.S.W.) 143, at p.146). For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F. B. Gilbert (dec.) ((1946) 46 S.R. (N.S.W.) 318, at p.323):

' . . . I am of opinion that, . . . there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.'

See also, Brambles Holdings Ltd. v. Trade Practices Commission ((1979) 40 F.L.R. 364, at p.365); Dougherty v. Chandler (1946) 46 S.R. (N.S.W.) 370, at p.374). It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration."

In the present case, any injustice flowing to Searle from the order appealed is not great. None of its substantive rights are affected. As a result of the order, upon filing the caveat, Drug Houses becomes a party to the petition by Searle. It is noted that in the absence of 0.5 r.1 Supreme Court (Industrial Property) Rules, Drug Houses would not have been required to file that caveat within any prescribed time. The learned Judge who heard the application had this in mind. He said this showed that the "legislature intends that subject to proper control by the Court interested persons who wish to oppose extension shall be given an opportunity to be heard". I agree with that view.

The Commissioner was represented at the commencement of the hearing of the appeal and a short submission was put on his behalf as follows:

"The Commissioner does not wish to put any detailed argument in this matter. The Commissioner's opinion is that the public interest would be best served by the granting of the extension sought by Drug Houses of Australia Pty Limited of the caveat. The Commissioner is of the view that the main hearing is better conducted when the party who has more knowledge of the commercial circumstances of the case is present, and accordingly that is the reason for supporting the application by Drug Houses of Australia. The Commissioner also wishes to inform the court that when the substantial matter comes for hearing that he will be represented at that hearing."

Counsel for Searle contended that Searle would suffer injustice as a result of the order since the hearing of the petition could be delayed and, on the assumption that the prayer in the petition was granted, the protection afforded by the Letters Patent would have been suspended for a longer period. In all the circumstances of the case, no great weight should be given to that injustice.

In challenging the order appealed from, counsel for Searle relied upon two main grounds. The first was that the learned Judge had applied the wrong test in holding that ignorance of Australian law in relation to extension of term of a patent was a sufficient cause for failing to file a caveat within the time specified in the Supreme Court (Industrial Property) Rules. Implicit in this ground was a proposition that persons interested should take all proper steps to maintain a search of the Official Journal and that a failure so to do resulting in the time for filing a caveat expiring before the caveat was filed should never be a valid reason for granting further time in which to file a caveat. The second ground was that on the evidence before him, the learned Judge should not have found that Drug Houses did not know the Australian law in relation to extension of term of a patent and thus its failure to file a caveat within the specified time was not a sufficient reason to grant the further time within which a caveat could be filed.

It is important to note two things. The power to grant further time is unfettered. The power is conferred in wide terms, namely to file the caveat "within such further time as the Court allows". The Court should be slow to impose limitations, fetters or restrictions on an unfettered power. Secondly, substantive rights have not been affected by the order made. Reference has been made already to this. Counsel for Searle drew attention to a number of sections of the Patents Act under which substantive rights are affected by the publication of information in the Official Journal. The importance of the publication of material in the Official Journal is recognized, but in the present case no substantive rights are affected and a reference to those sections does not assist in the resolution of this appeal.

In support of his first contention counsel relied on the authority of the Privy Council decision reported in Re Hopkinson's Patent (1896) 13 R.P.C. 114. In that case, eleven caveats against a petition for extension of term of a patent had been filed within the time specified by rules. Those caveators were objecting to an extension of term. In addition, the Crown would appear at the hearing of the petition. Another person interested applied to the Privy Council for further time within which to file a caveat. The only reason given for failure to file the caveat within time was that the person interested did not see the advertisement. On behalf of the Privy Council, Lord Watson said at p.115:

"Lord Watson. - Then you do not show any reason why it should be allowed. All the persons interested ought to have seen it. If their Lordships admitted this application simply because parties choose to shut their eyes and do not examine into the matter at the time, it might be very serious.

Graham (counsel for the person interested). - Then the time will not be extended, my Lord?

Lord Watson. - Not if you have no explanation and simply say you did not see the notice."

That approach has not been adopted in all cases; see for example Maschinenfabrik Augsburg-Nurnberg A.G.'s Patent (1930) 47 R.P.C. 193 per Luxmoore J. at pp.199-200.

There is no principle of law that ignorance of Australian law or a failure to see an advertisement in the Official Journal is a complete bar to the granting of leave to file a caveat after the expiration of the time specified by 0.5 r.1 Supreme Court (Industrial Property) Rules. This approach is supported by the absence in the Patents Act or the Patents Regulations of any time limitations within which a caveat is to be filed.

There are conflicts between the material in the affidavit of Mr. Klieber, the Managing Director of Drug Houses, and his oral evidence given before the learned Judge. Likewise, on the evidence as a whole, there is a possibility that the knowledge of another officer of Drug Houses should have been attributed to Drug Houses, namely knowledge of the Australian law. Nevertheless, the Judge who made the order saw Mr. Klieber giving his evidence and stated reasons why he accepted the facts found that it was not until 12 May 1983 that Mr. Klieber first became aware that an application could be made to extend an Australian patent and that Searle had made such an application. That finding was open to the learned Judge and this Court should not interfere with that finding. Likewise, the finding by the Judge relating to the knowledge of Drug Houses should not be disturbed.

Accordingly, the appeal should be dismissed with costs in the manner indicated in the judgment of the other members of the Court.